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Aktia Bank Plc’s Interim Report January–March 2021: A strong start to the year – good income development lifted the comparable operating profit

Aktia Pankki Oyj
·8-min read

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

Aktia Bank Plc’s Interim Report January–March 2021: A strong start to the year – good income development lifted the comparable operating profit

The quarter in short

  • The stable development of the net interest income continued mainly due to the strong balance growth of corporate credits

  • The housing market was still active and especially the demand for holiday homes continued to increase

  • Assets under management were at the same level as at the year-end and amounted to EUR 10.4 billion

  • Net subscriptions for Aktia’s investment products on the emerging markets decreased somewhat, but without any significant effect on the results

  • Positive value changes together with the stable actuarially calculated result contributed to the very favourable development of net income from life insurance

  • Aktia’s acquisition of the wealth management operations of Taaleri was completed on 30 April 2021

Outlook 2021 (unchanged)

The comparable operating profit for 2021 is expected to be clearly higher than during 2020 provided that the circumstances on the market and in society are stable.

Mikko Ayub, CEO:

Aktia had a strong first quarter. Net interest income increased to EUR 21.3 (19.7) million following the positive development continuing from the year before. The underlying reasons for the strong net interest income are both increased lending and active pricing within corporate lending. Financing costs were still at a moderate level. There have not been any significant changes in margins in the private customer segment. The housing market was still active and the demand especially for holiday houses continued to grow. The share of digital housing transactions increased further.

Net commission income for the quarter was at the same level as in the previous year and amounted to EUR 25.0 (25.2) million. Aktia’s customer assets under management amounted at the end of the period to EUR 10.4 (31 December 2020; 10.4) billion. Net subscriptions for Aktia’s investment products on the emerging markets decreased somewhat, but their total effect on the results was not significant. The change in customers’ consumption behaviour and the decline in the use of credit cards were still reflected in the decreased amount of card payments.

Aktia’s strong competence within asset management was rewarded during the quarter when the independent fund rating agency Morningstar selected the best asset management houses in Finland in three categories: equity funds, fixed income funds and best overall. Aktia was the best in all these categories. It feels really good to once again receive recognition for our long-term work.

The quarter was excellent in terms of net income from life insurance, which amounted to EUR 9.9 (-5.2) million. Positive changes in market values contributed to the favourable development, but also the actuarially calculated result was stable. It is also worthwhile to remember that the weak results of the reference period for the first quarter of 2020 were burdened by the market drop due to the covid-19 pandemic and the subsequent negative value changes.

The comparable operating expenses for the period amounted to EUR 38.7 (35.6) million and were thus considerably higher than in the previous year. However, the cost base includes one-off expenses of EUR 1.2 million in connection with the acquisition of Taaleri’s wealth management operations. Operating expenses also include the estimated stability fee for credit institutions of EUR 2.8 (2.3) million for 2021.

The Finnish Financial Supervisory Authority’s new regulations for the definition of default and the change in calculation models increased the provision for credit loss by approximately EUR 0.8 million. In addition, the macroeconomic assumptions for the ECL model were updated which brought about a positive result effect of EUR 0.6 million for the quarter. Credit losses were still on a moderate level.

Aktia’s comparable operating profit for the first quarter of the year was EUR 16.9 (2.8) million. I am very satisfied with the results, although the prevailing covid-19 pandemic still affects the operating income to a degree.

Aktia acquired Taaleri’s wealth management operations

Aktia informed in March of the acquisition of Taaleri Plc’s wealth management operations. The significant co-operation
agreement with Taaleri gives our customers access to Taaleri’s successful alternative investment products when Aktia becomes the distributor of Taaleri’s alternative investment products in Finland. The transaction received necessary approvals from the authorities and the completion of the transaction was made public on 30 April 2021.

The transaction is unique in Aktia’s history and very significant also on the Finnish asset management market. With the transaction, Aktia will become one of the leading asset managers in Finland while providing also comprehensive banking and life insurance operations. Asset management is the core of Aktia’s strategy and the acquisition of Taaleri’s wealth management operations is a significant step for Aktia towards the goal of being the best asset manager in Finland.

The customer base transferred with the acquisition, and the increasingly broader product offering, supplements well Aktia’s current customer and product portfolio. It also enables an even larger investment in new customer acquisition going forward. In the future, Aktia will be able to make better use of current market conditions with its more versatile range of investment products.

At the same time, the transaction signifies a change on the playing field of asset management in Finland: the volume of Aktia’s assets under management will increase considerably, which will furthermore strengthen Aktia’s position on the asset management market. Together with the operations transferred from Taaleri, Aktia will become one of the leading asset management organisations in Finland combining an extensive and supplementary product range within asset management, a comprehensive portfolio management, strong customer focus and rewarded Private Banking competence, as well as digital competence.

The arrangement is a unique possibility for both Aktia and Taaleri. We are paying special attention to a smooth integration process by underlining both employee and customer satisfaction. The future of asset management in Aktia is built on the strengths in Aktia’s and Taaleri’s merged units and on the application of best practices of both parties.

Key figures

(EUR million)

1Q2021

1Q2020

%

2020

4Q2020

%

3Q2020

2Q2020

Net interest income

21.3

19.7

8%

80.7

20.8

2%

20.0

20.1

Net commission income

25.0

25.2

0%

97.6

25.4

-1%

24.2

22.9

Net income from life insurance

9.9

-5.2

-

19.9

10.2

-3%

4.7

10.1

Total operating income

57.9

39.9

45%

201.1

57.0

2%

49.4

54.8

Operating expenses

-38.7

-35.6

9%

-142.2

-36.4

6%

-33.8

-36.3

Impairment of credits and other commitments

-2.2

-1.4

58%

-4.0

-0.8

169%

-0.1

-1.8

Operating profit

16.9

2.8

508%

54.8

19.7

-14%

16.0

16.3

Comparable operating income1

57.9

39.9

45%

201.1

57.0

2%

49.4

54.8

Comparable operating expenses1

-38.7

-35.6

9%

-141.9

-36.3

7%

-33.8

-36.3

Comparable operating profit1

16.9

2.8

508%

55.1

19.8

-15%

16.0

16.5

Cost-to-income ratio

0.67

0.89

-25%

0.71

0.64

5%

0.68

0.66

Comparable cost-to-income ratio1

0.67

0.89

-25%

0.71

0.64

5%

0.68

0.66

Earnings per share (EPS), EUR

0.20

0.03

567%

0.61

0.22

-9%

0.18

0.19

Comparable earnings per share (EPS), EUR1

0.20

0.03

567%

0.61

0.22

-9%

0.18

0.19

Return on equity (ROE), %

8.6

1.4

533%

6.7

9.2

-7%

7.8

8.4

Comparable return on equity (ROE), %1

8.6

1.4

533%

6.7

9.3

-7%

7.8

8.5

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

13.8

15.9

-14%

14.0

14.0

-2%

15.6

15.7

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 May 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-q1-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 830 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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