LHV Group renewed the Financial Plan for 2018

AS LHV Group is disclosing the revised financial plan for 2018. According to the updated plan, the consolidated net profit of LHV Group will be EUR 1.8 million higher than previously forecasted and the net profit attributed to the shareholders of the group EUR 2.7 million more than in the previous plan.

LHV Group revised its financial plan for this year in order to take into account the impact of the sale of its Lithuanian business unit, UAB "Mokilizingas" and also the effect of advising one substantial transaction. The new plan has included the actual financial results of 2018 Q1.

According to the renewed plan, the group’s income for 2018 will be EUR 2.8 million less and the costs EUR 3.3 million less than in the previously disclosed financial plan. According to the renewed financial plan, LHV forecasts this year’s consolidated net profit to amount to EUR 26.1 million, an increase of EUR 3.9 million (+18%) compared to 2017, out of which EUR 24.3 million will be attributed to the shareholders of the group, which means an increase of EUR 4.7 million from last year.

The financial plan has been attached to the announcement and will be made available at https://investor.lhv.ee/en/reports/.

LHV’s Q1 profit decreased by income tax amount of EUR 2 million

The first three months of 2018 brought AS LHV Group a net profit of EUR 4.3 million, with the bank posting a profit of EUR 3.6 million, asset management EUR 0.7 million and Lithuanian business unit Mokilizingas EUR 0.2 million. In Q1, LHV Group paid income tax amounting to EUR 2.0 million. LHV Group’s return on equity was 12.4% in Q1.

The profit of the consolidation group was EUR 2.5 million lower than in Q4 of 2017 and EUR 0.8 million less than a year ago, Q1 of 2017.

In the first three months of this year the group’s consolidated loan portfolio grew by EUR 34 million (+12%; +EUR 269 million in Q4) and reached EUR 766 million. The consolidated deposits grew by EUR 188 million (+3%; +EUR 36 million in Q4) reaching EUR 1,725 million. Among this the deposits of financial intermediaries grew by EUR 126 million.

During the quarter the volume of funds managed by LHV rose by EUR 24 million (+2%; EUR 35 million in Q4) and reached EUR 1,127 million.

Comments by Madis Toomsalu, CEO of LHV Group:
"In the first quarter, the trends seen last year have continued. LHV’s solid fundamentals are supported by the Estonian economic environment. Economic growth has accelerated and domestic risks are offset by a balanced budget, low government debt, and a positive balance of trade. The main risk is the high development volume in the real estate sector. The credit market remains strong.

We consider it a strong result that the number of customers is growing: the bank’s customer number increased by 6,000 during the quarter and the number of active pension clients by 1,200. A study conducted by Dive affirmed that the quality of LHV’s service is very high and Euromoney magazine named LHV’s private banking service the best in Estonia.

As to new products, we introduced two new loans: a Health and Beauty Loan and a Home Furnishing Loan. We helped with the market launch of mTasku, a payment solution developed by Telia.
Q1 included the opening of LHV Bank’s United Kingdom branch. The objective of the branch is developing financial intermediaries business line.
In March, we announced the establishment of a new Pillar 2 pension fund that invests into Estonia. Provided suitable investments exist, the fund will actively invest up to 100% of its assets into Estonian stocks, bonds, real estate and other funds.

The group’s consolidated Q1 profit of EUR 4.3 million was influenced by income tax amounting to EUR 2.0 million and greater impairments occasioned by the adoption of the IFRS standard’s impairment model. The payment of dividends by LHV Varahaldus to LHV Group incurred income tax expense of EUR 1.1 million and the income tax expense on the LHV Bank dividend amounted to EUR 0.8 million.

In February, for the first time, we released a long-term, five-year financial forecast in addition to this year’s financial plan. LHV continues to be a rapidly growing company, and to support the growth, we increased LHV Bank’s share capital by EUR 10 million within the group.

The bank’s consolidated profit was EUR 3.6 million in Q1. The first quarter was characterized by the fact that customers remained highly active and growth in loans and deposits. The total number of the bank’s customers approached 140,000.
The bank’s loan portfolio grew by EUR 34 million in Q1. The increase in Q1 loan impairment costs to EUR 0.9 million is largely related to the changeover to IFRS 9 in early 2018.
The profit of LHV Varahaldus was EUR 0.7 million in Q1, being influenced by the income tax expense on payment of dividends.
The Lithuanian business unit Mokilizingas posted a profit of EUR 0.2 million in Q1, which is EUR 1.1 million less than in the last quarter of 2017. The net loan portfolio increased by EUR 10 million during the quarter, standing at EUR 60 million by the end of the quarter. The portfolio’s credit quality remains stable.

Late in the first quarter, we disclosed an offer made by AS Inbank to acquire the shares in "UAB Mokilizingas". By now we have accepted this offer. The value of the shares held by LHV amount to EUR 7.5 million. The sale of our share will earn AS LHV Group an extraordinary profit of EUR 3 million, thus we plan to review our Financial plan for 2018. We will disclose the renewed Financial plan on 17 May."

AS LHV Group interim report 1st quarter of 2018
AS LHV Group Presentation to Investors April 2018