LHV Group — Earnings Release 2023

Feb 6, 2024

LHV Group

All subsidiaries of LHV Group ended the year profitably

Strong end of the year

Financial results, EURt	9 quarters	Q4-23	$Q3-23$	$\Delta$ quarter
Net interest income	. 1 . 1	67,670	68,140	$-470$
Net fee and commission income	t mutt	16,299	13,617	$+2,682$
Other income	▃▄▃▃▀▀▃▃▀	1,723	$-278$	$+2,001$
Total net income	ألابري	85,693	81,479	$+4,213$
Total operating expenses	an an Fill	37,852	32,807	$+5,045$
Earnings before impairment	الانسري	47,841	48,672	$-831$
Impairment losses	الممهما الممد	9,430	2,883	$+6,546$
Income tax expense	_ _	5,642	6,314	$-671$
Net profit	. . .	32,769	39,475	$-6,706$
Business volumes, EURm	9 quarters	Q4-23	$Q3-23$	$\Delta$ quarter
Deposits from customers	.	5,731	5,316	$+415$
Loans portfolio (net)	n mate	3,562	3,376	$+186$
Assets under management	.	1,519	1,451	$+68$
Customers, thous.		587	577	$+10$
Fin. intermediaries' payments, thous. pcs	a na mpili	15,914	13,214	$+2,701$
Key figures	9 quarters	Q4-23	$Q3-23$	$\Delta$ quarter
Cost / income ratio (C/I)	.	44.2%	40.3%	$+3.9$ pp
Net interest margin (NIM)		4.0%	4.3%	$-0.3$ pp
pre-tax ROE*	بالالبيرز	28.7%	36.7%	$-8.0$ pp
ROE*	ta a Bill	24.5%	31.6%	$-7.1$ pp

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Both profitability and business volumes annual targets have been met

Financial results, EURt	13 months	Dec 23	YTD 23	YTD22	FP YTD	Δ YTD FP
Total net income, incl.		29,364	310,457	173,542	299,714	$+10,743$
Net interest income		22,906	253,819	129,111	246,390	$+7,429$
Net fee and commission income		5,342	54,145	44,900	51,753	$+2,393$
Total operating expenses		14,855	134,321	89,639	128,866	$+5,455$
Earnings before impairment		14,509	176,136	83,903	170,848	$+5,288$
Impairment losses		4,437	11,539	8,051	8,221	$+3,318$
Income tax expense		1,790	23,659	14,421	22,588	$+1,071$
Net profit, incl.		8,282	140,938	61,431	140,039	$+899$
attr. to shareholders		8,424	139,601	59,807	138,725	$+877$
Business volumes, EURm	13 months	Dec 23	YTD 23	YTD22	FP YTD	Δ YTD FP
Deposits from customers		5,731	5,731	4,901	5,608	$+123$
Loans (net)		3,562	3,562	3,209	3,506	$+56$
Assets under management		1,519	1,519	1,332	1,541	$-22$
Fin. intermediaries' payments, thous. pcs		5,807	49,454	26,124	40,608	$+8,846$
Key figures	13 months	Dec 23	YTD 23	YTD22	FP YTD	Δ YTD FP
Cost / income ratio (C/I)		50.6%	43.3%	51.7%	43.0%	$+0.3$ pp
Net interest margin (NIM)		3.9%	3.9%	2.0%	3.8%	$+0.1$ pp
pre-tax ROE*		22.1%	34.0%	20.3%	33.6%	$+0.4$ pp
ROE*		18.2%	29.0%	16.4%	28.9%	$+0.2$ pp

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Strong deposit collection in the last quarter

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The quality of the loan portfolio remains good

Financial results, EURt	9 quarters	Q4-23	Q3-23	$\Delta$ quarter
Net interest income	.	59,576	59,900	$-324$
Net fee and commission income	la di Lincol	8,444	5,715	$+2,728$
Other income	__	3,531	$-130$	$+3,661$
Total net income	an an Little	71,551	65,486	$+6,065$
Total operating expenses	n na Tall	22,870	20,496	$+2,375$
Earnings before impairment	الالتسد	48,681	44,990	$+3,691$
Impairment losses	___	9,588	2,773	$+6,815$
Income tax expense	. .	5,520	6,192	$-671$
Net profit	الالتان وممر	33,572	36,025	$-2,453$
Business volumes, EURm	9 quarters	$Q4 - 23$	$Q3-23$	$\Delta$ quarter
Deposits from customers		5,535	5,256	$+279$
incl. banking services' deposits	Witness	991	910	$+82$
Loans (net)	n mende	3,549	3,452	$+97$
Customers, thous.		417	407	$+10$
Key figures	9 quarters	$Q4-23$	$Q3-23$	$\Delta$ quarter
Cost / income ratio (C/I)	illi sin	32.0%	31.3%	$+0.7$ pp
Net interest margin (NIM)		3.7%	3.8%	$-0.2$ pp
pre-tax ROE*	ta a Hill	30.8%	35.6%	$-4.8$ pp
ROE*	ta a 1111	26.4%	30.3%	$-3.9$ pp

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All main indicators surpassed the financial plan

Financial results, EURt	13 months	Dec 23	YTD 23	YTD22	FP YTD	Δ YTD FP
Total net income, incl.		24,868	260,077	161,670	247,941	$+12,136$
Net interest income		19,424	228,470	129,487	219,949	$+8,521$
Net fee and commission income		2,428	27,217	32,408	27,045	$+172$
Total operating expenses		8,579	85,235	64,544	83,133	$+2,102$
Earnings before impairment		16,289	174,841	97,126	164,807	$+10,034$
Impairment losses		4,620	11,372	2,995	7,176	$+4,196$
Income tax expense		1,750	22,107	13,259	20,867	$+1,239$
Net profit		9,920	141,363	80,872	136,764	$+4,599$
Business volumes, EURm	13 months	Dec 23	YTD 23	YTD22	FP YTD	Δ YTD FP
Deposits from customers		5,535	5,535	4,957	5,300	$+235$
incl. banking services' deposits		991	991	1,281	896	$+95$
Loans (net)		3,549	3,549	3,187	3,454	$+95$
Key figures	13 months	Dec 23	YTD 23	YTD22	FP YTD	Δ YTD FP
Cost / income ratio (C/I)		34.5%	32.8%	39.9%	33.5%	$-0.8$ pp
Net interest margin (NIM)		3.5%	3.6%	2.0%	3.5%	$+0.1$ pp
T1 capital adequacy		19.6%	19.6%	19.1%	20.3%	$-0.7$ pp
Total capital adequacy		22.1%	22.1%	21.9%	22.3%	$-0.3$ pp

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Deposits and loans in a strong growth trend

Financial results, EURt	9 quarters	Q4-23	$Q3-23$	$\Delta$ quarter
Total net income, incl.	- 11	11,952	11,780	$+172$
Net interest income	- 11	9,647	9,089	$+558$
Net fee and commission income	-111	2,195	2,704	$-509$
Other net income	المستور	110	-13	$+123$
Total operating expenses		8,875	8,503	$+371$
Earnings before impairment	-----	3,078	3,277	$-199$
Impairment losses		31	110	$-79$
Net profit	----	3,046	3,166	$-120$
Business volumes, EURm		Q4-23	$Q3-23$	$\Delta$ quarter
Deposits from customers	п	239	135	$+104$
Loans (net)		79	61	$+19$
Key figures		Q4-23	$Q3-23$	$\Delta$ quarter
Cost / income ratio (C/I)		74.3%	72.2%	$+2.1$ pp
Net interest margin (NIM)		11.2%	17.4%	$-6.2$ pp
pre-tax ROE		23.4%	29.2%	$-5.8$ pp

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Growth faster than planned in both interest and fee income

Financial results, EURt	13 months	Dec 23	YTD 23	YTD22	FP YTD	Δ YTD FP
Total net income, incl.		4,248	36,755	67	33,544	$+3,210$
Net interest income		3,394	28,917	60	27,662	$+1,255$
Net fee and commission income		851	7,807	O	5,949	$+1,858$
Other net income		4	30		$-67$	$+97$
Total operating expenses		3,150	31,300	11,737	29,432	$+1,868$
Earnings before impairment		1,098	5,455	$-11,670$	4,113	$+1,342$
Impairment losses		7	176	0	864	$-688$
Net profit		1,091	5,279	$-11,670$	3,249	$+2,030$
Business volumes, EURm	13 months	Dec 23	YTD 23	YTD22	FP YTD	YTD FP Δ
Deposits from customers		239	239	$\overline{0}$	347	$-108$
Loans (net)		79	79	22	129	$-49$
Key figures	13 months	Dec 23	YTD 23	YTD22	FP YTD	Δ YTD FP
Cost / income ratio (C/I)		74.2%	85.2%	17572.7%	87.7%	$-2.6$ pp
Net interest margin (NIM)		11.2%	14.7%	0.3%	10.8%	$+3.9$ pp
T1 capital adequacy		28.7%	28.7%	na	24.7%	$+4.0$ pp
Total capital adequacy		28.7%	28.7%	na	24.7%	$+4.0$ pp

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Strong quarter in stock markets, the large decline of 2022 was offset by 2023

Index funds and pension fund Roheline NAV change YTD

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Quarterly net profit 0.5 EURm

Financial results, EURt	9 quarters	$Q4-23$	$Q3-23$	$\Delta$ quarter
Total net income	.	2,252	2,256	$-4$
Total operating expenses		1,838	1,639	$+198$
EBIT		415	617	$-202$
Net financial income	予 以前 。	125	$-12$	$+137$
Net profit		539	605	$-65$
Business volumes, EURm	9 quarters	Q4-23	$Q3-23$	$\Delta$ quarter
Pillar II pension funds	.	1,428	1,370	$+58$
Pillar III pension funds	an an Dùt	84	74	$+9$
Eurofunds	.	7	8	$-o$
Active customers of PII funds, th.		123	125	-1
Key figures	9 quarters	Q4-23	$Q3-23$	$\Delta$ quarter
Cost / income ratio (C/I)	. I L unn	77.3%	73.1%	$+4.3$ pp
pre-tax ROE	--------	9.7%	11.3%	$-1.6$ pp
ROE	-------	9.7%	11.3%	$-1.6$ pp

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Net profit plan fulfillment was affected by lower financial income

Financial results, EURt	13 months	Dec 23	YTD 23	YTD22	FP YTD	YTD FP $\Lambda$
Total net income		770	8,845	7,951	8,890	$-46$
Total operating expenses		630	6,997	7,077	6,953	$+44$
EBIT		140	1,848	874	1,937	$-89$
Net financial income		104	292	-146	583	$-292$
Income tax expense		0	488	830	488	$+0$
Net profit		244	1,652	$-103$	2,032	$-381$
Business volumes	13 months	Dec 23	YTD 23	YTD22	FP YTD	Δ YTD FP
Assets under management, EURm		1,519	1,519	1,332	1,541	$-22$
Active customers of PII funds, thous.		123	123	131	124	$-$ O
Key figures	13 months	Dec 23	YTD 23	YTD22	FP YTD	Δ YTD FP
Cost / income ratio (C/I)		72.1%	76.6%	90.7%	73.1%	$+3.4$ pp

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A quarter with stable growth and profitability

Financial results, EURt	9 quarters	Q4-23	$Q3-23$	$\Delta$ quarter
Total net income		1,705	1,489	$+216$
Total expenses	السررر	1,350	1,164	$+186$
Technical result	-9-9-8	355	325	$+30$
Net investments income		73	-22	$+95$
Other operating income and expenses		-5	-4	-1
Net profit	-----	423	299	$+124$
Business volumes, EURt	9 quarters	Q4-23	$Q3-23$	$\Delta$ quarter
Gross written premiums		8,198	7,525	$+673$
No of Customers (thous.)		161	160	$+1$
Key figures	9 quarters	Q4-23	$Q3-23$	$\Delta$ quarter
Net loss ratio	المحالف الم	61.2%	64.8%	$-3.6$ pp
Net expense ratio	Hilasa	32.1%	30.4%	$+1.7$ pp
pre-tax ROE	7070 FB	33.6%	25.6%	$+8.0$ pp
ROE	-9-81F	33.6%	25.6%	$+8.0$ pp

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A month with few incurred losses and a positive result

Financial results, EURt	13 months	Dec 23	YTD 23	YTD 22	FP YTD	Δ YTD FP
Total net income, incl.		682	5,006	1,487	4,715	$+291$
Net earned premiums		2,260	23,073	8,358	21,937	$+1,136$
Net incurred losses		1,222	15,410	6,176	14,900	$+509$
Other net income		$-356$	$-2,657$	$-694$	$-2,322$	$-336$
Total expenses		495	4,766	3,153	4,572	$+194$
Technical result		187	240	$-1,666$	144	$+97$
Net investment income		46	79	$-22$	169	-90
Other operating income and expenses		$-2$	$-14$	$-5$	$-6$	-8
Net profit		231	305	$-1,693$	307	$-2$
Business volumes, EURt	13 months	Dec 23	YTD 23	YTD22	FP YTD	Δ YTD FP
Gross written premiums		2,468	31,412	17,138	31,817	$-405$
No of customers (thous.)		161	161	150	na	na
Key figures	13 months	Dec 23	YTD 23	YTD22	FP YTD	Δ YTD FP
Net loss ratio		54.1%	66.8%	73.9%	67.9%	$-1.1$ pp
Net expense ratio		33.5%	32.2%	46.0%	31.8%	$+0.4$ pp

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12 months

Risks and capitalisation

Portfolio quality remains strong

LHV Finance loans overdue porfolio Retail banking loans overdue portfolio

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LHV's capitalisation and liquidity are strong

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Share information

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Madis Toomsalu madis.toomsalu@lhv.ee

Meelis Paakspuu meelis.paakspuu@lhv.ee