LHV Group (LHV1T) Investor Update summary

Business Environment

• Estonia's economy contracted by 1.0% in 2024, with slow recovery and weak domestic demand due to geopolitical uncertainty.

• Tax hikes are expected to accelerate price growth, with core inflation remaining high and unemployment slightly elevated for several years.

• The UK faces slow economic recovery, with inflation driven by energy prices and unemployment projected to rise to 4.8% by 2027.

Financial Performance and Outlook

• Net profit for 2025 is forecast to decrease by 17% to €125.1 million due to falling interest rates and higher tax rates.

• Profit before taxes is expected at €153.3 million, down 12% from 2024.

• Cost/income ratio will rise to 47.7%, while ROE from net profit is projected at 18.1%.

• Expenditure is set to increase by 2% to €149.4 million, while income will decrease by 7% to €313 million.

• Net profit is expected to grow at a 12% annual average over the next five years, reaching €268.5 million by 2029.

Business Volumes and Growth Initiatives

• Loans to private customers reached EUR 1.9bn and to businesses EUR 5.7bn in 2024; taxes paid totaled EUR 162m.

• Deposits stood at EUR 6.9bn, loan volume at EUR 4.6bn, and number of customers at 456,000 in 2024.

• Loan portfolio is projected to grow by 17% in 2025, with significant increases in Estonia and the UK.

• Deposits are expected to rise by 9% to €7.56 billion, with growth in both Estonia and the UK.

• Over five years, loans will nearly double and deposits will grow by 65%.