Aktia Bank Plc’s Half-year Report January–June 2024: Strong result improvement compared to the previous year and good return on equity

Aktia Bank Plc
Stock Exchange Release
2 August 2024 at 8.00 a.m.

Aktia Bank Plc’s Half-year Report January–June 2024: Strong result improvement compared to the previous year and good return on equity

The quarter in short

Comparable operating profit: EUR 30.8 million, 21% higher than last year (25.6). Result improvement in all business areas.
Comparable cost/income ratio: Improved to 0.57 (0.61).
Comparable return on equity (ROE): Increased to 14.9% (13.4) due to improved profit.
Net interest income: 18% higher than last year due to high interest income from lending, growth in profitable financing solutions and high reference rates.
Net commission income: Approximately at the previous year’s level.
Assets under Management: Increased in the quarter, driven by favourable market development. Negative total net subscriptions in the quarter, but positive net subscriptions in the last month of the quarter.
Net income from life insurance: Continued stable development largely due to investment performance and low loss ratio.
Comparable operating expenses: Good cost control with decreased personnel costs in other respects, although the operating expenses increased by 5% mainly due to increased IT expenses.
Credit losses: Credit loss provisions increased slightly compared to last year but remained moderate thanks to good risk management and the quality of the loan book.
Share of AuM invested in SFDR* Article 8/9 classified funds: Increased to 98.0% from last year’s 95.4%. *Sustainable Finance Disclosures Regulation.

Outlook 2024 (updated)

Aktia’s comparable operating profit for 2024 is expected to be higher than the EUR 104.8 million reported for 2023.

The outlook has been prepared based on the following expectations:

Despite market uncertainty and a probable decline in interest rates, the net interest income is expected to be higher than in 2023.
Net commission income is expected to be somewhat higher than in 2023, provided that the market conditions are favourable.
The life insurance business is expected to develop steadily. However, the result may be affected by changes in market values.
Total operating expenses are expected to remain on approximately the same level as in 2023, given the absence of stability contribution offset by higher expected IT expenses.
Impairments and provisions for credit losses are expected to increase slightly compared to the 2023 level, given the current market situation.

Previous outlook for 2024 (published on 30 April 2024): Aktia’s comparable operating profit for 2024 is expected to be somewhat higher or higher than the EUR 108.4** million reported for 2023.

** Aktia Bank Plc has revised the reporting for 2023 due to a technical error in interest calculation for a limited number of corporate accounts. For more information, see note 11, Correction of previously reported figures in 2023.

Aleksi Lehtonen, CEO:

Aktia’s purpose is to create prosperity. This societal mission is something I want to stress in my first review as CEO of Aktia. By thinking further with and offering innovative and competitive solutions to our customers, we create prosperity for the whole society.

Aktia's quarterly performance was once again strong. Our comparable return on equity (ROE) remained at a good level and amounted to 14.9%. The comparable cost/income ratio was 0.57, which is an improvement from last year and better than our long-term target (below 0.60). In other words, our three business areas continued to deliver stable results and our risks were kept under control.

Although the housing market remained soft, the positive development of the banking business continued, with strong demand for financing solutions such as leasing and hire purchase. In the Asset Management business, even though net subscriptions for the quarter were negative, we were happy to see positive net subscriptions within both Private Banking and institutional customers in June. The result of the life insurance business also remained stable, and sales of risk life insurance policies remained at the same good level as in previous quarters.

We have continued to invest in customer experience, functionality of our banking system, information security and processes required by regulation, which is reflected in higher IT expenses. Overall, however, we have continued to apply a strict cost control. To summarise, we are on the right track to achieve Aktia’s financial targets, which extend to 2025.

Continued focus on development

The development of Aktia’s Asset Management is progressing according to plan and the organisational structure of the business area has been simplified. We have the building blocks needed, especially employees with first-class skills. By focusing on employees, customers and business development, we ensure the long-term competitiveness of Asset Management and Aktia as a whole. We have also recruited a Head of Customers who has the overall responsibility for the customer focus and institutional sales in Asset Management. By taking concrete measures such as these, we are well on track to become the leading wealth manager bank.

In August, our new Chief Information Officer Oskari Kurki will assume his duties and the responsibility for Aktia’s IT operations. We will continue to make considerable efforts and investments in IT operations, as they are a key part of Aktia’s core business and an inseparable part of our processes and the customer experience.

Launches and collaboration

Aktia actively engages with industry leaders in selected areas. At the end of May, we announced that Aktia and Swedbank have entered into a strategic partnership, as a further step in a decades-long relationship of doing business together. The collaboration enables us to make even better use of, among other things, the strategic investments we have made in leasing and factoring platforms.

Among the launches in Asset Management, it is worth mentioning that in June we launched the Aktia Velkarahastot II Ky (Private Debt Fund). The fund’s first investment object is the Oaktree Opportunities XII fund. The fund manager Oaktree is a leading alternative investment fund manager. The fund gives access to a professionally managed portfolio of opportunistic debt investment, which only large institutional investors usually have access to.

Looking to the future

At the beginning of June, I had the pleasure to start as CEO at Aktia. I wish to express my sincere thanks to Juha Hammarén, who previously took care of CEO duties, as well as to the Executive Committee and the whole organisation, who have enabled me to take over responsibilities smoothly. In June, I met many of our truly professional and committed colleagues across the country and joined a large number of customer meetings, demonstrating well-functioning customer relationships. Employee and customer satisfaction go hand in hand, and because of this, I am especially pleased that the results of the employee survey, conducted in the spring, are showing a clearly positive trend.

I look forward to achieving our ambitious targets together with the employees in order to harness the large potential within Aktia. We have started the work related to Aktia’s strategic themes and updating our long-term financial targets. Our mission must be reflected in everything we do: to create prosperity for customers, owners and society as a whole. I am proud that our work has an important, comprehensive purpose.

Key Figures

(EUR million)	Q2/2024	Q2/2023	∆ %	1–6/2024	1–6/2023	∆ %	Q1/2024	∆ %	2023
Net interest income	38.8	32.8	18%	77.9	63.7	22%	39.1	-1%	140.4
Net commission income	30.8	30.4	2%	61.0	60.6	1%	30.1	2%	120.4
Net income from life insurance	7.4	5.7	29%	15.0	12.9	17%	7.7	-4%	24.1
Total operating income	76.7	69.3	11%	154.0	138.7	11%	77.3	-1%	287.4
Operating expenses	-44.8	-42.2	6%	-86.2	-89.3	-3%	-41.4	8%	-176.6
Impairment of credits and other commitments	-1.8	-1.3	38%	-4.5	-2.3	101%	-2.7	-34%	-7.0
Operating profit	30.1	25.8	17%	63.4	47.1	35%	33.3	-9%	102.6
Comparable operating income¹	76.7	69.1	11%	154.0	138.4	11%	77.3	-1%	287.2
Comparable operating expenses¹	-44.1	-42.2	5%	-84.8	-87.9	-4%	-40.7	8%	-174.2
Comparable operating profit¹	30.8	25.6	21%	64.7	48.2	34%	33.9	-9%	104.8
Cost-to-income ratio	0.58	0.61	-4%	0.56	0.64	-13%	0.54	9%	0.61
Comparable cost-to-income ratio¹	0.57	0.61	-6%	0.55	0.64	-13%	0.53	9%	0.61
Earnings per share (EPS), EUR	0.33	0.28	18%	0.71	0.52	36%	0.38	-12%	1.12
Comparable earnings per share (EPS), EUR, euro¹	0.34	0.28	22%	0.72	0.53	35%	0.38	-11%	1.15
Return on equity (ROE), %	14.5	13.6	0.9*	15.8	12.8	3.0*	16.5	-2.0*	13.3
Comparable return on equity (ROE), %¹	14.9	13.4	1.4*	16.1	13.1	3.0*	16.8	-1.9*	13.6
Common Equity Tier 1 capital ratio (CET1), %²	11.5	11.0	0.5*	11.5	11.0	0.5*	11.4	0.1*	11.3

* The change is calculated in percentage points
1) Alternative performance measures
2) At the end of the period

Briefing for analysts, investors and media

Aktia's results briefing for analysts, investors and media will be held in English on Friday, 2 August 2024 at 10.30 a.m. Aktia's CEO Aleksi Lehtonen and CFO Outi Henriksson will present the results.

The briefing can be viewed live as a webcast or as a recording after the event at https://aktia.videosync.fi/aktia-oyj-q2-report-2024. Questions can be submitted in writing during the live webcast.

AKTIA BANK PLC

For more information:
Oscar Taimitarha, Director, Investor Relations, tel. +358 40 562 2315

Distribution:
Nasdaq Helsinki Ltd
Mass 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 850 people around Finland. Aktia's assets under management (AuM) on 30 June 2024 amounted to EUR 14.1 billion, and the balance sheet total was EUR 12.4 billion. Aktia's shares are listed on Nasdaq Helsinki Ltd (AKTIA). aktia.com.

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