Evli Bank Plc's Half Year Financial Report January-June 2018
EVLI BANK PLC STOCK EXCHANGE RELEASE JULY 13, 2018, AT 11.00 AM
COMMISSION INCOME AND ASSETS UNDER MANAGEMENT CONTINUED TO GROW
- In the Wealth Management and Investor Clients segment operating profit increased by almost 26 percent and was EUR 9.1 million (1-6/2017: EUR 7.3 million)
- The operating profit in the Advisory and Corporate Clients segment over doubled and was EUR 0.8 million (EUR 0.3 million)
- The revenues from the trading activities through the own balance sheet declined in the Group Operations segment.
- The Group's net revenue increased to EUR 34.9 million (EUR 34.1 million)
- The Group's operating profit was EUR 10.4 million (EUR 9.8 million)
- Evli's diluted earnings per share were EUR 0.40 (EUR 0.31) and return on equity was 28.8 percent (22.3%)
- Net assets under management grew year on year and totaled EUR 11.9 billion (EUR 11.8 billion) at the end of June, which is historically the highest amount for Evli. Respectively from the beginning of the year, growth was EUR 0.7 billion.
- The proportion of recurring revenue to operating costs improved to 113 percent (110%).
- The Group's net revenue was EUR 18.0 million (EUR 17.9 million)
- The Group's operating profit was EUR 5.2 million (EUR 5.2 million)
- Earnings per share amounted to EUR 0.16 (EUR 0.16).
Outlook for 2018 unchanged
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 continued decline in equity prices or a reduction in investors' risk appetite would have a negative impact on the company's profit performance. Demand for Evli's products has remained stable and assets under the Group's management have grown substantially in recent years, which would soften the result-impact of any reversal of the market.
There has been positive development in the demand for advisory services, and its outlook for 2018 is stable. Customer's demand for Evli's products and services has developed positively, which has also led to a systematic increase in lending. In the advisory business and in own investment activities, substantial fluctuations in annual returns are possible.
Due to successful and stable development at the beginning of the year, we estimate that the result for the 2018 financial year will be clearly positive.
|Income statement key figures|
|Operating income, M€||34.9||34.1||71.4|
|Operating profit/loss, M€||10.4||9.8||21.3|
|Operating profit margin, %||29.8||28.8||29.8|
|Profit/loss for the financial year, M€||10.3||7.1||17.5|
|Profitability key figures|
|Return on equity (ROE), %||28.8||22.3||25.5|
|Return on assets (ROA), %||2.1||1.5||2.0|
|Balance sheet key figures|
|Equity-to-assets ratio, %||7.2||5.6||7.6|
|Group capital adequacy ratio, %||16.4||14.0||15.0|
|Key figures per share|
|Earnings per Share (EPS), fully diluted, €||0.41||0.32||0.72|
|Comprehensive Earnings per Share (EPS), fully diluted, €||0.40||0.31||0.69|
|Dividend per share, €*||0.52|
|Equity per share, €||2.97||2.69||3.10|
|Share price at the end of the period, €||9.84||6.90||9.60|
|Other key figures|
|Expense ratio (operating costs to net revenue)||0.70||0.71||0.70|
|Recurring revenue ratio, %||113||110||113|
|Personnel at the end of the period||268||254||240|
|Market value, M€||233.1||160.9||224.9|
*Dividend from 2017 approved by the Annual General Meeting. The dividend was paid on March 21, 2018.
Maunu Lehtimäki, CEO
Second-quarter revenue and operating profit remained at the previous year's level despite a clear increase in net commission income. A decline in trading returns weakened the growth in revenue and profit. The growth in commission income is a result of a particularly positive trend in the client assets under management, which increased to a record of EUR 11.9 billion during the review period. Evli's funds collected net subscriptions of about EUR 0.5 billion during the first half, and, measured with fund subscriptions, Evli collected the highest amount of assets out of all fund management companies in Finland. The increase in client assets was boosted by successful customer acquisition activities and strong sales of asset management mandates, positive net subscriptions to funds and new product launches during the beginning of the year, particularly in the strategically important area of alternative investment products. For the fourth consecutive year, Evli was ranked the best institutional asset manager in a survey by KANTAR SIFO Prospera.
The development was also positive in the area of corporate clients, apart from a couple of delays in Corporate Finance orders. Evli managed to grow its business activities in corporate finance, investment research and incentive systems.
During the second quarter, our revenue and operating profit remained at the level of the previous year and our operating margin was almost 30 percent. Our key strategic indicator, the ratio of our recurring revenue in relation to the Group's operating expenses, reached 113 percent. Including the profit of associated companies, the Group's return on equity rose to almost 29 percent.
To target growth alongside the promotion of our traditional business, we continued our efforts in international fund sales, development of alternative investment products and the creation of a simply unique customer experience. As was the case in the first quarter, we made progress on each strategic frontier. In international sales, we continued to expand the distribution of our funds. In addition to a distribution agreement concerning Germany, which was signed in the first half of the year, we also signed an agreement regarding fund distribution in the Gulf region. In alternative investment products, we launched the Evli Healthcare I Ky fund, which invests in care facilities during the first quarter. At the establishment phase, we collected over EUR 70 million in investments and during the second quarter we collected around another EUR 30 million. We also launched the new non-UCITS fund Evli Rental Yield, which invests in commercial premises and had assets of about EUR 40 million at the end of June.
Due to our success in the first half, the outlook for 2018 is very promising. We will continue to focus on our strategic priorities and concentrate on achieving stable and profitable growth. We expect that on this basis, the result for 2018 will be clearly in the positive.
EVLI BANK PLC
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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, investment 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 6/2018). The Evli Group's equity capital totals EUR 69.4 million and its BIS capital adequacy ratio is 16.4 percent (June 30, 2018). 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 2018, SFR Scandinavian Financial Research Institutional Investment Services, Finland 2017 (shared first place).
Nasdaq Helsinki Ltd, main media, www.evli.com