LHV Group — Interim / Quarterly Report 2024

Oct 22, 2024

LHV Group

Strong growth in business volumes

A quarter with the historically highest business volumes

Financial results, EURt	9 quarters	Q3-24	Q2-24	△ quarter
Net interest income		67.426	70.425	-2,999
Net fee and commission income		16,320	16,262	+58
Other income	----------------	1.153	602	+551
Total net income		84,900	87,289	-2,389
Total operating expenses		37,244	37,589	-345
Earnings before impairment		47.655	49.700	-2,045
Impairment losses		7,277	5,044	+2,233
Income tax expense		5,681	6.071	-390
Net profit		34,698	38,585	-3,888
Business volumes, EURm	9 quarters	Q3-24	Q2-24	△ quarter
Deposits from customers		6,286	5.784	+502
Loans portfolio (net)		4,126	3,891	+236
Assets under management		1.521	1,529	-8
No of customers, thous.		603	597	+6
Fin. intermediaries' payments, thous. pcs		18,789	18,315	+474
Key figures	9 quarters	Q3-24	Q2-24	△ quarter
Cost / income ratio (C/I)		43.9%	43.1%	+ 0.8 pp
Net interest margin (NIM)		3.6%	3.9%	- 0.3 pp
pre-tax ROE*		26.1%	29.9%	- 3.8 pp
ROE*		22.4%	25.8%	- 3.4 pp

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Small differences with the updated financial plan

Financial results, EURt	13 months	Sep 24	YTD24	YTD23		FP YTD A YTD FP
Total net income, incl.		27,957	257,604	224,765	259,002	-1,398
Net interest income		22,212	206,770	186,149	208,319	-1,549
Net fee and commission income		5.036	48.126	37,828	48,331	-205
Total operating expenses		12,974	110,361	96,470	110,935	-574
Earnings before impairment		14,983	147,243	128,295	148,067	-824
Impairment losses		2,945	15,171	2,109	15,392	-222
Income tax expense		1,654	18,087	18,017	18,262	-176
Net profit, incl.		10.385	113,985	108,169	114.413	-427
attr. to shareholders		10,335	113,216	107,063	113,628	-412
Business volumes, EURm	13 months	Sep 24	YTD24	YTD23	FP YTD	A YTD FP
Deposits from customers		6,286	6,286	5,316	6,288	-2
Loans (net)		4,126	4,126	3,376	4.161	-35
Assets under management		1.521	1,521	1,451	1,518	+4
Fin. intermediaries' payments, thous. pcs		6,234	54,925	33,539	51,890	+3,035
Key figures	13 months	Sep 24	YTD24	YTD23	FP YTD	A YTD FP
Cost / income ratio (C/I)		46.4%	42.8%	42.9%	42.8%	+ 0.0 pp
Net interest margin (NIM)		3.5%	3.7%	3.9%	3.8%	- 0.0 pp
pre-tax ROE*		23.3%	29.6%	36.0%	29.8%	- 0.2 pp
ROE*		20.1%	25.6%	30.8%	25.7%	- 0.2 pp

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Strong growth in business volumes

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High activity of the customers and historically highest business volumes

Financial results, EURt	9 quarters	Q3-24	Q2-24	△ quarter
Net interest income		59,990	60,060	-71
Net fee and commission income		8,740	8,232	+508
Other income		1.033	487	+546
Total net income		69,763	68,780	+983
Total operating expenses		22,832	23,225	-393
Earnings before impairment		46,931	45,555	+1,376
Impairment losses	------------------------------------------------------------------------------------------------------------------------------------------------------------------------------	7,093	4,859	+2,234
Income tax expense		5.740	5,861	-120
Net profit		34,098	34,836	-738
Business volumes, EURm	9 quarters	Q3-24	Q2-24	△ quarter
Deposits from customers		5.716	5,459	+257
incl. banking services' deposits		905	853	+52
Loans (net)		3.904	3.744	+160
No of customers, thous.		445	433	+11
Key figures	9 quarters	Q3-24	Q2-24	△ quarter
Cost / income ratio (C/I)		32.7%	33.8%	- 1.0 pp
Net interest margin (NIM)		3.5%	3.5%	- 0.1 pp
pre-tax ROE*		29.4%	32.2%	- 2.8 pp
ROE*		25.2%	27.6%	- 2.4 pp

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Differences with the updated financial plan minimal

Financial results, EURt	13 months	Sep 24	YTD24	YTD23		FP YTD A YTD FP
Total net income, incl.		22,830	207,329	188,526	207,886	-557
Net interest income		19.466	180,299	168,894	181.420	-1,121
Net fee and commission income		2,713	24,843	18,774	24,634	+209
Total operating expenses		8,039	68.861	62,365	69,466	-605
Earnings before impairment		14,792	138,468	126,161	138,420	+48
Impairment losses		2,900	14,758	1,784	14,972	-214
Income tax expense		1.748	17,983	16,586	17,902	+81
Net profit		10,144	105,728	107,790	105,546	+182
Business volumes, EURm	13 months	Sep 24	YTD24	YTD23	FP YTD	A YTD FP
Deposits from customers		5,716	5,716	5,256	5,755	-39
incl. banking services' deposits		905	905	910	1,003	-98
Loans (net)		3,904	3.904	3,452	3.935	-31
Key figures	13 months	Sep 24	YTD24	YTD23	FP YTD	A YTD FP
Cost / income ratio (C/I)		35.2%	33.2%	33.1%	33.4%	0.2 pp -
Net interest margin (NIM)		3.3%	3.5%	3.6%	3.5%	0.0 pp -
T1 capital adequacy		18.0%	18.0%	21.0%	17.8%	+ 0.2 pp
Total capital adequacy		20.2%	20.2%	23.6%	20.0%	0.2 pp +

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Loan portfolio grew by over 50% during the quarter, deposits by over 40%

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Retail banking mobile app open for testing by employees

Financial results, EURt	9 quarters	Q3-24	Q2-24	△ quarter
Total net income, incl.		9,374	12,037	-2,663
Net interest income		7,211	9,629	-2,417
Net fee and commission income		2,230	2,442	-212
Other net income	-------	-67	-34	-34
Total operating expenses		9,992	9,821	+171
Earnings before impairment		-618	2,216	-2,834
Impairment losses	---	184	185	- 1
Income tax expense		-201	1.093	-1,294
Net profit		-602	938	-1,539
Business volumes, EURm		Q3-24	Q2-24	△ quarter
Deposits from customers	-------	635	446	+189
Loans (net)		223	147	+76
Key figures		Q3-24	Q2-24	△ quarter
Cost / income ratio (C/I)		106.6%	81.6%	+ 25.0 pp
Net interest margin (NIM)		4.6%	7.8%	- 3.2 pp
pre-tax ROE		-3.8%	9.7%	- 13.5 pp
ROE		-2.9%	4.5%	- 7.3 pp

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The result affected by higher expenses in September

Financial results, EURt	13 months	Sep 24	YTD24	YTD23		FP YTD A YTD FP
Total net income, incl.		2,998	32,894	24,802	33,676	-782
Net interest income		2,474	25,637	19,271	25,971	-334
Net fee and commission income		549	7,234	5,612	7.657	-423
Other net income		-25	23	-80	48	-25
Total operating expenses		3,516	28,202	22,425	27,952	+250
Earnings before impairment		-518	4,691	2,377	5,724	-1,032
Impairment losses		45	413	145	420	- /
Income tax expense		-141	-926	0	-670	-256
Net profit		-422	5,204	2,232	5,973	-769
Business volumes, EURm	13 months	Sep 24	YTD24	YTD23	FP YTD	A YTD FP
Deposits from customers		635	635	135	575	+61
Loans (net)		223	223	61	226	-3
Key figures	13 months	Sep 24	YTD24	YTD23	FP YTD	A YTD FP
Cost / income ratio (C/I)		117.3%	85.7%	90.4%	83.0%	+ 2.7 pp
Net interest margin (NIM)		4.4%	6.4%	14.1%	6.8%	0.5 pp -
I 1 capital adequacy		30.8%	30.8%	na	30.6%	+ 0.2 pp
Total capital adequacy		30.8%	30.8%	na	30.6%	0.2 pp +

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All LHV pension funds with positive returns in the Q3

Pillar II comparable pension funds NAV change YTD

Index funds and pension fund Roheline NAV change YTD

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Quarterly net profit 0.6 EURm

Financial results, EURt	9 quarters	Q3-24	Q2-24	Δ quarter
Total net income		2,251	2,235	+16
Total operating expenses		1,781	1,674	+107
EBIT		470	562	-91
Net financial income	------------------------------------------------------------------------------------------------------------------------------------------------------------------------------	113	183	-70
Net profit	==============================================================================================================================================================================	583	744	-161
Business volumes, EURm	9 quarters	Q3-24	Q2-24	△ quarter
Pillar II pension funds		1,413	1,426	-13
Pillar III pension funds		100	വട	+5
Eurofunds		8	8	+0
Active customers of PII funds, th.		116	118	-2
Key figures	9 quarters	Q3-24	Q2-24	Δ quarter
Cost / income ratio (C/I)		75.3%	69.2%	+ 6.1 pp
pre-tax ROE	==============================================================================================================================================================================	12.3%	16.5%	4.2 pp l
ROF	==============================================================================================================================================================================	12.3%	16.5%	- 4.2 pp

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Net profit ahead of the updated financial plan

Financial results, EURt	13 months	Sep 24	YTD24	YTD23		FP YTD
Total net income		719	6,673	6,593	6,688	-15
Total operating expenses		523	5,280	5,159	5,356	-76
EBIT		196	1,393	1,434	1,332	+62
Net financial income		59	514	167	500	+14
Income tax expense		0	801	488	801	+0
Net profit		255	1,107	1,112	1,031	+76
Business volumes	13 months	Sep 24	YTD24	YTD23	FP YTD	A YTD FP
Assets under management, EURm		1,521	1,521	1,451	1,518	+4
Active customers of PII funds, thous.		116	116	125	115	+1
Key figures	13 months	Sep 24	YTD24	YTD23	FP YTD	A YTD FP
Cost / income ratio (C/I)		67.2%	73.5%	76.3%	74.5%	1.1 pp

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Stable sales results and good profitability

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A quarter with positive results

Financial results, EURt	9 quarters	Q3-24	Q2-24	A quarter
Net earned premiums	------------------------------------------------------------------------------------------------------------------------------------------------------------------------------	8.930	8.485	+445
Commissions expense	------------------------------------------------------------------------------------------------------------------------------------------------------------------------------	1,168	1,102	+66
Gross incurred losses	------------------------------------------------------------------------------------------------------------------------------------------------------------------------------	5,878	5,360	+519
Operating expenses	■■■■■■■■	1,248	1,433	-186
Insurance result without reinsurance	============================================================================================================================================================================== ----	636	590	+46
Reinsurance result	==============================================================================================================================================================================	306	215	+91
Total result from insurance activities		330	375	-45
Net other income		122	47	+75
Net profit		452	422	+31
Business volumes. EURt	9 quarters	Q3-24	Q2-24	A quarter
Contract premiums written	. ■■■■■■■■	8,452	8,963	-511
No of customers (thous.)		169	168	+1
Key figures	9 quarters	Q3-24	Q2-24	A quarter
Net loss ratio	==============================================================================================================================================================================	66.6%	63.0%	+ 3.6 pp
Net expense ratio		29.0%	32.1%	- 3.2 pp
pre-tax ROE		29.3%	29.4%	- 0.2 pp
ROE		29.3%	29.4%	- 0.2 pp

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A month with increased sales activity

Financial results, EURt	13 months	Sep 24	YTD24	YTD23		FP YTD A YTD FP
Net earned premiums		2,939	25,540	18,497	25,206	+334
Commissions expense		385	3,306	2,148	3,214	+93
Gross incurred losses		1,843	16,589	12,282	16,471	+118
Operating expenses		438	4,014	3,415	4,078	-64
Insurance result without reinsurance		273	1,630	652	1,444	+187
Reinsurance result		117	807	767	711	+96
Total result from insurance activities		156	823	-115	732	+91
Net other income		41	307	-3	256	+51
Net profit		197	1,130	-118	988	+142
Business volumes, EURt	13 months	Sep 24	YTD24	YTD23	FP YTD	A YTD FP
Contract premiums written		2,728	28,203	23,214	28,081	+122
No of customers (thous.)		169	169	160	na	na
Key figures	13 months	Sep 24	YTD24	YTD23	FP YTD	A YTD FP
Net loss ratio		64.3%	65.7%	69.1%	65.9%	0.2 pp
Net expense ratio		29.8%	30.8%	32.2%	30.9%	0.2 pp

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9 months

Risks and capitalisation

Capitalisation

Capital ratios and minimum requirements as of September 2024

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Loan portfolio quality

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Liquidity and funding

Loans-to-deposits ratio LCR and NSFR

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Madis Toomsalu madis.toomsalu@lhv.ee

Meelis Paakspuu meelis.paakspuu@lhv.ee