Assets Under Management AUM

Aktia Bank Plc Interim Report January-March 2022:

Aktia Bank Plc
Stock Exchange press release
May 11, 2022 at 8:00 a.m.

Aktia Bank Plc Interim report from January to March 2022: Market uncertainty reduced comparable operating profit

The quarter inot short

  • The strong underlying business performance continued.
  • Net interest income continued to increase supported by strong business client activity.
  • Market uncertainty resulted in cautious withdrawals from private clients and sales of interest rate hedges rose sharply.
  • Negative unrealized changes in the life insurance company’s investment portfolio weighed on the life insurance net result due to the impact of rapidly rising interest rates and lower market caused by the war of Russian aggression.

Outlook 2022 (unchanged)

The comparable operating profit in 2022 should be slightly higher than in 2021, provided that the market development is favorable and the social situation remains stable. Aktia Group’s result for 2022 depends on the impact of uncertainty caused by Russia’s war of aggression on the market.

  • Net interest income growth is expected to remain strong, particularly in the corporate segment, due to active pricing and expected volume growth. Financing costs are expected to increase slightly as interest rates rise.
  • Growth in fee income should continue. Growth is supported by the completion of the integration of Taaleri’s wealth management activities.
  • The development of net income from life insurance depends on the development of market values. Due to rising interest rates and market uncertainty, negative unrealized value changes were recorded in the first quarter of the year, but positive value changes of the real estate portfolio are expected for the rest of the year. The actuarially calculated result should improve compared to last year.
  • Taking into account the impact of inflation, expenses are expected to be approximately in line with comparable operating expenses in 2021.
  • Provisions for potential credit losses are expected to remain at a moderate level while Aktia’s liquidity and capital adequacy remain stable.

Dividend

In accordance with the proposal of the board of directors, the 2022 annual general meeting of Aktia Bank Plc has decided the payment of a dividend of 0.56 euro per share for the accounting period from January 1 to December 31, 2021. The dividend was paid on April 19, 2022. .

Mikko Ayub, CEO:

I’m sure we all expected a more normal year after two years of the coronavirus pandemic, but expectations changed very quickly at the start of the year. The Russian war of aggression against Ukraine and the human suffering of civilians on the battlefield shocked us all. The need for humanitarian aid in Ukraine has increased as fighting intensified, and Aktia, along with its staff, has supported UNICEF’s valuable work for Ukrainian children through a donation.

The war will also have a huge impact on the economy and society, and the consequences will certainly be visible in the distant future. Today, a reliable banking sector, and Aktia is part of it, is an important part of the proper functioning of society and the economic system. Aktia is a stable and conservative wealth management bank operating in Finland and has no operations in Russia, Belarus or Ukraine. However, rising inflation and rising energy and commodity prices are consequences with obvious negative effects on the Finnish economy.

So far, the effects of the war on Aktia’s affairs have been moderate. For our part, we follow all the sanctions imposed on Russia. In March, we decided to suspend all outgoing and incoming payments to and from Russia and Belarus for the time being. The decision was based on Aktia’s own risk assessment. There are also no significant direct risks related to the crisis area in our credit portfolio. In wealth management, the risks are also manageable – Aktia’s equity capital does not contain direct investments in Russia, and Aktia has halted new sales of funds from other players investing primarily in Russia.

Market downturn lowered comparable operating profit

Aktia’s comparable operating profit in the first quarter of 2022 was €13.3 million, which was lower than last year’s reference period comparable operating profit of €16.9 million. euros. The main reason for lower earnings developments was the weakened operating environment: even before the war in Ukraine, the market outlook was clouded by inflation fears and expectations of higher interest rates . The market decline following the Russian attack and the impact of rapidly rising interest rates on bond investments resulted in negative unrealized value changes in the insurance company’s investment portfolio. life, which weighed on the life insurance net result at EUR 1.8 (Q1/2021; 9.9) million in the first quarter of the year. The life insurance business itself, however, continued its positive development – ​​written premiums increased by 18% since last year and sales of investment-linked savings and risk insurance are remained vigorous.

In the other income categories, the good development continued despite the uncertain operating environment, and the comparable income amounted to EUR 58.8 (57.9) million. Net interest income amounted to 25.1 (21.3) million euros, a marked increase compared to the reference period. The strong growth is once again mainly due to the excellent development of business customer activity. The good demand also shows that companies want to secure their own funding and liquidity in the uncertain situation. Our customers have also appreciated our improved offer. They were particularly satisfied with the investment financing offer. The exceptional situation of the business of individuals resulted in the caution of customers. According to our strategy, we do not target the growth of our market share, but, in accordance with our conservative credit policy, we target the growth of the customer segments that are dear to us, those who wish to increase their wealth. Sales of interest rate hedges increased significantly during the beginning of the year.

Net fee and commission income in the first quarter amounted to 31.3 (25.0) million euros, which, given the nervous market environment, is only a moderate decrease compared to the Q4/2021 of 33.7 million euros and mainly the result of a decline in market values. Assets under management have decreased by around €1 billion since the beginning of the year and stood at €14.4 billion at the end of the quarter. Market values ​​decreased by around €840 million and net subscriptions were around -€210 million, mainly due to redemptions by international institutional investors of our emerging funds (EMD). However, the continued excellent development of the relative performance of Aktia’s EMD funds creates good conditions for the assets to return as the market situation improves. Aktia’s Private Banking sales also continued to develop well.

Comparative expenses for the quarter remained at the same level as at the beginning of the year, reaching 45.9 million euros (Q4 2021; 44.9), which is a good level considering that that we made a reservation of 4.6 million euros in the first quarter for the stability commission of the Financial Stability Authority. The corresponding figure for last year in the first quarter was 2.8 million euros. Personnel costs were below the level of the third and fourth quarters of last year and provisions for credit losses were very moderate.

Key figures

(EUR million) 1T/2022 1T/2021 % 2021 4Q/2021 % 3Q/2021 2Q/2021
Net interest income 25.1 21.3 18% 96.2 24.1 4% 23.1 27.7
Net commissions 31.3 25.0 25% 124.0 33.7 -7% 33.5 31.7
Net life insurance income 1.8 9.9 -82% 37.7 7.6 -76% 9.7 10.5
Total operating result 59.0 57.9 2% 263.8 65.5 -ten% 67.1 73.3
Operating Expenses -45.9 -38.7 19% -174.4 -45.2 -2% -41.6 -48.8
Impairment of credits and other commitments 0.3 -2.2 -4.5 0.1 141% -1.0 -1.4
Operating profit 13.5 16.9 20% 84.6 20.3 33% 24.4 23.0
Comparable operating profit1 58.8 57.9 2% 263.2 65.5 -ten% 66.5 73.3
Comparable operating expenses1 -45.9 -38.7 19% -171.1 -44.9 -2% -41.6 -45.9
Comparable operating result1 13.3 16.9 21% 87.4 20.7 35% 23.8 26.0
Cost/revenue ratio 0.78 0.67 16% 0.66 0.69 13% 0.62 0.67
Comparable cost/income ratio1 0.78 0.67 16% 0.65 0.69 14% 0.63 0.63
Earnings per share (EPS), EUR 0.15 0.20 -26% 0.95 0.23 -34% 0.28 0.24
Comparable earnings per share (EPS), EUR1 0.15 0.20 -25% 0.98 0.23 -36% 0.27 0.28
Return on equity (ROE), % 6.5 8.6 -24% 10.0 9.5 -31% 11.4 10.5
Comparable return on equity (ROE), %1 6.5 8.6 -25% 10.3 9.6 -33% 11.2 12.3
Common Equity Tier 1 (CET1) ratio, %2 10.6 13.8 -23% 11.2 11.2 -5% 10.4 10.8

1) Alternative performance indicators
2) At the end of the period

Results conference webcast

A live webcast of the results event will take place on May 11, 2022 at 10:30 a.m. CEO Mikko Ayub and CFO Outi Henriksson will present the results. The event takes place in English and can be seen live on https://aktia.videosync.fi/2022-q1-results. A recording of the webcast will be available on www.aktia.com after the event.

AKTIA BANK PLC

For more information:
Outi Henriksson, CFO, tel. +358 10 247 6236
Lotta Borgström, Director, Investor Relations and Communications, tel. +358 10 247 6838, lotta.borgstrom (at) aktia.fi

Distribution:
Nasdaq Helsinki Ltd
Central Media
www.aktia.com

Aktia is a Finnish asset manager, bank and life insurance company that has been creating wealth and well-being from generation to generation for 200 years. We serve our customers across digital channels and face-to-face from our offices in Helsinki, Turku, Tampere, Vaasa and Oulu regions. Our award-winning asset management company sells investment funds internationally. We employ approximately 900 people in Finland. from Aktia assets under management (At M) on December 31, 2021 amounted to EUR 15.5 billion, and the balance sheet total amounted to EUR 11.7 billion. from Aktia the shares are listed on Nasdaq Helsinki Ltd (AKTIA). aktia.com.