Aktia Bank PLC Class A · OMXHEX:AKTIA
Aktia Bank PLC Class A — Debt Investor Presentation (May 2019)
30 slides from Aktia Bank PLC Class A's debt investor presentation, May 3, 2019
Slide 1: Aktia Q1 2019 Debt Investor presentation
3 MAY 2019 Aktia Q1 2019 Debt Investor presentation Timo Ruotsalainen Head of Treasury
Slide 2: Aktia Bank Plc Executive Summary
Aktia Bank Plc EXECUTIVE SUMMARY Retail bank with focus on growth areas in Finland Provides banking services to private customers, small and middle sized companies and institutional investors. Business supported by own branch network and digital services Households accounts for 77 % of the loan port
Slide 3: Aktia's Q1 2019 in brief
Aktia’s Q1 2019 in brief Good underlying performance ‒ total operating income +3%, comparable operating profit -5% • Income from interest rate hedges unwound in 2012 EUR 2.2 million lower compared to the reference period • EUR 2 million stability fee booked in its entirety to the first quarter High
Slide 4: Key Figures Q1'19 vs. Q1'18
Key Figures Q1’19 vs. Q1’18 Total operating income +3% EUR 52.7 (51.2) million Net interest income -6% EUR 19.4 (20.7) million Net commission income -5% EUR 22.7 (23.8) million Total operating expenses +8% EUR 36.1 (33.5) million Comparable operating profit -5% EUR 17.2 (18.0) million EPS Comparable
Slide 5: Demand for housing loans continues
Demand for housing loans continues BANKING BUSINESS • The demand for housing loans continues but tough competition puts pressure on margins. • Interest rate collars and Interest rate cap products in high demand with the customers. • The 4% increase of the corporate loan book reflects out strategic f
Slide 6: Finnish households a key business driver
Finnish households a key business driver STRUCTURE OF LENDING AND DEPOSITS Lending Deposits 0.7% 6.7% 9.9% 18.3% 12.0% Total Total EUR 6,157 million EUR 3,999 million (6,106) (3,963) 77.5% 75,0 % Households Housing associations Households Public entities and non-profit organisations Corporates Publi
Slide 7: Good growth in Assets under management continues
Good growth in Assets under management continues ASSET MANAGEMENT Assets under management excluding custody (AuM) milj. euroa • Higher income mainly explained by positive 10 000 9 373 value changes of EUR 1.7 (-0.9) million in the 8 860 9 000 life insurance business. Net commission income 7 962 8 00
Slide 8: 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 1–3/2019: 1–3/2019: 1–3/2019 (comparable): 1–3/2019:
Slide 9: Four action programs for strategy implementation
Four action programs for strategy implementation Corporate culture Operational excellence Reshaping customer Sales experience 9
Slide 10: Financial overview
Financial overview Aktia
Slide 11: Operating income increased by 3% during the first quarter
Operating income increased by 3% during the first quarter Table Info 1Q2019 1Q2018 , % Total operating income 52.7 51.2 +3% Net interest income 19.4 20.7 -6% Net commission income 22.7 23.8 -5% Net income from life insurance 8.3 5.8 +43% Other income 2.3 0.8 +169% Total operating expenses -36.1 -33
Slide 12: Distribution of operating income and expenses
Distribution of operating income and expenses Operating income Operating expenses 2.3 8.0 8.3 19.4 Total Total 16.4 52.7 36.1 EUR million 4.9 EUR million 22.7 6.8 Net interest income Net income from life insurance Staff costs Depreciation of tangible and intangible assets Net comission income Other
Slide 13: Stable underlying development in income
Stable underlying development in income INCOME MIX Net interest income: EUR million Despite margin pressure the average +3% margin for the total loan book remained 60 on a stable level. Income from interest 51,2 52,7 rate hedges unwound in 2012 was EUR 50 2.2 million lower compared to the reference
Slide 14: Increased expenses due to larger IT costs
Increased expenses due to larger IT costs 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 -5 -3,1 end of March amounted to 774 (31 March -5,6 -4,9 2018; 796). -6,8 -10 -8,2 -8,
Slide 15: Comparable operating profit decreased by 5%
Comparable operating profit decreased by 5% COMPARABLE OPERATING PROFIT PER SEGMENT EUR million -5% -3% 21 18,0 17,7 18 17,2 17,2 15 +37% 12 9,6 -58% 9 6,7 7,0 -19% 6 3,8 2,8 3,0 3 1,7 0,5 0 Banking Asset Group Other and Comparable Operating Business Management functions eliminations operating profi
Slide 16: Aktia – the debt investment case
Aktia – the debt investment case 16
Slide 17: 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 16.9 % (16.4% on 31 March 2018) • Target over time is to exceed the regulative requirement CET1 % 8.0% with 150-300 basis points Pillar 1 min req 4.5
Slide 18: 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 ECL (IFRS 9) Stage 1 Stage 2 Stage 3 €mio origination criteria: ≤ 30 days 6,7 7,0 0,1 • Identification of the customer Households 2,4 5,9 0,0 mandatory (KYC) > 30 ≤ 90 0,0 17,3 2,0 • Res
Slide 19: High-quality liquidity portfolio
High-quality liquidity portfolio At the end of March 2019 the Bank Group’s liquidity buffer was approximately equivalent to the estimated outgoing cash flow of finance from the wholesale market for 36 months. The Liquidity Coverage ratio (LCR) was 113%. 31.12.2018 31.12.2018 8% EUR million 1,527 1,3
Slide 20: Sound funding profile
Sound funding profile DEBT MATURITY PROFILE Customers deposits and covered bonds dominate Subordinated debt EUR million 2% 1 200 REPOs & ECB 6% 1 000 Senior debt MEUR 855 11% 800 600 EUR 7,669 400 Covered bonds MEUR 2,171 million Customer 28% deposits 200 MEUR 3,999 52% 0 2019 2020 2021 2022 2023->
Slide 21: 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 22: Cover pools
Cover pools 1Q 2019 Cover Pool 2 Cover Pool 1 Total asset pool EUR 2,305 million EUR 182 million (No substitute assets) No of loans / average loan 38,094 / EUR 60,513 2,467 / EUR 73,819 balance First ranking residential mortgages First ranking residential mortgages Types of loans and pledges of shar
Slide 23: The Finnish Economy
The Finnish Economy STRONG BUT VERY EXPORT DRIVEN ECONOMY 23
Slide 24: The Finnish Economy: Key facts about Finland
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 38,959 (2016) • Credit ratings: Aa1 (stable) / AA+ (stable) / AA+ (stable) 21
Slide 25: The Finnish Economy: Growth continues, but weaker
The Finnish Economy GROWTH CONTINUES, BUT WEAKER 22
Slide 26: The Finnish Economy
The Finnish Economy Employment rate, 15-64 year olds 80 7 78 ” 76 8 ™ 13 2 n 0 6 68 er 66 85 Private debt, % of GDP 225 2001 2002 2008 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 ‘Sources: Aktia and Macrabond 23 Sweden Denmark Finiand Frans | Germany ‘Sources
Slide 27: Macroeconomic environment
Macroeconomic environment WORRYING ENVIRONMENT 24
Slide 28: Finnish housing market
Finnish housing market SOLID AND STABLE MARKET, A SLOWDOWN IN GROWTH PROJECTED 25
Slide 29: Courageously. Skilfully. Together.
Courageously. Skilfully. Together.
Slide 30: Contacts and additional information
Contacts and additional information Outi Henriksson Timo Ruotsalainen CFO Head of Treasury Tel. +358 10 247 6236 Tel. +358 10 247 7211 outi.henriksson@aktia.fi timo.ruotsalainen@aktia.fi Debt investor information: http://www.aktia.com/en/velkasijoittajat (website) http://www.aktia.com/en/julkaisut (