LHV Group — Interim / Quarterly Report 2022

Feb 7, 2023

LHV Group

High-quality loan portfolio together with volatile deposits

Interest income growth and good loan portfolio quality

Financial results, EURt	9 quarters	Q4-22	$Q3-22$	$\Delta$ quarter
Net interest income	a an t-Indi	44,098	32,041	$+12,057$
Net fee and commission income	la dutt	11,549	12,000	$-451$
Other income	予 ーニニョョ __=	910	257	$+654$
Total revenue	n an India	56,557	44,298	$+12,259$
Total operating expenses	.	26,881	22,813	$+4,068$
Earnings before impairment	la Hatl	29,676	21,485	$+8,191$
Impairment losses	والمواردة والمتوارد	250	7,407	$-7,158$
Income tax expense	lla concent	5,112	3,331	$+1,781$
Net profit	ta et la cal	24,315	10,747	$+13,567$
Business volumes, EURm	9 quarters	Q4-22	Q3-22	$\Delta$ quarter
Deposits from customers	.	4,901	5,168	$-268$
Loans (net)	THEFT	3,209	3,095	$+114$
Assets under management	.	1,332	1,266	$+66$
Customers, thous.		556	544	$+12$
Fin. intermediaries' payments, thous. pcs		7,293	5,793	$+1,501$
Key figures	9 quarters	Q4-22	$Q3-22$	$\Delta$ quarter
Cost / income ratio (C/I)	athal in	47.5%	51.5%	$-4.0$ pp
pre-tax ROE*	la Uard	29.1%	14.2%	$+14.9$ pp
ROE*	la Magal	24.0%	10.8%	$+13.3$ pp

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Net profit target achieved

uuendada

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Activity of customers is on good level

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Strongest quarter in LHV Pank's history

Financial results, EURt	9 quarters	Q4-22	$Q3-22$	$\Delta$ quarter
Net interest income	an an t-an t-l	44,388	31,993	$+12,396$
Net fee and commission income	an Lut	8,259	8,716	$-457$
Other income	Perry profi	791	273	$+517$
Total revenue	a sa taon T	53,438	40,981	$+12,457$
Total operating expenses		18,101	16,434	$+1,667$
Earnings before impairment	a sa taon T	35,337	24,548	$+10,790$
Allowance for credit losses	La parte d 'In	430	2,171	$-1,741$
Income tax expense	المستحدث	4,990	3,209	$+1,781$
Net profit	a an Dùbhla B	29,918	19,168	$+10,750$

Business volumes, EURm	9 quarters	$Q4-22$		$Q3-22$ $\Delta$ quarter
Deposits from customers	.	4.957	5.223	-266
Loans (net)	.	3.187	3.095	$+92$
Customers, thous,	an an I	396	382

Key figures	9 quarters	Q4-22	$Q3-22$ $\Delta$ quarter
Cost / income ratio (C/I)	al tallita	33.9%	$40.1\% - 6.2 \text{ pp}$
pre-tax ROE*	a tituli	37.5%	$26.5\% + 11.0$ pp
ROE*	a tuna l	32.2%	$22.7\% + 9.4$ pp
Net interest margin (NIM)	an an an Alb	2.9%	$2.0\% + 0.9$ pp

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Financial plan fulfilled with surplus

Financial results, EURt	13 months	Dec 22	YTD22	YTD21	FP YTD	Δ YTD FP
Total revenue, incl.		19,231	161,674	127,894	153,937	$+7,737$
Net interest income		16,270	129,487	97,662	110,931	$+18,556$
Net fee and commission income		2,918	32,408	31,172	42,253	$-9,845$
Total operating expenses		5,768	64,548	49,339	62,978	$+1,570$
Earnings before impairment		13,463	97,126	78,555	90,959	$+6,167$
Allowance for credit losses		$-296$	2,995	3,948	9,246	$-6,251$
Income tax expense		2,153	13,259	10,556	11,312	$+1,947$
Net profit		11,606	80,872	64,051	70,401	$+10,471$
Business volumes, EURm	13 months	Dec 22	YTD22	YTD21	FP YTD	Δ YTD FP
Deposits from customers		4,957	4,957	5,847	6,155	$-1,198$
Loans (net)		3,187	3,187	2,677	3,097	$+90$
Key figures	13 months	Dec 22	YTD22	YTD21	FP YTD	Δ YTD FP
Cost / income ratio (C/I)		30.0%	39.9%	38.6%	40.9%	$-1.0$ pp
Net interest margin (NIM)		3.2%	2.0%	1.6%	1.6%	$+0.4$ pp
T1 capital adequacy		17.7%	17.7%	16.0%	15.6%	$+2.1$ pp
Total capital adequacy		20.4%	20.4%	18.7%	19.0%	$+1.4$ pp

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Actively managed funds with the best return on the market

Index funds and pension fund Roheline NAV change YTD

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Net assets, number of customers and market share slightly increasing

Financial results, EURt	9 quarters	Q4-22	$Q3-22$	$\Delta$ quarter
Total revenue	an a Bhainn a	2,015	1,977	$+38$
Total operating expenses	. . .	1,610	1,767	$-157$
EBIT	$\sim 0.1$ and $\sim 10$	405	210	$+195$
Net financial income	Benede n en	136	26	$+110$
Net profit	▊▁▁▃▆▁▁▂▂	541	237	$+305$
Business volumes, EURm	9 quarters	Q4-22	Q3-22	$\Delta$ quarter
Pillar II pension funds	llinnin	1,263	1,206	$+57$
Pillar III pension funds	an IIII	63	54	$+9$
Eurofunds	. milimi	7	6	$+1$
Active customers of PII funds, th.	ilin m	131	130	$+2$
Key figures	9 quarters	Q4-22	Q3-22	$\Delta$ quarter
Cost / income ratio (C/I)	te la calina	74.8%	88.2%	$-13.3$ pp
$\overline{a}$		$\cap$ $\cap$ $\cap$		$\sqrt{2}$

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Profitability is behind the plan mainly due to lower returns than expected

Financial results, EURt	13 months	Dec 22	YTD 22	YTD21	FP YTD	YTD FP Λ
Total revenue		689	7,951	11,375	8,084	$-133$
Total operating expenses		420	7,077	10,015	6,867	$+210$
EBIT		269	874	1,359	1,217	$-343$
Net financial income		$-168$	$-146$	577	541	$-687$
Income tax expense		0	830	1,241	830	$+0$
Net profit		101	$-103$	695	928	$-1,031$
Business volumes	13 months	Dec 22	YTD 22	YTD21	FP YTD	YTD FP Λ
Assets under management, EURm		1,332	1,332	1,349	1,389	$-57$
Active customers of PII funds, thous.		131	131	138	129	$+2$
Key figures	13 months	Dec 22	YTD 22	YTD21	FP YTD	Δ YTD FP
Cost / income ratio (C/I)		80.6%	90.7%	83.8%	79.6%	$+11.1$ pp

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Health insurance added to product portfolio

Financial results, EURt	9 quarters	Q4-22	Q3-22	$\Delta$ quarter
Total revenue	. III. III	397	464	-68
Total expenses		922	870	$+52$
Technical result		$-526$	$-406$	$-120$
Net investments income	m.		$-25$	$+27$
Other operating income and expenses		-3	$-1$	$-2$
Net profit	m m r I	$-527$	$-432$	$-95$
Business volumes	9 quarters	Q4-22	Q3-22	$\Delta$ quarter
Gross written premiums, EURt		6,029	4,750	$+1,279$
No of Customers (thous.)		150	152	$-2$
Key figures	9 quarters	Q4-22	$Q3-22$	$\Delta$ quarter
Net loss ratio		78.0%	71.6%	$+6.4$ pp
Net expense ratio		38.8%	45.7%	$-6.9$ pp
pre-tax ROE		$-39.5\%$	$-30.0\%$	$-9.5$ pp
ROE		$-39.5%$	$-30.0%$	$-9.5$ pp

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Net earned premiums are growing but higher provisions reduced net revenues

Financial results, EURt	13 months	Dec 22	YTD22	YTD21	FP YTD	Δ YTD FP
Total revenue, incl.		7	1,487	1,069	2,736	$-1,249$
Net earned premiums		1,098	8,358	2,273	7,536	$+822$
Net incurred losses		986	6,176	1,106	4,253	$+1,923$
Total expenses		337	3,153	1,894	3,012	$+141$
Technical result		$-330$	$-1,666$	$-826$	$-276$	$-1,390$
Net investments income		3	$-22$	4	147	$-170$
Other operating income and expenses		$-1$	$-5$	$\overline{0}$	$\overline{0}$	$-5$
Net profit		$-328$	$-1,693$	$-823$	$-129$	$-1,565$
Business volumes	13 months	Dec 22	YTD 22	YTD21	FP YTD	YTD FP Δ
Gross written premiums, EURt		1,956	17,138	6,747	11,504	$+5,634$
No of customers (thous.)		150	150	143	na	na
Key figures	13 months	Dec 22	YTD22	YTD21	FP YTD	$\Delta$ YTD FP
Net loss ratio		89.8%	73.9%	48.7%	56.4%	$+17.5$ pp
Net expense ratio		40.2%	46.0%	87.7%	47.2%	$-1.2$ pp

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12 months

Annexes

Capitalisation levels increased in year-end

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Strong quality of the portfolio

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Madis Toomsalu madis.toomsalu@lhv.ee

Meelis Paakspuu meelis.paakspuu@lhv.ee