Announcement View
Company AS LHV Group
Type Company Release
Category Half-yearly financial report
Publicize date 23 Jul 2024 08:00:00 +0300
Attachments
LHV Group Interim Report 2024-Q2-EN.pdf
LHV Group Presentation 2024-Q2-EN.pdf
LHV Group Factbook 2024-Q2-EN.pdf
LHV Group Interim Report 2024-Q2-ET.pdf
LHV Group Presentation 2024-Q2-ET.pdf
LHV Group Factbook 2024-Q2-ET.pdf
Languages
Kell English
Currency
Title LHV Group’s unaudited financial results for Q2 and 6 months of 2024
Content
For LHV Group, Q2 of 2024 was marked by strong growth in its loan portfolio,
which was also reflected in a strong financial result.

AS LHV Group generated a net profit of EUR 38.6 million in Q2, which is EUR 2.1
million less than in Q1 (-5%), but EUR 3 million more than in the same period a
year ago (+8%). The return on equity attributable to LHV Group's shareholders
was 25.8% in Q2.

All subsidiaries of the Group were profitable during the quarter. In Q2, AS LHV
Pank earned a net profit of EUR 34.8 million, LHV Bank Ltd EUR 0.9 million, AS
LHV Varahaldus EUR 0.7 million, and AS LHV Kindlustus EUR 0.4 million.

In Q2 of 2024, the Group earned a total net income of EUR 87.3 million, which is
2% more than in Q1 and 17% more than in Q2 a year earlier. Of the quarterly
revenue, net interest income amounted to EUR 70.4 million, and net fee and
commission income to EUR 16.3 million. The Group's consolidated operating
expenses amounted to EUR 37.6 million in Q2, which is 6% more than in Q1 and
14% more than in Q2 of 2023.

By the end of June, LHV Group's consolidated assets stood at EUR 7.33 billion.
Over the quarter, the asset volume dropped by EUR 40.8 million, i.e., by 1%.
Compared to the previous quarter, the consolidated loan portfolio increased by
EUR 246 million to EUR 3.89 billion (+7%; +EUR 83 million in Q1). The Group's
consolidated deposits decreased by EUR 150 million over the quarter to EUR 5.78
billion (-3%; +EUR 203 million in Q1). At the same time, the deposits of regular
clients grew. The total volume of funds managed by LHV decreased by EUR 11
million during the quarter and amounted to EUR 1.53 billion at the end of June
(-1%; +EUR 21 million in Q1). The number of processed payments related to
financial intermediaries' clients amounted to 18.3 million in Q2 (+3% compared
to 17.8 million in Q1).

Consolidated net income of AS LHV Group for 6 months of 2024 amounted to EUR
172.7 million (+21% compared to 2023) and total expenses reached EUR 73.1
million (+15% compared to 2023). The Group's 6-month consolidated net profit was
EUR 79.3 million, an increase of EUR 10.6 million, i.e., by 15%, compared to the
previous year. Over the 6 months, AS LHV Pank earned a net profit of EUR 71.6
million, LHV Bank Ltd EUR 5.8 million, AS LHV Varahaldus EUR 0.5 million, and AS
LHV Kindlustus EUR 0.7 million. LHV Group's ROE for the first half of the year
was 27.6%.

By the end of Q2, LHV Group exceeds the current financial plan in terms of net
profit by EUR 16.2 million.

 Income statement, EUR thousand                        Q2-2024 Q1-2024 Q2-2023
------------------------------------------------------------------------------
    Net interest income                                 70 424  68 918  62 900
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    Net fee and commission income                       16 262  15 543  12 352
------------------------------------------------------------------------------
    Net gains from financial assets                        -37     536    -547
------------------------------------------------------------------------------
    Other income                                           638     418     197
------------------------------------------------------------------------------
 Total revenue                                          87 287  85 415  74 902
------------------------------------------------------------------------------
    Staff costs                                        -21 108 -20 275 -15 851
------------------------------------------------------------------------------
    Office rent and expenses                              -609    -572    -982
------------------------------------------------------------------------------
    IT expenses                                         -3 471  -3 100  -3 747
------------------------------------------------------------------------------
    Marketing expenses                                    -973    -658  -1 087
------------------------------------------------------------------------------
    Other operating expenses                           -11 426 -10 924 -11 373
------------------------------------------------------------------------------
 Total operating expenses                              -37 587 -35 528 -33 040
------------------------------------------------------------------------------
 EBIT                                                   49 700  49 888  41 862
------------------------------------------------------------------------------
 Earnings before impairment losses                      49 700  49 888  41 862
------------------------------------------------------------------------------
    Impairment losses on loans and advances             -5 043  -2 851    -809
------------------------------------------------------------------------------
    Income tax                                          -6 071  -6 335  -5 422
------------------------------------------------------------------------------
 Net profit                                             38 586  40 702  35 631
------------------------------------------------------------------------------
    Profit attributable to non-controlling interest        300     158     278
------------------------------------------------------------------------------
    Profit attributable to share holders of the parent  38 286  40 544  35 353
------------------------------------------------------------------------------

------------------------------------------------------------------------------
    Profit attributable to non-controlling interest       0,12    0,13    0,11
------------------------------------------------------------------------------
    Profit attributable to share holders of the parent    0,12    0,12    0,11



 Balance sheet, EUR thousand                   Jun 2024  Mar 2024  Jun 2023
----------------------------------------------------------------------------
    Cash and cash equivalents                  3 217 448 3 402 338 2 604 108
----------------------------------------------------------------------------
    Financial assets                             157 131   249 968   369 289
----------------------------------------------------------------------------
    Loans granted                              3 925 877 3 676 442 3 272 084
----------------------------------------------------------------------------
    Loan impairments                             -35 333   -31 843   -18 588
----------------------------------------------------------------------------
    Receivables from customers                    15 919    22 934    28 199
----------------------------------------------------------------------------
    Other assets                                  48 681    50 733    52 223
----------------------------------------------------------------------------
 Total assets                                  7 329 723 7 370 572 6 307 315
----------------------------------------------------------------------------
       Demand deposits                         3 882 999 3 926 714 4 005 191
----------------------------------------------------------------------------
       Term deposits                           1 900 930 2 007 628 1 057 177
----------------------------------------------------------------------------
       Loans received                            735 281   568 355   510 934
----------------------------------------------------------------------------
    Loans received and deposits from customers 6 519 211 6 502 697 5 573 302
----------------------------------------------------------------------------
    Other liabilities                            100 710   141 573   120 896
----------------------------------------------------------------------------
    Subordinated loans                           107 521   127 568   131 301
----------------------------------------------------------------------------
 Total liabilities                             6 727 441 6 771 838 5 825 499
----------------------------------------------------------------------------
 Equity                                          602 282   598 734   481 816
----------------------------------------------------------------------------
    Minority interest                              7 695     7 394     7 287
----------------------------------------------------------------------------
 Total liabilities and equity                  7 329 723 7 370 572 6 307 315




Although the economic situation is still difficult, the quality of LHV's loan
portfolio remained at a good level and loan volumes grew faster than planned.
Interest income was also supported by the persistence of higher interest rates.
The number of clients increased across the Group and there were no setbacks in
the good level of activity.

The number of clients of LHV Pank increased by 5,400, whereas over the year, the
number of bank clients has increased by 33,000, i.e., 8%. The activity among
clients while using the daily banking services was good. During the quarter, the
number of clients with investment assets exceeded 100,000.

The volume of loans increased strongly: the volume of retail loans increased by
EUR 94 million over the quarter and the volume of business loans increased by
EUR 100 million. The quarter was active in terms of home loans, as in addition
to new loans, refinancing increased this volume. LHV's market share in home
loans reached 24% in May. Deposits were also in focus. The deposits of regular
clients increased by EUR 137 million in Q2. At the same time, the deposits of
financial intermediaries were reduced by EUR 176 million and platform deposits
by EUR 180 million.

The quality of the loan portfolio as a whole has remained stronger than planned
and the share of overdue loans continues to remain low. Forward-looking write-
downs were made both for individual clients and on a model-by-model basis.

For investing clients, we were the first in Estonia to introduce automatic bond
trading. During the quarter, the bank also began offering the LHV Instalment
payment as a new product, which allows merchants to offer their clients more
flexible payment options. At the end of May, in cooperation with EIF, we began
offering favourable loans to apartment associations and small businesses that
encourage sustainable investments. Leasing for electric cars also became more
favourable. In June, we started cooperation with Bolt and Snabb to offer
discounts to LHV bank card holders.

The loan portfolio of LHV Bank in the United Kingdom is growing, but deposit-
taking is also picking up the pace. The loan portfolio increased by EUR 52
million over the quarter, with EUR 141 million in approved but not yet issued
loans. The volume of retail deposits through three deposit platforms increased
by EUR 119 million over the quarter. LHV Bank will continue to prepare for the
retail banking offering, as well as to develop banking channels and promote
brand awareness. The opening of a new mobile bank for clients is planned for the
end of this year. While LHV Bank joined the euro standard payment scheme at the
beginning of July, it is also planned to join the real-time payment scheme by
the end of the year.

For LHV Varahaldus, Q2 was characterised by a good rate of return for pension
funds. The quarterly rate of return of the LHV pension funds M, L, and XL was
2.2%, 2.8%, and 2.2%, respectively. The rate of return of the more conservative
funds XS and S was 1.2% and 1.4%, respectively. Over the quarter, Pension fund
Indeks increased by 4.7%, Pension fund Roheline decreased by 0.4%. The operating
income of Varahaldus was similar to the previous quarter, with operating
expenses slightly lower. Net profit is somewhat ahead of what has been planned
due to the financial income arising from the rate of return on funds. The volume
of the II pillar was affected by the movements of clients at the beginning of
May, as well as the exit from the II pillar. The number of active clients making
monthly contributions to the pension fund was 118,000 by the end of the quarter.

The sales results of LHV Kindlustus were in accordance with the financial plan
in Q2, with the biggest growth seen in terms of products concerning travel and
home insurance. The profitability of insurance is at a good level thanks to the
growth of revenue, with the premiums of concluded contracts having increased by
12% year-on-year. As at the end of June, 168 thousand clients of LHV Kindlustus
held a total of 241,000 valid insurance contracts.

As at the end of the half-year, LHV Group is well capitalised. In Q2, LHV Group
organised the first major issue of MREL bonds to international markets in the
amount of EUR 300 million. The capital raised by the AT1 bond in the amount of
EUR 20 million was repaid to investors. The Group's internal capital generation
capacity exceeds the growth of loans.

Comment by Madis Toomsalu, the Chairman of the Management Board at LHV Group:
"For LHV, this was the half-year with the largest increase in loan volumes in
its history. This year, we have issued more than EUR 770 million in new loans to
Estonian people and companies. Additionally EUR 66 million has been issued in
England. This is reflected in the strong growth of the entire portfolio, and in
Q2 alone, LHV's loan portfolio grew by EUR 246 million.

Against the backdrop of economic uncertainty, the confidence of companies to
invest is crucial to restoring growth. However, the continuation of
controversies is to be expected, where, alongside the financial difficulties of
some companies and notices of redundancies, some have become increasingly bold
in investing, and where the partial counterbalance to the tax increase is the
falling interest rate.

LHV's strong capitalisation and deposit base will continue to be aimed at
supporting such investments. At the same time, our investment banking activity
is also important, since LHV has organised almost all major public and targeted
fundraisings, and in the near future, we are also organising an offer of
Estonian government bonds.

I am glad to see that more and more Estonian people are finding their way to
growing money with investments. When in May the number of LHV's clients with
investment assets exceeded 100,000, we once again received evidence that our
decades of work to promote the investor community have gone a long way."


To access the reports of AS LHV Group, please visit the website at
https://investor.lhv.ee/en/reports/.

In order to present the results of the quarter, LHV Group will organise an
investor meeting via the Zoom webinar platform. The virtual investor meeting
will take place before the market opens on 23 July at 9.00. The presentation
will be in Estonian. Please register at the following address:
https://lhvbank.zoom.us/webinar/register/WN_lqbhs6XcRNqrbP8S3lQDMQ#/registration.

LHV Group is the largest domestic financial group and capital provider in
Estonia. The LHV Group's key subsidiaries are LHV Pank, LHV Varahaldus, LHV
Kindlustus, and LHV Bank Limited. The Group employs over 1,100 people. As at the
end of June, LHV's banking services are being used by 433,000 clients, the
pension funds managed by LHV have 118,000 active clients, and LHV Kindlustus
protects a total of 168,000 clients. LHV Bank Limited, a subsidiary of the
Group, holds a banking licence in the United Kingdom and provides banking
services to international financial technology companies, as well as loans to
small and medium-sized enterprises.



Priit Rum
Communications Manager
Phone: +372 502 0786
Email: priit.rum@lhv.ee
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