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Pealkiri

LHV Group updated its financial plan for 2020

Teade

In relation to the milder than estimated effects of the coronavirus crisis, LHV
Group's financial results exceed what was forecast previously, which is why AS
LHV Group is publishing an updated financial plan for the current year. Compared
to the plan that has been in force since April, both forecast revenues and
business volumes have increased; at the same time, impairment losses have
decreased - therefore, the profit forecast and efficiency indicators have been
raised.

Pursuant to the updated financial plan, this year, the consolidated revenues of
LHV Group will increase by 29%, expenses by 11%, and the impairment losses on
loans by 3.7 times. In comparison to the previous year, consolidated net profit
will grow by EUR 5.5 million, i.e., 20%. The quality of the loan portfolio is
significantly better, compared to the spring-plan. The financial plan that was
in effect so far foresaw significantly higher discounts and thereby, a decrease
in revenue in the year-on-year comparison.

                         Updated    2019 Change   Previous   Change compared to
 Key indicators          FP 2020 results    YoY    FP 2020        previous plan
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 Financial results, EURt
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 Total revenue            95,395  73,818 21,577     87,316                8,079
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 Total expenses           43,749  39,266  4,483     44,773               -1,024
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 Impairment losses on
 loans                    11,950   3,209  8,740     19,357               -7,408
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 Earnings before taxes    39,697  31,342  8,354     23,185               16,512
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 Net profit               32,611  27,092  5,519     19,231               13,380
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 Business volumes, EURm
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 Loans                     2,227   1,687    540      1,806                  421
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 Deposits                  3,301   2,701    600      2,985                  316
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 Assets under management   1,531   1,374    157      1,454                   78
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 Key ratios
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 Cost / Income ratio       45.9%   53.2%  -7.3%      51.3%                -5.4%
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 ROE (pre tax)             16.6%   16.2%   0.4%      10.2%                 6.4%
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 Capital adequacy          17.3%   18.0%  -0.6%      17.6%                -0.2%
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The updated financial plan also considers the effect of the purchase of the
Danske Bank corporate and municipal loan portfolio, and therefore, regarding LHV
business volumes, estimates the loan portfolio to grow by 32% this year, and
deposits to grow by 22%. Pursuant to the updated plan, the volume of managed
funds will increase by 11% this year.

Compared to the financial plan disclosed at the peak of coronavirus crisis, the
Group will earn 70% more in net profit this year, reaching EUR 32.6 million. Of
this, EUR 21.8 million has been earned in the first 9 months. At the same time,
the financial plan has not estimated the potential of a success fee by asset
management.

In the updated plan, the company's cost/income ratio and the return on equity
have improved as the growth of business volumes increase revenues; at the same
time, expenses have slightly gone down compared to the previous plan. LHV's
capitalisation and liquidity are still at a strong level.

Comment by Madis Toomsalu, CEO of LHV Group:
"LHV can only be as successful as our clients. In terms of economic sectors, the
situation is different, but the economy as a whole has fared better than what
was initially forecast. We have continued with decisions that support our
clients and with our local and open credit policy. Through this, our loan
portfolio has continued to grow during the crisis as well, and loan discounts
have remained significantly lower than what was forecast. The updated forecast
takes into account the interest revenues added by the purchase of the Danske
portfolio from the beginning of October. The forecast has estimated the
capitalisation of LHV Pank and LHV Kindlustus during the current year. In the
case of LHV Varahaldus, operating revenues have been taken into account; a
potential success fee would be added outside of the forecast, since estimating
the inputs that are the basis for the success fee has a high error rate. Besides
business in Estonia, we are increasingly focusing on growing the business
related to clients in the United Kingdom; from the estimated profit of the Group
in 2020 in the amount of EUR 32.6 million, this constitutes EUR 4.8 million in
total."

LHV Group is the largest domestic financial group and capital provider in
Estonia. LHV Group's key subsidiaries are LHV Pank and LHV Varahaldus. LHV
employs over 490 people. LHV's banking services are used by more than 235,000
clients, and pension funds managed by LHV have more than 183,000 active clients.
LHV's UK branch offers banking infrastructure to 130 international financial
services companies, via which LHV's payment services reach clients around the
world.




Priit Rum
LHV Communication Manager
Phone: +372 502 0786
Email: [email protected] (mailto:[email protected])