LHV Group — Investor Presentation 2021

Feb 16, 2021

LHV Group

LHV historically rapid growth

2020 – three remarkable events in addition to strong growth

Rapid growth

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Customer convenience

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Awards

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Asset Management

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Other

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Business volumes have multiplied in the past 5 years

Financial results, EURt	2016	2017	2018	2019	2020
Total income, incl.	50,558	58,523	70,024	73.818	103,547	20%
Net interest income	29,976	35,502	39.770	47,388	68.492
Net fee and commission	19.186	22,180	26,002	25,677	33,351
Total expenses	28,914	31,945	33,807	39,266	43,975	11%
Operating profit	21.644	26.578	36.217	34.552	59.572
Impairment losses on loans	1,480	3,154	5,269	3,209	10,898
Earnings before taxes	20,164	23,424	30,947	31,342	48,674
Income tax expense	270	1.248	3,758	4,250	8,827
Net profit, incl.	19.894	22.176	27.190	27,092	39.847	19%
attr. to shareholders	17,816	19,601	25,237	24,797	37,950
Business volumes, EURt	2016	2017	2018	2019	2020
Deposits	177	1.537	1,422	2.701	4,120
Loans (net)	538	732	919	1,687	2,209
Assets under management	974	1,103	1,214	1,374	1,537
Key figures	2016	2017	2018	2019	2020
Cost / income ratio (C/I)	57.2%	54.6%	48.3%	53.2%	42.5%
pre-tax ROE*	19.6%	17.6%	20.9%	16.2%	20.5%
ROE*	20.7%	17.6%	18.4%	14.0%	17.3%
T1 capital adequacy	15.1%	14.0%	13.6%	13.9%	14.4%
Total capital adequacy	20.7%	18.3%	19.4%	18.0%	19.3%

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Strategy

LHV Group today

The largest and fastest growing financial group and capital provider in Estonia

LHV's home markets are Estonia and the United Kingdom

Fast and profitable growth in Estonia

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Investment = LHV

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The most capable partner for financial intermediaries

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High-yield pension funds

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Insurance

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B E S T B A N K I N C U S T O M E R S E R V I C E T H E M O S T A T T R A C T I V E E M P L O Y E R I N F I N A N C I A L S E C T O R 1 s t P L A C E B E S T I N V E S T O R R E L A T I O N S

Financial projection and action plan

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Rapid increase in main business revenues through increased business volumes

Financial results, EURt	FP2021	2020	A YoY	A %
Total revenue, incl.	121.498	103.547	+17,951	+17%
Net interest income	87,955	68.492	+19.463	+28%
Net fee and commission income	30,777	33,351	-2,574	-8%
Total operating expenses	60,257	43,975	+16,282	+37%
Earnings before impairment	61,241	59,572	+1,669	+3%
Impairment losses on loans	11.914	10.898	+1,015	+9%
Earnings before taxes	49,327	48,674	+653	+1%
Income tax expense	7,578	8,827	-1,249	-14%
Net profit	41,749	39,847	+1,903	+5%
Net profit w/o amortisation from leaving customers	46,160	39,847	+6,314	+16%
Attr. to shareholders	39,465	37,950	+1,514	+4%
Business volumes, EURm	FP2021	2020	A YoY	0 %
Deposits from customers	4.101	4.120	-19	-0%
Loans (net)	2.604	2,209	+395	+18%
Assets under management	1,221	1.537	-316	-21%
Key figures	FP2021	2020	Δ YoY
Cost / Income ratio (C/I)	49.6%	42.5%	+ 7.1 pp
pre-tax ROE*	18.7%	21.0%	- 2.3 pp
ROE*	15.8%	17.8%	2.0 pp
T1 capital adequacy	14.1%	14.4%	- 0.2 pp
Total capital adequacy	18.2%	19.3%	1.1 pp -

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Capital enhancing quality growth in all business segments

Financial results, EURt	2021	2022	2023	2024	2025
Total income, incl.	121.498	138.164	160,270	189,545	223,670	16%
Net interest income	87,955	97,172	111,294	132,368	156,697
Net fee and commission income	30,777	36,284	42,868	50,302	57,947
Total expenses	60,257	63,480	68,420	75,344	82,862	8%
Operating profit	61,241	74.683	91,850	114,200	140,808
Impairment losses on loans	11,914	11,990	13,769	15,808	17,552
Earnings before taxes	49,327	62.694	78.081	98,392	123,256
Income tax expense	7,578	8,616	9,983	12,388	14,736
Net profit	41.749	54.078	68,098	86.004	108,520	27%
Net profit w/o amortisation from leaving customers	46,160	54,598	68,634	86,563	109,105
Attr. to shareholders	39,465	51,022	64,041	80,669	101,135
Business volumes, EURm	2021	2022	2023	2024	2025
Deposits	4.101	4.746	5,284	5.924	6.604
Loans (net)	2,604	3,058	3,573	4,120	4,690
Assets under management	1.221	1,385	1,630	1,900	2,138
Key figures	2021	2022	2023	2024	2025
Cost / income ratio (C/I)	49.6%	45.9%	42.7%	39.8%	37.0%
pre-tax ROE*	18.7%	20.5%	21.7%	22.9%	23.9%
ROE*	15.8%	17.7%	18.9%	20.0%	20.9%
T1 capital adequacy	14.1%	14.1%	14.3%	15.6%	16.4%
Total capital adequacy	18.2%	18.6%	18.3%	19.4%	19.4%

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Increasing volumes in all business segments

Retail banking

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Corporate banking

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Financial intermediaries business line

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Strong profit growth through increased business volumes and efficiency

Financial results, EURt	FP2021	2020	A YoY	A 9
Total revenue, incl.	111.167	88.519	+22,647	+26%
Net interest income	88,646	69,046	+19,600	+289
Net fee and commission income	22,178	18,385	+3,793	+219
Total operating expenses	45,333	36,268	+9,065	+25%
Earnings before impairment	65,834	52,251	+13,583	+26%
Impairment losses on loans	11.914	10,898	+1,015	+99
Earnings before taxes	53,920	41,353	+12,567	+30%
Income tax expense	7.578	6,750	+828	+129
Net profit, incl.	46,343	34,603	+11,739	+34%
attr. to shareholders	44,062	32,514	+11,547	+369
Business volumes, EURm	FP2021	2020	A YoY	A 9
Deposits from customers	4,118	4,141	-24	-19
Loans (net)	2,604	2,209	+395	+189
Key figures	FP2021	2020	A YoY
Cost / Income ratio (C/I)	40.8%	41.0%	0.2 pp
pre-tax ROE*	22.5%	20.5%	+ 2.0 pp
ROE*	19.4%	17.7%	1.7 pp +
T1 capital adequacy	14.4%	15.3%	- 0.9 pp
Total capital adequacy	17.5%	18.8%	1.2 pp

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Profitability negatively affected by amortisation arising from leaving clients

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Financial results, EURt	FP2021	2020	Δ YOY	△ %
Total revenue	8,965	15,578	-6,613	-42%
Total expenses, incl.	10,933	6,389	+4,544	+71%
Amortisation due to leaving customers	4.411	O	+4,411	na
Earnings before taxes	-1,968	9,189	-11,157	na
Income tax expense	1,241	844	+397	+47%
Net profit	-3,209	8,345	-11,554	na
Net profit w/o amortisation from leaving customers	1,202	8,345	-7,143	-86%
Business volumes	FP2021	2020	A YoY	A %
Assets under management, EURm	1,221	1,537	-316	-21%
Active customers of PII funds, thous.	129	180	-52	-29%
Key figures	FP2021	2020	Δ YoY
Cost / Income ratio (C/I)	122.0%	42.7%	+ 79.3 pp
pre-tax ROE	-7.3%	34.0%	41.3 pp
ROE	-11.8%	30.9%	42.7 pp

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Profitable first year in business

Financial results, EURt	FP2021	2020	A YoY	A 9
Total revenue	2,134	0	+2,134	n
Total expenses	2,124	551	+1,574	+2869
Earnings before taxes	10	-551	+560	n
Income tax expense	0	0	+0	n
Net profit	10	-551	+560	m
attr. to shareholders	6	-358	+364	n
Business volumes	FP2021	2020	A YoY	Nº
Gross Premiums, EURm	13,031	0	+13,031	n
Key figures	FP2021	2020	A YoY
Cost / Income ratio (C/I)	99.5%	nm	na
pre-tax ROE	0.1%	-48.1%	+ 48.2 pp
ROE	0.1%	-48.1%	+ 48.2 pp

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5 year targets

LHV Bank

600 EURm

2,500 / 2,500 EURm

LHV Asset Management

Madis Toomsalu madis.toomsalu@lhv.ee

Meelis Paakspuu meelis.paakspuu@lhv.ee