7 August 2018: January – June 2018 acting CEO Juha Hammarén
The outlook for the Finnish economy remains good Year-on-year change in Finnish GDP (%) 2 Source: Aktia and Macrobond
Interest rate environment still challenging ECB interest rates, 3- and 12 month Euribor ECB interest rate Euribor 12 month Euribor 3 month Deposit rate Source: Aktia and Macrobond 3
January – June 2018: The transformation progressed well with several positive changes Smoother customer experiences and better customer service Aktia's NPS* • Focus on personal service and financial advice. improved to • Customer satisfaction improved from 59.1 in December 2017 to 63.2 in June 2018. 63.2 • Automation, robotics and data support development of smooth digital solutions that increasingly benefit our customers. Competence development • Artificial Intelligence training for our personnel supports Aktia’s digital transformation. 4 * NPS: Net Promoter Score measures customer satisfaction (<50 excellent)
April – June 2018 in short The transformation is proceeding well. Increased net commission income and cost savings are leading to results. New products, customer concepts and digitalisation initiatives are introduced. New CEO appointed 6 August 2018. Wealth Management Strategy implementation Issue of 5 year EUR 500 million Good sales and record high level • • of mutual fund capital. covered bond at good terms. Upgraded credit rating by The cooperation with Universal • • Investment in Europe proceeds Moody’s . well. Decreased holdings in Aktias ’ • Real Estate Agent business* KANTAR SIFO Prospera: Aktia’s • institutional asset management Insurance agency for Folksam • Non-Life Insurance ended* on third place in ”External Asset Management Finland 2018” New digital solutions Automated authority queries • Personal and Corporate and credit decisions. Banking A new CRM implemented. • New customer concepts and • Launches in autumn 2018: New • relationship models introduced. digital marketing platform, Continued development of the • Wealth Path (robotised advicory product offering. platform); Aktia's code app; Successful launch of a new loan • Aktia’s mutual funds and corridor product. consumer credits through new Demand for mortgage loans • web portals. remain high. 5 *Events after the end of the period.
Outlook for 2018 (unchanged): • The continued low interest rate environment and decreased income from previously unwound interest-rate hedges (2012) will have a negative impact on the total net interest income for 2018. • Commission income is expected to increase in 2018. Furthermore, the cost savings measures taken in 2017 are expected to affect profitability in a more favourable way than previously estimated. • Impairments of credits are expected to remain low in 2018. The comparable operating profit for 2018 is expected to be somewhat higher than the comparable operating profit for 2017. 6
Comparable operating profit by segment: A strong result despite lower net income from life insurance in Wealth Management +11% +16% EUR million 40 36,6 35,9 35 32,8 30,8 30 25 +33% 20 -9% 15,6 15 +15% 12,4 11,7 11,3 8,9 10 7,7 Net income from life insurance in Wealth Management decreased by -10% -11% 5 20 % to EUR 9 million due to unrealised value changes in the 0,6 0,6 0,3 0,3 investment portfolio (IFRS 9) 0 Wealth Personal Group Comparable Operating profit Other Elimi- & Management functions operating nations Corporate profit Banking 1-6/2018 1-6/2017 7 Personal & Corporate Banking : Financing, insurance, savings and investment products and services. Wealth Management: Asset Management, Private Banking and Life Insurance. Group functions: Treasury as well as support and staff functions.
January – June 2018: Higher net commission income and lower costs contributed to 11 % higher comparable operating profit , % EUR million 2Q2018 2Q2017 1 – 6/ 2018 1 – 6/ 2017 , % Total operating income 55.8 54.2 3 % 107.0 107.3 0 % Net interest income 23.5 22.9 3 % 44.2 46.2 -4 % Net commission income 26.2 24.6 7 % 50.1 45.7 9 % Net income from life insurance 5.0 5.8 -14 % 10.8 12.8 -16 % Other income 1.1 1.0 13 % 2.0 2.6 -23 % Total operating expenses -38.3 -39.7 -4 % -71.8 -77.0 -7 % Operating profit 18.2 14.4 26 % 35.9 30.8 16 % 18.5 16.9 10 % 36.6 32.8 Comparable operating profit* 11 % 0.21 0.16 32 % 0.43 0.36 Earnings Per Share (EPS) 21 % Return on Equity (ROE) % 10.1 7.4 37 % 10.2 8.2 25 % 0.68 0.69 -1 % 0.66 0.70 Cost-to-income ratio (comparable) -5 % 16.3 18.0 -10 % 16.3 18.0 Common Equity Tier 1 capital ratio -10 % 8 *Excl. items affecting comparability, mainly costs for restructuring.
Financial objectives 2018 – 2022 Comparable cost-to- Comparable income ratio operating profit to a to 0.61 c. EUR 80 million 1-6/2018 (comparable): 0.66 1 – 6/2018: EUR 36.6 million Return on Equity Common Equity Tier 1 capital ratio ROE to 9.7 % CET1 to 1.5 – 3 % units over regulatory requirements 1 – 6/2018: 10.2 % 1 – 6/2018: 6 percentage points higher than the minimum capital requirement* or 16.3 % *Regulatory requirement: 10.3 % 9
Income mix: Total operating income supported by strong net commission income growth 0 % 107,3 107,0 EUR million 100 80 -4 % +9 % 60 50,1 46,2 45,7 44,2 40 -16 % 20 12,8 10,8 -23 % 2,6 2,0 0 Net interest income Net commision income Net income from life Other income Total operating income insurance 1-6/2018 1-6/2017 10
Operating income by segment: New customer concepts and product offering supported growth in Personal & Corporate Banking EUR million 0 % 120 107,3 107,0 100 +4 % 80 60,7 Net commission income • 58,2 60 increased in P & C 0 % Banking and Wealth Management 40 -14 % 31,5 31,5 Net interest income • 17,8 decreased in all three 20 15,4 segments -0,5 -0,2 0 Personal & Corporate Wealth management Group functions Other & Eliminations Total operating income Banking -20 11 1-6/2018 1-6/2017
Operating expenses: Cost efficiency has improved Other operating The Group's total EUR million Staff costs IT expenses Depreciations expenses expenses 0 Personnel and IT • expenses decreased. -3,4 -6,3 -10 Depreciations including • -12,0 depreciation for the for -15,7 -20 +87 % -18,9 -19,2 the core banking platform -24 % EUR 3.0 million (-) due to -30 +2 % implementation of the -34,3 core banking platform. -40 -39,1 Other operating expenses • -50 -12 % include the EU statutory fee of the period for the -60 fund for financial stability. -70 -71,8 -80 -77,0 12 1-6/2018 1-6/2017 -7 %
Net interest income mix per quarter: “Deposits and lending” remain strong, income from hedging measures and the liquidity portfolio decreasing EUR million 50 All income from the • 40 liquidity portfolio is reported together 26,9 30 28,3 27,3 25,4 25,5 25,9 0,0 26,1 23,4 (previously in 1,6 25,3 24,6 24,3 23,8 23,7 24,1 23,9 23,0 22,9 21,5 23,5 0,1 21,8 20,7 7,6 7,9 8,0 4,0 0,7 5,7 5,1 3,9 4,4 3,6 4,0 4,0 Miscellaneous and 6,2 4,0 4,0 4,0 4,0 3,4 3,5 4,0 3,3 3,3 20 3,8 4,6 3,1 2,2 3,4 5,4 2,4 5,9 Protective Measures) 6,5 5,7 8,0 6,9 7,3 7,7 8,6 8,8 17,9 17,4 9,3 17,1 17,3 16,9 16,9 9,2 8,9 15,8 8,9 15,3 9,3 14,8 14,8 14,6 14,3 14,4 14,1 2Q2018 net interest 10 • 13,0 12,4 11,5 11,2 10,0 10,2 9,6 income include -0,7 -0,3 -1,6 -1,0 -0,6 -1,5 -1,8 0 -0,7 -1,1 -1,3 -1,6 -1,9 -1,9 interest income from -2,3 -2,2 -2,4 4-6/13 7-9/13 10-12/13 1-3/14 -0,5 4-6/14 7-9/14 10-12/14 1-3/15 4-6/15 7-9/15 10-12/15 1-3/16 4-6/16 7-9/16 10-12/16 1-3/17 4-6/17 6-9/17 10-12/17 1-3/18 4-6/18 Aktia’s TLTRO -10 refinancing program (EUR 2.6 million) Liquidity portfolio Other, incl. funding from wholesale market Hedging measures through interest rate derivatives Deposits and lending 13
Net commission income mix: The strong growth of ”Saving” contributed to a 9 % increase in net commission income EUR million 50.1 50 45.7 9,7 8,3 40 3,8 4,1 2,4 2,6 5,3 30 5,8 20 27,8 23,6 10 ”Saving” includes mutual funds, asset management and securities brokerage 1,1 1,4 0 1-6/2018 1-6/2017 Other Saving 14 Lending Insurance services Real estate agency Card and payment services
Customer assets of Wealth Management, excluding shares in custody: Assets under management increased during the first six months EUR million 10 000 9 000 8 970 8 000 7 962 7 000 6 523 6 000 5 788 5 525 5 000 5 192 4 000 3 000 2 000 1 000 0 2013 2014 2015 2016 2017 30.6.2018 15
Capital adequacy: CET1 still on a good level • Aktia’s Common Equity Tier 1 Capital is at a good level at Change in CET1% 16.3 % (18.0 % on 31 December 2017) CET1 % 18.0% 31 December 2017 • Aktia’s Common Equity Tier 1 Capital decreased due to: Introduction of the risk -1.3 percentage weight floor points • The introduction of the risk weight floor of 15% for housing loans increased risk-weighted commitments by Other increase in risk- -0.5 percentage EUR 168 million. weighted points • The corporate lending also increased the risk-weighted commitments commitments. Increase in CET1 +0.1 capital base percentage points CET1 % 16.3% 30 June 2018 16
Courageously. Skilfully. Together.
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