LHV Group — Interim / Quarterly Report 2022

Jul 19, 2022

LHV Group

Business environment affecting various areas differently

Business volumes continue growing

Financial results, EURt	9 quarters	$Q2-22$	Q1-22	$\Delta$ quarter
Net interest income	--------	27,185	25,787	$+1,398$
Net fee and commission income	a a Bonn Bonn	11,005	10,346	$+659$
Other income	--------	-288	$-1,349$	$+1,061$
Total revenue	an ta bhliai	37,903	34,784	$+3,118$
Total operating expenses	an an Dùbhla i	21,080	18,865	$+2,215$
Earnings before impairment	an bootham	16,822	15,919	$+903$
Impairment losses on loans and bonds		$-341$	735	$-1,076$
Income tax expense	a Leonidae	3,177	2,801	$+376$
Net income	, alem II an	13,986	12,383	$+1,604$
Business volumes, EURm	9 quarters	$Q2-22$	Q1-22	$\Delta$ quarter
Deposits from customers	. .	5,367	5,410	$-44$
Loans (net)	.	2,925	2,753	$+172$
Assets under management	.	1,259	1,362	$-103$
Customers, thous.	.	532	517	$+15$
Fin. intermediaries' payments, thous. pcs	.	6,445	6,592	$-147$
Key figures	9 quarters	$Q2-22$	Q1-22	$\Delta$ quarter
Cost / income ratio (C/I)	in din H	55.6%	54.2%	$+1.4$ pp
pre-tax ROE*	an bon titue	18.8%	18.1%	$+0.7$ pp
ROE*	an Ing Mary	15.3%	14.7%	$+0.6$ pp.

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Net profit behind the financial plan by -3.5 EURm

Financial results, EURt	13 months	Jun 22	YTD22	YTD21	FP YTD	Δ YTD FP
Total revenue, incl.		12,374	72,687	61,599	79,765	$-7,078$
Net interest income		9,053	52,972	43,299	53,148	$-176$
Net fee and commission income		3,624	21,351	18,246	25,978	$-4,626$
Total operating expenses		7,376	39,946	31,685	39,100	$+846$
Earnings before impairment		4,999	32,741	29,915	40,666	$-7,925$
Impairment losses on loans and bonds		$-49$	394	810	4,640	$-4,246$
Income tax expense		934	5,978	4,773	6,124	$-146$
Net income, incl.		4,114	26,369	24,332	29,902	$-3,533$
attr. to shareholders		3,933	25,423	23,452	28,946	$-3,523$
Business volumes, EURm	13 months	Jun 22	YTD22	YTD21	FP YTD	Δ YTD FP
Deposits from customers		5,367	5,367	4,921	5,734	$-368$
Loans (net)		2,925	2,925	2,401	2,858	$+66$
Assets under management		1,259	1,259	1,620	1,330	$-72$
Fin. intermediaries' payments, thous. pcs		2,092	13,037	13,363	16,095	$-3,058$
Key figures	13 months	Jun 22	YTD22	YTD21	FP YTD	Δ YTD FP
Cost / income ratio (C/I)		59.6%	55.0%	51.4%	49.0%	$+5.9$ pp
Net interest margin (NIM)		1.7%	1.6%	1.6%	1.6%	$+0.0$ pp
pre-tax ROE*		16.4%	18.0%	22.8%	20.0%	$-2.0$ pp
ROE*		13.4%	14.7%	19.1%	17.0%	$-2.4$ pp
ROA		0.8%	0.8%	0.9%	0.9%	$-0.1$ pp

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Adapting to new situation

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Decent growth in loan volumes

Financial results, EURt	9 quarters	$Q2 - 22$	Q1-22	$\Delta$ quarter
Net interest income	--------	27,232	25,875	$+1,357$
Net fee and commission income	a a comhlan	7,643	7,790	$-147$
Other income	__ _	147	$-1,431$	$+1,578$
Total revenue	-------	35,021	32,233	$+2,788$
Total operating expenses	.	15,635	14,379	$+1,256$
Earnings before impairment	--------	19,387	17,854	$+1,532$
Impairment losses on loans and bonds		$-341$	735	$-1,076$
Income tax expense	. .	2,792	2,269	$+523$
Net income	.	16,936	14,851	$+2,086$
Business volumes, EURm	9 quarters	$Q2 - 22$	Q1-22	$\Delta$ quarter
Deposits from customers	--------	5,425	5,437	$-12$
Loans (net)	---------	2,925	2,753	$+172$
Customers, thous.	---------	368	355	$+13$
Key figures	9 quarters	$Q2 - 22$	$Q1 - 22$	$\Delta$ quarter
Cost / income ratio (C/I)	The Book Pro	44.6%	44.6%	$+0.0$ pp
pre-tax ROE*	. a bailt i ban	25.9%	23.3%	$+2.6$ pp
ROE*	.	22.2%	20.2%	$+2.1$ pp
Net interest margin (NIM)	.	1.7%	1.6%	$+0.1$ pp

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Net profit behind the financial plan by -2.3 EURm

Financial results, EURt	13 months	Jun 22	YTD22	YTD21	FP YTD	Δ YTD FP
Total revenue, incl.	$\sim$ $\sim$	11,498	67,254	57,037	73,593	$-6,338$
Net interest income		9,070	53,106	44,069	53,307	$-200$
Net fee and commission income		2,456	15,433	13,179	19,910	$-4,477$
Total operating expenses		5,372	30,013	23,379	29,447	$+567$
Earnings before impairment		6,126	37,241	33,658	44,146	$-6,905$
Impairment losses on loans and bonds		-49	394	810	4,640	$-4,246$
Income tax expense		893	5,061	4,554	5,469	$-409$
Net income		5,282	31,787	28,294	34,037	$-2,250$
Business volumes, EURm	13 months	Jun 22	YTD22	YTD21	FP YTD	YTD FP Δ
Deposits from customers		5,425	5,425	4,947	5,781	$-357$
Loans (net)		2,925	2,925	2,401	2,858	$+66$
Key figures	13 months	Jun 22	YTD22	YTD21	FP YTD	Δ YTD FP
Cost / income ratio (C/I)		46.7%	44.6%	41.0%	40.0%	$+4.6$ pp
Net interest margin (NIM)		1.7%	1.6%	1.6%	1.6%	$+0.0$ pp
T1 capital adequacy		14.9%	14.9%	15.8%	15.4%	$-0.5$ pp

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Actively managed funds have retained value in difficult market conditions

Pillar II comparable pension funds NAV change (YTD)

Index funds and pension fund Roheline NAV change YTD

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Profitability negatively affected by negative returns of funds

Financial results, EURt	9 quarters	$Q2-22$	Q1-22	$\Delta$ quarter
Total revenue	. . .	2,000	1,959	$+41$
Total operating expenses	ana albany	1,823	1,877	$-55$
EBIT	22 I.a - Antoni	177	82	$+95$
Net financial income	8 - - - - - - - -	$-411$	103	$-514$
Income tax expense	ш	O	830	$-830$
Net income	المستور المسا	-234	-646	$+412$
Business volumes, EURm	9 quarters	$Q2 - 22$	Q1-22	$\Delta$ quarter
Pillar II pension funds	.	1,200	1,301	$-101$
Pillar III pension funds	-------	52	54	$-2$
Eurofunds	--------	6	7	$-1$
Active customers of PII funds, th.		131	135	$-4$
Key figures	9 quarters	$Q2-22$	Q1-22	$\Delta$ quarter
Cost / income ratio (C/I)	an da Balder	114.8%	91.1%	$+23.7$ pp
pre-tax ROE	▃▃▊▂ ▄ ▂▄▁ ▃	$-4.3%$	3.0%	$-7.2$ pp
ROE	▃▃ ▊▁▁▕ ▆▃▃	$-4.3%$	$-10.4%$	$+6.1$ pp

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More people joining than exiting the second pillar

Financial results, EURt	13 months	Jun 22	YTD 22	YTD21	FP YTD	YTD FP
Total revenue		641	3,959	4,617	3,963	$-4$
Total operating expenses		582	3,700	6,539	3,451	$+249$
EBIT		59	258	$-1,922$	512	$-254$
Net financial income		$-259$	$-308$	292	266	$-575$
Income tax expense		Ω	830	1,241	830	$+0$
Net income		$-200$	-880	$-2,871$	$-52$	$-828$
Business volumes	13 months	Jun 22	YTD22	YTD21	FP YTD	YTD FP $\Lambda$
Assets under management, EURm		1,259	1,259	1,620	1,330	$-72$
Active customers of PII funds, thous.		131	131	175	130	$+1$
Key figures	13 months	Jun 22	YTD 22	YTD21	FP YTD	Δ YTD FP
Cost / income ratio (C/I)		152.2%	101.4%	133.2%	81.6%	$+19.8$ pp

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Rapid growth in business volumes and improving financial results

Financial results, EURt	9 quarters	$Q2-22$	Q1-22	$\Delta$ quarter
Total revenue	- III - - II	484	142	$+342$
Total expenses	a an Dùbhl	719	642	$+77$
Technical result		-235	$-500$	$+265$
Net investments income		0		$-2$
Net income	--	$-235$	-499	$+263$
Business volumes	9 quarters	$Q2-22$	Q1-22	$\Delta$ quarter
Gross written premium, EURt	. .	4,612	1,748	$+2,864$
No of Customers (thous.)	. I II II	149	147	$+2$
Key figures	9 quarters	$Q2-22$	Q1-22	$\Delta$ quarter
Net loss ratio	a i Li	63.4%	81.6%	$-18.1$ pp
Net expense ratio		50.8%	58.0%	$-7.2$ pp
pre-tax ROE		-15.6%	-31.1%	$+15.6$ pp
ROE		$-15.6%$	-31.1%	$+15.6$ pp

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Sales volumes of all products rapidly increasing

Financial results, EURt	13 months	Jun 22	YTD22	YTD21	FP YTD	YTD FP Δ
Total revenue, incl.		205	627	505	1,155	$-529$
Net earned premiums		593	2,911	617	2,928	$-18$
Net incurred losses		349	2,075	104	1,563	$+512$
Total expenses		256	1,361	894	1,467	$-106$
Technical result		$-51$	-734	$-390$	$-312$	$-422$
Net investments income		-8		0	27	$-26$
Net income		$-60$	$-734$	$-388$	$-285$	$-449$
Business volumes	13 months	Jun 22	YTD22	YTD21	FP YTD	YTD FP
Gross written premium, EURt		1,449	6,359	3,776	5,857	$+502$
No of Customers (thous.)		149	149	128	na	na
Key figures	13 months	Jun 22	YTD22	YTD21	FP YTD	Δ YTD FP
Net loss ratio		58.8%	71.3%	16.9%	53.4%	$+17.9$ pp
Net expense ratio		49.8%	53.9%	146.1%	57.3%	$-3.3$ pp

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6 months

Annexes

Liquidity and capitalization as planned

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Strong quality of the portfolio

LHV Finance loans overdue porfolio Retail banking loans overdue portfolio

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Madis Toomsalu madis.toomsalu@lhv.ee

Meelis Paakspuu meelis.paakspuu@lhv.ee