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AS LHV Pank Consolidated Annual Report 2018

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AS LHV Pank Consolidated Annual Report 2018 AS LHV Pank Consolidated Annual Report 2018 (Translation of the Estonian original) 2/113 Consolidated Annual Report 01.01.2018 – 31.12.2018 Legal name AS LHV Pank Commercial Registry no. 10539549 Legal address Tartu mnt. 2, 10145 Tallinn Phone (372) 6800400 Fax (372) 6800410 E-mail [email protected] Main activities Banking Security brokerage Financial advisory Finance lease and other lending Management Board Erki Kilu (Chairman) Andres Kitter Indrek Nuume Jüri Heero Meelis Paakspuu Martti Singi Kadri Kiisel Supervisory Board Madis Toomsalu Rain Lõhmus Andres Viisemann Tiina Mõis Raivo Hein Heldur Meerits Auditor Auditors’ legal name AS PricewaterhouseCoopers Auditors’ Commercial Registry no. 10142876 Auditors’ legal address Pärnu mnt.15, 10141 Tallinn, Estonia AS LHV PANK TARTU MNT 2, 10145 TALLINN 6 802 670 [email protected] LHV.EE 3/113 Contents Management report ..................................................................................................................................................................................... 4 Financial results .......................................................................................................................................................................................... 6 Management and compensation policy ...................................................................................................................................................... 9 Business environment............................................................................................................................................................................... 11 CONSOLIDATED FINANCIAL STATEMENTS ........................................................................................................................................... 14 Consolidated statement of profit or loss and other comprehensive income ......................................................................................... 14 Consolidated statement of financial position .......................................................................................................................................... 15 Consolidated statement of cash flows ..................................................................................................................................................... 16 Consolidated statement of changes in equity ......................................................................................................................................... 17 Notes to the consolidated financial statements...................................................................................................................................... 18 NOTE 1 General information .................................................................................................................................................................... 18 NOTE 2 Summary of significant accounting policies ............................................................................................................................. 18 NOTE 3 Risk management ....................................................................................................................................................................... 35 NOTE 4 Significant management estimates and assumptions .............................................................................................................. 85 NOTE 5 Net interest income ..................................................................................................................................................................... 85 NOTE 6 Net fee and commission income ................................................................................................................................................ 86 NOTE 7 Operating expenses .................................................................................................................................................................... 86 NOTE 8 Due from central bank, credit institutions and investment companies ................................................................................... 87 NOTE 9a Available-for-sale financial assets ........................................................................................................................................... 87 NOTE 9b Equity and debt instruments at fair value through other comprehensive income................................................................ 88 NOTE 10 Financial assets and liabilities at fair value through profit or loss ........................................................................................ 88 NOTE 11 Loans and advances to customers .......................................................................................................................................... 89 NOTE 12 Receivables from customers .................................................................................................................................................... 91 NOTE 13 Other assets .............................................................................................................................................................................. 91 NOTE 14 Tangible and intangible assets ................................................................................................................................................ 91 NOTE 15 Deposits from customers and loans received ......................................................................................................................... 92 NOTE 16 Accounts payable and other liabilities..................................................................................................................................... 92 NOTE 17 Operating lease ......................................................................................................................................................................... 93 NOTE 18 Subordinated debts ................................................................................................................................................................... 93 NOTE 19 Shareholders’ equity in the public limited company............................................................................................................... 94 NOTE 20 Assets under management ....................................................................................................................................................... 95 NOTE 21 Contingent assets and liabilities .............................................................................................................................................. 95 NOTE 22 Transactions with related parties ............................................................................................................................................. 96 NOTE 23 Subsidiary .................................................................................................................................................................................. 97 NOTE 24 Separate financial statements of parent company .................................................................................................................. 99 Signatures of the Management Board to the consolidated annual report .......................................................................................... 103 Independent auditor’s report ................................................................................................................................................................. 104 Proposal for profit distribution .............................................................................................................................................................. 111 Signatures of the Supervisory Board to the annual report .................................................................................................................. 112 Allocation of income according to EMTA classificators ...................................................................................................................... 113 AS LHV PANK TARTU MNT 2, 10145 TALLINN 6 802 670 [email protected] LHV.EE 4/113 Management report LHV’s mission is to help raise Estonian capital. LHV’s vision is were fully adopted at the beginning of the year in accordance with focused on Estonia where people and businesses dare to think IFRS 9. This had a minor impact on the impairment of loans. The big, engage in enterprise and invest in the future. LHV values: bank was subjected to the advance income tax liability in April, simplicity, support, performance. charged directly to expenses. Net profit for the year amounted to EUR 18.4 million. LHV Bank (hereinafter the Bank) is the largest domestic bank. The Bank focuses on active and independent customers with an The Financial Supervision Authority submitted its annual entrepreneurial mind-set. For private customers, the Bank mainly supervisory assessment and the additional own funds offers services related to the safeguarding and growing of requirement in the capital adequacy calculations. Changes were savings. For business customers, the Bank offers flexible and introduced in both the composition of and the requirements for appropriate financing, along with the management of daily additional own funds, compared to last year. Considering the financial affairs. The Bank's products and services are simple, larger systemic risk buffer imposed on
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