Lhv Group As · OMXTSE:LHV1T
Lhv Group As — Debt Investor Presentation (November 2022)
34 slides from Lhv Group As's debt investor presentation, Nov 3, 2022
Slide 1: LHV Group
LHV Group 03 November 2022 AS LHV GROUP TARTU MNT 2, TALLINN 6 802 670 INFO@LHV.EE LHV.EE
Slide 2: Disclaimer
Disclaimer By attending this meeting where this presentation is made, or by reading the presentation slides or by accepting delivery of this document, you agree to be bound by the following limitations. This presentation has been drawn up by AS LHV Group (the Company) purely for informational purpos
Slide 3: Speakers today / Table of contents
Speakers today Table of contents Page No Meelis Paakspuu Executive summary 4 Chief Financial Officer of LHV Group Indicative term sheet 5 Business environment 6 Kadri Haldre Head of Treasury of LHV Bank LHV Group 10 Business units 25 Appendix 31 3
Slide 4: Executive summary
LHV Group Executive summary Fast growing and resilient operating environment Estonia has been in a strong macroeconomic environment with 4.2%* annual GDP growth over the past 5 years In Q2 2022, GDP grew by 0.6%* year on year, despite the inflationary environment and the shock from Russia’s aggressi
Slide 5: Contemplated tap issue due 2025 by LHV Group: Indicative Term sheet
Contemplated tap issue due 2025 by LHV Group Indicative Term sheet Issuer LHV Group LHV Group Issuer Rating: Baa3 (stable); LHV Bank Deposits Rating Baa1 (stable) (Moody’s); the bonds are Rating expected to be rated Baa3 by Moody’s Status Senior Unsecured, Unsubordinated, RegS (MREL eligible) Tempor
Slide 6: Business environment
Business environment
Slide 7: LHV home markets: Estonia
LHV home markets ESTONIA Member of EU, NATO and OECD Estonia’s position in global indexes: • #18 Ease of doing business • #4 World Press Freedom Index • #13 Corruption Perception Index • #5 PISA education tests 2018 Tallinn What makes Estonia stand out Third largest bank Second largest manager of •
Slide 8: Strong labour market in a cooling economy
Strong labour market in a cooling economy Estonia's GDP growth 16% • Economic activity has cooled down due to rapid increases in producer and 8% consumer prices and weaker foreign demand 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 • The labour market remains strong despite th
Slide 9: Strong and growing market share in Estonia
Strong and growing market share in Estonia Corporate loans Household loans 18% • Growing loan portfolio at 9% • LHV has achieved 9% a pace higher than the market share, after 9.0 market average, whilst 10.4 offering home loans for EURb ensuring its high quality EURb a few years only Banking Services
Slide 10: LHV Group
LHV Group
Slide 11: LHV Group Structure
LHV Group Structure LHV Group Holding company Date of foundation 26.08.2004 60.3 EURm Number of customers 544,200 21.1% Number of employees 820 Net profit ROE Estonia UK 100% 100% 65% 100% 100% LHV Pank LHV Varahaldus LHV Kindlustus EveryPay LHV UK* Banking Fund management Insurance Payment solution
Slide 12: Key highlights for the nine months ended 30 September 2022
LHV Group Key highlights for the nine months ended on 30 September 2022 Loans to Deposits Total assets No of customers* Ratio 6.3 EURbn 544 thous 59.9% 48.8% Net Stable Funding Capital Adequacy Net loans Ratio Ratio 3.1 EURbn 152.4% 19.2% Deposits Cost to Income Ratio NPL ratio** 5.2 EURbn 53.6% 51.
Slide 13: History and key milestones
LHV Group History and key milestones Acquisition of EveryPay 35 EURm Acquisition of public offering Danske’s 273 EURm of shares corporate and public sector portfolio LHV UK completed the 250 EURm covered purchase bond issue transaction of Bank North's The beginning of Card payment LHV UK Activity li
Slide 14: Share information
LHV Group Share information Overview: Top 5 shareholders Shareholding structure as of 09/2022: Regulated market Nasdaq Baltic Main list Shareholders 30,462 Rain Lõhmus Security short name LHV1T Countries represented 45 21.8% Andres Viisemann Estonian residents 76% Estonian residents Total 95% 50.4%
Slide 15: Moody's issuer and senior unsecured rating of Baa3 (stable)
LHV Group Moody’s issuer and senior unsecured rating of Baa3 (stable) LHV Group Issuer and Senior Unsecured Rating LHV Bank Deposit Rating Baa3 (stable) Baa1 (stable) • The rating reflects LHV Group’s principal role as a bank holding • Moody’s highlights strong solvency, with low levels of problem c
Slide 16: Business units
LHV Group Business units LHV Bank LHV Banking Services Third largest bank in Estonia Provide services to international clients and financial technology companies, including major payment institutions Long-term goal is to become the largest and most profitable bank in Estonia Ability to link traditio
Slide 17: Combining growth with profitability
LHV Group Combining growth with profitability • The Group has shown a track record of Results and volumes, EURm 2019 2020 2021 9m 2022 profitable growth over the past years Net profit 27.1 39.8 60.3 37.1 Total assets 3,032 4,971 6,845 6,262 Loans (net) • The number of customers and customer 1,687 2,
Slide 18: Capital above regulatory requirements as of 30 September 2022
LHV Group Capital above regulatory requirements as of 30 September 2022 Capital adequacy requirements Capital structure • LHV is classified as other systemically important institution („O-SII“) EURm 24% 500 445 • The Central Bank of Estonia can set 19.2% systemic risk buffer requirement. O-Sll Buffe
Slide 19: Compliance with MREL Requirements: HoldCo issuance strategy
Compliance with MREL Requirements HoldCo issuance strategy Issuance Capital / MREL AT1 LHV HoldCo Tier 2 Group HoldCo Senior Issuance Funding OpCo LHV LHV Asset Deposits, LHV UK EveryPay LHV Bank Covered Insurance Management bonds • Single Point of Entry strategy envisaged by LHV's resolution plan,
Slide 20: Compliance with MREL Requirements: Envisaged issuance to help fulfil targets
Compliance with MREL Requirements Envisaged issuance to help fulfil targets 30% 29.22% • The MREL-TREA Target is currently 19.08% Combined buffer 5.00% 23.49% but will increase to 24.22% from 2024 23.08% 24% Senior 4.29% 4.00% bonds • In order to pay dividends, the combined buffer 18% Tier 2 3.23% r
Slide 21: Simple balance sheet and diversified loan portfolio
LHV Group Simple balance sheet and diversified loan portfolio EURm Structure of assets EURm Structure of liabilities and equity 8,000 8,000 • LHV has a straightforward balance 6,845 sheet. Assets are made up of loans 6,262 6,000 6,000 and liquidity. Funding is mainly 4,971 raised from deposits, whic
Slide 22: Conservative approach to liquidity ratios
LHV Group Conservative approach to liquidity ratios Loans / deposits ratio NSFR • LHV is running a conservative 100% 200% 163% approach to liquidity risk. LCR and 153% 153% 152% NSFR levels are comfortably 75% 63% 150% 54% 60% above regulatory minimums and 46% internal tolerance levels 50% 100% 25%
Slide 23: LHV Bank: High quality credit portfolio
LHV Bank High quality credit portfolio Loans by stages Provisions / stage 3 gross amount • Loan portfolio has a decent growth EURm 238.5% 200% 177.7% while quality has remained high 3,600 2,700 150% 133.0% 119.3% • Share of stage 3 loans increased slightly during the Coronavirus 1,800 100% pandemic,
Slide 24: Committed to ESG goals
LHV Group Committed to ESG goals Environmental Social & Governance We have signed the UN Principles for Responsible Banking We act ethically and transparently and emphasise the and plan to meet all requirements for signatories importance of bona fide business and respect for partners, Contributing t
Slide 25: Business units
Business units
Slide 26: LHV Bank: Main profitability driver in LHV Group
LHV Bank Main profitability driver in LHV Group Financial results, EURt 2019 2020 2021 9m 2022 • Business volumes of LHV Bank have gone Net interest income through a period of rapid growth over the 47,915 69,046 97,662 85,101 Net fee and commission income past few years 12,808 18,385 31,172 24,149 O
Slide 27: LHV Bank: Well diversified revenue sources
LHV Bank Well diversified revenue sources Total revenue Deposits • Revenues are well diversified 2 55 478 between the three main business 22 lines (retail banking, corporate 1,522 banking, services to financial 104 45 5,223 intermediaries) EURm EURm 09/2022 09/2022 • The Bank is deposit funded mainl
Slide 28: LHV Asset Management: AUM and NAV change
LHV Asset Management AUM and NAV change EURm AUM and customers cust. (th.) Passive funds and pension fund Roheline • LHV’s pension funds are known for 1,600 200 100% NAV change investing actively in Estonia and in Thousands Millions alternative asset classes 1,200 150 75% 131 55% 106 800 100 52% • T
Slide 29: LHV Asset Management: Business volumes and key financial
LHV Asset Management Business volumes and key financial • LHV is Estonia’s second largest manager Financial results, EURt 2019 2020 2021 9m 2022 of compulsory pension funds (so-called II Total revenue 12,869 14,966 11,375 5,936 pillar defined contribution pension scheme) Total expenses 6,097 6,389 1
Slide 30: LHV Insurance: Business volumes and key financial
LHV Insurance Business volumes and key financial • LHV Kindlustus commenced sales Financial results, EURt 2019 2020 2021 9m 2022 activities in January 2021 Total revenue 0 0 1,069 1,091 Total expenses 0 551 1,894 2,231 • The volumes of gross and net premiums Technical result 0 -551 -826 -1,140 are g
Slide 31: Appendix
Appendix
Slide 32: Management
LHV Group Management Madis Toomsalu Meelis Paakspuu Jüri Heero Martti Singi • Manager of AS LHV Group • Member of the Management Board of • Member of the Management Board of • Member of the Management Board of • Chairman of the Management Board of AS LHV Group, AS LHV Pank AS LHV Group, AS LHV Pank
Slide 33: Outstanding subordinated bonds and MREL eligible instruments
Investor Information Outstanding subordinated bonds and MREL eligible instruments LHV Group 2028 LHV Group 2030 LHV Group LHV Group LHV Group T2 bond T2 bond 8.00% AT1 bond 9.50% AT1 bond Senior preferred Senior preferred notes CRR2 compliance Tier 2 capital Tier 2 capital AT1 capital AT1 capital (M
Slide 34: Meelis Paakspuu, CFO; Kadri Haldre, Head of Treasury
Meelis Paakspuu CFO meelis.paakspuu@lhv.ee Kadri Haldre Head of Treasury kadri.haldre@lhv.ee
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