Aktia Bank Plc’s Financial Statement Release January-December 2023: Aktia achieved a strong result, driven by a very good net interest income

Aktia Bank Plc
Stock Exchange Release
8 February 2024 at 8.00 a.m.

Aktia Bank Plc’s Financial Statement Release January-December 2023: Aktia achieved a strong result, driven by a very good net interest income

October-December in short

Interest income from lending grew strongly, raising the net interest income to a high level. The average margin of the loan book also increased.
Net commission income from asset management increased slightly from the reference period. The growth was supported by, for example, commissions from private equity funds and structured products.
Assets under management grew in the fourth quarter and net sales to Private Banking customers remained positive, but as a whole net subscriptions were negative.
The life insurance business developed steadily.
Despite high inflation, we managed to keep cost increases at a reasonable level.
The continuous and effective risk assessment of our credit portfolio helped to keep credit losses at a moderate level.

January-December in short

The Banking business achieved a very strong result and the Group’s comparable operating profit grew to EUR 108.4 million.
The cooperation with Finnair brought Aktia slightly over 30,000 new customers. In addition, successful corporate sales resulted in around 3,500 new corporate customers for Aktia.
Interest income continued to grow strongly, supported by the rise in interest rates and good margin development.
Demand for housing loans was soft, but demand for corporate loans – especially for hire purchase and leasing financing – remained strong.
Asset management’s net sales to domestic institutional investors and Private Banking customers were clearly positive in 2023, but net sales to foreign customers were negative.
Outsourcing of services and high inflation increased IT costs. The increase in costs also reflects our active focus on information security, improving customer experience and reforming systems.

Proposed dividend

Aktia's Board of Directors proposes, in accordance with the company's dividend policy, that a dividend of EUR 0.70 per share to be paid for 2023, which constitutes 60% of the profit for the reporting period and corresponds to a dividend of approx. EUR 51 million.

Outlook 2024

Aktia's comparable operating profit for 2024 is expected to be somewhat higher than the EUR 108.4 million reported for 2023.

The outlook has been prepared based on the following assumptions:

Despite market uncertainty and a probable decline in interest rates, the net interest income is expected to be slightly 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.
Operating expenses are expected to be on the same level or somewhat higher than in 2023, IT expenses are expected to increase slightly.
Impairments and provisions for credit losses are expected to increase slightly compared to the 2023 level, given the current market situation.

Juha Hammarén, CEO

The fourth quarter of 2023 was excellent for Aktia. All three of our business areas, Banking, Asset Management, and Life Insurance, developed positively. I consider the significant increase in the number of customers, which continued until the end of the year, as a particular success. In the course of the year, we welcomed over 30,000 new customers.

Net interest income increased by 61 per cent from the corresponding quarter last year, and net commission income also increased from the reference period, which we can be satisfied with in the current market environment. The increase in net interest income combined with a moderate increase in costs, despite high inflation, brought the comparative operating profit for the full year to EUR 108.4 million. When considering the result, it should be noted that the comparative figures have been recalculated according to IFRS 17, making the comparison between years difficult.

Business areas developed well

The Banking business developed strongly. Demand for fixed-term deposits has remained high. The general uncertainty kept the demand for housing loans subdued despite a slight pick-up towards the end of the year. However, the total credit stock grew as the demand for hire purchase and leasing financing remained strong among corporate customers. The average margin for the entire loan book continued to grow. The balance sheet also developed well. I am particularly pleased that credit losses remained at a moderate level and the quality of the credit stock remained in line with our strategy. We have been actively reviewing the risks of our credit portfolios, and this has paid off.

In the Asset Management business, market uncertainty has been reflected particularly on the development of commission income. In the fourth quarter, the trend turned, and commission income grew from the reference period. Assets under management increased, although most of the increase came from the change in market value. Net sales to Private Banking customers continue strong in the fourth quarter and were clearly positive on an annual basis, similar to sales to domestic institutional investors. At the end of the year, a reorganisation was implemented in Asset Management to improve customer experience and develop and strengthen service models.

The fourth quarter was strong for the Life Insurance business. The sales of risk life insurance developed well for the fifth consecutive year and the sale of investment-linked insurance remained stable. Net income from life insurance grew from the corresponding quarter of the previous year and the actuarially calculated result for the full year improved. In the summer, the company selected a supplier for its basic system project, and the planning of the project progressed towards the end of the year, so that the implementation can begin in early 2024.

The new Corporate Sustainability Reporting Directive requires more extensive reporting of sustainability data from 2024 onwards. Sustainability guides everything we do in Aktia and we look forward to being able to further strengthen our sustainability work through more comprehensive reporting. We have prepared for the new requirements set by regulation and are well prepared to respond to the new reporting requirements.

Focus on developing customer and employee experience

Aktia’s personnel costs were slightly higher than in the corresponding quarter of the previous year. By contrast, the fixed salary costs were lower than last year, which means that the trend is moving in the right direction. At the beginning of 2023, we promised to reward our employees with EUR 1 million if Aktia´s comparable operating profit for 2023 exceeds EUR 100 million. The reward will be distributed equally among all employees and the share of the Executive Committee will be donated to charity.

IT costs increased clearly due to outsourcing of services, high inflation and investments in information security, improvement of customer experience and system renewals. In improving customer experience, we focus on solutions that enable smoother and quicker identification services and complement the tools for meeting customers in digital channels. One example is the Aktia Contact Center system renewal, which has been received well. With improvements like these, we can contribute towards seamless customer services in a concrete way.

An excellent employee and customer experience, the best wealth management, and customers who want to grow their wealth are the cornerstones of our operations also in the coming year. We strive to be worthy of your trust and meet your expectations every day of the year.

Key Figures

(EUR million)	Q4/2023	Q4/2022	∆ %	1-12/2023	1-12/2022	∆ %	Q3/2023	∆ %	Q2/2023	Q1/2023
Net interest income	38.9	24.2	61%	144.0	99.2	45%	39.5	-2%	33.8	31.8
Net commission income	29.8	29.1	2%	120.4	122.0	-1%	30.0	-1%	30.4	30.3
Net income from life insurance	6.0	3.3	82%	24.1	79.2	-70%	5.1	18%	5.7	7.2
Total operating income	75.2	58.2	29%	291.0	302.9	-4%	75.2	0%	70.3	70.3
Operating expenses	-46.5	-44.1	6%	-176.6	-169.4	4%	-40.8	14%	-42.2	-47.1
Impairment of credits and other commitments	-2.4	-7.1	-66%	-7.0	-10.2	-32%	-2.3	8%	-1.3	-0.9
Operating profit	25.2	6.9	266%	106.2	123.5	-14%	32.0	21%	26.8	22.2
Comparable operating income¹	75.2	58.2	29%	290.8	302.8	-4%	75.2	0%	70.0	70.3
Comparable operating expenses¹	-45.5	-42.7	7%	-174.2	-168.1	4%	-40.8	12%	-42.2	-45.8
Comparable operating profit¹	26.3	8.3	216%	108.4	124.7	-13%	32.0	-18%	26.5	23.6
Cost-to-income ratio	0.62	0.76	-18%	0.61	0.56	9%	0.54	15%	0.60	0.67
Comparable cost-to-income ratio¹	0.60	0.73	-18%	0.60	0.56	7%	0.54	11%	0.60	0.65
Earnings per share (EPS), EUR	0.28	0.07	300%	1.16	1.37	-15%	0.34	-18%	0.29	0.25
Comparable earnings per share (EPS), EUR¹	0.29	0.09	222%	1.19	1.38	-14%	0.34	-15%	0.29	0.27
Return on equity (ROE), %	12.8	3.7	9.1*	13.7	17.0	-3.3*	16.2	-3.4*	14.1	12.3
Comparable return on equity (ROE), %¹	13.3	4.5	8.7*	14.0	17.2	-3.2*	16.2	-3*	13.9	13.0
Common Equity Tier 1 capital ratio (CET1), %²	11.3	10.8	5%	11.3	10.8	5%	11.0	3%	11.0	11.1
Dividend per share (Proposal from Board of Directors), EUR				0.70	0.43	63%

* The change is calculated in percentage points
1) Alternative performance measures
2) At the end of the period
Reference periods 2022 have been recalculated according to the new IFRS 17 standard for insurance contracts.

Webcast from the results event

A live webcast from the results event will take place on 8 February 2024 at 10.30 a.m. (EET). CEO Juha Hammarén and CFO Outi Henriksson will present the results. The event is held in English and can be seen live at https://aktia.videosync.fi/2023-q4-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

ir@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 860 people around Finland. Aktia's assets under management (AuM) on 31 December 2023 amounted to EUR 13.7 billion, and the balance sheet total was EUR 12.0 billion. Aktia's shares are listed on Nasdaq Helsinki Ltd (AKTIA). aktia.com.

Attachment