LHV Group — Investor Presentation 2022

Feb 15, 2022

LHV Group

2021 – rapid growth and higher customer activity

Rapid growth

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Customer convenience

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Awards

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Asset Management

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Insurance

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Business volumes have multiplied in the past 5 years

Financial results, EURt	2017	2018	2019	2020	2021
Total income, incl.	58,523	70,024	73,818	103,547	140,379	23%
Net interest income	35,502	39,770	47,388	68,492	97,319
Net fee and commission income	22.180	26,002	25.677	33,351	43.478
Total expenses	31,945	33,807	39,266	43,975	65,183	18%
Operating profit	26,578	36,217	34,552	59,572	75,197
Impairment losses on loans	3,154	5,269	3,209	10,898	3,948
Earnings before taxes	23.424	30.947	31.342	48.674	71,249
Income tax expense	1,248	3,758	4,250	8,827	10,986
Net profit	22,176	27,190	27,092	39,847	60,263	25%
Attr. to shareholders	19,601	25,237	24,797	37,950	58,261
Business volumes, EURm	2017	2018	2019	2020	2021
Deposits	1,537	1,422	2,701	4,120	5,808
Loans (net)	732	ਰ 19	1.687	2,209	2.677
Assets under management	1,103	1,214	1.374	1,537	1,349
Key figures	2017	2018	2019	2020	2021
Cost / income ratio (C/I)	54.6%	48.3%	53.2%	42.5%	46.4%
pre-tax ROE*	18.8%	20.4%	16.9%	21.1%	26.0%
ROE*	17.8%	18.0%	14.6%	17.9%	22.0%
1 capital adequacy	14.0%	13.6%	13.9%	15.6%	15.1%
Total capital adequacy	18.3%	19.4%	18.0%	20.5%	19.0%

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Strategy

Mission and strategy

Long-term goals

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Financial projection and action plan

Structure

Increasing business volumes and investments in the UK

Financial results, EURt	FP2022	2021	A YoY	C
Total revenue, incl.	166,838	140,379	+26,459	+19
Net interest income	110.483	97,319	+13,164	+14
Net fee and commission income	54,973	43,478	+11,495	+26
Total operating expenses	83,889	65,183	+18,706	+29
Earnings before impairment	82,949	75,197	+7,753	+10
Impairment losses on loans	9,246	3,948	+5,298	+134
Earnings before taxes	73,703	71,249	+2,454	+3
Income tax expense	12.210	10.986	+1.224	+11
Net profit	61,493	60,263	+1,230	+2
Attr. to shareholders	59,250	58,261	+989	+2
Business volumes, EURm	FP2022	2021	A YoY	<
Deposits from customers	6.109	5,808	+302	+5
Loans (net)	3.097	2.677	+420	+16
Fin.intermediaries' payments, mil. pcs	38	27	+10	+37
Assets under management
	1,389	1,349	+40
Key figures	FP2022	2021	A YoY
Cost / Income ratio (C/I)	50.3%	46.4%	+3,8 pp	+3
pre-tax ROE*	19.4%	26.0%	-6,5 pp
ROE*	16.7%	22.0%	-5,3 pp
T1 capital adequacy	16.3%	15.1%	+1,2 pp

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Continuation of strong growth

Financial results, EURt	2022	2023	2024	2025	2026
Total income, incl.	166,838	199,800	231,993	272,523	312,379	17%
Net interest income	110,483	127,182	14/,1/6	171,096	198,229
Net fee and commission income	54,973	70.930	82,975	98,894	111,239
Total expenses	83,889	94,303	102,680	107,624	115,265	12%
Operating profit	82,949	105,497	129,313	164,899	197,114
Impairment losses on loans	9,246	12,738	15,204	17,033	18,752
Earnings before taxes	73,703	92,759	114,109	147,866	178,361
Income tax expense	12,210	13,720	15,937	19,399	22,575
Net profit	61.493	79.040	98.172	128,467	155,786	21%
Attr. to shareholders	59,250	75,988	93,894	122,489	148,222
Business volumes, EURm	2022	2023	2024	2025	2026
Deposits	6,109	6,841	7,504	8,301	8,912
Loans (net)	3,097	3,674	4,296	4,905	5,520
Fin.intermediaries' payments, mil. pcs	38	59	80	101	132
Assets under management	1,389	1,522	1,675	1,793	1,935
Key figures	2022	2023	2024	2025	2026
Cost / income ratio (C/I)	50.3%	47.2%	44.3%	39.5%	36.9%
pre-tax ROE*	19.4%	20.2%	20.8%	22.3%	22.3%
ROE*	16.7%	17.8%	18.5%	20.1%	20.2%
T1 capital adequacy	16.3%	15.9%	16.2%	17.1%	18.2%
Total capital adequacy	20.5%	19.7%	19.4%	19.0%	19.8%

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Increasing volumes in all business lines

Retail banking

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Corporate banking

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Financial intermediaries business line

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Increase in business volumes along with strong results

Financial results, EURt	FP2022	2021	A YoY	A 9
Total revenue, incl.	153.937	127,894	+26,043	+20%
Net interest income	110.931	97.662	+13,269	+14%
Net fee and commission income	42,253	31.172	+11,081	+369
Total operating expenses	62,978	49,339	+13,639	+28%
Earnings before impairment	90,959	78,555	+12,404	+16%
Impairment losses on loans	9,246	3,948	+5,298	+134%
Earnings before taxes	81,713	74,607	+7,106	+10%
Income tax expense	11,312	10.556	+ /55	+79
Net profit, incl.	70,401	64,051	46,350	+10%
attr, to shareholders	68.114	61,761	+6,352	+10%
Business volumes, EURm	FP2022	2021	A YOY	A 9
Deposits from customers	6.155	5,841	+308	+5%
Loans (net)	3.097	2.677	+420	+16%
Key figures	FP2022	2021	A YoY
Cost / Income ratio (C/I)	40.9%	38.6%	+ 2.3 pp
pre-tax ROE*	25.9%	30.6%	- 4.7 pp
ROE*	22.3%	26.2%	- 4.0 pp
11 capital adequacy	15.6%	14.9%	+ 0.7 pp
Total capital adequacy	19.0%	17.5%	+ 1.5 pp

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Funds' volume continues to grow, less impact from customers leaving II pillar

Financial results, EURt	FP2022	2021	A YOY	A %
Total revenue	8,625	11,952	-3,327	-28%
Total expenses	6,867	10,015	-3,149	-31%
Earnings before taxes	1,758	1,936	-178	-9%
Income tax expense	830	1,241	-411	-33%
Net profit	928	695	+233	+34%
Business volumes	FP2022	2021	A YOY	A %
Assets under management, EURm	1,388	1.349	+40	+3%
Active customers of PII funds, thous.	129	138	-9	-6%
Key figures	FP2022	2021	A YOY
Cost / Income ratio (C/I)	79.6%	83.8%	4.2 pp
pre-tax ROE	7.3%	7.1%	0.2 + pp
ROF	3.9%	2.5%	1.3 pp +

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Rapid growth in business volumes

Financial results, EURt	FP2022	2021	A YoY	A%
Total revenue	2,884	1,073	+1,811	+169%
Total expenses	3,012	1,894	+1,118	+59%
Earnings before taxes	-129	-822	+693	-84%
Income tax expense	0	1	-1	-100%
Net profit	-129	-823	+694	-84%
attr, to shareholders	-84	-535	+451	-84%
Business volumes	FP2022	2021	A YoY	△%
Gross Premiums, EURm	11.504	6.747	+4.757	+71%
Key figures	FP2022	2021	A YoY
Cost / Income ratio (C/I)	104.5%	176.6%	- 12.2 pp
Net loss ratio	56.4%	48.7%	+ 7.8 pp
Net expense ratio	47.2%	87.7%	- 40.4 pp
pre-tax ROE	-2.0%	-11.7%	+ 9.7 pp
ROE	-2.0%	-11.7%	+ 9.7 pp

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5 year targets

LHV Pank

LHV UK

3,100 / 2,800 EURm

105 mil

Madis Toomsalu madis.toomsalu@lhv.ee

Meelis Paakspuu meelis.paakspuu@lhv.ee