AKTIA BANK HALF-YEAR REPORT 1-6/2017
CEO Martin Backman 8.8.2017
• Total income amounted to EUR 107.3 (109.8) million
• Net commission income increased by 16 % to EUR 45.7 (39.6) million.
• In the reference period, Aktia received EUR 5.9 million from the sale of Visa Europe.
• Net interest income from borrowing and lending continued to increase, while returns from the bank’s liquidity portfolio continued to decrease and net interest income fell by appr. 4 % to EUR 46.2 (48.7) million.
• The new core banking system was implemented successfully in the first week of July
• Total expenditure rose to EUR 77.0 (73.3) million
• EUR 3.1 (0.4) million were costs for restructuring related to personnel, and also IT expenses increased by 14 % due to the final implementation of the core banking system.
• The ongoing organisation changes and the new core banking system are expected to improve efficiency and the cost structure from 2018 onwards.
• The comparable operating profit amounted to EUR 32.8 (32.2) million.
2
THE FIRST HALF-YEAR
OUTLOOK FOR 2017 (UNCHANGED)
The continued low interest rates have a negative impact on the return from Aktia’s liquidity portfolio, resulting in lower net interest income than in 2016.
Write-downs on credits are expected to remain low in 2017.
The operating profit for 2017 is estimated to be lower than in 2016, as no larger one-time gains are expected.
3
4
EURm 1-6/2017 1-6/2016 CHANGE %
Total operating income 107.3 109.8 -2 %
Net interest income 46.2 48.7 -5 %
Net commission income 45.7 39.6 +16 %
Net income from life insurance 12.8 12.8 0 %
Other income 2.6 8.8 -71 %
Total operating expenses -77.0 -73.3 +5 %
Operating profit 30.8 37.0 -17 %
Comparable operating profit* 32.8 32.2 +2 %
Earnings per share (EPS), EUR 0.37 0.45 -18 %
Return on Equity (ROE), % 8.2% 9.8% -16 %
JANUARY - JUNE 2017
* Excluding e.g. gains from sale of Visa Europe 2016 and restructuring costs 2017
5
EURm 4-6/2017 4-6/2016 CHANGE %
Total operating income 54.2 59.4 -9 %
Net interest income 22.9 24.1 -5 %
Net commission income 24.6 20.7 +19 %
Net income from life insurance 5.8 6.9 -16 %
Other income 1.0 7.8 -87 %
Total operating expenses -39.7 -36.8 +8 %
Operating profit 14.4 22.4 -36 %
Comparable operating profit* 16.9 16.6 +2 %
Earnings per share (EPS), EUR 0.17 0.27 -36 %
Return on Equity (ROE), % 7.4% 11.6% -36 %
APRIL- JUNE 2017 – ASSET MGMT CONTINUED STRONGLY
* Excluding e.g. gains from sale of Visa Europe 2016 and restructuring costs 2017
BANKING BUSINESS
ASSET
MANAGEMENT
• Strong increase in commission
income
• NII decreased y-o-y
• Lower yield from liquidity portfolio
• Continued NII improvement from borrowing & lending
• Core banking system implemented
• Higher IT expenses increased total costs
• Increased new lending to households
• Continued growth in Private Banking client base and AuM
• Transformational actions led to changes of organisation and new areas of responsibility
• Strong market development and sales boosted commission income
• Net inflow increased, mutual funds AuM at all-time high EUR >4,8bn
• Transformational actions led to changes of organisation and new areas of responsibility
BUSINESS HIGHLIGHTS 1-6/2017
INSURANCE
• Life Insurance net investment income decreased
• Yield from Life Insurance portfolio was 0.1 (2.0)%
• Life insurance premiums written increased
• Transformational actions led to changes of organisation and new areas of responsibility
6
CORE BANKING SYSTEM SUCCESSFULLY IMPLEMENTED
• The total investment, including migration costs, was EUR 67 million, and the total activated investment costs for the project amounted to approximately EUR 61 million.
• The cost savings brought by the new core banking platform will materialise gradually from H2 2017 onwards.
• Depreciation of the project is planned to take place during 10 years corresponding to an annual depreciation of EUR 6 million.
7
CUSTOMER SEGMENTS
DIGITALITY
INSTITUTIONS
PRIVATE BANKING
RETAIL BANKING
CORPORATES, FOUNDATIONS, FAMILY OFFICES PREMIUM
BANKING
8
RESULT HIGHLIGHTS & OUTLOOK
2 SEGMENT OVERVIEW
3 BALANCE SHEET
9
1
MARKET DEVELOPMENT
10
milj. € %
117 113
103
97 96
46,2
-0,4
-0,2
0
0,2
0,4
0,6
0,8
0
20
40
60
80
100
120
140
2012 2013 2014 2015 2016 2017
% EURm
NII progress
4 978 5 192
5 525
5 788 6 523
7 328
0
500
1000
1500
2000
2500
3000
3500
4000
4500
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
2012 2013 2014 2015 2016 2017
Index EURm
Assets under management (AuM)
NII Euribor 3-m HEX 25 AuM
1-6/2017 1-6/2017
105,4 106,6
48.7
39.6
12.8 8.8
109.8
46.2 45.7
12.8
2.6
107.3
0
20
40
60
80
100
120
1-6/2016
1-6/2017
-2%
+16% -5%
0 % -71%
11
INCOME 1-6/2017
Net interest income
Net commission income
Net income from life insurance
Other operating income
Group total
EU
R m
illion
EXPENSES 1-6/2017
105,4 106,6
36.3
13.8
4.2
19.0
73.3
39.1
15.7
3.4
18.9
77.0
0,0
15,0
30,0
45,0
60,0
75,0
90,0
1-6/2016
1-6/2017
-20%
+14%
+8%
-1%
+5%
12
Personnel IT expenses Depreciations Other operating expenses
Group total
EU
R m
illion
50,4
59,4
50,9 50,6 53,1 54,2
14,6
22,4
15,8
8,6
16,4 14,4
15,6 16,6 16,9
8,5
15,9 16,9
0
20
40
60
80
1-3/2016 4-6/2016 7-9/2016 10-12/2016 1-3/2017 4-6/2017
Total operating income Operating profit Comparable operating profit
OPERATING INCOME & OPERATING PROFIT
EU
R m
illio
n
13
AKTIA GROUP COST-INCOME RATIO
105,4 106,6
0.70 0.68 0.69 0.70 0.72
2013 2014 2015 2016 1-6/2017
14
15
24.2
10.5
1.5 0.7
37.0
32.2
21.0
12.8
-3.6
0.6
30.8 32.8
-10
0
10
20
30
40
THE SEGMENTS' CONTRIBUTION TO THE OPERATING PROFIT 1-6/2017
1-6/2016
1-6/2017
Banking Business
Asset Management
& Life Insurance
Miscellaneous Eliminations Group total
-13%
+21%
-17%
-
-19%
EU
R m
illio
n
+2%
Group excl items affecting
comparability
1
3
16
2
RESULT HIGHLIGHTS
SEGMENT OVERVIEW
BALANCE SHEET
LENDING VS. ASSETS UNDER MANAGEMENT
17
E
UR
mil
lio
n 5,192
5,525 5,788
6,523
7,328
6,802 6,416
5,856 5,717 5,746
0
1000
2000
3000
4000
5000
6000
7000
8000
2013 2014 2015 2016 6/2017
AuM
Credit stock
18,715,9
13,0 13,6 14,812,8 13,3 13,8 14,9 15,8 16,4 15,9 15,3 15,0
13,311,5 10,4 10,0 9,6
11,2 10,211,5 12,4 13,0
14,6 14,1 14,3 14,4 14,8 15,3 15,8 14,817,117,9
5,811,3
12,9 14,8 15,115,9 14,6 12,6 11,0 9,6 7,3 7,0 7,2 7,2
7,49,0 11,1 10,9 11,1
10,8 9,49,1 8,4 8,1
7,8 7,8 7,7 8,9 9,0 8,9 8,8 8,78,1 7,4
7,9
12,2 14,6 11,48,6 9,5
8,7 9,58,3 7,7
7,3 7,4 7,1 7,4 7,9 8,9 8,67,4
6,2 5,35,8 5,3 5,3 4,2 3,1 2,4 1,8 0,4 0,8
-0,2 -0,6 -0,6 -1,8 -2,4
32,5
39,4
40,5
39,8
38,5
38,2
36,6
35,9
34,2
33,0
31,1
30,3
29,6
29,7
28,7
29,3
30,1
28,3
26,9
27,3
25,4
25,9
26,1
25,3
25,5
24,3
23,8
23,7
24,6
24,1
23,9
23,0 23,4
22,9
1-3
/09
4-6
/09
7-9
/09
10-1
2/
09
1-3
/10
4-6
/10
7-9
/10
10-1
2/
10
1-3
/11
4-6
/11
7-9
/11
10-1
2/
11
1-3
/12
4-6
/12
7-9
/12
10-1
2/
12
1-3
/13
4-6
/13
7-9
/13
10-1
2/
13
1-3
/14
4-6
/14
7-9
/14
10-1
2/
14
1-3
/15
4-6
/15
7-9
/15
10-1
2/
15
1-3
/16
4-6
/16
7-9
/16
10-1
2/
16
1-3
/17
4-6
/17
Axis TitleBorrowing and lending Hedging of interest rate risk Other
EU
R m
illio
n
18
NET INTEREST INCOME (QUARTERLY)
55,1
41,2 47,2
57,4 60,8
30,1 34,9
30,8
44,0 35,0
32,3 35,4
17,9 15,5
31,4 27,5
20,5 7,7
-0,6
0,6
-4,2
117,3 112,6
102,8 97,3 95,6
48,7 46,2
-10
30
70
110
150
2012 2013 2014 2015 2016 1-6/2016 1-6/2017
Borrowing- and lending Hedging Other
NET INTEREST INCOME (ANNUAL)
19
-5%
EU
R m
illio
n
AUM & NET INFLOW IN AKTIA’S MUTUAL FUNDS
20
EU
R m
illio
n
3 3 3 3 2 1 1
29 33
37 42 41
20 24
9
9
9
10 10
5
6
3
4
4
4 4
2
3
8
7
6
7 7
3
4
13
15
16
14 15
8
8
0
20
40
60
80
100
2012 2013 2014 2015 2016 1-6/2016 1-6/2017
Payments
Real Estate
Insurance
Lending
Saving
Other
NET COMMISSION INCOME
21
+16% y-o-y
EU
R m
illio
n
65.3
70.7
74.9 80.0
79.7
39.6
45.7
1
2
22
3
RESULT HIGHLIGHTS & OUTLOOK
SEGMENT OVERVIEW
BALANCE SHEET
ASSETS & LIABILITIES
23
19.5
22.2*
18.0
Aktia 2016 Banks in Finlandaverage 2016
Aktia 6/2017
• Aktia’s Common Equity Tier 1 Capital (CET1 %) on a good level
• Aktia’s Common Equity Tier 1 Capital decreased due to
• New core banking system increased intangible assets and other deductibles
• Growth in corporate lending increased risk-weighted assets by EUR 125m
CAPITAL ADEQUACY
Common Equity Tier 1 capital ratio, %
24
Change in CET1%
CET1 % 31.12.2016 19.5%
Increased intangible assets and other deductibles
-0.3 percentage points
Risk-weighted assets +EUR 125m
-1.2 percentage points
CET1 % 30.6.2017 18.0%
* Source: FSA 8.6.2017
8.67 9.39 9.26 9.24
8.84
31.12.2013 31.12.2014 31.12.2015 31.12.2016 30.6.2017
EUR/share
EQUITY PER SHARE (NAV)
25
26
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