LHV Group — Earnings Release 2020

Nov 10, 2020

LHV Group

October results November 10, 2020

LHV Group An active month, result affected by the Danske transaction

Financial results, EURt	13 months	Oct-20	YTD20	YTD19		FP YTD A YTD FP
Total revenue, incl.		9.152	77,250	59,492	76,942	+308
Net interest income		6.353	54.951	37,811	55,266	-315
Net fee and commission income		2,332	21.499	21.104	21.313	+186
Total operating expenses		4.428	36,977	31,423	36,299	+678
Earnings before impairment		4,724	40,273	28,069	40,643	-370
Impairment losses on loans		1,405	10,061	1,568	9,849	+212
Income tax		675	5.762	3,848	5.708	+54
Net profit, incl.		2,643	24.451	22,653	25,087	-636
attr. to shareholders		2.412	22,523	20,837	23.151	-627
Business volumes, EURm	13 months	Oct-20	YTD20	YTD19	FP YTD	A YTD FP
Deposits from customers		3,334	3,334	2,565	3,214	+120
Loans (net)		2.135	2,135	1,246	2.153	-18
Assets under management		1.496	1.496	1,342	1,508	-12
Key figures	13 months	Oct-20	YTD20	YTD19	FP YTD	A YTD FP
Cost / income ratio (C/I)		48.4%	47.9%	52.8%	47.2%	+ 0.7 pp
pre-tax ROE*		14.9%	15.4%	16.7%	15.8%	- 0.4 pp
ROE*		12.9%	12.8%	14.3%	13.2%	- 0.3 pp
Net interest margin (NIM)		1.8%	2.0%	2.2%	2.0%	- 0.0 pp
ROA		0.8%	0.9%	1.3%	0.9%	- 0.0 pp

• · · The result was affected by one-off costs related to the acquisition of Danske's portfolio, which were recognised in expenses, as well as slightly higher provisions and higher income tax calculation on planned dividends from subsidiaries
• · The volumes of loans, deposits and pension funds are in line with the financial plan
• plan remains valid

LHV Banking Successful integration of the Danske portfolio

Financial results, EURt	13 months	Oct-20	YTD20	YTD19	FP YTD	A YTD FP
Total revenue, incl.		8,656	69,957	48,508	69,545	+413
Net interest income		6,599	55,225	38,388	55,442	-216
Net fee and commission income		1,566	14,232	9,861	14,084	+148
Total operating expenses		3,732	30,740	25,818	30,152	+588
Earnings before impairment		4,924	39,217	22,691	39,393	-175
Impairment losses on loans		1.405	10,061	1,568	9,849	+212
Income tax		575	4,616	2,876	4,599	+17
Net profit		2,943	24,541	18,246	24,945	-404
Business volumes, EURm	13 months	Oct-20	YTD20	YTD19	FP YTD	A YTD FP
Deposits from customers		3,368	3,368	2,577	3,243	+124
Loans (net)		2,135	2,135	1,246	2,153	-18
Key figures	13 months	Oct-20	YTD20	YTD19	FP YTD	A YTD FP
Cost / income ratio (C/I)		43.1%	43.9%	53.2%	43.4%	+ 0.6 pp
Net interest margin (NIM)		1.9%	1.9%	2.1%	1.9%	0.0 pp

• · · Danske corporate and local governments loan portfolio acquisition at the beginning of October
• · The number of bank customers increased by 5,200, customer activity remains high
• · Loan portfolio grace periods end and customers return to regular payment schedules
• 1.4 EURm forward looking provisions were made for a few customers
• · Deposits increased by 111 EURm, the main increase from corporate banking deposits by 76 EURm

LHV Asset Management Increase in the number of customers, pension reform enactment

Financial results, EURt	13 months	Oct-20	YTD20	YTD19		FP YTD A YTD FP
Total revenue		746	7,555	11,514	7,561	-6
Total expenses		532	5,236	4,968	5,236	-0
Earnings before taxes		214	2,319	6,546	2,325	-6
Income tax		0	844	972	844	+0
Net profit		214	1,475	5,574	1,481	-6
Business volumes	13 months	Oct-20	YTD20	YTD19	FP YTD	A YTD FP
Assets under management, EURm.		1.496	1,496	1,342	1,508	-12
Active customers of PII funds, thous.		184	184	176	184	-0
Key figures	13 months	Oct-20	YTD20	YTD19		FP YTD △ YTD FP
Cost / income ratio (C/I)		69.5%	72.0%	44.2%	72.4%	- 0.4 pp

• · The number of customers continued to grow, by the end of October more than 184 thousand active customers
• · October was negative for the markets. LHV's more conservative funds M, S and XS showed a positive return, while the value of funds with higher equity risk decreased. Pension fund Roheline remained at the same level, losing 0.1% in value
• · The Supreme Court declared the pension reform constitutional, in 2021 there will be several new opportunities for pension savers
• · Interest in suspending payments was modest, with 1.2% of LHV's customers useing the opportunity

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