Aktia Bank PLC Class A · OMXHEX:AKTIA
Aktia Bank PLC Class A — Debt Investor Presentation (August 2019)
40 slides from Aktia Bank PLC Class A's debt investor presentation, Aug 1, 2019
Slide 1: Aktia investor presentation
1 AUGUST 2019 Aktia investor presentation June 2019
Slide 2: A domestic bank focusing on growth areas in Finland
A domestic bank focusing on growth areas in Finland 2
Slide 3: Timeline
Timeline 200 YEARS OF BANKING Aktia Bank is listed on the New strategy concentrates on Aktia expands sales of its emerging Aktia introduces the first completely main list of Nasdaq OMX individual wealth management and market government bonds to digital credit card in Finland Helsinki stock exchange
Slide 4: Our three business areas are organized into three reporting segments
Our three business areas are organized into three reporting segments Business areas Share of total operating income in 2018 14% Retail Banking Corporate Banking Asset Management in banking operations in banking operations 25% Personal Corporate Asset Banking Banking Management 61% Premium Life Banki
Slide 5: Aktia’s year 2018
Aktia’s year 2018 KEY FIGURES 2018 OPERATING INCOME OPERATING EXPENSES 210.1 143.0 21.4 7.3 Total operating Operating Expenses, 38.3 income, EUR EUR million million 85.9 0% (210.3) -11% (160.7) Total Total 66.7 210.1 143.0 65.4 9.4 EUR million EUR million Comparable Return on equity 12.4 operating p
Slide 6: Finnish households a key business driver
Finnish households a key business driver STRUCTURE OF LENDING AND DEPOSITS JUNE 30, 2019 Lending Deposits 0.6% 7.3% 10.4% 18.8% 11.9% Total Total EUR 6,246 million EUR 4,140 million (6,107) (3,963) 77.1% 73.9% Households Housing associations Households Public entities and non-profit organisations Co
Slide 7: Strong lending and high customer activity
Strong lending and high customer activity BANKING BUSINESS • High demand for housing loans continued but tough competition puts further pressure on margins. • Interest rate collar and cap products still in high demand among the customers. • The digitalisation of payment services is progressing: a vi
Slide 8: New products to improve the customer experience further
New products to improve the customer experience further BANKING BUSINESS AKTIA DIGITAL GOLD CREDIT • First completely digital credit card in Finland • One of the most secure pay cards for online shopping • Fast credit decisions ‒ the card in use already one day after application APPLE PAY • Aktia th
Slide 9: International assets in UI-Aktia funds increased further
International assets in UI-Aktia funds increased further ASSET MANAGEMENT Assets under management excluding custody • The UI-Aktia mutual fund capital increased by (AuM) 38% from the turn of the year and amounted EUR million to EUR 1.6 (1.1) billion at the end of June. 12 000 10 000 9,896 • The mark
Slide 10: Responsibility in Aktia
Responsibility in Aktia Aktia
Slide 11: New responsibility programme
New responsibility programme AKTIA’S CORPORATE • In 2018 Aktia launched a new corporate RESPONSIBILITY PROGRAMME responsibility programme together with stakeholders. As a part of the programme we created an action plan for the responsibility programme for the coming 5-year period. • Initiatives in 2
Slide 12: Responsible investments in Aktia
Responsible investments in Aktia CORNERSTONES IN OUR BUSINESS Our view Our methods GHG emissions Initiatives and memberships Only by considering all • Exclusion We calculate and report the material aspects regarding the • Norm-based screening carbon footprint of our equity environment, society and a
Slide 13: Smaller carbon footprint of equity funds than on the reference market
Smaller carbon footprint of equity funds than on the reference market The Carbon Footprint of Aktia’s Equity Funds • Aktia will report every six months on the most important indicators of our 150 corporate responsibility programme. The indicators will be complemented in the future. 100 • The carbon
Slide 14: Aktia Q2 2019
Aktia Q2 2019 Aktia
Slide 15: Financial summary Q2 and YTD
Financial summary Q2 and YTD EUR million 2Q2019 2Q2018 , % 1-6/2019 1-6/2018 , % Total operating income 60.6 55.8 9% 113.3 107.0 6% Net interest income 19.2 23.5 -18% 38.7 44.2 -13% Net commission income 24.0 26.2 -9% 46.7 50.1 -7% Net income from life insurance 6.6 5.0 33% 14.9 10.8 38% Other inc
Slide 16: The good underlying development of Aktia’s business operations continued
The good underlying development of Aktia’s business operations continued INCOME MIX Net interest income: EUR million +6% Net interest income decreased by 13% to EUR 38.7 million. Net interest income from 120 113.3 borrowing and lending increased by 5% to 107.0 EUR 36.1 million. Income from interest
Slide 17: Total operating income increased by 6% − includes EUR 9.6 million gain from sale of Samlink shares
Total operating income increased by 6% − includes EUR 9.6 million gain from sale of Samlink shares OPERATING INCOME PER SEGMENT EUR million +6% 120 113.3 107.0 100 -2% 80 65.2 63.8 60 +20% 40 +36% 32.2 26.9 21.0 20 15.4 0 -0.5 -3.7 -20 Banking Business Asset Group Functions Other & Total operating M
Slide 18: Expenses approximately at the same level as last year
Expenses approximately at the same level as last year OPERATING EXPENSES Staff costs: EUR million The staff costs were approximately at the same level as during the reference period. 0 The number of full-time employees at the -10 end of June amounted to 828 (30 June -6.3 -9.8 2018; 868). -12.0-13.0
Slide 19: The debt investment case
The debt investment case Aktia
Slide 20: CET1 on a solid level
CET1 on a solid level CAPITAL ADEQUACY AND CAPITAL REQUIREMENT • Aktia’s Common Equity Tier 1 (CET1) Capital is at a good CAPITAL REQUIREMENT % level at 16.5% (16.4% on March 31, 2018). CET1 % 8.0% • Target over time is to exceed the regulative requirement Pillar 1 min req 4.5% with 150–300 basis po
Slide 21: Prudent and low-risk lending policy
Prudent and low-risk lending policy LOW LONG-TERM TREND IN NON-PERFORMING LOANS Aktia Bank operates under strict origination criteria: ECL (IFRS 9) (EUR million) Stage 1 Stage 2 Stage 3 • Identification of the customer mandatory (KYC). ≤ 30 days 39.3 14.9 0.1 • Responsible lending: customer ability
Slide 22: High-quality liquidity portfolio
High-quality liquidity portfolio At the end of June 2019 the Bank Group’s liquidity buffer was approximately equivalent to the estimated outgoing cash flow of finance from the wholesale market over 33 months. The Liquidity Coverage ratio (LCR) was 121%. 2% June 30, March 31, 2019 2019 EUR million 1,
Slide 23: Sound funding profile
Sound funding profile Customers deposits and covered bonds dominate EUR million 2% 6% 1 200 13% MEUR 916 1 000 800 Total 7,303 600 EUR million 57% MEUR 4,140 400 22% MEUR 1,622 200 0 2019 2020 2021 2022 2023-> Customer deposits Senior debt Subordinated Covered Bonds Subordinated Debt REPOs & ECB deb
Slide 24: Aktia Bank as covered bond issuer
Aktia Bank as covered bond issuer • The Aktia Bank mortgage loan portfolio is of very high quality: • Only prime residential mortgage loans • Collateral located in Finland • Low average LTV Aktia Bank operates under the • Aktia Bank covered bonds are CRR & UCITS, ECB repo and legislation as mortgage
Slide 25: Cover pools
Cover pools Lappi 2Q 2019 COVER POOL 2 COVER POOL 1 Pohjois-Pohjanmaa Total asset pool EUR 2,136 million EUR 172 million (No substitute assets) 2% No of loans / 35,448 / EUR 60,256 2,374 / EUR 72,482 average loan balance Kainuu Types of loans First ranking residential First ranking residential mortg
Slide 26: Finland − a strong but very export driven economy
Finland − a strong but very export driven economy 26
Slide 27: The Finnish Economy
The Finnish Economy KEY FACTS ABOUT FINLAND • Member of EU and Euro area • Population: 5.5 million • Area: 338,430 sq. Km • GDP per capita EUR 42,077 (2018) • Credit ratings: Aa1 (stable) / AA+ (stable) / AA+ (stable) 27
Slide 28: The Finnish Economy
The Finnish Economy GROWTH CONTINUES, BUT WEAKER 28
Slide 29: The Finnish Economy
The Finnish Economy Employment rate, 15-64 year olds Private debt, % of GDP (2017) 80 228 79 a \ 4 WS \ ea 100 n 1 L \ 6s A) 68 if 50 a «s _ 6s cena ns n't en ana aa ae 3 Denmark France Finland Germany ‘Sources: Aktia and Macrobond ‘Sources: Aktia and Macrobond . Aktia
Slide 30: Macroeconomic environment
Macroeconomic environment EXPORTS SLOWING DOWN 30
Slide 31: Finnish housing market
Finnish housing market SOLID AND STABLE MARKET, A SLOWDOWN IN GROWTH FORESEEN old apartments 31
Slide 32: Going forward
Going forward Aktia
Slide 33: Getting ready for a new era
Getting ready for a new era THE ONGOING TRANSFORMATION • Operational environment is changing • Customer behaviour is changing • New technologies reshape the industry • Low interest rates and increased regulation • Turning point of the economy MEGATRENDS • Rupture of work and living • AI and robotisa
Slide 34: Strategy
Strategy Increase and secure our customers’ Develop our service model Use of digitalisation wealth We provide tailored solutions for We enhance our specialist organisation We invest in flexible digital concepts and investments and financing in an easy and and offer our customers advanced services us
Slide 35: Four action programs for strategy implementation
Four action programs for strategy implementation Corporate culture Operational excellence Reshaping customer Sales experience 35
Slide 36: Financial targets 2022
Financial targets 2022 Comparable Return on Comparable Common Equity operating profit Equity ROE cost-to-income Tier 1 capital ratio to approximately to 9.7% ratio CET1 to 1.5–3 EUR 80 million to 0.61 percentage points over regulatory requirements* 1–6/2019: 1–6/2019: 1–6/2019 (comparable): 1–6/2019
Slide 37: Appendices
Appendices Aktia
Slide 38: Awarded Asset Management
Awarded Asset Management MORNINGSTAR AWARDS LIPPER FUND AWARDS Best Fund House Fixed Income 2013, 2014, 2015, 2018, 2019 Overall Group Award: TOP 3 Fund House Fixed Income 2016, 2017 Small Company Fixed Income 2019 TOP 3 Fund House Overall 2019 Small Company 2017 Best Balanced Fund (Aktia Secura) 20
Slide 39: Operating income split
Operating income split EUR MILLION 120 100 95,6 91,4 79,7 80 80 74,9 70,7 69,1 70,1 65,3 58,8 60 57,4 55,1 47,2 41,2 40 29,8 31,2 33,3 23,3 24,7 26,6 28,1 24,9 27,3 24 25,9 21,4 20 25,8 14,9 18,5 21,3 11,3 16 15,8 14,4 8,3 0 2012 2013 2014 2015 2016 2017 2018 Interest rate hedging Liquidity portfoli
Slide 40: Think further.
Think further.
Aktia Bank — Debt Investor Presentation (August 2019) on 6ix