Evli Bank Plc's Interim Report January-March 2019

26.April 2019 at 12:00:00 CET

Evli Bank Plc Interim Report 1-3 2019



January-March 2019

Outlook for 2019

The risks associated with the general trend in the equity and fixed income markets are high due to the prevailing uncertainty on the markets. A possible continued decline in equity prices or a reduction in investors' risk appetite would have a negative impact on the company's profit performance. Evli Group's assets under management have grown substantially in recent years, which softens the result-impact of any reversal of the market. Sales of alternative investment products, in particular, have brought new, stable revenue. Evli has initiated a series of internal, strategy-based actions and cost savings, leading to improvements in the company's cost effectiveness.

There has been positive development in the demand for advisory services, and its outlook for 2019 is stable. Own balance sheet investments share of Evli's business decreased during 2018. Nevertheless, it may have a significant impact on the company's result performance. In the advisory business and in own investment activities, fluctuations in quarterly and annual returns are possible. Customer's demand for Evli's products and services has continued to be good, which has also led to a systematic increase in lending.

Because of profitable and stable development, we estimate that the result for the 2019 financial year, will be clearly positive.

Key Figures

  1-3/2019 1-3/2018 1-12/2018
Income statement key figures      
Operating income, M€ 16.8 17.0 68.5
Operating profit/loss, M€ 4.3 5.2 18.9
Operating profit margin, % 25.7 30.8 27.6
Profit/loss for the financial year, M€ 3.5 5.9 17.3
Profitability key figures      
Return on equity (ROE), % 19.2 34.1 23.0
Return on assets (ROA), % 1.4 2.3 1.9
Balance sheet key figures      
Equity-to-assets ratio, % 5.7 6.1 9.5
Group capital adequacy ratio, % 15.8 15.4 16.2
Key figures per share      
Earnings per Share (EPS), fully diluted, € 0.13 0.24 0.68
Comprehensive Earnings per Share (EPS), fully diluted, € 0.13 0.23 0.67
Dividend per share, €* - - 0.61
Equity per share, € 2.79 2.80 3.27
Share price at the end of the period, € 7.70 9.48 7.28
Other key figures      
Expense ratio (operating costs to net revenue) 0.74 0.69 0.72
Recurring revenue ratio, % 110 120 113
Personnel at the end of the period 256 259 254
Market value, M€ 184.0 224.6 172.5

*Dividend for 2018 approved by the Annual General Meeting. The dividend was paid on March 21, 2019.

Maunu Lehtimäki, CEO

After the steep decline in share prices at the end of last year the market environment calmed down and equity and corporate bond prices recovered. Despite this, investor activity and sentiment were cautious at the beginning of the year and this was reflected in Evli's first quarter financial performance. During the review period, our net revenue declined 1 percent, net commission income by 8 percent and operating profit by 18 percent year on year. A decline in fund and brokerage fees, in particular, had a negative effect on performance. However, the balance sheet returns developed exceptionally well and was EUR 1.1 million in the first quarter.

The core areas in Evli's strategy performed according to expectations during the first quarter. In line with the strategy we focused on developing alternative investment products, on international fund sales and on projects to improve client experience and digitalization.

In the area of alternative investment products, we launched the new Evli Private Equity II Ky fund that invests in private equity funds in the first quarter and raised around EUR 60 million for our real estate equity funds. The Evli Healthcare I fund, which invests in care facilities, reached its target size of EUR 200 million and was closed to new subscriptions. The total capital in the alternative investment products, including investment commitments, was around EUR 400 million at the end of the review period compared with around EUR 100 million a year earlier.

International fund sales grew by around EUR 100 million during the first quarter, the majority of the growth came from corporate bond funds. As was the case in the previous year, foreign investors were interested in the Nordic Corporate Bond fund and the fund's capital increased to almost EUR 700 million. Overall, our international fund capital grew to EUR 2.1 billion compared with EUR 1.7 billion a year earlier. Evli's major markets outside Finland are Sweden and the other Nordic countries and large countries in Central Europe, particularly Germany, France and Spain.

In Finland, the sales performance of fund products and discretionary asset management services was varied. The sale of asset management services to private and institutional clients increased according to plan. However, fund sales were negative during the first quarter on account of a couple of large redemptions. Evli Fund Management Company's net subscriptions to traditional mutual funds were around EUR 100 million negative, but as a result of the recovery of share prices our fund capital increased and exceeded that of the end of last year at EUR 8.1 billion. Evli is the fourth largest fund management company in Finland and its market share was 7.1 percent at the end of March. Our client assets under management grew to EUR 11.9 billion.

In the Advisory and Corporate Clients segment the Corporate Finance business area performed in line with expectations and invoicing was at the level of the previous year. The company's mandate base is stable so the outlook for the coming quarters is also positive. The incentive system management business grew as it has in previous years due to new clients and existing clients extending their current incentive systems.

We will continue our resolute work to develop our strategic focus areas in order to reach our target of achieving an even broader selection of funds and more international clientele. By developing new alternative investment products, we want to meet client demand even better and strengthen the average margin of our fund products. We will also continue our work to create a unique client experience and to boost the efficiency of our investment processes. We have invested in the development of our information systems for a long time now. During 2019 our target is to launch new digital services and update our back-office systems. We believe this work will have a positive impact on client satisfaction and our profitability.


For additional information, please contact:

Maunu Lehtimäki, CEO, Evli Bank Plc, tel. +358 50 553 3000, maunu.lehtimaki@evli.com
Juho Mikola, CFO, Evli Bank Plc, tel. +358 40 717 8888, juho.mikola@evli.com

Evli Bank Plc

Evli is a bank specialized in investments that helps institutions, corporations and private persons increase their wealth. The product and service offering includes mutual funds, asset management and capital markets services, alternative investment products, equity research, administration of incentive programs and Corporate Finance services. The company also offers banking services that support clients' investment operations. Evli is the highest ranked and most used institutional asset manager in Finland*.

Evli has a total of EUR 11.9 billion in client assets under management (net 3/2019). The Evli Group's equity capital totals EUR 66.6 million and its BIS capital adequacy ratio is 15.8 percent (March 31, 2019). The company has more than 250 employees. Evli Bank Plc's B shares are listed on Nasdaq Helsinki Ltd.

*KANTAR SIFO Prospera External Asset Management Finland 2015, 2016, 2017, 2018, SFR Scandinavian Financial Research Institutional Investment Services, Finland 2015, 2016 ,2017, 2018.

Nasdaq Helsinki Ltd, main media, www.evli.com