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Aktia Bank Plc’s Half-Year Report January–June 2021: Record-strong second quarter

·9-min read

Aktia Bank Plc
Stock Exchange Release
5 August 2021 at 8.00 a.m.

Aktia Bank Plc’s Half-Year Report January–June 2021: Record-strong second quarter

The quarter in short

  • The comparable operating profit EUR 26.0 million at an all-time high during the second quarter

  • Strong volume increase in corporate loans and mortgages with continuously low expected credit losses

  • The half-year report includes Taaleri’s wealth management business (May−June)

  • The integration work after the acquisition continues according to plan

  • Very good development in life insurance business

  • The increase in expenses is attributable to the costs related to the acquisition

Outlook 2021 (maintained)

Aktia maintains its previous outlook in which the comparable operating profit for 2021 is expected to be considerably higher than during 2020.

  • The increase in net interest income is expected to continue owing to strong volume increase and reasonable financing expenses

  • The increase in commission income from fund and asset management is expected to be higher than during the first half year due to the acquisition of Taaleri’s wealth management operations

  • Expenses are expected to be higher than during 2020 considering the increased staff expenses due to the acquisition of Taaleri’s wealth management operations as well as one-off transaction and integration related expenses

  • Provisions for possible expected credit losses are expected to increase moderately. Aktia’s liquidity is expected to be at a high level whereas the capital adequacy ratio is expected to be solid but somewhat lower than during the first quarter, which is mainly attributable to the acquisition of Taaleri’s wealth management operations.

Dividend

On 27 July 2021, Financial Supervisory Authority (FIN-FSA) informed that its recommendation on the distribution of credit institutions’ profits will not be extended beyond 30 September 2021. Aktia’s Board of Directors will make the decision on the dividend for 2020 in October. The decision and the payment schedule will be informed separately. Aktia’s Annual General Meeting 2021 authorised the Board of Directors to decide on the payment of a maximum dividend of EUR 0.43 per share for the accounting period 1 January−31 December 2020.

Aktia paid out a dividend of EUR 0.53 per share for the accounting period 1 January–31 December 2019. The record date was 13 January 2021 and the payment date 20 January 2021.

Mikko Ayub, CEO:

The second quarter of the year was very significant to Aktia. Amid the coronavirus pandemic, we completed the most extensive corporate transaction in the history of Aktia, when Aktia acquired Taaleri’s wealth management operations and at the same time started a cooperation in conjunction with which Aktia became the distributor of Taaleri’s alternative investment products in Finland. At the same time, we went from four business areas to three: Asset Management, Banking (previously Private Customers and Corporate Customers) and Life Insurance. In conjunction with this, Private Banking was moved from the Banking operations to become a part of Asset Management – the reported segments were otherwise unchanged. These measures clarified and streamlined the organisation and brought decision-making closer to the customer. The updated comparable figures for the reported segments have been published in our stock exchange release 4 August 2021.

We purposefully started integrating Taaleri’s wealth management operations into Aktia as soon as the transaction was completed on 30 April 2021. The integration work continues according to plan, and I can say that I am already very happy with the new entity. Cross-selling and additional sales started immediately, and the revenue and expense synergies have started to become concrete. It is very important that we in our integration work maintain the strengths of both actors while creating a common corporate culture for the new entity. I want to thank both new and old Aktia employees for having an excellent attitude and for their persistent work during the past spring. We are still only starting our common journey and the active work for building a new asset management bank continues.

The corporate acquisition has been well received also by the customers. The acquisition of Taaleri’s wealth management operations was an important step for us both strategically and financially and thus offers our customers an exceptional customer experience, high-quality asset management products, award-winning Private Banking expertise as well as comprehensive banking and life insurance products. Our objective is to make our combined product and service selection available to all our customers during the second half of the year.

Aktia arranges a Capital Markets Day on 8 September 2021, during which we will present Aktia’s business more closely and will provide more information about the company’s strategic direction. More information about the programme and the details of the event will be provided later in August.

Continued strong increase in net interest income

In its half-year report, Aktia reports a result that includes Taaleri’s wealth management business that was acquired in the spring. This complicates particularly the comparison of the commission income and the expenses with the corresponding period last year. It is also good to remember that the result from the given period was affected by the market drop due to the coronavirus pandemic as well as the subsequent negative value changes.

The comparable operating profit during the second quarter of the year amounted to EUR 26.0 (16.5) million, which is the best result in the history of Aktia. The good financial performance was mainly affected by the increase in net interest income as well as particularly by the strong commission income from the new asset management business that had been acquired via the Taaleri transaction.

Net interest income increased to EUR 27.7 (20.1) million and thus its good increase continued. The positive effect (EUR 5.3 million) of the negative interest rate that had accumulated in the end of the second quarter from the European Central Bank’s financing programme TLTRO III is reflected in the net interest income for the second quarter. The good sentiment in lending continued particularly on the corporate side, where the margins were at a competitive yet profitable level. The sales of mortgages to household customers also continued exceptionally strong, while we maintained our conservative risk profile. The bank’s financing expenses continued at a moderate level.

Net commission income of the Group was EUR 31.7 (22.9) million during the second quarter. The majority of the growth was due to the acquisition of Taaleri’s wealth management operations but also the commission income without an effect from the Taaleri transaction increased supported by the good market development. Aktia’s assets under management (AuM) were EUR 15.6 billion at the end of the period. The life insurance business also had a very good result during the second quarter of the year and net income from life insurance amounted to EUR 10.5 (10.1) million. The positive value changes as well as the actuarially calculated result contributed to a good development. It is worth noting that the net income from life insurance for the given quarter was exceptionally strong after the market values of the investments had recovered from the market drop at the end of March 2020.

The comparable expenses of the business increased compared to both the given period and the first quarter and amounted EUR 45.9 (36.1) million. The increase in expenses was almost solely tied to growth due to the acquisition of Taaleri’s wealth management operations, which meant that approximately 100 employees and to some extent other expenses for the normal business operations were transferred to Aktia. Additionally, the completion of the corporate transaction was associated with a significant number of consultancy expenses, tax expenses and other one-off expenses, of which the total amount was EUR 4.4 million during the second quarter.

Key figures

(EUR million)

2Q2021

2Q2020

%

1-6/2021

1-6/2020

%

1Q2021

%

2020

Net interest income

27,7

20,1

37%

49.0

39.8

23%

21.3

30%

80.7

Net commission income

31.7

22.9

39%

56.8

48.1

18%

25.0

27%

97.6

Net income from life insurance

10.5

10.1

4%

20.4

4.9

315%

9.9

6%

19.9

Total operating income

73.3

54.8

34%

131.2

94.7

39%

57.9

27%

201.1

Operating expenses

-48.8

-36.3

35%

-87.6

-71.9

22%

-38.7

26%

-142.2

Impairment of credits and other commitments

-1.4

-1.8

-20%

-3.6

-3.2

14%

-2.2

-37%

-4.0

Operating profit

23.0

16.3

41%

39.9

19.1

109%

16.9

36%

54.8

Comparable operating income1

73.3

54.8

34%

131.2

94.7

39%

57.9

27%

201.1

Comparable operating expenses1

-45.9

-36.1

27%

-84.6

-71.7

18%

-38.7

18%

-141.9

Comparable operating profit1

26.0

16.5

57%

42.9

19.3

122%

16.9

54%

55.1

Cost-to-income ratio

0.67

0.66

2%

0.67

0.76

-12%

0.67

0%

0.71

Comparable cost-to-income ratiol1

0.63

0.66

-5%

0.64

0.76

-16%

0.67

-6%

0.71

Earnings per share (EPS), EUR

0.25

0.19

32%

0.45

0.22

105%

0.20

25%

0.61

Comparable earnings per share (EPS), EUR1

0.29

0.19

53%

0.49

0.22

123%

0.20

45%

0.61

Return on equity (ROE), %

10.1

8.4

20%

9.1

4.9

87%

8.6

17%

6.7

Comparable return on equity (ROE), %1

11.8

8.5

38%

9.8

4.9

99%

8.6

37%

6.7

Common Equity Tier 1 capital ratio (CET1), %2

10.8

15.7

-31%

10.8

15.7

-31%

13.8

-22%

14.0

1) Alternative performance measures excluding items affecting comparability
2) At the end of the period

Webcast from the results conference

A live webcast from the results event will take place on 5 August 2021 at 10.30 a.m. CEO Mikko Ayub and CFO Outi Henriksson will present the results. The event is held in English and can be seen live at https://aktia.videosync.fi/2021-q2-results. A recording of the webcast will be available at 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 insurer that has been creating wealth and wellbeing from one generation to the next for 200 years. We serve our customers in digital channels everywhere and face-to-face in our offices in the Helsinki, Turku, Tampere, Vaasa and Oulu regions. Our award-winning asset management business sells investment funds internationally. We employ approximately 900 people around Finland. Aktia's assets under management (AuM) on 31 December 2020 amounted to EUR 10.4 billion, and the balance sheet total was EUR 10.6 billion. Aktia's shares are listed on Nasdaq Helsinki Ltd (AKTIA). aktia.com.

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