Aktia Bank Plc Financial Statement January-December 2022: Changes in the operating environment marked Aktia’s year 2022

Aktia Bank Plc
Stock Exchange Release
17 February 2023 at 8.00 a.m.

Aktia Bank Plc Financial Statement January-December 2022: Changes in the operating environment marked Aktia’s year 2022

The quarter in short

• Interest income from lending grew strongly towards the end of the year.
• Net subscriptions were negative despite the strong new sales in asset management.
• Expenses were at the same level as the previous quarters.
• The calibration of the ECL model (Expected Credit Loss), driven by the regulation, increased the provisions for potential future credit losses. The quality of the credit portfolio remained solid.

The year 2022 in short

• Interest income began to grow strongly as interest rates increased, however higher financing and hedging costs weighed down net interest income.
• The demand for mortgage loans slowed down, but the demand for corporate loans remained strong. Margin development was good.
• The volatile investment market weighed down assets under management, net subscriptions for the full year amounted to EUR -69 million.
• In particular, higher interest rates weighed down value changes in the life insurance portfolio and the net income from life insurance, while life insurance business continued to perform well.
• International distribution of Aktia investment products increased – Funds from Aktia’s portfolio management are now sold in 17 different countries.
  
  

Outlook for 2023

Aktia's comparable operating profit in 2023 is expected to be clearly higher than in 2022.

Dividend

Aktia's Board of Directors proposes, in accordance with the company's dividend policy, that a dividend of EUR 0.43 per share be paid for 2022, which constitutes 60% of the profit for the reporting period.

Mikko Ayub, CEO:

In 2022, Aktia's market environment changed significantly. The Russian invasion of Ukraine, which began early in the year, was part of the reason why the central banks tightened their monetary policy in order to curb inflation. After a pause of many years, interest rates started rising again, which increased Aktia's interest income, but also its financing costs.

Provisions for potential future credit losses increased in the last quarter due to calibration of the ECL model, driven by the regulation. It is clear that a potential recession would have an impact on customers' ability to pay, and consequently, on the increase of credit losses. However, the demand for instalment-free periods has not yet increased significantly, and so far customers seem to be able to cope well with managing their loans. The majority of Aktia's loan portfolio consists of mortgages, and a good quality credit portfolio is clearly beneficial to us – Aktia continues to be a responsible creditor.

However, last year also brought us business-related challenges. The uncertain investment environment caused a market downturn during the year, weighing down Aktia's assets under management. The higher interest rates decreased the net income from life insurance through changes in the value of the life insurance portfolio, which caused volatility in Aktia’s result. The life insurance business as such continued to develop well and the sales of risk life insurances increased in particular.

New investment products in 2022, such as the UI-Aktia Sustainable Corporate Bond fund, a dark green fund in accordance with Article 9 in the EU Sustainable Finance Disclosure Regulation, substantially increased sales: in December, the Fund's subscriptions amounted to EUR 100 million. Moreover, the rapid expansion of international distribution channels gives us the possibility to reach a larger customer base. Funds from Aktia’s portfolio management are now sold in 17 different countries. The integration of the Taaleri wealth management, acquired by Aktia in 2021, will also be completed in 2023, as we stated in connection with the acquisition. Now we have all the premises to fully implement the growth strategy for Aktia asset management.                                

We continue to rely on our strategy of becoming the leading wealth manager bank

Aktia's comparable operating profit in 2022 was EUR 65.2 (87.4) million, thus clearly lower than the previous year. Although the operating environment had a major impact on performance development, we must continue our determined efforts to develop our own activities. The net interest income improved especially towards December and the development for the start of this year looks promising: the growth is expected to continue this year with the annual repricing of mortgage loans. The effect of the interest rate hedges made in 2022 will also start to contribute positively in the net interest income.

Cost management is one of the main objectives for this year, and here, the Inflation brings its own additional challenges. This year holds a lot of question marks in terms of both the investment market and the global political situation. We must therefore maintain a high response capability in case of various disturbing factors.

Aktia’s operations continue to rely heavily on our strategy of becoming the leading wealth manager bank. Together, Asset Management, Banking and Life Insurance form a solid foundation for our work. An excellent employee and customer experience, the best wealth management, and customers who are willing to increase their wealth are the cornerstones of our strategy. An increase in individuals’ wealth through the Aktia Wealth Plan benefits our customers and thus the Finnish society as a whole and makes our work meaningful.

Key figures

1) Alternative performance measures
2) At the end of the period

Webcast from the results event

A live webcast from the results event will take place on 17 Februrary 2023 at 10.30 a.m. CEO Mikko Ayub and CFO Outi Henriksson will present the results. The event is held in English and can be seen live at https://aktia.videosync.fi/2022-q4-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 6236
Lotta Borgström, Director, Investor Relations and Communications, tel. +358 10 247 6838, lotta.borgstrom (at) aktia.fi

Distribution:
Nasdaq Helsinki Ltd
Central media
www.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 31 December 2022 amounted to EUR 13.5 billion, and the balance sheet total was EUR 12.4 billion. Aktia's shares are listed on Nasdaq Helsinki Ltd (AKTIA). aktia.com.

Attachment

• Aktia Bank Plc Financial Statement January-December 2022