0QF8 Aktia Bank Abp

Aktia Bank Plc’s Interim Report January–September 2024: Stable quarterly result and positive trend in asset management

Aktia Bank Plc
Stock Exchange Release
6 November 2024 at 8.00 a.m.

Aktia Bank Plc’s Interim Report January–September 2024: Stable quarterly result and positive trend in asset management

The quarter in short

• Comparable operating profit: EUR 31.5 million, somewhat higher than last year (31.0).
• Comparable cost/income ratio: 0.56 (0.55).
• Comparable return on equity (ROE): 15.0 (15.8)%; the difference is mainly due to a higher average equity.
• Net commission income: 3% higher than last year thanks to higher net income from funds and card operations.
• Assets under management: Increased in the quarter, driven by positive net subscriptions and favourable market development.
• Net interest income: 7% lower than last year due to the impact of non-standard interest terms for certain corporate accounts and falling interest rates.
• Net income from life insurance: Strong development due to good sales, low loss ratio and good investment performance.
• Comparable operating expenses: Good cost control despite continued investments in IT.
• Credit losses: Provisions decreased compared to last year.
• The share of assets under management classified as sustainable under Article 8/9 increased to 98.1% from 95.3% last year.

Outlook 2024 (unchanged)

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.
  
  

Aleksi Lehtonen, CEO:

I have said in various contexts that only a company with thriving employees can have genuinely satisfied customers. During the year, we have seen the results of Aktia’s employee surveys moving in the right direction. Therefore, it is not surprising – but all the more pleasing – that we have also seen a significant improvement in customer satisfaction.

The very comprehensive EPSI Rating study, published in the third quarter, shows how our customer satisfaction develops and where we stand compared to the sector. Aktia has improved significantly in all the sub-areas covered by the EPSI study, and our overall result is now very close to the “very satisfied” threshold. This year, Aktia was the bank improving the most in the ranking. The study shows that our customers to a large extent are also likely to recommend Aktia.

I am happy and grateful for this feedback and especially for the fact that our customers explicitly feel appreciated and cared for. This is in line with the direct feedback I have received when attending customer meetings: Aktia’s customers appreciate personal service and there exists a strong trust. My message regarding both employee and customer satisfaction is the same: we are moving in the right direction, but there is still work to be done. We can become even better, and we need to prove ourselves worthy of our customers’ confidence every day.

As an asset manager, customer confidence is of the utmost importance to us in our aim to be the best partner for those who want to increase their wealth over time. We fulfil our purpose, to create wealth, by thinking further with our customers and always making sure that our customers have a good wealth plan. Managing and increasing wealth in a well-planned way is to act responsibly, not only for ourselves, but also for those close to us. It should also be noted that a large part of the wealth in Finland will be transferred to the next generation within a decade, which requires a great deal of planning.

Continued stable performance

The financial result remained stable in the third quarter. The comparable operating profit of EUR 31.5 million was well in line with the two previous quarters of 2024 and was 2% higher than in the third quarter of 2023, which was the best quarter last year performance-wise. Our comparable return on equity (ROE) was 15% and the comparable cost-to-income ratio was 0.56 – both again at a better level than our long-term objectives of ROE of at least 12% and cost-to-income ratio below 0.60.

The good result was driven by higher net commission income, strong net income from life insurance and continued cost control. On the other hand, the net interest income for the quarter was still partly burdened by the non-standard corporate interest rates announced in July. We revised the accounts in the third quarter, and the terms for corporate accounts are now up to date.

Positive net subscriptions and improvement in the housing market

The positive development in asset management continued. I am very pleased that customer assets under management continued to increase and especially that net subscriptions were positive during the quarter. Overall, the inflow into Aktia's own funds has been strong this year and in September, Aktia Fund Management Company was among the best in Finland measured in net subscriptions. The fact that a significant proportion of investments are made in insurance wrappers shows that capitalisation redemption contracts and unit-linked insurance play an important role in our customers' investment solutions. There is a clear confidence in Aktia's investment solutions, and the best recognition we can get is when customers trust us to manage their wealth.

There are also encouraging signs in the housing market, and we have noted a growing trend in the number of loan applications, which started to pick up in the summer. In the third quarter, we already saw growth in the loan book among Premium and Private banking customers, although the total loan book decreased slightly as a result of amortisations.

Value creation through updated strategy

As I have mentioned earlier, we are currently reviewing the Group's overall strategy and long-term financial objectives. Our current strategy period extends to 2025, and now is the time to reflect and choose our priorities for the coming years. The work is progressing well and we look forward to being able to tell about our strategic priorities in more detail. However, the purpose of our activities remains the same: to create prosperity – for our customers, employees, owners, and society as a whole.

Key Figures

(EUR million)	Q3/2024	Q3/2023	∆ %	1–9/2024	1–9/2023	∆ %	Q2/2024	∆ %	1–12/2023
Net interest income	36.1	38.6	-7%	114.0	102.3	11 %	38.8	-7%	140.4
Net commission income	30.9	30.0	3%	91.8	90.6	1 %	30.8	0%	120.4
Net income from life insurance	8.9	5.1	74%	23.9	18.0	33 %	7.4	21%	24.1
Total operating income	76.1	74.3	2%	230.1	212.9	8 %	76.7	-1%	287.4
Operating expenses	-43.1	-40.8	6%	-129.3	-130.1	-1 %	-44.8	-4%	-176.6
Impairment of credits and other commitments	-1.8	-2.3	-23%	-6.3	-4.5	39%	-1.8	-3%	-7.0
Operating profit	31.2	31.0	1%	94.6	78.1	21%	30.1	4%	102.6
Comparable operating income1	76.1	74.3	2%	230.1	212.7	8 %	76.7	-1%	287.2
Comparable operating expenses1	-42.8	-40.8	5%	-127.7	-128.7	-1%	-44.1	-3%	-174.2
Comparable operating profit1	31.5	31.0	2%	96.2	79.2	21%	30.8	2%	104.8
Cost-to-income ratio	0.57	0.55	3%	0.56	0.61	-8%	0.58	-3%	0.61
Comparable cost-to-income ratio1	0.56	0.55	3%	0.55	0.61	-8%	0.57	-2%	0.61
Earnings per share (EPS), EUR	0.34	0.33	3%	1.05	0.85	23%	0.33	3%	1.12
Comparable earnings per share (EPS), EUR, euro1	0.34	0.33	4%	1.06	0.86	23%	0.34	1%	1.15
Return on equity (ROE), %	14.9	15.8	-0,9*	15.3	13.7	1,6*	14.5	0,3*	13.3
Comparable return on equity (ROE), %1	15.0	15.8	-0,8*	15.6	13.9	1,7*	14.9	0,1*	13.6
Common Equity Tier 1 capital ratio (CET1), %2	11.9	11.0	0,9*	11.9	11.0	0,9*	11.5	0,4*	11.3

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

Briefing for analysts, investors and media

Aktia's results briefing for analysts, investors and media will be held in English on Wednesday 6 November 2024 at 10.30 a.m. Aktia's CEO Aleksi Lehtonen and interim CFO Karri Varis 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-pankki-oyj-q3-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 September 2024 amounted to EUR 14.3 billion, and the balance sheet total was EUR 12.0 billion. Aktia's shares are listed on Nasdaq Helsinki Ltd (AKTIA). aktia.com.

Attachment

• Aktia Bank Plc Interim report 1–9_2024