NOTICE ON CALLING THE ANNUAL GENERAL MEETING OF THE SHAREHOLDERS

The Management Board of AS LHV Group (hereinafter the "Group") hereby calls the general meeting of the shareholders, to be held at 13:00 on 24 March 2021 (Tallinn time) at Hilton Tallinn Park Hotel, "Ballroom" conference hall (Fr. R. Kreutzwaldi 23, Tallinn, second floor).

Registration of participants will start at the venue of the meeting at 12:00. Registration will end at 12:45. We kindly ask all shareholders and representatives to arrive in a timely manner, taking into account the time required for registration.

The Management Board of the Group confirms appropriate measures will be taken on the site of the meeting to minimize the possibility of spreading the coronavirus in order to protect the participants of the special general meeting, incl. hand sanitizers and personal protective equipment are provided on site of the meeting. The measures to be taken will be updated if needed according to the overall situation and possible societal restrictions at the time of the meeting. Regardless, in order to prevent the spread of COVID-19, the Management Board of the Group requests to prefer voting on the items on the agenda of the general meeting using electronic means prior to the meeting and not to physically participate in the meeting and to watch the general meeting by video transmission.

In order to vote using electronic means the shareholders are to fill in a voting ballot, which is available on the Group’s website investor.lhv.ee. The filled in voting ballot must be signed digitally and sent to the e-mail address group@lhv.ee by not later than on 23 March 2021 at 09:00. The procedure of the electronic voting can be found in more detail on the Group’s website investor.lhv.ee.

The list of shareholders entitled to participate at the general meeting will be established 7 (seven) days before the general meeting, i.e. as at 17 March 2021 COB of Nasdaq CSD.

For registration, we kindly ask participants to submit the following documents:

1. shareholders who are natural persons are required to submit their identity document; representa-tives must also submit a valid written authorisation document;
2. legal representatives of shareholders who are legal persons are required to submit their identity document; authorised representatives must also submit a valid written authorisation document. If the legal person has not been registered in the Estonian commercial register, we kindly request submission of a valid extract of the register in which the legal person has been registered and under which the representative is authorised to represent the shareholder (legal authorisation). The extract must be prepared in English or translated into English by a sworn translator or authority equivalent to a sworn translator, be verified by a notary, and bear the Apostille.

A shareholder must inform the Group of the appointment of a representative or withdrawal of the authorisation prior to the general meeting, by sending the corresponding digitally signed notice to the general meeting's e-mail address group@lhv.ee or by delivering the notice in a format which can be reproduced in writing to the Group's location at Tartu mnt 2, Tallinn 10145, first floor, on working days between 09:00 and 19:00. Should a shareholder wish to inform the Group of the appointment of a representative or withdrawal of the authorisation granted to a representative prior to the general meeting, the corresponding notice must have been delivered to and received by the Group at least 3 (three) days before the general meeting, not later than on 22 March 2021 at 09:00. Rain Lõhmus, Chairman of the Supervisory Board of the Group, may be appointed as the authorised representative, if the shareholder so desires.

The authorisation document form is available for the shareholder on the Group's website at investor.lhv.ee.

Pursuant to the resolution adopted by the Group's Supervisory Board on 17 February 2021, the general meeting will have the following agenda, with the proposals of the Management Board and the Supervisory Board specified under the agenda items and with the Supervisory Board proposing to vote for all draft resolutions specified under the agenda items:

1. Approval of the Annual Report 2020
   To approve the Annual Report 2020 of the Group, as presented to the general meeting.

2. Profit allocation for 2020
   The profit attributable to the Group as the parent company of the consolidation group in the financial year 2020 amounts to EUR 37,950 thousand. To transfer EUR 0 to the legal reserve. To approve the profit allocation proposal made by the Management Board and pay dividends in the net amount of 29 euro cents per share. The list of shareholders entitled to receive dividends will be established as at 07 April 2021 COB. Consequently, the day of change of the rights related to the shares (ex-dividend date) is set to 06 April 2021. From this day onwards, the person acquiring the shares will not have the right to receive dividends for the financial year 2020. Dividends shall be disbursed to the shareholders on 09 April 2021.

3. Overview of the economic results for the first two months of 2021
   An overview provided by the Management Board to the shareholders on the economic results for the first two months of 2021.

4. Overview on the business environment and the five-year financial forecast
   An overview provided by the Management Board on the business environment and the Group's five-year financial forecast.

Votes shall be cast by open ballot. All documents related to the annual general meeting of the Group (including the notice on calling the general meeting, the draft resolutions, the Group's Annual Report 2020, report on the activities of the Supervisory Board in 2020 and assessment of the Annual Report, and other documents to be submitted to the general meeting) will be made available to the shareholders on the Group's website investor.lhv.ee and at the Group's location at Tartu mnt 2, Tallinn 10145, first floor, during working days from 09:00 to 19:00 until (including) the day of the general meeting.

All shareholders shall have the right to receive from the Management Board information on the Group's activities at the general meeting. The Management Board may refuse to give information, if there is reason to presume that this may cause significant damage to the interests of the Group or the companies incorporated in the Group. Where the Management Board refuses to give information, a shareholder may demand that the legality of the shareholder's demand be decided by the general meeting or submit, within 2 (two) weeks after the refusal, a petition to a court in a proceeding on petition in order to obligate the Management Board to give information.

Any questions regarding the agenda items of the general meeting should be addressed to the Group's e-mail address group@lhv.ee so that the question would be received by the Group at least 3 (three) days before the general meeting, not later than on 22 March 2021 at 09:00.

Shareholders, whose shares represent at least 1/20 (one-twentieth) of the share capital of the Group, may demand the inclusion of additional items on the agenda of the annual general meeting, if the corresponding request is filed in writing at least 15 (fifteen) days prior to the general meeting, not later than on 10 March 2021 at 23:59, at the e-mail address group@lhv.ee or to the Group's location at Tartu mnt 2, Tallinn 10145.

Shareholders, whose shares represent at least 1/20 (one-twentieth) of the share capital of the Group, may submit to the Group in writing a draft resolution on each agenda item, by posting the draft to the e-mail address group@lhv.ee or to the Group's location at Tartu mnt 2, Tallinn 10145. The draft must be submitted in electronic form or by e-mail so that it would be delivered to and received by the Group not later than 3 (three) days before the general meeting, not later than on 22 March 2021 at 09:00.

LHV Group unaudited financial results for Q4 and the 12 months of 2020

In Q4 2020, AS LHV Group earned a consolidated net profit of EUR 18 million: of that, the bank earned a net profit of EUR 13 million, while EUR 1.6 million in net profit was earned from servicing clients related to the United Kingdom branch. The net profit of Varahaldus, supported by the earned performance fee, was EUR 7.1 million. The pre-tax rate of return on equity capital owned by the shareholders of LHV Group was 36.1% in Q4.

In addition to productive everyday activities, the Q4 results of the Group were also affected by one-off events: the acquisition of Danske’s loan portfolio and the performance fee of pension funds. The net profit of LHV Group in Q4 2020 was EUR 7.3 million higher compared to Q3, and EUR 11.6 million higher, year-on-year.

By the end of the quarter, LHV Group’s volume of assets increased to EUR 4.97 billion. Within the quarter, the Group’s consolidated loan portfolio grew by EUR 353 million to EUR 2.21 billion (+19%; + EUR 52 million in Q3) and deposits increased by EUR 904 million to EUR 4.12 billion (+28%; + EUR 129 million in Q3). At the same time, the deposits related to financial intermediaries increased by EUR 457 million and deposits of regular clients by EUR 464 million; deposits related to the deposit platform continued to be decreased. The volume of funds managed by LHV increased by EUR 41 million in Q4, to EUR 1.54 billion (+3%; + EUR 56 million in Q3). Loan discounts were made in the extent of EUR 2.2 million in Q4.

The consolidated net profit of AS LHV Group in 2020 amounted to EUR 39.8 million, which was EUR 12.8 million (+47%) more than in 2019. In 2020, the pre-tax return on the equity owned by LHV Group shareholders was 20.5%, while the return on equity based on net profit was 17.3%. LHV’s profit outperformed the financial plan by EUR 7.2 million, largely due to the performance fee of pension funds. Within the year, the bank earned EUR 34.6 million (EUR 5.3 million from servicing clients related to the United Kingdom branch) and Varahaldus earned EUR 8.3 million.

The volume of LHV Group’s assets grew by EUR 1.94 billion (+64%). The consolidated loan portfolio of LHV Group increased by EUR 522 million year-on-year (+31%) and deposits increased by EUR 1419 million (+53%). The volume of the funds managed by LHV grew by EUR 163 million (+12%) year-on-year.

Despite the ongoing health crisis, LHV Group achieved good results in terms of all indicators in the last quarter of 2020. The Banker magazine recognised LHV with the title of the best bank in Estonia; also, the Estonian Association for Environmental Management recognised LHV’s Tallinn office as the best Green Office of the year.

During the quarter, LHV gained over 23,000 new bank clients – within the year, the number of LHV Pank clients increased by 28%, i.e., by almost 57,000. The activity of regular clients was also unprecedented. The activity of clients was increased due to changes accompanying the pension reform. Among more important events for clients, LHV introduced the Google Pay payment opportunity and a loan product for apartment associations to the market. LHV Pank decided to decrease the service fees for foreign shares, and this amendment to the price list entered into force at the turn of the year, together with introducing the pension investment account to the market. In November, the indirect member service was launched for payment intermediaries.

In October, the acquisition of Danske’s credit portfolio related to companies and the public sector was finished; as a result, LHV’s loan portfolio increased by EUR 254 million and surpassed the EUR 2 billion mark. Both corporate and retail loans grew in Q4. The health crisis did not have a strong effect on the credit portfolio in Q4, and its quality remains good; grace periods are ending as planned – by the end of the year, 1170 clients with a total loan volume of EUR 155 million were still in the grace period. The loan discounts made are mainly model-based; the credit rating of a few loan customers most affected by the crisis has worsened, while the proportion of nonperforming loans remains low.

During the quarter, LHV announced the plan to create a separate bank located in the United Kingdom, to distinguish the bank’s activities in Estonia and the United Kingdom more than before. Regulatory approval is a prerequisite of this plan. In relation to this, changes in the management of AS LHV Pank and AS LHV Finance have been conducted by today. Erki Kilu took command of the new company LHV UK Limited; he is replaced by Chairman of the Management Board of AS LHV Pank Kadri Kiisel. The new Head of AS LHV Finance is Mari-Liis Stalde.

The activity of LHV Varahaldus has been most affected by the strong quarter of stock markets and the pension reform that entered into force on 1 January. The number of active clients of the II pillar grew by 4000 people within the quarter, while the number of III pillar clients multiplied; the growth of volume however remained modest. Pension funds with the strongest rate of return in 2020 were LHV pension funds; the highest rate of return was achieved by clients of LHV Pensionifond Roheline that only started out in March. Whereas the rate of return of funds XL and L exceeded the reference index, Varahaldus earned a performance fee in the amount of EUR 6.2 million for the year. During the quarter, LHV Varahaldus introduced the first green III pillar pension fund in Estonia, LHV Pensionifond Roheline Pluss, to the market. The pension reform that entered into force will negatively affect the volume of funds in 2021, but the volumes will presumably reach the end of 2020 levels by the end of 2023.

At the end of December, the Financial Supervision Authority granted AS LHV Kindlustus an activity licence for an insurance provider to engage in non-life insurance activities. In the coming months, LHV Kindlustus will start offering home insurance, and the extended warranty insurance at Euronics stores. During the year, the company will also introduce motor third party liability insurance, comprehensive insurance, travel insurance and accident insurance to the market.

Comment by Madis Toomsalu, CEO of LHV Group:
“Considering the ongoing health crisis and the accompanying economic downturn, it was a good year for LHV. The ability of clients to adapt to the situation turned out to be most important. We also tried to contribute here, offering as flexible solutions as possible to clients, including grace periods. The majority of agreed grace periods have ended by today. As the second important decision, we continued financing the economy, even in the background of the crisis. Loan portfolios also grew organically, but the largest contribution was made by the acquisition of Danske’s corporate and public credit portfolio. To ensures LHV’s further growth, at the end of the year, we announced our intention to establish a bank in the United Kingdom to separate our current business activities in Estonia and in the United Kingdom more clearly. Applying for the activity licence may take a couple of years and it requires the permission of local supervisory authorities. As an important topic, we sensed that LHV’s responsibility in ensuring the well-being of the environment and society has increased. Whereas in the past, we have placed great emphasis on effects related to overall management and social risks, in recent years, we have also greatly addressed environmental risks. Last year, we adopted LHV’s strategy on sustainability and the goals derived from this strategy.

In economic terms, the trends that had already emerged earlier, deepened in 2020. National budget deficits increased and central banks showed a willingness to finance such deficits. The view was taken that economic regions with sufficient size and power, a historically sound currency, and central banks ensuring unlimited monetary creation, could not become insolvent. Just as boundaries of zero interest rates were smashed in the past, now the obstacles to monetary expansion have also disappeared. An objective assessment on the quality of these measures can only be made in the years to come. While the issues of fiscal and financial growth can be partially mended with money supply, it is less certain to what extent such mending will increase inequality, whether between countries with different levels of debt, between people investing or spending, or between different generations.”

AS LHV Group reports are available at: investor.lhv.ee/aruanded.

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 520 people. LHV’s banking services are used by 259,000 clients, and pension funds managed by LHV have more than 180,000 active clients. LHV’s UK branch offers banking infrastructure to 140 international financial services companies, via which LHV’s payment services reach clients around the world.