5 MAY 2020 Q1 Investor presentation
Aktia’s Q1 2020 in brief Unrealised value changes the main reason for the lower net income from life • insurance of EUR -5.2 (8.3) million and thus the low comparable operating profit of EUR 2.8 (17.2) million. • Very strong activity among private and corporate customers during January- February supported an increase in the net interest income to EUR 19.7 (19.4) million. Demand for housing loans decreased in March, stable lending margins. • Net commission income increased to EUR 25.2 (23.2) million. Assets under management (AuM) decreased due to large market movements but the proportion of corona related redemptions was relatively small. • The expansion of the product selection for asset management continued during the quarter. The distribution contracts for UI-Aktia funds in Chile and Peru were signed. • The cost level was close to unchanged compared to the previous year. Aktia Q1 2020 Investor Presentation 5 May 2020 2
A good result despite the economic uncertainty Banking Business Private customers • January−February was characterised by high activity within private customers. • Lending activity was on a good level at the start of the year and the growth of the loan book stable. However, a drop in the demand for housing loans could be seen after the coronavirus outbreak. • The interest in instalment-free periods increased clearly towards the end of the quarter. • The demand for Aktia’s asset management services increased among private customers. Corporate customers • The corporate customer business had a strong growth and a good activity level at the beginning of the year. • The market situation was still favourable at the beginning of the year and companies’ investment appetite was higher than expected. • However, the coronavirus situation in March caused a fast change on the market. The main focus in March was on giving advice to our customers. • Aktia continued the purchase of loans to housing companies from the Mortgage Society of Finland (Hypo) to a value of EUR 48 million. Aktia Q1 2020 Investor Presentation 5 May 2020 3
The steep market decline had a large impact on the assets under management Asset Management Asset Management • Assets under management (AuM) amounted to EUR 8,136 (31 March 2019; 8,786) million. Assets under management excluding custody (AuM) EUR million • Customer assets under management decreased during the quarter due to strong and negative market movements 12,000 as a result of the global coronavirus pandemic. 9,853 10,000 8,353 • Aktia’s focus on international growth continued. The 8,136 7,628 8,000 distribution contracts for UI-Aktia funds in Chile and Peru 6,235 5,597 5,405 were signed. 6,000 Life Insurance 4,000 • The focus on developing the life insurance business 2,000 continued and led to higher activity levels. • The demand for personal coverage has increased steadily 0 2014 2015 2016 2017 2018 2019 31 March during the whole quarter compared to the corresponding 2020 period last year. International institutional assets (UI-Aktia) Institutional assets Retail assets 5 May 2020 4 Aktia Q1 2020 Investor Presentation
Key Figures Q1 2020 (Q1 2019) EUR 19.7 (19.4) million Net interest income +1% EUR 25.2 (23.2) million Net commission income +9% EUR 39.9 (52.7) million Total operating income -24% Comparable operating income -24% EUR 39.9 (52.7) million EUR -35.6 (-36.1) million Total operating expenses -1% Comparable operating expenses -1% EUR -35.6 (-36.1) million EUR 2.8 (17.2) million Comparable operating profit -84% EPS Comparable C/I ratio ROE CET1 EUR 0.03 0.89 1.4% 15.9% (EUR 0.21) (0.69) (31 March 2019; 9.4%) (31 March 2019; 16.9%) Aktia Q1 2020 Investor Presentation 5 May 2020 5
Aktia Q1 2020 Investor presentation Covid-19: impacts and strategy Aktia Q1 2020 Investor Presentation 5 May 2020 6
Coronavirus pandemic: impacts • We always put safety of our customers and personnel first • The operational reliability ensured through active crisis management and business continuity plans • A rapid and agile change in the way of working: appr. 80% of the personnel working remotely • A big change in customer behaviour: digital banking solutions at the centre when Aktia takes a big digital leap forward • Remote customer meetings have become a part of everyday business, the use of digital signatures in conjunction with housing transactions has also picked up • Almost 9,000 instalment-free period applications from private customers, a significant increase even within corporate banking Aktia Q1 2020 Investor Presentation 7
Our strategic priorities still valid 2023 Win in asset management Acquire new customers in growing cities Drive operational efficiency to capitalise on our challenger position Banking & Insurance Aktia Q1 2020 Investor Presentation 5 May 2020 8
Inorganic growth: M&A as a part of Aktia’s strategy • Inorganic activities are a viable and increasingly important means to grow for Aktia. • Aktia assumes an active role in executing its M&A strategy. • Aktia is also open for opportunistic business ventures if new opportunities in untapped or developing areas AKTIA are recognised and found viable. • Execution of inorganic activities during the strategy period until 2023 will also secure Aktia’s growth options beyond 2023. Aktia Q1 2020 Investor Presentation 5 May 2020 9
The financial targets for 2023 Comparable Return on Comparable Common Equity operating profit Equity (ROE) cost-to-income Tier 1 capital ratio (CET1) 1.5 – 3 EUR 100 million above 11% ratio under 0.60 percentage points over the regulatory requirement 1 – 3/2020; 31 March 2020; 1 – 3/2020; 31 March 2020; EUR 2.8 million 1.4% 0.89 4.6 percentage points over the minimum capital requirement 11.3% (1 – 12/2019; (31 December 2019; (1 – 12/2019; (31 December 2019; EUR 68.2 million) 10.3%) 0.66) 3.4 percentage points over the minimum capital requirement 11.3%) Aktia Q1 2020 Investor Presentation 5 May 2020 10
Aktia Q1 2020 Investor presentation Financial overview Aktia Q1 2020 Investor Presentation 5 May 2020 11
Balance sheet total increased to EUR 9,845 million 31 March 2020 Total liabilities and equity Total assets EUR million EUR million Deposits from the 9,845 9,697 9,845 10000 9,697 10000 public Lending to the public Liabilities to central 8000 and public-sector 8000 banks and credit 4,260 4,060 entities institutions Liquidity portfolio Debt securities 6,590 6,429 issued 6000 6000 598 536 Life insurance assets Technical provisions incl. Unit Link 4000 4000 2,623 2,837 Other assets Other liabilities 1,313 1,408 2000 2000 1,260 1,137 1,352 1,194 Equity 547 468 653 603 610 607 0 0 31 March 2019 31 March 2020 31 March 2019 31 March 2020 Aktia Q1 2020 Investor Presentation 5 May 2020 12
Structure of lending and deposits 31 March 2020 Lending Deposits Total EUR 6,590 million Total EUR 4,260 million 1% 9% 12% 21% 13% 71% 74% Households Corporates Households Corporates Housing associations Public entities and non-profit organisations Public entities and non-profit organisations Aktia Q1 2020 Investor Presentation 5 May 2020 13
Comparable operating profit Q-o-Q Comparable operating profit Comparable operating income EUR million EUR million 25 60.0 55.2 52.9 20 52.7 50.6 1.7 1.2 1.8 0.0 50.0 8.3 39.9 6.8 6.6 8.3 0.3 15 40.0 Other 25.3 25.8 25.2 24.8 23.2 30.0 Net income from 10 19.2 17.6 life insurance 17.2 Net commission 20.0 14.3 income 5 Net interest 10.0 19.7 19.4 19.2 19.6 19.3 income 2.8 0 0.0 -5.2 Q1/2019 Q2/2019 Q3/2019 Q4/2019 Q1/2020 -10.0 Q1/2019 Q2/2019 Q3/2019 Q4/2019 Q1/2020 Aktia Q1 2020 Investor Presentation 5 May 2020 14
Comparable operating profit 1 – 3/2020 vs 1 – 3/2019 * Organic growth in net interest income (EUR 1.0 million), net +16% underlying profit growth commission income (EUR 2.0 million), net income from life insurance (without unrealised value changes)* (EUR -0.6 million), other income (EUR -0.1 million) and operating expenses (EUR 0.5 million) EUR million 1.3 2.0 1.0 0.8 14.4 17.2 0.4 0.5 2.4 1.3 2.8 Comparable Model-based Comparable Organic growth Actuarially Other income operating profit expected credit operating profit in net interest calculated result 1 – 3/2019 losses (ECL) 1 – 3/2020 income (Net income from Lower income Other life insurance) Operating Organic growth Other net income from unwound expenses in net commission from investments interest rate income (Net income from hedges life insurance) Aktia Q1 2020 Investor Presentation 5 May 2020 15
Total operating income decreased by 24% Income mix EUR million -24% 60 52.7 50 39.9 40 +9% +1% 30 25.2 23.2 19.7 19.4 20 -86% 8.3 10 1.8 0.2 0 -5.2 -10 Net interest Net commission Net income from Other income Total operating income income life insurance income 1-3/2019 1-3/2020 Aktia Q1 2020 Investor Presentation 5 May 2020 16
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