Release Date: August 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Aktia Bank PLC (FRA:2A41, Financial) reported a 21% increase in comparable operating profit for Q2, reaching EUR30.8 million.
- The bank's return on equity (ROE) was strong at 14.9% for Q2, exceeding its long-term target of 12%.
- Net interest income grew by 18% compared to the previous year, driven by margin improvements and product mix.
- Aktia Bank PLC (FRA:2A41) maintained a healthy loan-to-value ratio of 43% and a strong solvency ratio of 187.5% in its Life Insurance business.
- The bank's liquidity coverage ratio (LCR) was exceptionally high at 277%, indicating strong liquidity management.
Negative Points
- Comparable operating expenses increased by 5% due to higher IT spending and inflationary pressures.
- The bank experienced negative net subscriptions in its Asset Management business during Q2, although this trend reversed in June.
- There was a slight decline in lending volumes, attributed to higher amortizations and a decrease in the loan book.
- Aktia Bank PLC (FRA:2A41) faced increased competition for deposits, leading to a shift towards term deposits.
- The bank's IT costs have risen substantially, impacting the cost base despite efforts to control personnel costs.
Q & A Highlights
Q: You have updated the outlook for 2024. Is the update really positive or only due to the restated numbers for 2023?
A: The outlook has been updated slightly upwards, removing the term "somewhat higher." This update is valid regardless of whether you compare it to the reported or restated numbers for 2023. The improved guidance is not solely due to a lower comparison figure.
Q: Can you tell us more about the development of the Asset Management business?
A: We had negative net subscriptions in Q2, but they turned positive at the end of the quarter and continued into July. This positive trend came from broad customer segments, including domestic and international institutions, private banking, and banking customers.
Q: How has the new cooperation with Swedbank started, and have you gained new clients because of the deal?
A: The cooperation with Swedbank has started well, and we have signed a few contracts. We are using our existing systems and platforms for this collaboration, which currently does not incur extra expenses.
Q: Have you seen any changes in the competition for deposits?
A: Our deposit base has remained quite flat, which is positive. There has been an internal shift from current accounts to term deposits, but no major movement in the overall deposit base. We have been competitive with term deposits, attracting funds due to favorable pricing.
Q: What are your initial thoughts about what strategic changes are needed to get the full potential out of Aktia?
A: We have started updating our long-term financial forecasts and strategy, which will be shared once completed. It's too early to comment on specific areas, but we are working on it and will provide updates in due course.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
