LHV Group — Interim / Quarterly Report 2023

Oct 24, 2023

LHV Group

All subsidiaries of LHV Group profitable

Third quarter strong as expected

Financial results, EURt	9 quarters	Q3-23	Q2-23	A quarter
Net interest income		68.140	62,900	+5,240
Net fee and commission income		13.617	12,352	+1,264
Other income	==============================================================================================================================================================================	-278	-350	+73
Total net income		81,479	74,902	+6,577
Total operating expenses	==============================================================================================================================================================================	32,806	33.040	-234
Earnings before impairment	==============================================================================================================================================================================	48,673	41,862	+6,811
Impairment losses	--------	2,883	809	+2,074
Income tax expense	---------	6,314	5.422	+892
Net profit	==============================================================================================================================================================================	39,476	35,631	+3,845
Business volumes, EURm	9 quarters	Q3-23	Q2-23	A quarter
Deposits from customers		5,316	5,062	+254
Loans portfolio (net)		3.376	3,253	+122
Assets under management		1,451	1,465	-13
Customers, thous.		577	575	+2
Fin. intermediaries' payments, thous. pcs		13,214	11,202	+2,011
Key figures	9 quarters	Q3-23	Q2-23	A quarter
Cost / income ratio (C/I)		40.3%	44.1%	- 3.8 pp
Net interest margin (NIM)		4.3%	4.1%	+ 0.2 pp
pre-tax ROE*		36.7%	35.4%	+ 1.3 pp
ROE*		31.6%	30.7%	+ 0.9 pp

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The previous annual plan was fulfilled in three quarters

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Business volumes in growth trend

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Quality of loan portfolio stays strong

Financial results, EURt	9 quarters	Q3-23	Q2-23	A quarter
Net interest income		59.900	56.094	+3,806
Net fee and commission income		5.715	5.510	+205
Other income	----	-130	-224	+95
Total net income		65,486	61,380	+4,106
Total operating expenses		20,496	21,083	-587
Earnings before impairment		44,990	40.297	+4,693
Impairment losses	==============================================================================================================================================================================	2.773	603	+2,170
Income tax expense		6,192	5,247	+944
Net profit	==============================================================================================================================================================================	36,025	34.447	+1,579
Business volumes, EURm	9 quarters	Q3-23	Q2-23	A quarter
Deposits from customers		5,256	5.133	+123
incl. banking services' deposits		910	1,010	-100
Loans (net)		3.452	3,276	+176
Customers, thous.		407	401	+1
Key figures	9 quarters	Q3-23	Q2-23	A quarter
Cost / income ratio (C/I)		31.3%	34.3%	- 3.1 pp
Net interest margin (NIM)		3.8%	3.7%	+ 0.2 pp
pre-tax ROE*	�����������	35.6%	36.2%	- 0.7 pp
ROE*		30.3%	31.4%	- 1.1 pp

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Income ahead of updated financial plan

Financial results, EURt	13 months	Sep 23	YTD23	YTD22		FP YTD A YTD FP
Total net income, incl.		21,990	188,526	108,234	184,885	+3,640
Net interest income		20,064	168,894	85,099	164.581	+4,313
Net fee and commission income		2,328	18.774	24,149	19.337	-564
Total operating expenses		7,118	62,365	46,445	62,694	-329
Earnings before impairment		14,873	126,161	61,789	122,191	+3,970
Impairment losses		929	1,784	2,565	2,864	-1,080
Income tax expense		1,974	16,586	8,269	15.580	+1,006
Net profit		11,969	107,790	50,955	103,747	+4,043
Business volumes, EURm	13 months	Sep 23	YTD23	YTD22	FP YTD	A YTD FP
Deposits from customers		5,256	5,256	5,223	5.143	+113
incl. banking services' deposits		aog	aog	1,522	896	+13
Loans (net)		3,452	3,452	3,095	3.376	+75
Key figures	13 months	Sep 23	YTD23	YTD22	FP YTD	A YTD FP
Cost / income ratio (C/I)		32.4%	33.1%	42.9%	33.9%	- 0.8 pp
Net interest margin (NIM)		3.8%	3.6%	1.7%	3.6%	+ 0.1 pp
T1 capital adequacy		20.5%	20.5%	16.5%	19.6%	+ 0.9 pp
Total capital adequacy		23.1%	23.1%	19.2%	22.0%	+ 1.0 pp

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In Q3, the five funds with the best returns were LHV actively managed funds

Pillar II comparable pension funds NAV change YTD

Index funds and pension fund Roheline NAV change YTD

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Net profit increased during the quarter primarily due to lower expenses

Financial results, EURt	9 quarters	Q3-23	Q2-23	A quarter
Total net income	100 000 000 000 000 000 000 000 000	2,256	2,211	+45
Total operating expenses		1,638	1,798	-160
EBIT		618	413	+204
Net financial income		-12	8	-20
Net profit		606	421	+185
Business volumes, EURm	9 quarters	Q3-23	Q2-23	A quarter
Pillar II pension funds		1,370	1,385	-16
Pillar III pension funds		74	72	+2
Eurofunds		8	7	+0
Active customers of PII funds, th.		125	128	-4
Key figures	9 quarters	Q3-23	Q2-23	A quarter
Cost / income ratio (C/I)		73.0%	81.0%	- 8.0 pp
pre-tax ROE		11.3%	8.1%	+ 3.2 pp
ROE		11.3%	8.1%	+ 3.2 pp

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EBIT largely according to plan, net profit affected by the return of funds

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A quarter with good profitability

Financial results, EURt	9 quarters	Q3-23	Q2-23	A quarter
Total net income		1,489	1,260	+229
Total expenses		1,164	1,220	-55
Technical result	------------------------------------------------------------------------------------------------------------------------------------------------------------------------------	325	40	+285
Net investments income		-22	-4	-19
Other operating income and expenses		-4	-3	-1
Net profit	==============================================================================================================================================================================	299	33	+265
Business volumes, EURt	9 quarters	Q3-23	Q2-23	A quarter
Gross written premiums		7,525	7,978	-453
No of Customers (thous.)		160	159	+1
Key figures	9 quarters	Q3-23	Q2-23	A quarter
Net loss ratio		64.8%	66.6%	- 1.8 pp
Net expense ratio		30.4%	33.4%	- 2.9 pp
pre-tax ROE	------------------------------------------------------------------------------------------------------------------------------------------------------------------------------	25.6%	3.0%	+ 22.6 pp
ROE		25.6%	3.0%	+ 22.6 pp

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September is the month with the best result this year

Financial results, EURt	13 months	Sep 23	YTD23	YTD22		FP YTD A YTD FP
Total net income, incl.		550	3,300	1,091	3,336	-35
Net earned premiums		2,138	16,374	5,247	16,029	+345
Net incurred losses		1,337	11,308	3,749	11,076	+233
Other net income		-251	-1,765	-407	-1,617	-147
Total expenses		410	3,415	2,231	3,381	+34
Technical result		140	-115	-1,140	-46	-69
Net investment income		-2	6	-24	රිපි	-92
Other operating income and expenses		2	9	2	6	+4
Net profit		137	-118	-1,166	47	-165
Business volumes, EURt	13 months	Sep 23	YTD23	YTD22	FP YTD	A YTD FP
Gross written premiums		2,611	23,214	11,109	23,755	-541
No of customers (thous.)		160	160	152	na	na
Key figures	13 months	Sep 23	YTD23	YTD22	FP YTD	A YTD FP
Net loss ratio		62.5%	69.1%	71.4%	69.1%	na
Net expense ratio		31.4%	32.2%	50.3%	31.6%	na

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Strong growth of the loan portfolio and interest income

Financial results, EURt	9 quarters	Q3-23	Q2-23	A quarter
Total net income, incl.		11,780	9.561	+2,219
Net interest income		9,089	7.418	+1,671
Net fee and commission income		2,704	2,209	+495
Other net income		-13	-66	+53
Total operating expenses		8,503	7,957	+547
Earnings before impairment		3,277	1,604	+1,673
Impairment losses		110	26	+84
Net profit		3,166	1.578	+1,588
Business volumes, EURm		Q3-23	Q2-23	A quarter
Deposits from customers		135	0	+135
Loans (net)	-	61	31	+29
Key figures		Q3-23	Q2-23	A quarter
Cost / income ratio (C/I)		72.2%	83.2%	- 11.0 pp
Net interest margin (NIM)		17.4%	48.9%	- 31.4 pp
pre-tax ROE		29.2%	18.1%	+ 11.1 pp

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Income growth faster than planned in both interest and fee income

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9 months

Annexes

Strong quality of the portfolio

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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Madis Toomsalu madis.toomsalu@lhv.ee

Meelis Paakspuu meelis.paakspuu@lhv.ee