Hello to everyone listening in. My name is Mihkel Torim.

Together with me I have also LHV Group's CFO, Mr. Meelis Paakspuu --

Hello. -- and

we are here presenting LHV Group's first quarter '26 results and happy to take any questions you have afterwards. To summarize the first quarter, net profit was in line with the financial plan that we presented a while back, altogether we had roughly €20 million net profit.

Capital position and liquidity remains very strong for the bank. All the ratios are exceeding internal targets with meaningful buffers.

On our subsidiaries, LHV Pank, which is the largest subsidiary that we have, we have reached half a million customers in Estonia, and year over year, we also had a loan portfolio growth of 11%. LHV Bank in UK loan portfolio increased almost 80% year over year, reaching 876 million, we are quite close to the billion-euro mark and plan to reach it within this year.

Then on the asset management side, the first quarter was delivered as planned, and also both of our pension funds, both in second and third pillar, were the best-performing on the market. In LHV Kindlustus, we had a difficult quarter, which was impacted quite a lot by both geopolitical events, which affected the travel part of the business, and also weather conditions, which led up to higher claims and also higher-sized claims, overall, the net result was quite a bit behind the plans that we had.

Altogether, portfolio growth, deposit growth was strong when it comes to net income and net profit, we are in the plan. Are we content with the result?

Of course not. We also expect that for the foreseeable next quarters, the results will also start gradually improving as was planned.

Yes, we are pretty much moving according to plan. When we compare the first quarter to the last one, maybe some things to highlight, net interest income was pretty much stable, interest income is starting to increase, interest costs are still a bit higher, but are expected to improve, and when it comes to net fee and commission income, fourth quarter is usually strong seasonally, first quarter is not that strong, but it's within our plan, and also in the fourth quarter, we recognized the success fee of the asset management, which had a meaningful impact, and which is not carried over to the first quarter.

Then, yes, on the operating expenses side, it was 7% increase quarter on quarter, but there was also a significant increase in one-off personnel-related costs and some outsourced tech activities to advisory services, I would say that approximately €1.1 million was related to the personnel, and some hundreds of thousands on top of that when it comes to extra outsourced costs. On the impairment side, it was a okay quarter, altogether the number was €1.3 million, and out of that, one was related to one specific provision in UK.

Volumes are growing year over year, €120 million worth of loan growth. Assets under management in our pension funds have increased as well, and deposits have declined over the quarter, which is also according to our plan.

Now if we compare the results to first quarter in '25, we still see small decline in the net interest income due to margin compression, but we see that the pressure is easing, and as mentioned, interest income on back of already larger portfolio is starting to pick up as well. On the expenses side, yes, the increase has been 21%, and some of it is one-off, and then some of it is usual growth in terms of investments and personnel.

Strong result in terms of portfolio quality, impairments have decreased quite a bit, and yes, as mentioned, the business volumes have grown also quite significantly. Just a short review of the net profit bridge year over year just to give a bit more flavor in terms of how different elements have impacted the results comparing to the first quarter of '25.

As you can see, the interest income is picking up, there still has been pressure in terms of interest expense, fees have increased a bit, and then when it comes to other income expenses, what we basically see here is that in first quarter of '25 there was one-off income from bond portfolio realization, which was quite significant, and also this line represents the fact that our insurance business was loss-making in first quarter of this year while it was generating profit a year ago. On the personnel expenses, there is approximately €1.1 million worth of one-offs in this quarter, and on the other operation expenses side, we have, as mentioned already in the previous months, we have made reserves approximately €3 million, and we don't expect them to continue into the second quarter.

Then impairments have been sort of a positive driver, they have improved the result to some degree. Overall, that's the bridge that has sort of led us to the €20 million outcome.

Then I will give word over to Meelis, who will explain the balance sheet and financing situation that we have.

Starting from the balance sheet side, that's it is notable that the balance sheet over the years have grown, but then when comparing with like end of the 2025, the balance sheet has slightly decreased. The reason for the decrease is coming from financial intermediaries deposits, that's there is €250 million smaller deposit base in end of March compared to like end of December.

This there is clear volatility in this this sector. We are not using them like a funding source, it is like more about how much liquidity we need to keep against them, that so this €250 million is just matter of numbers, not like essence of the positions.

That the deposits are in financial intermediaries side very volatile. They are they have always been.

The maximum amount in LHV's balance sheet has been 2.6 billion in one year. Currently we are talking about 1.25 billion euros, that so this gives an indication that what kind of volumes we are we are talking.

Then moving over to the capital side, that's LHV is well-capitalized. We have quite a bit of buffers on top of our own internal risk appetite level, that's and this our own internal risk appetite levels already include our buffers compared to like regulators.

The most important line here is capital adequacy CET1, that where we are ended up having 16.18% as of end of March, and this number doesn't include first-month profits and doesn't include also share options what are going to be exercised within within couple of weeks. That so both of them are bringing back something like 25 altogether something like €25 million of capital, capitalization is even actually even better than the picture shows.

That slightly similar discussion also about liquidity, that liquidity is measured mostly through LCR and NSFR. Both have regulatory limits of 100, our internal risk limits are at 120 and 110.

Our LCR ratio is 192%, and this incorporates also fact that all financial intermediaries are covered 100% with liquidity effectively mathematically at 1% 100% ratio. That taking this these ones out, our LCR ratio is close to 300%, what is way above market average of 150, 160.

That and with NSFR side, what is shows the stability of the funding, there as well 150 is a very strong numbers, that market average is maybe 10 percentage points below that. Looking loan portfolio quality on group level, the portfolio is strong, that we had couple of cases what we placed into stage three, what we define as non-performing loans, that year ago, and and this portfolio has been step-by-step reduced.

Now it is at 1.6% level, but is still high for us. We have used to be below 1% levels, but same time compared to the European average, then it is almost twice lower than European average.

This is not important. Important is how much collateral we have regarding this NPLs, and the table next to the graph is showing that there's collateral shortfall for stage three loans is just 4.9 million, that's based on very conservative view of the collaterals.

That there is not quite large position of loans what is not provisioned, that it is very tiny amounts. Looking at the group financial results compared to the financial plan, that's nothing to say, that business volumes are in line, that loans are just exactly at at the at this financial plan level, deposits are slightly ahead, assets under management again exactly in line.

Positive thing is also the number of customers, that when in Estonia we have 500,000 customers and on group level 700,000, that so year-on-year growth has been 85,000, that so very sizable number. Looking at net profit side, that even taking into account this one-offs and also much harder first quarter than usual for insurance business, that group is still in line with with financial plan, slightly ahead, that so everything is in positive side here.

Covering also LHV Pank, as mentioned earlier, in Q1 we reached 500,000 customers. We are dealing with efficiency gains from loan margins and deposits, that also mobile app redesign was launched, that here the main mark is actually this that this is not like as an one large step, but it is now continuing to be evolving with small steps further as well, that so there is every month there is something new in this this app, that but it is constantly evolving.

In addition to that, we have been for more than a year, maybe even one and a half years, dealt with our core platform migration, and now we plan to complete it it in May this year, that so we are we're very very close to getting the last systems into the cloud, that after that we could say that if something happens with Estonian internet setup or LHV main buildings, that or Telia setups, then LHV is still fully operational from from the distance as well, that giving us much better base for doing quicker developments, one item, and also ability to to change the scale of the operations, that if there is then higher volume coming in, we know that there is a certain peak moments, and we are able to within seconds add additional resources. As a positive thing, we have been recognized as the best employer in the financial sector in Estonia, that and very nice award to receive.

Looking at the deposit side, year-on-year growth 9%, Estonian market 5%, have been able to gain market share. That step-by-step we are looking that also that how now deposit structure is changing, and now when year ago there was 29% of our deposit base were term deposits and as of now it is 25%, it is step-by-step moving in right direction.

On lending side, loan portfolio grew by 11%, Estonian market by 8%. The loan portfolio growth came mostly from the retail side, mortgages, and less from the corporate side.

In corporate side in Q1, we we knew, and it was in in our plans, that there was a repayment of €100 million large single corporate exposure, and this also shows that the portfolio didn't increase more or less due to that. That net interest income, we are seeing that improvement is already there, that it is we see that the effect is Euribor effect is kicking in, that our asset sides are pricing to the higher levels, while liability sides are not moving as fast because they are still still on the earlier higher interest rate levels.

That so not much change in the liability side, but certainly on the asset sides. Fee income side, 9% growth year-by-year, very good, when looking at quarter-to-quarter, then first quarter is always lower, that so no no surprises, nothing nothing strange here.

Bank all in all, we are very much in in line with the plans. That and when we are looking at total numbers, then here is one item what needs to be stated out, that when on paper it seems that LHV Bank is behind the plans, but then there is one row what is other income, and in this other income row there is included also internal swap what is made with LHV Bank, and this this result is going to be eliminated on the when we're putting together the group level.

Same time on UK level, it is treated as a hedge accounting, that it is not affecting their their results, that so effectively when we are looking at UK LHV Bank results, then we should add this €2.3 million to their results, then it is it is comparable with the last years. That and now giving it back over to Mihkel, who is covering UK Bank, asset management, and insurance.

Thank you, Meelis. To summarize the first-quarter results of the bank we are running in the United Kingdom, overall, net income has slightly increased, there was a decline in net profit, but having said that, the nominal values are still quite low, and first quarter was affected by one specific provision, so that's not that significant impact.

Overall loan portfolio growth was almost 80%, as mentioned before, and at the same time, the deposits have been also growing at a similar pace, and return on equity is still very low to our standards or expectations, but we do expect that together with the volume growth of the lending business, we expect to see significant improvement of the results, especially in the second half of the year. When it comes to business development, we are happy with the fact that we have received regulatory approvals both for consumer credit provision and also individual savings account products, which enables us to do further product development in those directions.

Looking at the full year and the fourth four quarters before this one, there's approximately 80% growth in loans, almost approximately 74% growth in deposits, and as mentioned, the best part is that we can see quite a big increase in terms of our own direct deposits from our direct clients, we have reached 16.5% of the total deposits in that regard, and also our direct retail customer number has grown from 5,000 at the end of last year to 7,140 by the end of first quarter. We have a good sense of how to attract retail customers and also retail deposits, and this gives us also better alignment in terms of product development on the sort of savings side.

Yes, in terms of net interest income, looking at the full-year development, we have almost doubled the amount of net interest income we are generating on back of our SME loan portfolio, which is quite significant, and as said, we are slowly gaining the critical mass in that business that enables us to cover more of the costs and also start to increase the profitability of the UK bank on back of this increasingly significant business. When it comes to fee and commission income, there has been, yeah, sort of on yearly basis, quite good development, having said that, there is also what affects that part is also the crypto values, which translate into the fee income that we are receiving, which are lower these days compared to the last year.

Expenses overall are pretty much in line with the plan, marginally above, but there are no significant deviations, they are quite marginal. Also when it comes to customer support, we have agentic AI proof of concept, which was successfully tested in first quarter, and as I mentioned before, expectations when it comes to the retail and sort of savings product growth, we also expect to roll out a cost-efficient customer support that will then support the retail banking growth without significant overhead that will be carried with that growth.

Looking at the outcome compared to the financial plan, yes, we have significant increase and also we have exceeded the financial plan in terms of net interest income on back of our increased lending book, while other income lines are sort of at the level that we expected or slightly below, but with quite small effect on the total outcome. Then as mentioned, when we look at earnings before impairment, it was also ahead of the plan, but there was one specific impairment in March, and that brought the net profit line a little bit below the financial plan.

This is part of the business as we are growing the loan book, and there is nothing significant really to bring out regarding that specific loan. Then regarding asset management, asset management has been performing exactly as planned.

The fact that there was a loss in first quarter is just related to the fact that they have paid dividends to the group, which has also been by now paid out to the group shareholders. Other than that, the funds' performance has been best of the market, also in first quarter, which was overall tough quarter for the market, but still beating the benchmark.

Then also in first quarter, there are signs that the number of customers is stabilizing as well, looking forward to see whether we can get the number up in the second quarter and quarters following that. At the same time, assets under management has steadily increased throughout the year and also within the first quarter.

Yes, as mentioned, the results are in plan, a little bit exceeding the first-quarter budget as well. Then regarding insurance, so as stated already in the beginning, it was a tough quarter, lots more claims than planned, and also the claims were higher than average.

Overall, the net loss for the quarter was 700,000, while we were expecting in the first quarter approximately similar number of profit. The market has also been quite competitive, but this I would say that this effect at the moment, it's an overall situation in the market, and it's not specific to LHV's position in the insurance market or market segments per se.

Overall, the premiums that we have written out has over the course of the year compared to the first quarter '25 increased. The volumes are up, they have been steady compared to the fourth quarter, and as said, the amount of losses in first quarter has been the highest.

Overall, the volumes were sort of pretty much in according to the plan, but the total outcome and the net loss was not what we expected. We see that together with the market, the results will gradually start picking up, but it's definitely going to be difficult to achieve insurance's own targets in terms of profit going forward, but otherwise, yeah, we expect them to gradually increase and improve to the level that they were supposed to be.

Overall summary being that net profit was in line with the financial plan. Obviously, year over year, the decline has been significant, but we also see that we are now sort of witnessing positive trends, and also, most importantly, the quarter was also planned exactly in the way that it has worked out.

As mentioned, there were some one-offs, some provisions that affected the first quarter. Some of them were planned, some of them not.

Liquidity, capital position is very strong. Customer number is increasing.

Volume is increasing, both in the bank in Estonia and in UK. Asset management is doing well, according to plan, and altogether, the insurance has faced a difficult quarter.

We expect them to obviously recover from this situation hopefully soon. That's all from us, and we are open to take any questions you might have.

I mentioned it already that the amount of the loan was €100 million, and rest is we can't comment, because it is a specific client, and if somebody wants, there is a possibilities to calculate it backwards from our report.

One-off operational expenses altogether, let's say, first my question is that what is one-offs, that there are always some kind of items what we can say that these are one-offs. That but here if I am looking at the personnel-related one-offs and then extra items what we took from the advisory side, that so we are talking here almost €1.5 million.

If the credit risk remains low, and this is a key component, that then, yes, then our results will be much much stronger.

The rationale comes from this that we have agreed internally that client relationship is handled from UK side. This means that all the risks what is related to the clients, all the pricing what is related with the client contracts is set by UK team.

That same time, as to make euro payments in real time, then you need to have access to euro accounts, and Estonian side, LHV Pank in Estonia, is the one who is able to offer this for this clients. What means that the clients have in most cases two banking agreements, one with Estonian side, one with UK side, but all the agreements, discussions with the clients, and risk-taking regarding the clients is handled by the UK team.

This also means that all the income what is coming from this activity, all the profit what is coming from this activity is belonged to the UK. Estonian side is covering the costs, but rest is shifted to UK by internal agreements.

There are several plans that but we have been already targeting quite a bit of these ones, that changing the ship is not happening within one or two days, that we started making changes inside organization more than a year ago, that and when looking at the personnel cost growth and within 2025 already the growth was close to zero, but was probably around 1% in total, that we continue with this kind of approaches, that our cost side is quite a bit flat, and same time, business is growing. That so you're putting this two items together, that's the efficiency gain is coming from it.

Also just to add, given that Erki Kilu has joined the bank only starting April this year, he has had three weeks now in the position, definitely he will have a review of the structure and how we work, and as it was also presented when the change was announced, I think we're looking also for further ways of collaboration between two banks, just trying to find ways how we can streamline the business, but at the same time, it's important that we continue growing the volumes and the business as well, because one thing is the personnel cost, which I think it's important that we really stay vigilant and we do everything we can to sort of stay within the plan, that's the whole point, but at the same time, we are doing also quite a lot of investments into tech into the future as well, balancing this out is important.

It is something what we could even state it is covered by the banking secrecy, that's it is a card business and all clients on banking services side have their own contracts. These agreements are customer-based, that but generally what I can say is that if the interest rates are going up, then our share is increasing as well.

Answer is yes, that we have applied. Second one is yes as well.

We hope that we are receiving the license before end of Q2, that but same time, it is a legal procedure that sometimes are taking more time than expected, but we are in the plan.

Presumably, I would say that the beginning of next year. Having said that, Chris, who is CEO of the bank now, who is also coming within the team, I think he's doing a terrific job and has really sort of taken over his role very smoothly, and is doing all the right steps.

Yes, the process is underway, but given usually how lengthy they are, I wouldn't really want to promise anything before the beginning of next year. As said, I would say that the plans, the execution, everything is moving according to the expectations or even, I would say, a bit better, other than that provision in March.

Average loan margin in UK is actually better than in Estonia, that we are talking about 3% to 4% levels there as a margin, that when we are comparing with competitors, it is an effective market, that we are very much in line with the competitors.

Thank you very much for listening in. Thanks for the questions.