Aktia Bank PLC Class A · OMXHEX:AKTIA
Aktia Bank PLC Class A — Investor Day (September 2019)
53 slides from Aktia Bank PLC Class A's investor day presentation, Sep 10, 2019
Slide 1: Aktia Capital Markets Day
Aktia Capital Markets Day 10 September 2019
Slide 2: 200 years of banking
200 years of banking 2017 strategy Aktia expands sales of emerging market Aktia divests remaining holding in concentrates on government bond strategy to Folksam Non-Life Insurance individual wealth international markets management and Aktia Bank is listed on the financing main list of Nasdaq OMX Hel
Slide 3: Aktia in brief
Aktia in brief 2019 Appr. 280,000 151,756 37,000 EUR 600 million Private customers Aktia Wallet Shareholders Market cap application downloads 30,000 10.2 M 45% 55% Corporate and institutional Online banking logins Senior management gender distribution customers Rating Long-term Short-term Outlook bo
Slide 4: Key figures
Key figures 1–6 2019 113.3 71.1 0.69 Outlook: Total operating income, Operating Expenses, Comparable Despite the uncertainty of the EUR million EUR million cost-to-income ratio economic development, the +6% (107.0) -1% (71.8) +5% (0.66) comparable operating profit 2019 is expected to be approximatel
Slide 5: 3 business areas organised into 2+1 reporting segments
3 business areas organised into 2+1 reporting segments Business areas Retail Banking Corporate Banking Asset in banking operations in banking operations Management Personal Banking Corporate Banking Asset Management Premium Banking Life Insurance Private Banking Reporting segments Banking Business A
Slide 6: Asset Management as a key business driver
Asset Management as a key business driver Share of total operating income 1−6 2019 Share of comparable operating profit 1−6 2019 Total EUR 113.3 million Total EUR 31.4 million 13% 18% 27% 55% 27% 60% Banking Business Asset Management Group Functions Banking Business Asset Management Group Functions
Slide 7: New responsibility programme
New responsibility programme In 2018 Aktia launched a new corporate responsibility Aktia’s corporate responsibility programme 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. Aktia reports every
Slide 8: Our Strategy
Our Strategy Aktia Capital Markets Day
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 9 10 SEPTEMBER 2019 AKTIA CMD 2019
Slide 10: 1. Win in asset management
1. Win in asset management PENETRATE THE RETAIL SEGMENT AND FURTHER EXPAND INTERNATIONAL SA LES Increase institutional customer base Grow in retail asset management • Invest in institutional sales capacity Broaden our asset • Expand internationally through management offering • Increase collaboratio
Slide 11: Aktia's fund ratings clearly above average
Aktia’s fund ratings clearly above average MORNINGSTAR AVERAGE FUND RATING 2013 –2019 4.50 4.00 3.50 3.00 2.50 2.00 11/2013 3/2014 8/2014 12/2014 4/2015 9/2015 1/2016 5/2016 10/2016 2/2017 6/2017 10/2017 3/2018 8/2018 12/2018 4/2019 Aktia Competitor 1 Competitor 2 Competitor 3 Competitor 4 Competito
Slide 12: 2. Acquire new customers in growing cities
2. Acquire new customers in growing cities SHIFT GROW TH FOCUS TO GROW ING CITIES AND RETHINK OW N PRESENCE IN RURAL AREAS We will go for growth in growing cities Improve sales capabilities and build offering around customer lifecycle • Planning a new customer service model • Differentiation through
Slide 13: Aktia Pop-Up
Aktia Digital Gold Credit
Slide 14: 3. Drive operational efficiency to capitalize on our challenger position
3. Drive operational efficiency to capitalize on our challenger position Improve cost efficiency Increase process automation Capitalise on our challenger position • Rethink our own presence in rural • Improve efficiency and customer • Create a business-minded and areas – planning on reducing experie
Slide 15: Updated long-term financial targets 2023
Updated 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 regulatory requirements (earlier 80 million) (earlier 9.7%) (earlier 0
Slide 16: The good bank. And a great asset manager.
Our Vision The good bank. And a great asset manager. Our Mission Building wealth together. Our Values Courageously, Skillfully, Together. 16 10 SEPTEMBER 2019 AKTIA CMD 2019
Slide 17: Banking Business
Banking Business Carola Nilsson EVP, Private Customers
Slide 18: Structure of lending and deposits
Structure of lending and deposits JUNE 30, 2019 Lending Deposits Total EUR 6,246 million Total EUR 4,140 million 1% 7% 10% 19% 12% 74% 77% Households Corporates Housing associations Households Corporates Public entities and non-profit organisations Public entities and non-profit organisations 18 10
Slide 19: Acquire new customers in growing cities
Acquire new customers in growing cities Oulu Tampere Population (2017), million 0.25 Population (2017), million 0.39 Expected population growth-% 18% Expected population growth-% 14% (2017−2040) (2017−2040) Vaasa Capital region (Helsinki) Population (2017), million 0.1 Population (2017), million 1.4
Slide 20: New meeting concept
New meeting concept Flagships stores Aktia HUB Aktia Meeting Point “Aktia @ Home” 20 10 SEPTEMBER 2019 AKTIA CMD 2019
Slide 21: Customer-centric financial journey
Customer-centric financial journey = Accelerating event (increasing financial wealth, i.e. inheritance, significant changes in earnings) = Decelerating event (ie. bankruptcy, divorce, illness) Upbeat Financial stability The Building your financial Financial planning beginning − identity Financial fr
Slide 22: Retail asset management
Retail asset management • Expanding our award-winning asset management offering and know-how to our large personal customer base • Increase collaboration throughout organisation & improve sales capabilities • Offering – Extend alpha-offering – Expand beta-offering; in-house or through partnerships •
Slide 23: Continued focus on digitalisation
Continued focus on digitalisation Mobile banking is growing fast throughout our client base − 55% increase in use of mobile services during last 12 months • Increased control with real-time push notifications for card payments through Aktia Wallet • Possibility for biometric identification instead o
Slide 24: Brand New Aktia
Brand New Aktia Aktia's brand renewal is based on Aktia’s 2023 strategy update with a clear intention to accelerate our growth. The renewal is targeted mainly to modern, youthful Finns that live in the fastest growing cities and want to increase their wealth with the help of Aktia’s financial consul
Slide 25: Asset Management
Asset Management Jetro Siekkinen Deputy Managing Director, Head of Portfolio Management, Aktia Asset Management Ltd.
Slide 26: Business becoming international
Business becoming international Assets under management excluding custody (AuM) EUR million • Total mutual fund assets on all-time high level at the end 12,000 of June 2019. 10,000 9,896 • International assets increased by 38% from the end of 8,860 2018 and amounted to EUR 1.6 (1.1) billion at the e
Slide 27: Award-winning Asset Management
Award-winning 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 Secu
Slide 28: Global expertise in portfolio management
Global expertise in portfolio management CORNERSTONES IN OUR BUSINESS Emerging Market Debt (sovereign) Corporate Credit • Local Currency instruments • Investment Grade credit • Frontier countries • Financials sector • Impact investing • Capital structure • Unique product solutions • High Yield Fixed
Slide 29: Strong growth in emerging market debt assets
Strong growth in emerging market debt assets EMD AUM DEVELOPMENT IN MUTUAL FUNDS (MILLION EUR) 4000 €3.5 bn 3500 +63% 3000 (€702 million) 2500 2000 1500 1000 500 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019/09 Finnish domiciled Luxembourg domiciled 29 10 SEPTEMBER 2019 AKTIA CM
Slide 30: Success factors in emerging market portfolio management
Success factors in emerging market portfolio management Transparent and Strong long term Stable, experienced Wide investment Focus in long-term disciplined country performance in and specialised universe and relationship with selection process different market EM debt team opportunity set clients co
Slide 31: Proven long term track record
Proven long term track record AND FAVOURABLE RISK CHARACTERISTICS 8 Aktia Emerging Market Local Currency Bond+ 6 Annual return since inception (%) Peer Group 4 2 0 -2 8 9 10 11 12 13 Volatility (%) Sources: Aktia, Bloomberg, J.P. Morgan and Morningstar; inception date 10/2008 31 10 SEPTEMBER 2019 AK
Slide 32: Impact investing in less developed countries
Impact investing in less developed countries DIRECT CO-OPERATION W ITH MULTINATIONALS 18 Countries 88 Investments 460 EUR million Focus on resolving actual problems with a sustainable angle in a way that the funds in fact are used for the intended projects such as infrastructure, agricultural and fo
Slide 33: Risk + Compliance
Risk+ Compliance Tina Schumacher Head of Risk and Compliance
Slide 34: Stable and resilient credit quality – retail banking
Stable and resilient credit quality – retail banking RETAIL CREDIT PORTFOLIO, 77% OF TOTAL PORTFOLIO Retail portfolio breakdown Geographical breakdown - real estate security 5% Uusimaa 13% Pohjanmaa 2% Varsinais-Suomi Pirkanmaa Pohjois-Pohjanmaa 80% Keski-Pohjanmaa Mortgage Loans Credit Cards & Cons
Slide 35: Stable and resilient credit quality – corporate banking
Stable and resilient credit quality – corporate banking CORPORATE CREDIT PORTFOLIO, 23% OF TOTAL PORTFOLIO Corporate portfolio breakdown Sector breakdown Real estate 20% Finance sector Consumer utilities 40% 5% Manufacturing Construction 8% Agriculture, forestry Electricity and gas prod. Other 27% H
Slide 36: Retail portfolio – risk profile
Retail portfolio – risk profile Retail LTV (WA 45,9%) Scoring distribution 12% 120% Scoring % of total exposure Excellent - Good A1 29,7% 10% 100% 0% < PD <= 0,2% A2 26,4% 8% 80% A3 6,2% A4 4,6% 6% 60% Satisfactory B1 8,0% 0,2% < PD <= 1,1% 4% 40% B2 3,3% B3 2,5% 2% 20% B4 1,8% 0% 0% Acceptable - We
Slide 37: Corporate portfolio – risk profile
Corporate portfolio – risk profile Corporate LTV (WA 42,8 %) Scoring distribution 14% 100% Scoring % of total exposure 90% Excellent - Good AAA 3,4% 12% 80% 0% < PD <= 0,1% AAA- 9,0% 10% 70% AA+ 37,2% 8% 60% Satisfactory AA 18,6% 50% 0,1% < PD <= 2,0% 6% AA- 9,5% 40% 30% A+ 9,5% 4% 20% A 5,1% 2% 10%
Slide 38: CET1 on a solid level
CET1 on a solid level CAPITAL ADEQUACY AND CAPITAL REQUIREMENT • At the end of June 2019, the Group’s Common Equity CET1 % EUR million Tier 1 (CET1) capital ratio was 16.5%. • After deductions, CET1 capital increased by EUR 9.2 800 25 20.8 20.5 million during Q2 the period which improved the CET1 70
Slide 39: Resolution requirement
Resolution requirement CONSOLIDATED MREL-REQUIREMENT • The Financial Stability Board has updated the MREL minimum MREL-requirement for Aktia Bank. 1,400 • The requirement is 23,37% of RWA, however, 1,237.5 1,271.8 1,193.1 at least 8% of the balance sheet total. 1,200 • The requirement enters into fo
Slide 40: Regulative environment & compliance
Regulative environment & compliance Continued emphasis on anti-money laundering/counter terrorism financing • Process automation & data analytics • Competent personnel Sustainability efforts growing • Environmental, Social & Governance (ESG) transparency and disclosure requirements increasing • CDP
Slide 41: Financial Prospects
Financial Prospects Outi Henriksson CFO
Slide 42: Financial summary Q2 and YTD
Financial summary Q2 and YTD EUR million 1-6/2019 1-6/2018 , % Total operating income 113.3 107.0 6% Net interest income 38.7 44.2 -13% Net commission income 46.7 50.1 -7% Net income from life insurance 14.9 10.8 38% Other income 13.1 2.0 562% Total operating expenses -71.1 -71.8 -1% Impairments of
Slide 43: Operating income
Operating income 1-6/2018 VS. 1-6/2019 EUR million 10.1 113.3 107.0 4.4 0.6 103.2 1.8 4.1 1.2 3.8 1.2 1.6 Operating Lower income Income Organic growth Income from Income from ended Organic Net income Other Operating Profit from the Operating income from interest rate from TLTRO Net interest the real
Slide 44: Updated long-term financial targets 2023
Updated 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 regulatory requirements (earlier 80 million) (earlier 9.7%) (earlier 0
Slide 45: Operating income
Operating income OVERVIEW 120 M€ 95.6 100 91.4 80 79.7 74.9 80 70.7 69.1 70.8 65.3 57.4 58.8 60 55.1 47.2 41.2 40 29.8 33.3 25.9 25.8 28.1 24.0 27.3 24.7 26.6 23.3 24.9 21.4 20 31.2 14.9 21.3 8.2 18.5 16.0 15.8 14.4 11.3 0 2012 2013 2014 2015 2016 2017 2018 2020* 2023* Net commission income Net inte
Slide 46: Increase operating income through organic growth
Increase operating income through organic growth Increase net commission Increased interest income from Increase revenues from income through growth in growth in lending activities to life insurance operations asset management retail and corporate customers Increase international Growth among prefer
Slide 47: Increased cost efficiency
Increased cost efficiency CONTINUE TO CUT RUNNING COSTS AND SHIFT COST MIX TO ENABLE STRAT EGIC INVESTMENTS Reduce running costs Comparable operating costs , M€ • Focus on compensation levels to stay competitive, but be conscious about 147.0 150.0 cost increases 141.3 CAGR ~ <–1% • Reduce or maintai
Slide 48: A good and stable dividend payer
A good and stable dividend payer − compelling return considering the low risk level Aktia’s dividend pay out in total 2011‒2018 Aktia’s dividend per share 2011‒2018 EUR MILLION EUR 45 42.6 42.0 0.70 39.9 37.8 0.64 0.60 0.61 40 0.60 0.57 33.3 32.0 35 0.50 0.48 0.50 30 28.0 0.42 25 0.40 20.0 20 0.30 0
Slide 49: Development of Aktia's comparable return on equity
Development of Aktia’s comparable return on equity Aktia’s comparable return on equity (ROE) 9.0% Aktia’s comparable return on equity (ROE) (2018) 2015‒2018, % 9.5 9.0 9.0 8.5 8.1 8.0 8.0 7.5 7.5 7.0 6.5 2015 2016 2017 2018 49 10 SEPTEMBER 2019 AKTIA CMD 2019
Slide 50: Sound funding profile
Sound funding profile STABLE CREDIT RATINGS: MOODY’S: A1 / P -1 CB: AAA, S&P: A- / A-2 Total 7,303 EUR million Potential interest in Senior and T2 issuance EUR million 6% 2% 1,200 13% 1,000 MEUR 916 800 600 57% MEUR 4,140 400 22% MEUR 1,622 200 0 Customer deposits Senior debt Subordinated debt 2019
Slide 51: Aktia Bank as covered bond issuer
Aktia Bank as covered bond issuer Lappi • Stable access to the covered bond market is in high priority. Pohjois-Pohjanmaa • Aktia Bank will focus on EUR 500 million public benchmark 2% Covered Bond issues with selective private placement offerings. Kainuu • The Aktia Bank mortgage loan portfolio is
Slide 52: Why invest in Aktia?
Why invest in Aktia? Profitable growth from asset management A stable and transparent domestic bank with responsible lending and investing A good and stable dividend payer − compelling return considering the risk level Solid profitability and capital position Targeting growth through clear strategic
Slide 53: The good bank. And a great asset manager.
The good bank. And a great asset manager.