What is the expected impact on LHV's equity price and dividend policy following the bond redemption?

The early redemption of the €200 m LHV Group 2030 Tier‑2 subordinated bonds removes a relatively high‑cost, 6‑7 % liability from the balance sheet and will immediately improve LHV’s net interest margin and leverage ratios. With the 30‑day notice already satisfied and the ECB’s consent secured, the market can price the cash‑flow relief as a boost to earnings and, consequently, to the equity’s valuation. In practice we have seen similar redemptions trigger modest upside in the share price – typically 2‑4 % on the news – as analysts upgrade profitability forecasts and adjust the price‑to‑earnings multiple upward. Technically, LHV’s chart is holding above its 50‑day SMA and the recent breakout above the 20‑day resistance (≈ €12.30) creates a short‑term bullish bias; a pull‑back toward the €11.80‑12.00 support could present an entry point for a position targeting a 5‑7 % rally over the next 4‑6 weeks.

From a dividend perspective, the freed‑up cash and the improvement in Tier‑2 capital buffers give the board discretionary room to either raise the payout ratio or initiate a special dividend. However, regulators will scrutinise the post‑redemption capital adequacy, so any dividend increase will likely be modest and tied to continued earnings growth. Investors should monitor LHV’s upcoming Q4 earnings release and any capital‑adequacy disclosures; a confirmed dividend hike would reinforce the price upside, while a cautious stance or a pause would temper expectations. In short, the equity is poised for a short‑to‑medium‑term upside on the redemption news, with an actionable bias toward buying on minor retracements and watching for dividend guidance as the primary catalyst for further price moves.