Aktia Bank Plc’s Half-year report January-June 2023: Continued strong growth in net interest income
09 Agosto 2023 - 2:00AM
Aktia Bank Plc’s Half-year report January-June 2023: Continued
strong growth in net interest income
Aktia Bank PlcStock Exchange Release9 August 2023 at 8.00
a.m.
Aktia Bank Plc’s Half-year report
January-June 2023: Continued
strong growth in net interest income
April-June in short
- Net interest income grew by 31% from
the previous year and amounted to EUR 33.8 (25.8) million.
- Net commission income decreased by
4% from the previous year and amounted to EUR 30.4 (31.6) million.
Positive net subscriptions were EUR 73 million.
- Net income from life insurance
amounted to EUR 5.7 (34.9) million. The recalculated comparative
figures for 2022 according to the new accounting standard IFRS 17
include considerable positive changes in market value, thus making
the comparison significantly more difficult.
- Comparable operating expenses were
on the previous year's level and amounted to EUR 42.2 (41.8)
million.
- The business developed according to
the company's expectations, but due to the accounting standard
change (IFRS 17) the comparable operating profit decreased to EUR
26.5 (49.7) million. The comparable operating profit during the
second quarter of last year, according to the accounting standard
used at the time, amounted to EUR 24.7 million.
- Credit loss provisions remained at a
very moderate level at EUR -1.3 million.
January-June in short
- Net interest income increased by 29%
from the previous year and amounted to EUR 65.6 (50.9)
million.
- Net commission income decreased by
4% from the previous year and amounted to EUR 60.6 (63.0)
million.
- Net income from life insurance
amounted to EUR 12.9 (56.3) million. The recalculated comparative
figures for 2022 according to the new accounting standard IFRS 17
include considerable positive changes in market value, thus making
the comparison significantly more difficult.
- Comparable operating expenses
increased by 3% and were EUR 87.9 (85.1) million. The inflation and
outsourcing of certain IT operations increased IT expenses.
- The business developed according to
the company's expectations, but due to the accounting standard
change (IFRS 17) the comparable operating profit decreased to EUR
50.1 (85.3) million.
Outlook 2023 (unchanged)
Aktia's comparable operating profit for 2023 is expected to be
clearly higher than the EUR 65.2 million reported for 2022 (under
the accounting standard previously applied for the life insurance
business).
The outlook has been prepared based on the following
assumptions:
- Net interest income is expected to
be significantly higher than in 2022.
- Net commission income is expected to
increase slightly in 2023.
- Life insurance business is expected
to develop stably. However, the result is affected by changes in
market values. The recalculated result for 2022 according to the
new accounting standard IFRS 17 is exceptionally high due to
accounting technical changes.
- Operating expenses are expected to
be on the same level or increase somewhat from 2022, due in
particular to higher inflation and the start-up expenses of IT
outsourcings (updated, earlier: are expected to be on the same
level as in 2022).
- Credit loss provisions are expected
to be at the same level as in 2022.
Juha
Hammarén,
interim CEO
Aktia’s strong financial development continued during the second
quarter of the year. Interest income from lending continued to grow
as the interest rate adjustments in the loan book increased faster
than the financing costs. Aktia issued a EUR 500 million covered
bond in May. The bond was oversubscribed 2.5-fold and priced very
competitively, which considering the market conditions was an
excellent result and an example of successful investor work both in
Finland and internationally. However, it should be noted that the
rise in interest rates also increases the costs for market-based
and deposit financing. Our deposit base remained stable also during
the second quarter.
The demand for housing loans remained soft as in the beginning
of the year due to the housing market slowing down and the
continuing general market uncertainty. So far, the employment rate
in Finland has remained high and we have not seen an increase in
the demand for instalment-free periods in housing loans. However,
the strong demand for hire purchase and leasing financing among
corporate customers continued. The quality of the loan book was
still on a high level, and the average margin for the entire loan
book continued to grow. Aktia's credit loss provisions during the
quarter remained at a very moderate level at EUR -1.3 million.
Net commission income for the quarter decreased somewhat
compared to the reference period. The market environment was still
unstable, and the development especially in the Finnish equity
market was regrettably modest. Market changes put pressure on
customer assets under management, which nevertheless remained
almost at the same level as at the beginning of the year and
amounted to EUR 13.8 billion. I am especially happy with the
positive net subscriptions of EUR 73 million. This is proof of our
successful advisory and sales efforts.
Aktia's position at the top of the European fixed income fund
houses was strengthened further when Aktia was awarded as the best
European fixed income fund house in the small fund houses category
in the Refinitiv Lipper Fund Awards. The rise in interest rates has
restored customers’ interest in fixed income investments, which
further strengthens Aktia’s position among asset managers. The
cooperation with Taaleri within alternative investments also
continued successfully. Together with Taaleri, Aktia launched the
Article 9 fund Aurinkotuuli III in February. The fund raised more
than EUR 160 million in its first round of funding, exceeding its
target. The Aurinkotuuli III fund strongly supports the green
transition in the energy economy.
Good profit development continued
The life insurance business, and hence the net income from life
insurance, also continued their positive development during the
second quarter. The sales of risk life insurances in particular
remained strong, and the actuarially calculated result increased to
EUR 7.7 million. In this context it should be noted that the
recalculated comparative figures for 2022 according to the new
accounting standard IFRS 17 include considerable positive changes
in market value, thus making the comparison of net income from life
insurance significantly more difficult throughout 2023.
Higher inflation made the cost development for the first half of
the year more challenging than we expected at the beginning of the
year. The costs increased also due to the start-up expenses of IT
outsourcings. We will pay special attention to cost control during
the rest of the year.
Aktia’s comparable operating profit in the second quarter
amounted to EUR 26.5 million, which I am very happy with. The
figure was considerably lower than in the reference period (49.7)
due to the recalculation of the net income from life insurance
according to the IFRS 17 accounting standard. The comparable
operating profit from the reference period last year, according to
the accounting standard used at the time, amounted to EUR 24.7
million, which includes capital gains of EUR 11 million in the life
insurance company’s investment portfolio.
Key Figures
(EUR million) |
Q2/2023 |
Q2/2022 |
∆ % |
1-6/2023 |
1-6/2022 |
∆ % |
Q1/2023 |
∆ % |
2022 |
Net interest income |
33.8 |
25.8 |
31% |
65.6 |
50.9 |
29% |
31.8 |
6% |
99.2 |
Net commission income |
30.4 |
31.6 |
-4% |
60.6 |
63.0 |
-4% |
30.3 |
0% |
122.0 |
Net income from life insurance |
5.7 |
34.9 |
-84% |
12.9 |
56.3 |
-77% |
7.2 |
-20% |
79.2 |
Total operating income |
70.3 |
93.7 |
-25% |
140.6 |
172.4 |
-18% |
70.3 |
0% |
302.9 |
Operating expenses |
-42.2 |
-41.8 |
1% |
-89.3 |
-85.1 |
5% |
-47.1 |
-11% |
-169.4 |
Impairment of credits and other commitments |
-1.3 |
-2.4 |
-45% |
-2.3 |
-2.1 |
9% |
-0.9 |
40% |
-10.2 |
Operating profit |
26.8 |
49.7 |
-46% |
49.0 |
85.5 |
-43% |
22.2 |
21% |
123.5 |
Comparable operating income1 |
70.0 |
93.7 |
-25% |
140.3 |
172.2 |
-19% |
70.3 |
0% |
302.8 |
Comparable operating expenses1 |
-42.2 |
-41.8 |
1% |
-87.9 |
-85.1 |
3% |
-45.8 |
-8% |
-168.1 |
Comparable operating profit1 |
26.5 |
49.7 |
-47% |
50.1 |
85.3 |
-41% |
23.6 |
13% |
124.7 |
Cost-to-income ratio |
0.60 |
0.45 |
34% |
0.64 |
0.49 |
29% |
0.67 |
-11% |
0.56 |
Comparable cost-to-income ratio1 |
0.60 |
0.45 |
35% |
0.63 |
0.49 |
27% |
0.65 |
-7% |
0.56 |
Earnings per share (EPS), EUR |
0.29 |
0.55 |
-47% |
0.54 |
0.95 |
-43% |
0.25 |
16% |
1.37 |
Comparable earnings per share (EPS), EUR1 |
0.29 |
0.55 |
-48% |
0.55 |
0.95 |
-41% |
0.27 |
8% |
1.38 |
Return on equity (ROE), % |
14.1 |
28.0 |
-50% |
13.3 |
24.2 |
-45% |
12.2 |
15% |
17.0 |
Comparable return on equity (ROE), %1 |
13.9 |
28.0 |
-50% |
13.6 |
24.1 |
-44% |
13.0 |
7% |
17.2 |
Common Equity Tier 1 capital ratio (CET1), %2 |
11.0 |
10.4 |
6 % |
11.0 |
10.4 |
6 % |
11.1 |
-1 % |
10.8 |
1) Alternative performance measures2) At the end of the
period
Reference periods 2022 have been recalculated according to the
new IFRS 17 standard for insurance contracts.
Webcast from the results event
A live webcast from the results event will take place on 9
August 2023 at 10.30 a.m. (EEST). interim CEO Juha Hammarén and CFO
Outi Henriksson will present the results. The event is held in
English and can be seen live at
https://aktia.videosync.fi/2023-q2-results. A recording of the
webcast will be available at www.aktia.com after the event.
AKTIA BANK PLC
For more information: Outi Henriksson, CFO, tel. +358
10 247 6236Lotta Borgström, Director, Investor Relations and
Communications, tel. +358 10 247 6838, lotta.borgstrom (at)
aktia.fi
Distribution:Nasdaq Helsinki LtdCentral mediawww.aktia.com
Aktia is a Finnish asset manager, bank and life insurer that has
been creating wealth and wellbeing from one generation to the next
for 200 years. We serve our customers in digital channels
everywhere and face-to-face in our offices in the Helsinki, Turku,
Tampere, Vaasa and Oulu regions. Our award-winning asset management
business sells investment funds internationally. We employ
approximately 900 people around Finland. Aktia's assets under
management (AuM) on 30 June 2023 amounted to EUR 13.8 billion, and
the balance sheet total was EUR 12.3 billion. Aktia's shares are
listed on Nasdaq Helsinki Ltd (AKTIA). aktia.com.
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