Download Aktia Bank Plc (2013)

AKTIA BANK PLC
DEBT INVESTOR PRESENTATION 31.12.2013
Executive Summary – Aktia Bank Plc
Retail bank with focus on growth areas in Finland
Provides services mainly to private customers, small-sized companies and institutional
investors
Business strongly supported by own branch network
Households accounts for 88 % of the loan portfolio and 78 % of the deposit stock
Continuously competitive and stable net interest income
EUR 112.6 million in 2013
Prudent lending policy and low loan losses
Write-downs EUR 2.7 million (0.04 %) in 2013, non performing loans 0.66 %
Solid profitability over time
Return on Equity (ROE) 8.1 % in 2013
Strong Capital Ratio
Tier 1 Capital Ratio 12.3 %, expected to improve approx. 4 %-pts. by IRBA
Credit ratings
Moody's:
S&P:
A3 / P-2, neg
A- / A-2, neg
Covered Bonds: Aaa
2
Presentation outline
1
Overview – Aktia Group
2
Financial key figures – Aktia Bank plc
3
Credit ratings
4
The Finnish economy
5
Summary and Contacts
3
Banking, Asset Management and
Insurance services to 300,000 customers
• Focus on households, small-sized companies and institutional investors
• Solid capital base, liquidity and funding position
• Market cap EUR 540 million,~46,000 shareholders
• The majority of shares held by committed long-term owners
Aktia Bank Plc (2013)
Operating income EUR 224.2 million
Operating profit EUR 65.4 million
Assets EUR 10,934 million
Banking, Operating profit EUR 50.5 million
• Market share in mortgages 4.1% and in deposits 3.7%
Asset Management & Life Insurance, Operating profit EUR 23.9 million
• Market share in mutual funds 6.4%
• Market share in life insurances 2.4%
Other services include; Non- life Insurance, Real Estate Services
Sources: Bank of Finland and Federation of Finnish Financial Services
4
Group structure 1.2.2014
Aktia Bank plc
(listed on NASDAQ OMX Helsinki)
100%
Aktia Life Insurance Ltd
100%
Aktia Fund Management Company Ltd
50.9%*
Aktia Real Estate Mortgage Bank plc
75%
Aktia Asset Management Ltd**
100%
Aktia Corporate Finance Ltd
100%
Aktia Real Estate Agency
100%
Saaristosäästöpankki Ltd
49.1%*
100%
POP Banks
and savings
banks
Aktia Invest Ltd
*of share capital Aktia Bank holds 70% of votes.
**Minority shares used as incentives for key personnel
5
Aktia Bank Plc
Focus on retail banking and institutional investors
• Aktia Bank is the 4th largest bank in
the Finnish retail market with focus on
growth areas in Finland such as the
Helsinki Metropolitan Area, the coastal
area and selected inland growth
centres. The majority of Finland's
population lives in this area.
• Business strongly supported by own
branch network. Aktia has 57 branch
offices.
• Households accounts for 88 % of the
loan portfolio and 78 % of the deposit
stock.
• Strategic partnership with Veritas
Pension Insurance.
6
The Dialogue concept
A successful tool for achieving cross-selling
Wealth
mgmt
Financial "360" review
Financial situation
Health and
well-being
Housing
Life
insurance
In depth
one-on-one
customer
discussion
Assets and
transfer of
wealth
Studies, work
and pension
Close
relations
Hobbies,
leisure and
holidays
Combining
basic solution,
identifying
special
service needs
Non-life
insurance
Follow-up
and review
Real
estate
Family
Other
services
Number of completed Dialogues
Today
in 2 years
in 6 years
in 10 years
2009: 22,620
2010: 41,000
2011: 50,000
2012: 54,000
2013: 56,200
7
Aktia Asset & Fund Management
Assets under management on all time high
Aktia has established a position as one of the leading asset & fund
management companies in Finland:
Morningstar Awards 2013, Finland
Best Fund House: Fixed Income
2012&2013
EUR million
31.12.2013
31.12.2012
change %
Assets under
mgmt
6,341
5,877
8%
Group financial
assets
3,114
2,955
5%
Total
9,456
8,832
7%
8
Aktia Life Insurance
Producer of customer friendly life insurance services
Key numbers
•
•
Market share
Technical provisions EUR 965 million (EUR 462m
unit-linked and EUR 503m interest rate related)
Solvency ratio healthy 17.5%
11%
Nordea Life
2.4%
Several co-operation partners in the finance
trade
Aktia Bank, Folksam Non-Life Insurance Company,
POP Bank Group, Pohjantähti Mutual Insurance
Company, Alandia Insurance, Veritas Pension
Insurance
Mandatum Life
8%
31%
LocalTapiola Mutual
Life
Aktia Life Insurance
22%
25%
Customers
OP-Pohjola Group
Others
Approximately 108,000 customers of which 102,000
are private customers and 6,000 corporate
customers
Focusing sales on more profitable, less
capital intensive products
Premium income increased 27% to EUR 140 million
y/y
Life Insurances
Loan
Insurances
Aktia Profile
Policy
9
Action plan 2015
•
Focus resources on core business
•
Utilise credit capacity to own customers
 Aktia terminates its services as central credit institution for local POP and Savings
banks in 2015
•
Simplified group structure and modern systems to allow for lower costs
 Aktia invest in new core banking system
•
Big one-off investment of approx. EUR 25 million
•
Reduces running IT costs from 2015 onwards by EUR 5 million p.a. and allows for similar
savings in processes
•
Minimise costs from Basel III
10
Objectives for 2014–2015
Growth
Increase the cross-selling index by 20%
Increase commission income by 5% p.a.
Profitability
Expenses -5 % p.a.
Capital adequacy
Tier 1 capital ratio at least 13 % over an
economic cycle (post IRBA)
Dividend pay-out
Dividend pay-out 40–60% of profit after
taxes
Best customer service in Finland
Increased customer closeness and
further improved customer service
11
Presentation outline
1
Overview – Aktia Group
2
Financial key figures – Aktia Bank plc
3
Credit ratings
4
The Finnish economy
5
Summary and Contacts
12
The Bank's capital adequacy
• Basel III entered into force 1 January 2014
• Temporary exceptional permit concerning holdings in Aktia Life Insurance, risk weight 280%
• Principles for Group internal capital allocation adjusted
 Total effect on Core Tier 1 ratio -0.5%-pts
IRBA application was submitted in August 2011 and is reviewed by Financial Supervisory
Authority. IRBA is expected to increase Tier 1 capital ratio by at least 4%-pts
15–16%
IRBA at least 4%-pts
10.6 %
2011
11.8 %
2012
12.3 %
2013
31.12.2013
31.12.2012
Capital buffer
395.1
441.3
Minimum capital
requirements
274.2
288.9
Capital adequacy
ratio,%
19.3
20.2
Tier 1 capital ratio, %
12.3
11.8
2014E
13
Results 2013
EUR million
2013
2012
change %
Net Interest Income
112.6
117.3
-4%
70.7
65.3
8%
224.2
217.9
3%
-157.2
-154.2
2%
Write-Downs
-2.7
-8.2
-67%
Operating Profit
65.4
56.0
17%
Profit for the period
52.4
40.3
30%
Banking Business, EUR million
2013
2012
2011
Cost-to-Income Ratio
0.72
0.74
0.73
8.1
8.5
7.1
Borrowing from the public
3,797
3,632
3,645
Lending to the public
6,802
7,202
7,063
Mortgage Loans
5,521
5,850
5,607
Capital Adequacy Ratio %
19.3
20.2
16.2
Tier 1 Capital Ratio %
12.3
11.8
10.6
3,464
3,611
3,694
Net Commission Income
Total Operating Income
Total Operating Expenses
KEY FIGURES
Return on Equity (ROE) %
Risk-Weighted Commitments
14
Assets and liabilities
Aktia Group
31.12.2013, EUR million
ASSETS
Other loans granted by Aktia Bank
1,167
AKTIA REMB loans distributed by Aktia Bank
1,233
AKTIA REMB loans distributed by Local Banks
1,649
Treasury and money markets
Liquidity credits to Local Banks
Current account at Bank of Finland
Other
62%
Demand deposits
3,215
29%
Time deposits
582
5%
Long-term issues to retail market
Senior debt
Subordinated debt
287
61
226
3%
Long-term funding
Covered bonds
Senior debt
Subordinated debt
Local Banks, Transaction Acc. & Deposits
Savings Banks
POP Banks
Short-term funding
Repos + ECB
CDs & wholesale MM deposits
Received cash collateral
3,614
2,541
1,066
6
33%
665
361
305
6%
578
0
405
173
5%
722
0
405
317
7%
2,191
146
188
1,464
390
3
20%
Investment portfolio in Life Insurance
650
6%
Technical prov. for unit-linked insurances
965
9%
Invest. for unit-linked provisions, Life Insurance
466
4%
Other Liabilities
385
4%
Other assets
103
1%
Equity
642
6%
Total assets
10,934
100%
10,934
100%
Liquidity portfolio
Government bonds / Municipal bonds
Government guaranteed bonds / Supra
Covered Bonds
Senior bonds issued by banks
Other bonds
Total liabilities and equity
15
RETAIL
Mortgage loans granted by Aktia Bank
6,802
2,753
WHOLESALE MARKET
Loans to public
LIABILITIES
Structure of lending and deposits
Business strongly supported by households through
own retail network
Lending
2013, EUR 6,802 million
(2012, EUR 7,202 million)
Deposits
2013, EUR 3,797 million
(2012, EUR 3,631 million)
16
Prudent and low risk lending policy
• Aktia Bank operates under
strict origination criteria:
•
•
•
Identification of the customer
mandatory
Responsible lending: customer
ability to pay stress tested
Credit personnel internally
educated and examined
•
Rating based credit risk
valuation
•
Collateral only in Finland
Non-performing loans over 90 days due
100
1.00
0.93
EUR
0.85
million
0.80
0.85
0.84
80
60
0.73
0.56 0.55
0.80
0.69
0.63
0.59
66.9
58.1 56.1
60.0
0.60 %
61.0
53.2
50.0
45.0
40
34.0
36.4
0.68 0.68 0.66
48.0 47.0
45.0
20
0
0.40
39.6
0.20
31.12.2009 31.12.2010 31.3.2011
30.6.2011
30.9.2011
31.12.2011 31.3.2012
30.6.2012
30.9.2012
31.12.2012
31.3.2013
30.6.2013
30.9.2013
31.12.2013
0.00
Non-performing loans more than 90 days overdue
As a percentage of stock incl commitments
17
High quality liquidity portfolio
Buffer covering at least 12 months liquidity need
0%
31.12.2013 31.12.2012
14%
16%
(EUR million)
2,424
1,862
Aaa
52.9 %
64.5 %
Aa1–Aa3
27.5 %
19.1 %
A1–A3
15.2 %
8.9 %
Baa1–Baa3
1.3 %
3.7 %
Ba1–Ba3
0.0 %
1.5 %
Gvmt and gvmt guar. bonds
Finnish municip.
(no rating)
3.0 %
2.2 %
Covered bonds
No rating
0.1 %
0.0 %
100.0 %
100.0 %
70%
Financial sector excl CB
Corporate bonds
Total
18
Sound funding profile
Deposits and Covered bonds dominate
2013, EUR 8,767 million
(2012, EUR 8,911 million)
Wholesale
Funding, EUR million
Current
Outstanding
Covered Bonds
2,541
EMTN Program
520
Domestic Program
294
Schuldschein
184
Other Funding *
362
* EIB, NIB etc.
19
Aktia Bank Plc, a mortgage bank
•
Aktia Bank operates under the current legislation as mortgage bank (Act on
Mortgage Credit Bank Operations, MCBA 688/2010).
•
The Bank replaces the old co-owned Aktia Real Estate Mortgage Bank Plc as the
active issuer on the EUR covered bond market .
•
The Aktia Bank mortgage loan portfolio is very high quality:
•
Only prime residential mortgage loans
•
Collateral located in Finland
•
The Bank issued successfully it’s inaugural covered bond in June 2013.
•
500 million EUR
•
5yr Maturity (2018)
•
The bonds were placed to 60 investors from several European and Nordic countries. Asian
bid represented 3% of total. Banks and Funds dominated as investors.
•
The order book was nearly twice oversubscribed
20
Covered Bond funding
3500
3000
2500
2000
Aktia REMB CB
1500
Aktia Bank CB
1000
500
0
Mar-13
Apr-13
Jun-13
Nov-13
Jun-14
Jan-15
Mar-15
May-15
Jun-16
Apr-19
Jun-21
• Stable access to the covered bond market is in high priority
• Aktia Bank will focus at EUR 500m public benchmark Covered Bond
issues
21
Aktia Bank cover pool 4Q2013
Asset Pool Total
EUR 1,066m (no substitute assets)
No of loans / average loan balance
18,142 / EUR 58,800
Types of loans
Non-performing loans (> 90 days in arrears)
First ranking residential mortgages and pledges of
shares in housing companies
Finland only, well diversified with concentration on
growth areas
0.0
WA LTV
57.83%
WA indexed LTV
Maximum LTV
56.75%
Covered Bond refinancing max LTV limit: 70%
Geography
Loans exceeding LTV 70 haircut at LTV 70%
WA seasoning
28.6 months
Overcollateralisation (%)
113.2%
22
Aktia REMB
• The co-owned Aktia Real Estate Mortgage Bank has ceased to
provide new mortgage loans from the beginning of Q4 2012
onwards
• Aktia REMB focuses on the maintenance and refinancing of the
current loan portfolio
• All owners (Aktia bank, POP and Savings banks) are fully
committed to safeguard the high quality of the existing cover
pool and make sure that Aktia MB meets the agreed capital and
liquidity targets also in the future.
• Aktia REBM has maintained the ability to issue covered bonds if
necessary
• Rating for existing covered bonds is Aa3
23
Aktia REMB Combined pools 4Q2013
Asset Pool Total
Non-performing loans
EUR 2,866m (EUR 2,856m mortgages + EUR
10m substitute assets)
38,943 / EUR 73,300
First ranking residential mortgages and pledges of
shares in housing companies
Finland only, well diversified with concentration on
growth areas
0.0
(> 3 months in arrears)
WA LTV
52.99%
No of loans / average loan balance
Types of loans
Geography
WA indexed LTV
Maximum LTV
51,27%
Covered Bond refinancing max LTV limit: 70%,
Underwriting maximum LTV limits: 70% 1)
WA seasoning
46.1 months
Overcollateralisation (%)
26.9%
* Pool 0 managed under the Finnish Act on Mortgage Credit Banks 1240/1999, Pool1 managed under the Finnish Act on Mortgage Credit Bank Operations
688/2010
1) Except where the exceeding loan amount is covered by a state guarantee
2) covered by a state guarantee
24
Presentation outline
1
Overview – Aktia Group
2
Financial key figures – Aktia Bank plc
3
Credit ratings
4
The Finnish economy
5
Summary and Contacts
25
Aktia Bank credit ratings
Senior:
Covered Bonds:
A3 / P-2, Outlook Negative
Aaa
Senior:
A- / A-2, Outlook Negative
For full rating reports please see: http://www.aktia.fi/en/investors/investing-in-aktia/rating
26
Presentation outline
1
Overview – Aktia Group
2
Financial key figures – Aktia Bank plc
3
Credit ratings
4
The Finnish economy
5
Summary and Contacts
27
The Finnish economy
Fiscally strong open economy
National balance of supply and demand
•
•
•
Population: 5,4 million
Area: 338,430 km2
GDP per capita EUR 35,928 (2012)
•
Finland is rated Aaa / AAA / AAA by Moody’s,
S&P and Fitch, all with stable outlook
Macroeconomic Indicators
2012
2013
GDP (%) YoY
-0.8
CPI (%) YoY
€ billion
%
GDP
194.5
71.3
Imports
78.4
28.7
Total supply
272.9
100
€ billion
%
Supply 2012 *
Demand 2012 *
Exports
77.3
28.4
Consumption expenditure
157.8
58.1
- private
109.5
40.3
- government
48.3
17.8
2014f
2015f
-0.6
0.6
1.6
Gross fixed capital formation
37.8
13.9
3.2
2.2
1.9
1.8
- private
32.7
12.1
Unemployment Rate (%)
7.7
8.2
8.3
8.1
- government
5.0
1.8
Government Gross Debt (% GDP)
53.6
58.4
61.0
62.5
Changes in inventories,
acquisition of valuables
-1.2
-0.5
Current Account Balance (% GDP)
-1.8
-1.2
-1.3
-1.1
271.6
100
Source: EU Economic Forecast, Autumn 2013
Total demand
Statistical discrepancy
1.3
* preliminary data
Source: Statistics Finland 1.3.2013
28
The Finnish economy
Substantial part of exports outside the EU
Exports by country (2012)
Exports by product group (2012)
Source: National Board of Customs, Statistics Finland
29
Some macroeconomic data
Unemployment Rate
Source: EU Economic Forecast, Autumn 2013
Gross debt-to-income ratio of households
Source: Eurostat
Housing Prices in various countries
Source: Macrobond
Annual GDP Y/Y
Source: EU Economic Forecast, Autumn 2013
30
Presentation outline
1
Overview – Aktia Group
2
Financial key figures – Aktia Bank plc
3
Credit ratings
4
The Finnish economy
5
Summary and Contacts
31
Summary – Aktia Bank Plc
Retail bank with focus on growth areas in Finland
Provides services mainly to private customers, small-sized companies and
institutional investors
Business strongly supported by own branch network
Households accounts for 88 % of the loan portfolio and 78 % of the deposit stock
Continuously competitive and stable net interest income
EUR 112.6 million in 2013
Prudent lending policy and low loan losses
Write-downs EUR 2.7 million (0.04 %) in 2013, non performing loans 0.66 %
Solid profitability over time
Return on Equity (ROE) 8.1 % in 2013
Strong Capital Ratio
Tier 1 Capital Ratio 12.3 %, expected to improve approx. 4 %-pts. by IRBA
Credit ratings
Moody's
S&P:
A3 / P-2, neg
A- / A-2, neg
Covered Bonds: Aaa
32
Contacts and additional information
Contacts
Timo Ruotsalainen
Anna Gabrán
Head of Treasury
Managing Director, Aktia REMB
Tel. +358 10 247 7211
[email protected]
Head of IR
Tel. +358 10 247 6501
[email protected]
Additional Information
http://www.aktia.fi/en/investors/investing-in-aktia
http://www.aktia.fi/en/investors/debt-investors/aktia-bank
33