Release Date: November 06, 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 2% increase in comparable operating income compared to the same quarter last year.
- The bank achieved a strong return on equity of 15% and a cost-to-income ratio of 0.56, indicating efficient operations.
- Assets under management increased due to positive net subscriptions and favorable market movements.
- The life insurance business performed exceptionally well, with a 74% increase in net income from life insurance compared to last year.
- Employee and customer satisfaction improved significantly, with Aktia climbing the most in the Finnish financial sector rankings.
Negative Points
- Net interest income decreased by 7% compared to the previous year, primarily due to a technical error in corporate accounts.
- The total loan book decreased slightly due to amortization, despite growth among premium and private banking customers.
- There was a 6% decline in deposits year-to-date, attributed to macroeconomic factors and less attractive term deposits.
- Comparable operating expenses increased by 5% from last year, driven by investments in IT.
- The net interest income margin decreased significantly quarter-to-quarter, raising concerns about future performance.
Q & A Highlights
Q: Can you please comment on Aktia's strategy process?
A: Yes, indeed, we are underway with this work, and it's continuing on schedule. We will present and comment on it when it is ready. We are doing thorough work, and once finalized, we will publish it. - Aleksi Lehtonen, CEO
Q: Could you please comment on the institutional sales in asset management?
A: We are pleased to report positive net subscriptions this quarter, with institutional sales leading the way. It's a long-term effort to earn clients' trust through systematic and client-driven approaches. We've made changes in our distribution channels in France and Latin America to remove bottlenecks. The macro environment is now more supportive for our EMD products. - Kati Eriksson, EVP Asset Management
Q: Could you comment on Aktia's interest rate sensitivity and hedges?
A: The interest rate sensitivity is more relevant than the hedges themselves. Our net interest income reacts negatively to a 200 basis point interest rate shock, as detailed in our annual Pillar 3 report. - Karri Varis, Interim CFO
Q: What was the impact of the one-off on net interest income (NII), and will it affect future quarters?
A: The decline in NII was mostly due to a one-off incident. The affected accounts have been renegotiated under new terms as of October. We maintain our outlook for the future. - Karri Varis, Interim CFO
Q: Could you provide details on the strong inflows in your funds, especially within retail banking?
A: We've been educating our retail banking staff about investment products for years. The biggest inflow was into our short-term fixed income fund, with good inflows also into credit and allocation funds. This reflects our comprehensive approach to wealth management. - Kati Eriksson, EVP Asset Management
Q: What is your analysis behind the low claims ratio in the life insurance business?
A: The claims ratio fluctuates naturally, and we will provide more details later. - Karri Varis, Interim CFO
Q: Why was the average personal account cost high in Q3?
A: Q3 is difficult to compare due to the number of interns over the summer, affecting personal costs. - Karri Varis, Interim CFO
Q: What caused the 6% decline in deposits year-to-date?
A: The decline is due to macroeconomic factors, with term deposits being less attractive due to interest rates. Our liquidity situation has been strong, and net subscriptions have been positive. - Karri Varis, Interim CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
