Aktia Bank Plc’s Interim Report January–March 2022: The market uncertainty decreased the comparable operating profit
May 11 2022 - 1:00AM
Aktia Bank Plc’s Interim Report January–March 2022: The market
uncertainty decreased the comparable operating profit
Aktia Bank PlcStock Exchange Release11 May 2022 at 8.00 a.m.
Aktia Bank Plc’s Interim Report
January–March
2022:
The market uncertainty decreased the comparable operating
profit
The quarter in
short
- The solid underlying business performance continued.
- The net interest income continued to increase with the support
of the strong corporate customer business.
- The uncertain market was reflected in the prudence of private
customers’ drawdowns, and the sales of interest rate hedges clearly
increased.
- The negative unrealised value changes in the life insurance
company's investment portfolio weighed down the net income from
life insurance as a result of the impact of the rapid increase in
interest rates and the market drop caused by Russia’s war of
aggression.
Outlook 2022 (unchanged)
The comparable operating profit in 2022 is expected to be
somewhat higher than in 2021 provided that the market development
is favourable and the circumstances in society remain stable. Aktia
Group's result for 2022 depends on the impact of the uncertainty
caused by Russia’s war of aggression on the market.
- The net interest income growth is expected to remain strong,
especially in the corporate customer segment, due to the active
pricing and expected volume growth. The financing expenses are
expected to increase slightly as interest rates increase.
- The growth in commission income is expected to continue. The
growth is supported by the completion of the integration of
Taaleri’s wealth management business.
- The development of the net income from life insurance is
dependent on changes in the market values. As a result of
increasing interest rates and market uncertainty, negative
unrealised value changes were recorded during the first quarter of
the year, but positive value changes from the real estate portfolio
are expected for the remainder of the year. The actuarially
calculated result is expected to improve compared to last
year.
- Considering the impact of inflation, the expenses are expected
to be approximately at the level of comparable operating expenses
in 2021.
- Potential credit loss provisions are expected to remain at a
moderate level while the liquidity and capital adequacy of Aktia
remain stable.
Dividend
In accordance with the proposal by the Board of Directors, Aktia
Bank Plc's Annual General Meeting 2022 decided on the payment of a
dividend of 0.56 euro per share for the accounting period 1 January
– 31 December 2021. The dividend was paid out on 19 April 2022.
Mikko Ayub, CEO:
I am sure we all expected a more normal year after two years of
the coronavirus pandemic, but the expectations changed very soon in
the beginning of the year. The Russian war of aggression against
Ukraine and the human suffering of civilians on the battlefield
have shocked us all. The need for humanitarian aid in Ukraine has
increased as the fighting has expanded, and Aktia, together with
its personnel, has supported UNICEF's valuable work for the
children of Ukraine through a donation.
The war will also have an extensive impact on the economy and
society, and the consequences will certainly be visible far into
the future. In these times, the reliable banking sector, and Aktia
as a part of it, is an important part of the well-functioning
society and the economic system. Aktia is a stable and conservative
wealth manager bank operating in Finland and has no operations in
Russia, Belarus or Ukraine. However, the rising inflation and
rising energy and raw material prices are consequences whose
negative effects on the Finnish economy are evident.
So far, the effects of the war on Aktia's business have been
moderate. For our part, we are following all the sanctions imposed
on Russia. In March, we decided to suspend all outgoing and
incoming payments to and from Russia and Belarus for the time
being. The decision was based on Aktia's own risk assessment. There
are also not any significant direct risks in relation to the crisis
area in our credit portfolio. In wealth management, the risks are
equally manageable – Aktia's own funds do not contain any direct
investments in Russia, and Aktia has stopped the new sales of other
actors' funds mainly investing in Russia.
The market decline decreased the comparable operating
profit
Aktia’s comparable operating profit in the first quarter of 2022
was EUR 13.3 million, which was lower than the comparable operating
profit in the reference period last year of EUR 16.9 million. The
main reason for the decline in the profit development was the
weakened operating environment: Even before the war in Ukraine, the
market outlook was overshadowed by inflation concerns and
expectations of increased interest rates. The market decline
following Russia's attack and the impact of the rapid increase in
interest rates on the fixed income investments led to negative
unrealised value changes in the life insurance company's investment
portfolio, which weighed down the net income from life insurance to
EUR 1.8 (Q1/2021; 9.9) million in the first quarter of the year.
The life insurance business itself, however, continued its positive
development – the premiums written increased by 18% since last
year, and the sales of investment-linked savings insurances and
risk insurances continued to be strong.
In other income categories, the good development continued
despite the uncertain operating environment, and the comparable
income amounted to EUR 58.8 (57.9) million. The net interest income
amounted to EUR 25.1 (21.3) million, thus clearly increasing in
relation to the reference period. The strong growth was again
mainly due to the excellent development in the corporate customer
business. The good demand also shows that companies want to secure
their own funding and liquidity in the uncertain situation. Our
customers have also welcomed our improved offering. They have been
especially happy with the offering in relation to investment
funding. The exceptional situation in the private customer business
has been reflected in caution among the customers. According to our
strategy, we are not aiming for growth in our market share, but, in
line with our conservative lending policy, we are aiming for growth
in the customer segments that are important to us – customers who
want to increase their wealth. The sales of interest rate hedges
clearly increased during the beginning of the year.
The net commission income in the first quarter amounted to EUR
31.3 (25.0) million, which, considering the nervous market
environment, is only a moderate decline from Q4/2021 of EUR 33.7
million and mainly the result of a decline in market values. The
assets under management decreased by around EUR 1 billion from the
turn of the year and amounted to EUR 14.4 billion at the end of the
quarter. The market values decreased by approximately EUR 840
million, and the net subscriptions amounted to approximately EUR
-210 million, which was largely due to the redemptions of
international institutional investors from our emerging market
(EMD) funds. However, the continued excellent relative return
development of Aktia’s EMD funds creates good conditions for the
assets to return as the market situation improves. The sales in
Aktia’s Private Banking also continued to develop well.
The comparative expenses of the quarter remained at the same
level as at the turn of the year, reaching EUR 45.9 million (Q4
2021; 44.9), which is a good level when taking into consideration
that we made a reservation of EUR 4.6 million in the first quarter
for the stability fee from the Financial Stability Authority. Last
year's corresponding figure in the first quarter was EUR 2.8
million. The staff expenses were below the level of the third and
forth quarter last year, and the credit loss provisions were very
moderate.
Key figures
(EUR
million) |
1Q/2022 |
1Q/2021 |
∆ % |
2021 |
4Q/2021 |
∆ % |
3Q/2021 |
2Q/2021 |
Net interest income |
25.1 |
21.3 |
18% |
96.2 |
24.1 |
4% |
23.1 |
27.7 |
Net commission income |
31.3 |
25.0 |
25% |
124.0 |
33.7 |
-7% |
33.5 |
31.7 |
Net income from life insurance |
1.8 |
9.9 |
-82% |
37.7 |
7.6 |
-76% |
9.7 |
10.5 |
Total operating income |
59.0 |
57.9 |
2% |
263.8 |
65.5 |
-10% |
67.1 |
73.3 |
Operating expenses |
-45.9 |
-38.7 |
19% |
-174.4 |
-45.2 |
-2% |
-41.6 |
-48.8 |
Impairment of credits and other commitments |
0.3 |
-2.2 |
- |
-4.5 |
0.1 |
141% |
-1.0 |
-1.4 |
Operating profit |
13.5 |
16.9 |
-20% |
84.6 |
20.3 |
-33% |
24.4 |
23.0 |
Comparable operating income1 |
58.8 |
57.9 |
2% |
263.2 |
65.5 |
-10% |
66.5 |
73.3 |
Comparable operating expenses1 |
-45.9 |
-38.7 |
19% |
-171.1 |
-44.9 |
-2% |
-41.6 |
-45.9 |
Comparable operating
profit1 |
13.3 |
16.9 |
-21% |
87.4 |
20.7 |
-35% |
23.8 |
26.0 |
Cost-to-income ratio |
0.78 |
0.67 |
16% |
0.66 |
0.69 |
13% |
0.62 |
0.67 |
Comparable cost-to-income ratio1 |
0.78 |
0.67 |
16% |
0.65 |
0.69 |
14% |
0.63 |
0.63 |
Earnings per share (EPS), EUR |
0.15 |
0.20 |
-26% |
0.95 |
0.23 |
-34% |
0.28 |
0.24 |
Comparable earnings per share (EPS), EUR1 |
0.15 |
0.20 |
-25% |
0.98 |
0.23 |
-36% |
0.27 |
0.28 |
Return on equity (ROE), % |
6.5 |
8.6 |
-24% |
10.0 |
9.5 |
-31% |
11.4 |
10.5 |
Comparable return on equity (ROE), %1 |
6.5 |
8.6 |
-25% |
10.3 |
9.6 |
-33% |
11.2 |
12.3 |
Common Equity Tier 1 capital ratio (CET1), %2 |
10.6 |
13.8 |
-23% |
11.2 |
11.2 |
-5% |
10.4 |
10.8 |
1) Alternative performance measures2) At the end of the
period
Webcast from the results conference
A live webcast from the results event will take place on 11 May
2022 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/2022-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 6236Lotta Borgström, Director, Investor Relations and
Communications, tel. +358 10 247 6838, lotta.borgstrom (at)
aktia.fi
Distribution:Nasdaq Helsinki LtdCentral mediawww.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 2021 amounted to EUR 15.5 billion,
and the balance sheet total was EUR 11.7 billion. Aktia's shares
are listed on Nasdaq Helsinki Ltd (AKTIA). aktia.com.
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