Aktia Bank PLC Class A · OMXHEX:AKTIA
Aktia Bank PLC Class A — Q4 2019 Earnings Presentation
40 slides from Aktia Bank PLC Class A's earnings presentation, Feb 14, 2020
Slide 1: Q4 2019 Investor presentation
14 FEBRUARY 2020 Q4 2019 Investor presentation Aktia Q4 2019 Investor Presentation 14 February 2020
Slide 2: Aktia's Q4 2019 in brief
Aktia’s Q4 2019 in brief • The comparable operating profit was EUR 19.2 million Recent arrangements and increased by EUR 9.0 million (+88%). • Aktia announced the acquisition • Strong lending and high customer activity continued. of Alandia’s life insurance portfolio. • Assets under management (AuM)
Slide 3: Strong lending and high customer activity continued
Strong lending and high customer activity continued Banking Business Private customers • The service model change proceeded as the merger of branch offices and a reduction in office premises was realised. • The interest in asset management products and different investment alternatives was growing.
Slide 4: Assets under Management at record high level
Assets under Management at record high level Asset Management Asset Management Assets under management excluding custody (AuM) • Assets under Management (AuM) amounted to EUR EUR million 9,853 (2018; 8,353) million, which is at the highest level ever. 12,000 • The activities for a more extensive ran
Slide 5: Corporate Responsibility Highlights and Actions in 2019
Corporate Responsibility Highlights and Actions in 2019 Corporate Responsibility Highlights: • Aktia reached rating level B in CDP’s (former Carbon Disclosure Project) international corporate responsibility ranking, which is over the average in the European financial sector. In CDP Climate Change ev
Slide 6: Smaller equity funds carbon footprint than on the reference market
Smaller equity funds carbon footprint than on the reference market The Carbon Footprint of Aktia’s Equity Funds 150 • Aktia will report every six months on the most important indicators of our corporate responsibility programme. The indicators will 100 be complemented in the future. • The carbon foo
Slide 7: Aktia 2023 strategy
Aktia Q4 2019 Investor presentation Aktia 2023 strategy Aktia Q4 2019 Investor Presentation 14 February 2020 7
Slide 8: Our market is changing – clarifying Aktia's role is critical
Our market is changing – clarifying Aktia’s role is critical to stay competitive New types of competition and Changing customer Macroeconomy and ecosystems behavior regulation New market entrants End-of-ownership Low or negative interest rates Ecosystem competition Lower customer loyalty Tightening
Slide 9: Our three strategic priorities
Our three strategic priorities 2023 Win in asset management Acquire new customers in growing cities Drive operational efficiency to capitalise on our challenger position Banking & Insurance Aktia Q4 2019 Investor Presentation 14 February 2020 9
Slide 10: Inorganic growth: M&A as a part of Aktia's strategy
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 AKTIA if new opportunities in untapped or
Slide 11: Long-term financial targets 2023
Long-term financial targets 2023 Comparable Return on Comparable Common Equity operating profit Equity (ROE) cost-to-income Tier 1 capital ratio EUR 100 million above 11% ratio under 0.60 (CET1) 1.5–3 percentage points over the regulatory requirement 1–12/2019: 1–12/2019: 1–12/2019: 31 December 2019
Slide 12: Financial overview
Aktia Q4 2019 Investor presentation Financial overview Aktia Q4 2019 Investor Presentation 14 February 2020 12
Slide 13: Aktia's business areas and reporting segments
Aktia’s business areas and reporting segments Business areas Private customers Corporate customers Asset Life Insurance Management Banking Asset Management Group Functions Private, corporate and Asset management and Group’s central functions institutional customers of the life insurance business inc
Slide 14: Key Figures 2019
Key Figures 2019 (2018) Net interest income -10% EUR 77.6 (85.9) million Net commission income +1% EUR 96.4 (95.6) million Total operating income +5% EUR 221.4 (210.1) million Comparable operating income +3% EUR 211.4 (206.1) million Total operating expenses +1% EUR -143.9 (-143.0) million Comparabl
Slide 15: Structure of lending and deposits
Structure of lending and deposits December 31, 2019 Lending Deposits Total EUR 6,429 million Total EUR 4,060 million 1% 6% 11% 19% 12% 76% 75% Households Corporates Households Corporates Housing associations Public entities and non-profit organisations Public entities and non-profit organisations Ak
Slide 16: Distribution of operating income and expenses
Distribution of operating income and expenses Q4 2019 Operating income Operating expenses Total EUR 55.2 million Total EUR 35.3 million 2.5 6.7 8.3 19.3 16.9 4.9 25.1 6.8 Net interest income Net comission income Staff costs IT expenses Net income from life insurance Other operating income Depreciati
Slide 17: Balance sheet total increased to EUR 9,697
Balance sheet total increased to EUR 9,697 December 31, 2019 Total assets Total liabilities and equity EUR million EUR million 9,697 9,697 Deposits from the 10000 10000 public 9,267 9,267 Lending to the public Liabilities to central 8000 and public-sector 8000 banks and credit entities 4,060 institu
Slide 18: Total operating income increased by 5%
Total operating income increased by 5% Income mix EUR million +5% 250 221.4 210.1 200 150 +1% -10% 95.6 96.4 100 85.9 77.6 +40% 50 30.0 21.4 17.5 7.3 0 Net interest Net commission Net income from Other income Total operating income income life insurance income 1-12/2018 1-12/2019 Aktia Q4 2019 Inves
Slide 19: Net interest income mix
Net interest income mix EUR million 30 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 25 0.1 5.7 5.1 4.4 4.0 4.0 4.0 3.9 21.5 21.8 20.7 23.5 4.0 4.0 4.0 4.0 4.0 3.6 0.7 21.0 20.7 6.2 3.5 3.4 19.2 19.6 19.3 3.3 3.3 2.8 2.0 19.4 0.8 20 3.8 1.3 1.2 0.7 4.6 3.1 2.0 1.7 1.6 1.6 1.5
Slide 20: Net commission income mix
Net commission income mix EUR million 110 Total 95.6 Total 96.4 Savings and investment products 100 includes borrowing, mutual funds, asset management 2.3 2.3 90 3.6 3.8 2.4 and securities brokerage +1% 9.6 80 10.2 70 21.0 ◼ Other 19.5 60 ◼ Insurance 50 ◼ Real estate agency ◼ Lending 40 ◼ Card and P
Slide 21: Comparable operating profit increased by 4%
Comparable operating profit increased by 4% Comparable operating profit per segment Banking Business: EUR million Strong lending and high customer activity +11% continued. +4% 80 74.8 Impairment on credits and other commitments 68.2 67.6 remained low (EUR -4.5 (-0.8) million). The 70 65.4 increase i
Slide 22: Comparable operating profit and income per quarter
Comparable operating profit and income per quarter Q-o-Q Comparable operating profit Comparable operating income EUR million EUR million 25 60.0 55.2 52.7 50.6 52.9 2.5 48.7 2.3 1.9 50.0 0.8 20 0.4 6.8 8.3 5.1 8.3 6.6 40.0 15 22.6 22.7 24.0 24.6 25.1 30.0 10 19.2 17.2 17.6 20.0 14.3 5 10.2 10.0 20.7
Slide 23: Outlook 2020
Outlook 2020 • The growth in the loan book and customer assets under management is expected to continue during 2020. The continued low interest rate environment will, however, continue to put pressure on the total net interest income in 2020. • The uncertainty regarding the future economic developme
Slide 24: The debt investment case
Aktia Q4 2019 Investor presentation The debt investment case Credit ratings Moody's: A1 / P-1, stable Covered Bonds: Aaa S&P: A- / A-2, stable Aktia Q4 2019 Investor Presentation 14 February 2020 24
Slide 25: CET1 on a solid level above the target range
CET1 on a solid level above the target range Capital Adequacy • At the end of the period, the Group’s Common Equity CET1 Tier 1 (CET1) capital ratio was 14.7%. EUR million % • After deductions, CET1 capital increased by EUR 3.9 800 24 million during Q4 which improved the CET1 capital ratio 20.8 20.1
Slide 26: CET1 meets regulative targets
CET1 meets regulative targets Capital adequacy and capital requirement • Aktia’s Common Equity Tier 1 (CET1) Capital is at a good level at 14.7% Capital requirement % (3Q19 15.6%). CET1 % 8.0% • Total Capital Ratio is 18.6% (3Q19 20.0%) Pillar 1 min req 4.5% • Target for CET 1 over time is to exceed
Slide 27: Prudent and low-risk lending policy
Prudent and low-risk lending policy Low long-term trend in non-performing loans ECL (IFRS 9) Aktia Bank operates under strict origination criteria: • Identification of the customer mandatory (KYC). (EUR million) Stage 1 Stage 2 Stage 3 ≤ 30 days • Responsible lending: customer ability to pay stress
Slide 28: High-quality liquidity portfolio
High-quality liquidity portfolio The liquidity portfolio consists The Liquidity Coverage ratio (LCR) was 118%. of high-quality assets that can be used to meet liquidity Total Liquidity Dec 31, Sept 30, portfolio 2019 2019 13% requirements in stressed EUR million 1,326 1,410 situations. The unencumbe
Slide 29: Sound funding profile
Sound funding profile The year 2020 will bring substantial senior refinancing interest. Total 7,117 EUR million Redemptions Millions 3% 4% 1,200 13% MEUR 913 1,000 800 600 58% 400 23% MEUR 4,060 MEUR 1,613 200 Customer deposits 0 Covered bonds 2020 2021 2022 2023 2024 2025-> Senior debt Subordinated
Slide 30: Aktia Bank as covered bond issuer
Aktia Bank as covered bond issuer Aktia Bank operates under • The Aktia Bank mortgage loan portfolio is of very high quality: the legislation as mortgage • Prime residential mortgage loans and loans for Housing Co-Operatives bank (Act on Mortgage • Collateral located in Finland Credit Bank Operation
Slide 31: Cover pools
Cover pools Lappi 4Q 2019 COVER POOL 2 COVER POOL 1 Pohjois-Pohjanmaa Total asset pool EUR 1,874 million EUR 158 million (No substitute assets) 2% No of loans / 31,578 / EUR 59,352 2,241 / EUR 70,319 average loan balance Kainuu Types of loans First ranking residential First ranking residential POOL
Slide 32: Finland − growing but very export driven economy
Aktia Q4 2019 Investor presentation Finland − growing but very export driven economy Aktia Q4 2019 Investor Presentation 14 February 2020 32
Slide 33: 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 42,502 (2018) Credit ratings: • Aa1 (stable) / AA+ (stable) / AA+ (stable) Aktia Q4 2019 Investor Presentation 14 February 2020 33
Slide 34: The Finnish Economy
The Finnish Economy Growth continues, but weaker Aktia Q4 2019 Investor Presentation 14 February 2020 34
Slide 35: The Finnish Economy
The Finnish Economy Aktia Q4 2019 Investor Presentation 14 February 2020 35
Slide 36: Macroeconomic environment
Macroeconomic environment Worrying environment Aktia Q4 2019 Investor Presentation 14 February 2020 36
Slide 37: Finnish housing market
Finnish housing market Solid and stable market, a slowdown in growth projected Aktia Q4 2019 Investor Presentation 14 February 2020 37
Slide 38: The good bank. And a great asset manager.
The good bank. And a great asset manager. Debt Investor Relations contacts: Timo Ruotsalainen Head of Treasury +358 10 247 7211 [email protected]
Slide 39: Appendices
Aktia Q4 2019 Investor presentation Appendices Aktia Q4 2019 Investor Presentation 14 February 2020 39
Slide 40: Financial summary Q4 and YTD
Financial summary Q4 and YTD EUR million Q42019 Q42018 , % 1-12/2019 1-12/2018 , % Total operating income 55.2 47.7 16% 221.4 210.1 5% Net interest income 19.3 20.7 -6% 77.6 85.9 -10% Net commission income 25.1 22.6 11% 96.4 95.6 1% Net income from life insurance 8.3 5.1 62% 30.0 21.4 40% Other in