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Published: 2022-02-15 07:00:00 CET
LHV Group
Company Announcement

LHV Group financial plan for 2022 and the five-year financial forecast

According to LHV’s financial plan for 2022, AS LHV Group’s consolidated revenues will increase by 19% this year to EUR 166.8 million, expenses by 29% to EUR 83.9 million, and net profit by 2% to EUR 61.5 million. 2022 will be a year of investments for LHV – while the company is forecasting significant growth in business volumes and revenues, more will be spent on growing the international business in the future.

Key indicators FF2022 2021
Profit before taxes 73.7 71.2 +3%
Net profit 61.5 60.3 +2%
Loans 3097 2677 +16%
Deposits 6109 5808 +5%
Volume of funds 1389 1349 +3%
Number of payments related to financial intermediaries (million) 38 27 +37%
Cost/income ratio 50.3% 46.4% +3.8 pp
ROE (before taxes; owners’ share) 19.4% 26.0% -6.5 pp
ROE (net profit; owners’ share) 16.7% 22.0% -5.3 pp
Capital adequacy 20.5% 19.0% +1.5 pp

* Calculated on the basis of average end-of-month equity balances
Business volumes have been presented in millions of euros

According to the financial plan, the Group’s consolidated loans will increase by EUR 420 million to EUR 3.1 billion (+16%) this year, with home loans increasing by EUR 183 million and corporate banking loans by EUR 170 million.

In terms of deposits, the financial plan foresees an increase of EUR 302 million to EUR 6.11 billion (+5%). Deposits from retail clients account for most of the increase, while deposits from financial intermediaries are planned to stabilise at EUR 2 billion.

The volume of funds managed by LHV is set to grow this year, with the company forecasting an increase of EUR 40 million to EUR 1.39 billion (+3%). At the same time, the number of active clients in the II pension pillar will decrease by another 6% as a result of the pension reform. The company’s profitability is negatively impacted by the non-monetary additional charges related to clients leaving the II pillar. No performance fees are expected to be earned by pension funds in 2022.

The business volumes of LHV Kindlustus are increasing, with gross insurance premiums growing to EUR 11.5 million (+71%) in 2022. Launched last year, the company contributes to growing the business further, but the financial plan does not yet indicate a profit for the year.

LHV Group’s return on equity (ROE) ratio will remain at 16.7% in 2022 and the company forecasts a cost/income ratio of 50.3%. Costs will be boosted by investments of EUR 10 million to obtain a banking licence for LHV UK Limited and to start up the business, as well as higher staff costs for group as a whole.

Comment by Madis Toomsalu, the CEO of LHV Group:
"For LHV, 2022 is the year of investments. We continue to grow well in the Estonian market, and we aim to become the largest bank in ten years and the second largest in five years. With a strong performance in Estonia, we can make a leap forward in our international business. We hope to obtain a banking licence in the UK by the end of the year, and in parallel we are working on setting up the organisation. This means that in the future, subject to the regulator’s approval, LHV Group will own two separate banks.

In Estonia, we focus on home and business loans. We would like to serve clients all over Estonia, and we will open an office in Pärnu. Separately, we attach particular importance to being the market leader in investment services. Strong growth translates into continued growth of the client base, as well as higher revenues and loan volumes. The increase in costs is due to investments in servicing financial intermediaries, risk control systems, and introducing the IRB approach in lending. In addition, we have taken into account the fact that the best employer pays fair remuneration to best employees.

In the event of pension funds, we focus on rates of return and implement an investment strategy focused on direct investments that is distinctive in our market. In the field of insurance, we want to grow the business by handling claims with the highest client satisfaction.

Internationally, we continue to be the most capable partner for financial intermediaries. Commercially, we will focus on the client base growth, new products and client segments, develop payment services, and create a new bank in the UK. At the same time, we will continue to recruit and staff development units in Leeds.

We strive to ensure that LHV has the strongest possible offering, the best service, and dedicated people to ensure growth. In the longer term, our activities will result in a doubling of the loan portfolio in five years, a 20% return on equity, and a 2.5-fold increase in profits."


Financial forecast for 2022–2026

AS LHV Group also discloses its financial forecast for the next five years. According to the forecast, the Group’s revenues will increase by 17% over the next five years on average, while expenses will increase by 12% per year, on average. Based on the forecast, the consolidated net profit of LHV will be nearly EUR 155.8 million by 2026, considering the average annual growth of 21%.

Key indicators FF2022 FP2023 FP2024 FP2025 FP2026
Profit before taxes 73.7 92.8 114.1 147.9 178.4
Net profit 61.5 79.0 98.2 128.5 155.8
Loans 3097 3674 4296 4905 5520
Deposits 6109 6841 7504 8301 8912
Volume of funds 1389 1522 1675 1793 1935
Number of payments related to financial intermediaries (million) 38 59 80 101 132
Cost/income ratio 50.3% 47.2% 44.3% 39.5% 36.9%
ROE (before taxes; owners’ share) 19.4% 20.2% 20.8% 22.3% 22.3%
ROE (net profit; owners’ share) 16.7% 17.8% 18.5% 20.1% 20.2%
Capital adequacy 20,5% 19,7% 19,4% 19,0% 19,8%

* Calculated on the basis of average end-of-month equity balances
Business volumes have been presented in millions of euros

The company forecasts organic growth in all key business volumes over the next five years. Compared to the end of 2021, the Group’s consolidated loan portfolio will double in five years to EUR 5.52 billion, while deposits will increase 1.5 times to EUR 8.91 billion. The company sees the volume of LHV managed funds returning to its previous peak in 2024 and growing to EUR 1.94 billion in 2026.

According to the five-year forecast, the growth of revenues has been planned to be significantly faster than the growth of costs. In terms of costs, one of the determining factors is the increase in labour costs. By 2026, LHV Group expects the cost/income ratio to fall to 36.9%. Return on equity based on net profit attributable to shareholders is forecast to reach the target of 20% in 2025.

The forecast is based on the assumption that the business and economic environment could change significantly over the next five years. The five-year forecast is based on the assumptions of a recovery from the health crisis, an increase in business volumes, a future increase in base interest rates, and the 6-month Euribor turning positive from mid-2025, as well as the continuation of the dividend policy of the company. The five-year financial forecast of Varahaldus takes into account the potential earning of performance fees from 2023 onwards. The revenue generated by LHV UK Limited as well as the full amount of its’ costs have not been included in the forecast, which assumes the availability of a banking licence.

LHV Group will amend the financial plan for 2022 if it becomes likely that the planned net profit will differ by more than 10% from the financial plan. The company will update the five-year plan at the beginning of 2023 or, if necessary, together with the changes made to the financial plan of 2022.


To introduce the financial plan, LHV will organise an investor meeting on 15 February at 9.00 via Zoom, the online seminar environment. Investors and interested parties are invited to register at: https://lhvbank.zoom.us/webinar/register/WN__jnZ8h-kQTe_uHe0nFzFgA.

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 670 people. As of January, LHV’s banking services are being used by 327,000 clients, the pension funds managed by LHV have 135,000 active clients, and LHV Kindlustus protects a total of 145,000 clients. LHV’s UK branch offers banking infrastructure to 180 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: priit.rum@lhv.ee 


LHV Group Financial Plan 2022 EN.pdf