Aktia Bank Plc’s Interim Report January–September 2021: Continued good performance in all business areas

Aktia Bank Plc
Stock Exchange Release
4 November 2021 at 8.00 a.m.

Aktia Bank Plc’s Interim Report January–September 2021: Continued good performance in all business areas

The quarter in short

• A good net interest income from both borrowing and lending

• The net commission income was at a very good level, the net subscriptions turned positive during the quarter

• The strong net income from life insurance was attributable to an increased actuarially calculated result and the net investment income was significantly higher than last year

• The comparable cost-to-income ratio decreased to 0.63

• The integration of Taaleri’s wealth management operations continues according to plan
  
  

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.

Dividend

On 5 October 2021, the Board of Directors of Aktia decided to pay out a dividend of EUR 0.43 per share for the accounting period of 1 January–31 December 2020 in accordance with the authorisation given by the Annual General Meeting of 2021. The dividend was paid on 14 October 2021.

Mikko Ayub, CEO:

The good performance continued during Aktia's third quarter. Thanks to the strong development in all business areas, the comparable operating profit amounted to EUR 23.8 (16.0; Q3/2020) million.

The net interest income was EUR 23.1 (20.0) million during the quarter. Lending among both private customers and corporate customers continued to grow at the current, moderate level of risk. Our goal in itself is not to increase the volume but upholding the good quality of the credit portfolio is equally important for us. Financing services were now also offered to the new private customers who became Aktia’s customers in connection to the acquisition of Taaleri’s wealth management operations.

The net commission income increased to EUR 33.5 (24.2) million. The assets under management remained at the level of the previous quarter and amounted to EUR 15.6 billion: the volatility of the equity market and the nervousness of investors weighed the changes in market values, but the net subscriptions turned positive during the quarter, which I am happy about. Taaleri’s wealth management operations, acquired in the spring, was also for the first time included in the figures of the whole quarter. The net income from life insurance increased to EUR 9.7 (4.7) million and both the actuarially calculated result and the net investments were at a good level.

Aktia’s comparable expenses amounted to EUR 41.6 (33.8) million. The big difference to last year's corresponding period is explained by the normal operating expense structure that has increased as a result of the acquisition of Taaleri’s wealth management operations.

Aktia has updated its strategy and financial targets

In the beginning of September, Aktia updated its strategy and long-term financial targets. The new strategy update, which extends to 2025, supports Aktia's growth objectives, and our ambitious goal is to create a completely new kind of wealth manager bank in Finland. Seamless cooperation between different business functions is a prerequisite for our success. I am also very happy with Aktia’s new climate objectives, according to which Aktia is aiming, among other things, at reaching carbon neutrality in its investment portfolios by 2050.

Aktia's new strategic priorities are:

1. Win in wealth management

Aktia's objective is to be the first choice for private and institutional customers. A comprehensive product offering, top portfolio management expertise and high-quality private banking are at the core of Aktia’s wealth management. A central part of the development of wealth management is to successfully carry out the integration of Taaleri’s wealth management operations that was acquired during last spring.

2. Growth among customers who are willing to increase their wealth

Aktia is seeking growth particularly amongst customers who want to increase their wealth and offers responsible and holistic wealth management advisory including a comprehensive selection of banking, wealth management and life insurance services. More efficient cross-selling of products and services in different business areas is an essential part of the whole. In Corporate Banking, Aktia seeks growth particularly amongst medium-sized companies, which fits well with our strategy of becoming the leading wealth manager bank.

3. Excellent customer experience

Aktia’s customer experience is an important driver of growth. Aktia invests in customer insight and the development of service models, with emphasis on seamless cooperation and comprehensive solutions between different business areas in order to create an excellent customer experience.

The new long-term financial targets for 2025 are: a comparable operating profit of above EUR 120 million, a comparable return on equity (ROE) of above 12 per cent, a comparable cost-to-income ratio of under 0.60 and a Common Equity Tier 1 capital ratio (CET1) above 1.5 percentage points over the regulatory requirements.

The integration progresses on schedule

The integration of Taaleri’s wealth management operations continues according to plan and the organisation of Aktia’s asset management was completed during the third quarter. Aktia now has one of the largest Portfolio Management teams in Finland. Aktia’s funds succeeded excellently during the quarter, which shows that Aktia's investment decisions are based on a strong investment process and philosophy that has been built for over ten years. It has also been great to see how the transition from strictly doing remote work to the adaptation of the hybrid work model during September has clearly contributed to the integration process. Communality is still important, also in our working life.

Aktia’s employee issuance at the end of September was oversubscribed, and the Board decided to, in accordance with to the conditions of the employee issuance, increase the number of shares offered. The Board accepted all subscriptions in the employee issuance – a total of 1,371,500 new shares. As part of the personnel financed their subscription through a loan granted by Aktia, the issue did not have any considerable effect on Aktia's CET1 capital ratio. I am very pleased with the outcome of employee issuance. The goal with the issuance was to involve and encourage the employees in becoming shareholders in Aktia and thus to long-term work to increase shareholder value. The issuance was oversubscribed, which is a strong indication of the personnel’s confidence in Aktia's future.

Key figures

(EUR million)	Q3/2021	Q3/2020	∆%	1-9/2021	1-9/2020	∆%	Q2/2021	∆%	Q1/2021	2020
Net interest income	23.1	20.0	16%	72.2	59.9	21%	27.7	-16%	21.3	80.7
Net commission income	33.5	24.2	39%	90.3	72.2	25%	31.7	6%	25.0	97.6
Net income from life insurance	9.7	4.7	105%	30.1	9.6	212%	10.5	-8%	9.9	19.9
Total operating income	67.1	49.4	36%	198.3	144.1	38%	73.3	-9%	57.9	201.1
Operating expenses	-41.6	-33.8	23%	-129.2	-105.7	22%	-48.8	15%	-38.7	-142.2
Impairment of credits and other commitments	-1.0	-0.1	-	-4.6	-3.2	44%	-1.4	29%	-2.2	-4.0
Operating profit	24.4	16.0	53%	64.3	35.1	83%	23.0	6%	16.9	54.8
Comparable operating income1	66.5	49.4	35%	197.7	144.1	37%	73.3	-9%	57.9	201.1
Comparable operating expenses1	-41.6	-33.8	23%	-126.2	-105.5	20%	-45.9	9%	-38.7	-141.9
Comparable operating profit1	23.8	16.0	49%	66.7	35.3	89%	26.0	-8%	16.9	55.1
Cost-to-income ratio	0.62	0.68	-9%	0.65	0.73	-11%	0.67	-7%	0.67	0.71
Comparable cost-to-income ratio1	0.63	0.68	-8%	0.64	0.73	-13%	0.63	-1%	0.67	0.71
Earnings per share (EPS), EUR	0.28	0.18	54%	0.72	0.39	85%	0.25	11%	0.20	0.61
Comparable earnings per share (EPS), EUR 1)1	0.27	0.18	51%	0.75	0.40	87%	0.29	-7%	0.20	0.61
Return on equity (ROE), %3	11.4	7.8	46%	10.0	5.8	71%	10.5	9%	8.6	6.7
Comparable return on equity (ROE), %1,3	11.2	7.8	43%	10.4	5.9	77%	12.3	-9%	8.6	6.7
Common Equity Tier 1 capital ratio (CET1), %2	10.4	15.6	-33%	10.4	15.6	-33%	10.8	-4%	13.8	14.0

1) Alternative performance measures excluding items affecting comparability
2) At the end of the period
3) The ROE definition has been updated

Webcast from the results conference

A live webcast from the results event will take place on 4 November 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-q3-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.

Attachment

• AktiaPlc_3Q2021