Market announcement

Title

LHV Group updated the company’s financial plan for 2021

Message

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.

                                                                         Change
 Key indicators      Updated FP                       Previous FP   compared to
                           2021    2020 Change YoY           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
-------------------------------------------------------------------------------
 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
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: [email protected] (mailto:[email protected])