LHV Group — Management Reports 2021

Aug 17, 2021

Company AS LHV Group

Type Company Release

Category Other corporate action

Disclosure time 17 Aug 2021 08:00:00 +0300

Attachments:

• LHV Group updated Financial plan 2021-08-EN.pdf (http://oam.fi.ee/en/download?id=5698)

• LHV Group uuendatud finantsplaan 2021-08-ET.pdf (http://oam.fi.ee/en/download?id=5699)

Currency

LHV Group updated the company's financial plan for 2021 Title

In relation to a better-than-predicted macroeconomic situation and the high activity of clients, this year's results of the AS LHV Group have significantly exceeded the financial plan published in February, which is why LHV is publishing its updated financial plan for 2021.

The updated financial plan has considered the actual financial results of the first half of the year; the forecast includes the plan for raising share capital and LHV Group's investment in B-North, a financial company in the United Kingdom. The forecast also considers the establishment costs of the bank intended to be established in the United Kingdom, and the effect of clients leaving pension funds. The potential success fee for Varahaldus is not expected in the forecast.

According to the updated financial plan, the planned income of AS LHV Group in 2021 is EUR 131.5 million, which is EUR 10 million more than in the financial plan that had been in force thus far, meaning annual growth of 27%. The planned net profit is EUR 53.8 million, which is EUR 12.1 million higher than previously planned, meaning annual growth of 35%. According to the financial plan, LHV Group exhibits a 19.6% return on equity based on net profit in 2021.

Key indicators	Updated FP 2021		2020 Change YoY	Previous FP	Change compared to 2021 previous plan
------------------------------------------------------------------------------- Financial results, EURt
------------------------------------------------------------------------------- Total revenue		131 500 103 547	27 953	121 498	10 002
------------------------------------------------------------------------------- Total expenses	61 273	43 975	17 298	60 257	1 016

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------------------------------------------------------------------------------- Impairment losses on loans -------------------------------------------------------------------------------	6 357	10 898	-4 542	11 914	-5 557
Earnings before taxes	63 870	48 674	15 197	49 327	14 543
------------------------------------------------------------------------------- Net profit	53 851	39 847	14 004	41 749	12 102
------------------------------------------------------------------------------- Business volumes, EURm
------------------------------------------------------------------------------- Loans	2 619	2 209	410	2 604	16
------------------------------------------------------------------------------- Deposits	5 076	4 120	956	4 101	975
------------------------------------------------------------------------------- Assets under management -------------------------------------------------------------------------------	1 354	1 537	-183	1 221	132
Key ratios
------------------------------------------------------------------------------- Cost / Income ratio	46.60%	42.47%	4.13%	49.60%	-3.00%
------------------------------------------------------------------------------- ROE (pre tax)	23.27%	21.02%	2.25%	18.68%	4.59%
------------------------------------------------------------------------------- Capital adequacy	20.18%	20.50%	-0.32%	18.21%	1.97%

Compared to the financial plan published in February, fee and commission income is largely higher due to the larger volume of currency exchange and settlements in the bank. Interest income is positively affected by the lower interest expense and the growth of deposits of clients that are financial intermediaries; the lower-than-expected income from loan portfolios purchased last year have a more negative effect. Credit losses have turned out to be lower than planned: in the new financial plan, this year's impairment of loans is EUR 5.6 million lower than in the plan published in February.The updated plan predicts a 19% growth of the loan portfolio and a 23% growth of deposits this year. Pursuant to the updated plan, the volume of managed funds will decrease by 12% this year.

Since we know already who the clients leaving pension funds this year are, the effect of the pension reform will have a somewhat smaller effect on LHV's results than what was planned in February. The growth of the portfolio of LHV Kindlustus is more modest than before, due to sales commencing later than expected.

Comment by Madis Toomsalu, CEO of LHV Group: "The Estonian economy has recovered well, and we can also see this from the activity of clients. We continue to grow

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quickly both in terms of the number clients and the volume of business activities, both in Estonia and internationally. In the financial plan, we have mostly increased the currency exchange and settlement revenues related to financial intermediaries, but we also forecast a higher number of clients and higher loan volumes in Estonia. At that, financing costs and credit losses are lower than expected, as is the effect of the pension reform."

LHV Group is the largest domestic financial group and capital provider in Estonia. LHV Group's key subsidiaries are LHV Pank, LHV Varahaldus, and LHV Kindlustus. LHV employs over 620 people. LHV's banking services are used by 290,000 clients, the pension funds managed by LHV have 174,000 active clients, and LHV Kindlustus protects a total of 132,000 clients. LHV's UK branch offers banking infrastructure to over 160 international financial services companies, via which LHV's payment services reach clients around the world.

Priit Rum Communication Manager Phone: +372 502 0786 Email: priit.rum@lhv.ee (mailto:riit.rum@lhv.ee)

Finantsinspektsioon http://www.fi.ee