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Evli Bank Plc’s Interim Report January-March 2021

Evli Pankki Oyj
·9-min read

EVLI BANK PLC STOCK EXCHANGE RELEASE APRIL 15, 2021, AT 3.30 PM (EET/EEST)

EXCELLENT FIRST QUARTER

Financial performance January-March 2021

  • Net revenue was EUR 27.1 million (1-3/2020: EUR 14.2 million)

  • Operating profit was EUR 11.8 million (EUR 2.1 million)

  • The Wealth Management and Investor Clients segment’s operating profit increased and was EUR 10.6 million (EUR 6.2 million)

  • The Advisory and Corporate Clients segment’s operating profit increased and was EUR 1.1 million (EUR 0.4 million)

  • The return from own balance sheet items developed positively and were EUR 1.0 million (EUR -3.7 million), which resulted in an increase in the operating profit in the Group Operations segment

  • Net assets under management amounted to EUR 15.0 billion (EUR 12.2 billion) at the end of March

  • Evli’s diluted earnings per share were EUR 0.34 (EUR 0.07) and return on equity was 40.6 percent (10.1%)

  • Proportion of recurring revenue to operating costs was 117 percent (118%).

Outlook for 2021 specified

This year has started positively from a business perspective, supported by strong client demand and favorable equity market performance.

The general performance of the equity and fixed income markets is always prone to risks, however. A decline in equity prices or a reduction in investors’ risk appetite would have a negative impact on the company’s profit performance, for example. Nevertheless, the assets under the Group’s management that reached a new record level by the end of the first quarter and the product selection that expanded, especially in alternative investment products, alleviate negative profit impacts of a possible market reversal.

There has been positive development in the demand for advisory services, and its outlook for 2021 is stable. Although investment activities through Evli’s own balance sheet constitute only a limited proportion of Evli’s business, these could still have a substantial impact on profit performance during sudden market movements. Seasonal and annual fluctuations in revenues from advisory business and own investments are possible.

In the view of the above mentioned reasons, the company has adjusted its outlook. If the market conditions continue to be favorable, we estimate that the operating profit for 2021 will exceed the level of the comparison period.

Earlier, we estimated that the operating profit for 2021 would be clearly positive.

Key Figures

1-3/2021

1-3/2020

1-12/2020

Income statement key figures

Operating income, M€

27.1

14.2

79.7

Operating profit/loss, M€

11.8

2.1

29.1

Operating profit margin, %

43.4

14.5

36.5

Profit/loss for the financial year, M€

10.2

1.9

23.2

Profitability key figures

Return on equity (ROE), %

40.6

10.1

26.2

Return on assets (ROA), %

5.2

0.7

2.7

Balance sheet key figures

Equity-to-assets ratio, %

13.2

5.1

12.3

Group capital adequacy ratio, %

16.2

14.6

15.2

Key figures per share

Earnings per Share (EPS), fully diluted, €

0.34

0.07

0.87

Comprehensive Earnings per Share (EPS), fully diluted, €

0.35

0.07

0.88

Dividend per share, €

-

0.73*

Equity per share, €

4.17

2.80

3.86

Share price at the end of the period, €

16.20

7.40

12.20

Other key figures

Expense ratio (operating costs to net revenue)

0.57

0.85

0.63

Recurring revenue ratio, %

117

118

124

Personnel at the end of the period

269

249

261

Market value, M€

390.6

176.9

294.1

*Approved by the Annual General Meeting. The time of payment of the dividend has not yet been determined.

Maunu Lehtimäki, CEO

The year 2021 has started in positive spirits on the capital markets. As was the case last year, demand for equities and other risk-bearing asset classes has remained strong, and in many markets, prices have risen to a higher level than at the turn of the year. Broad fiscal and monetary policy support measures, the progress in coronavirus vaccinations and expectations regarding global economic recovery have all contributed to increasing investor optimism. However, concerns regarding economic overheating and inflation pressure buildup have caused long-term interest rates to rise in the United States. In Europe on the other hand, the unhurried vaccination rate and more moderate economic stimulus measures than in the United States have kept upward pressure on long-term interest rates in check.

Evli’s operations showed excellent and disturbance-free development during the quarter. Our client activity was also at a high level. We have generally met with our clients online, which is the safest option from a health perspective, and we believe that this operating model is here to stay to some extent.

Evli’s operating income nearly doubled in relation to the comparison period and was EUR 27.1 million. The Group’s operating profit rose more than five-fold to EUR 11.8 million. The profit for the comparison period was hampered by a valuation loss of nearly EUR four million from securities transactions and foreign exchange dealing. Evli’s return on equity rose to 40.6 percent (10.1%) during the quarter and equity surpassed EUR 100 million. The ratio of recurring revenue to operating costs was 117 percent (118%).

The income from the Wealth Management and Investor Clients segment’s operations increased by 40 percent and was EUR 22.0 million. Client assets under management were a record-high EUR 15.0 billion (EUR 12.2 billion) and Evli Fund Management Company’s fund capital was EUR 9.5 billion (EUR 7.5 billion). Net subscriptions totaled EUR 461.3 million, focusing primarily on short-term fixed income investments and European equities. Alternative investment products, asset management fees and funds’ performance-based fees had a positive impact on the growth in the segment’s earnings. Evli’s position as the leading asset manager of high-net-worth individuals and institutions strengthened further, as exemplified by the building of new client relationships and the growth of client assets under management.

The Advisory and Corporate Clients segment’s return increased by 88 percent and was EUR 4.0 million. The Corporate Finance unit’s invoicing recovered from the exceptionally low level in the comparison period and was EUR 2.0 million (EUR 0.6 million). The incentive business grew as in previous years, and the unit’s invoicing totaled EUR 2.1 million (EUR 1.5 million). A share exchange executed last year in which Evli Awards Management Oy and Alexander Incentives Oy were merged into a new company Evli Alexander Incentives Oy has made good progress and the company has gained new client relationships in incentive system planning and management during the first quarter. The growth in client interest in the company’s services in the area of unlisted Finnish companies and listed Swedish companies, in addition to traditional listed Finnish companies, has been especially pleasing.

Evli’s key strategic drivers – international fund sales and sales of alternative investment products – performed according to plan in the beginning of the year. Despite extensive travel restrictions, international sales have recovered, and the outlook has brightened further as a result of the positive investment environment and our funds’ good performance.

In line with the plan, there were no new launches of alternative investment products during the first quarter, and sales were focused on the Evli Infrastructure Fund, Evli Forest Impact Fund and Evli Rental Yield Fund, which were open for subscriptions. During the course of the year, we intend to present investors with new alternative investment funds in the private equity, growth equity and unlisted corporate bond (private debt and leveraged loans) asset classes. The planning and preparation work for these new products has progressed as planned and launches are scheduled for the upcoming quarters. Our goal is to offer our clients a broad range of varied alternative investment products to support traditional asset classes, enabling the implementation of a comprehensive and well-diversified asset management strategy.

Responsibility is one of our strategic focus areas and we have continued its development according to plan. We launched new client-specific ESG reports during the first quarter. We prepare a comprehensive and varied sustainability report on all of our clients’ investments, thus increasing transparency and allowing clients to follow the development of ESG key indicators. In addition, we have implemented a new set of responsibility laws, the Sustainable Finance Disclosure Regulation (SFDR), in accordance with which the majority of Evli’s funds were classified as funds that promote sustainability factors, while two were classified as funds that have a sustainability objective.

Announced at the end of January, the research work examining the future of credit institution operations has made good progress, and we aim to complete it during the first half. The study evaluates the significance of credit institution operations as a part of Evli Group, and the potential impacts of breaking away from these operations on business and finances.


EVLI BANK PLC

For additional information, please contact:

Maunu Lehtimäki, CEO, Evli Bank Plc, tel. +358 (0)50 553 3000, maunu.lehtimaki@evli.com
Juho Mikola, CFO, Evli Bank Plc, tel. +358 (0)40 717 8888, juho.mikola@evli.com


Evli Bank Plc

Evli is a bank specialized in investments that helps institutions, corporations and private persons increase their wealth sustainably. The product and service offering includes mutual funds, asset management and capital markets services, alternative investment products, equity research, incentive plan design and administration as well as Corporate Finance services. The company also offers banking services that support clients' investment operations. Evli is Finland´s most widely used institutional asset manager* and offers Finland's best Private Banking service**.

Evli has a total of EUR 15.0 billion in client assets under management (net 3/2021). Evli Group's equity capital totals EUR 105.1 million and its BIS capital adequacy ratio is 16.2 percent (March 31, 2021). The company has around 270 employees. Evli Bank Plc's B shares are listed on Nasdaq Helsinki Ltd.

*KANTAR SIFO Prospera External Asset Management Finland 2017, 2018, 2019, 2020 surveys.
**KANTAR SIFO Prospera Private Banking 2019 and 2020 Finland surveys.


Distribution:
Nasdaq Helsinki Ltd, main media, www.evli.com