Aktia plc Interim Report for 1 January - 30 June 2009
Aktia plc
Interim report
20.8.2009 at 10.00
Not for release or distribution in the United States, Australia, Canada or Japan
Aktia plc Interim Report for 1 January - 30 June 2009
The period in brief
Aktia's result for the first six months was stable
Operating profit before write-downs was EUR 39.5 million (EUR 29.2 million),
April - June EUR 27.5 million, (EUR 14.7 million)
Operating profit was EUR 22.0 million (EUR 29.9 million), April - June EUR 11.7
million (EUR 15.7 million)
Net interest income increased by 46.4% to EUR 71.9 million (EUR 49.1 million)
The Group's equity was strengthened by 25.1% to EUR 396.3 million (EUR 317
million at 31 December 2008)
Listing on the Stock Exchange in September is being prepared
The general economic situation continues to be weak with increased loan losses
The Group's income to remain stable in 2009
The CEO's comments
“Work to integrate Aktia's banking and insurance businesses continues. With our
“One Aktia” service concept our aim is to provide our customers with one point
of contact where we can present Aktia's wide range of financial products and
services. This objective imposes considerable demands on our product companies
and especially our staff in the branch offices. The staff have taken on this
challenge in an admirable way. We still have a lot to do to become the best at
helping our customers improve and safeguard their finances.
The economic situation in Finland continues to be challenging. The financial
crisis, which has translated into a general downturn in the real economy, has
led to a sharp increase in credit loss provisions, primarily for corporate
loans. Small and medium-sized enterprises are being hardest hit by the current
economic climate. Given that only 15% of Aktia's lending is to corporate
customers, and with strong net interest income and our continued efforts to
monitor our costs, we will be able to achieve a satisfactory result this year.
We are looking forward to the Stock Exchange listing that is scheduled for the
autumn”, says CEO Jussi Laitinen.
Key figures
--------------------------------------------------------------------------------
| | 1-6 2009 | 1-6 2008 | 1-12 2008 |
--------------------------------------------------------------------------------
| Earnings per share, EUR | 0.26 | 0.37 | 0.09 |
--------------------------------------------------------------------------------
| Equity per share, EUR | 5.51 | 4.55 | 4.85 |
--------------------------------------------------------------------------------
| Return on equity (ROE), % | 9.2 | 14.6 | 1.8 |
--------------------------------------------------------------------------------
| Earnings per share excluding negative | 0.70 | -0.54 | -0.22 |
| goodwill recorded as income and including | | | |
| the fund at fair value, EUR | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Capital adequacy ratio, % (conglomerate) | 144.2 | 115.1 | 135.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Average number of shares, million | 67.0 | 60.2 | 60.2 |
--------------------------------------------------------------------------------
| Number of shares at end of period, million | 67.0 | 60.2 | 60.2 |
--------------------------------------------------------------------------------
| Personnel (FTEs), average number of | 1,213 | 992 | 1,010 |
| employees from the beginning of the | | | |
| financial year | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Banking business (incl. Private Banking) | | | |
--------------------------------------------------------------------------------
| Cost-to-income ratio | 0.57 | 0.69 | 0.65 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Borrowing from the public, EUR million | 3,080 | 3,069 | 3,098 |
--------------------------------------------------------------------------------
| Lending to the public, EUR million | 5,820 | 5,082 | 5,426 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Capital adequacy ratio, % | 14.7 | 12.8 | 13.7 |
--------------------------------------------------------------------------------
| Tier 1 capital ratio, % | 9.2 | 10.1 | 9.3 |
--------------------------------------------------------------------------------
| Risk-weighted commitments, EUR million | 3,395 | 3,229 | 3,313 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Asset Management | | | |
--------------------------------------------------------------------------------
| Mutual fund volume, EUR million | 2,927 | 1,858 | 2,490* |
--------------------------------------------------------------------------------
| Managed and brokered assets, EUR million | 5,083 | 3,722 | 4,538 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Life Insurance | | | |
--------------------------------------------------------------------------------
| Premium income before reinsurers' share, | 36.0 | 48.2 | 91.4 |
| EUR million | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Expense ratio, % | 106.3 | 104.1 | 99.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Working capital, EUR million | 65.6 | 82.6 | 50.4 |
--------------------------------------------------------------------------------
| Solvency ratio, % | 11.2 | 12.5 | 8.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Investments at fair value, EUR million | 813.1 | 921.8 | 804.6 |
--------------------------------------------------------------------------------
| Technical provisions for interest-linked | 599.1 | 655.8 | 627.6 |
| policies, EUR million | | | |
--------------------------------------------------------------------------------
| Technical provisions for unit-linked | 168.6 | 191.7 | 149.6 |
| policies, EUR million | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-Life Insurance | | | |
--------------------------------------------------------------------------------
| Premium income before reinsurers' share, | 44.0 | - | - |
| EUR million | | | |
--------------------------------------------------------------------------------
| Premium income, EUR million | 29.3 | - | - |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Operating cost percentage, % | 26.1 | - | - |
--------------------------------------------------------------------------------
| Loss ratio, % | 88.2 | - | - |
--------------------------------------------------------------------------------
| Total cost percentage, % | 114.3 | - | - |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Technical provisions before reinsurers' | 116.8 | - | - |
| share, EUR million | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Solvency capital, EUR million | 46.9 | - | - |
--------------------------------------------------------------------------------
| Solvency ratio of technical provisions, % | 42.6 | - | - |
--------------------------------------------------------------------------------
| Solvency percentage (risk carrying | 78.9 | - | - |
| capacity), % | | | |
--------------------------------------------------------------------------------
*) Including fund volume of Aktia Invest from December 2008.
Activity of the report period
Profit
The Group's operating profit for the first six months was EUR 22.0 million (EUR
29.9 million). During April - June the Group's operating profit amounted to EUR
11.7 million (EUR 15.7 million).
The banking business reported an operating profit of EUR 41.4 million (EUR 19.1
million) before write-downs. Despite increased write-downs of credits EUR 17.8
million (0.0), the banking business achieved an operating profit of EUR 23.8
million (EUR 19.0 million) thanks to improved net interest income. Asset
management suffered as a result of the situation in the investment market and
returned an operating profit of EUR 0.1 million (EUR 2.1 million). The
contribution of the insurance business to the Group's operating profit for the
reporting period was EUR 0.2 million (EUR 3.7 million) for life insurance, while
that of non-life insurance was EUR -2.8 million.
The operating profit from associated companies was EUR 0.6 million (EUR -0.1
million).
Profit for the reporting period was EUR 16.5 million (EUR 22.8 million). During
April - June the Group's profit for the period amounted to EUR 9.3 million (EUR
12.2 million).
Income
The Group's total income increased by 24.4% in the first six months to EUR 114.9
million (EUR 92.4 million). During April - June the Group's total income was EUR
65.0 million (EUR 47.6 million).
Net interest income increased to EUR 71.9 million (EUR 49.1 million). The
derivatives used by Aktia to limit its interest rate risk contributed EUR 9.1
million (EUR -2.7 million) to the improved net interest income during the first
six months. Active interest-rate risk management including fixed-rate
investments was the main factor of the remaining improvement in net interest
income. Net interest income from borrowing from and lending to the public was
stable. During April - June net interest income rose to EUR 39.4 million from
its strong level of EUR 32.5 million in the first quarter.
Net commission decreased by 8.1% to EUR 20.6 million (EUR 22.4 million).
Commission income from funds, asset management and brokering fell to EUR 10.5
million (EUR 11.2 million). Card and payment services commissions rose to EUR
5.7 million (EUR 5.4 million). Income from real estate agency commissions
decreased to EUR 3.7 million (EUR 4.2 million). Commission expenses increased by
EUR 3.7 million to EUR 7.0 million (EUR 3.3 million). Of the total commission
expenses, EUR 1.7 million is due to local banks for mortgages brokered. All
business areas contributed to increased net commission during April - June.
Net income from life insurance amounted to EUR 7.0 million (EUR 11.2 million).
Aktia Non-Life Insurance, consolidated since 1 January 2009, reports a net
income of EUR 7.4 million from non-life insurance. Net income from the insurance
business includes insurance premium income, net income from investment
activities, insurance claims paid and the change in provisions. Net income from
non-life insurance in particular developed favourably during April - June.
Other operating income totalled EUR 1.8 million (EUR 3.9 million). This
reduction is largely due to the fact that the sale of the banking business' real
estate holdings during the corresponding period last year resulted in capital
gains.
Expenditure
The operating costs of the Group increased by 19.4% to EUR 75.4 million (EUR
63.2 million). Most of the change was due to costs related to the new
businesses, Aktia Non-Life Insurance and Aktia Invest. During April - June the
Group's operating expenses amounted to EUR 37.4 million (EUR 32.9 million).
Staff costs increased by EUR 6.5 million to EUR 39.2 million (EUR 32.7 million).
Other administration costs amounted to EUR 22.3 million (EUR 19.5 million). Most
of the increase of EUR 2.8 million is related to investments in IT.
Total depreciation and write-downs on tangible and intangible assets increased
to EUR 3.5 million (EUR 2.8 million). Other operating expenses increased by EUR
2.4 million to EUR 10.6 million (EUR 8.2 million). The biggest change in other
operating expenses was attributable to increased rental costs that rose by EUR
2.4 million. This increase is due to Aktia having disposed of much of its real
estate holdings which it used during 2008 and the rents for the new businesses.
Profit April - June 2009
The Group's operating profit in the second quarter was EUR 11.7 million (EUR
15.7 million). Net interest income improved on the first quarter by EUR 6.9
million to EUR 39.4 million (EUR 25.3 million) during April - June thanks to
active risk management. The Group's profit for the period was EUR 9.3 million
(EUR 12.2 million).
The banking business' operating profit* was adversely affected during April -
June by write-downs of credits totalling EUR 15.9 million (0.0). The insurance
business' contribution to the Group's operating profit after eliminations was
EUR -1.8 million (EUR 1.1 million) for life insurance and EUR 0.6 million (-)
for non-life insurance.
The fund at fair value showed an improvement of EUR 35.5 million (EUR -36.2
million) for April - June.
The Group's segments reported the following operating profit for the second
quarter
--------------------------------------------------------------------------------
| Operating profit (EUR million) | Q2 2009 | Q2 2008 |
--------------------------------------------------------------------------------
| Banking business | 11.7 | 10.4 |
--------------------------------------------------------------------------------
| Asset Management | 0.4 | 1.1 |
--------------------------------------------------------------------------------
| Life Insurance | 0.0 | 5.6 |
--------------------------------------------------------------------------------
| Non-Life Insurance | 0.2 | |
--------------------------------------------------------------------------------
| Miscellaneous | 0.6 | 3.9 |
--------------------------------------------------------------------------------
| Eliminations | -1.1 | -5.4 |
--------------------------------------------------------------------------------
| Total | 11.7 | 15.7 |
--------------------------------------------------------------------------------
Balance sheet and off-balance sheet commitments
The Group's balance sheet total increased by 5.9% during the period and amounted
to EUR 10,105 million (EUR 9,540 million at 31 December 2008). This increase in
the balance sheet total is largely due to growth in the mortgage stock.
Borrowing both from the public and from savings banks and local cooperative
banks decreased by a total of 6.7% to EUR 4,678 million (EUR 5,015 million at 31
December 2008) while borrowing using other financial instruments increased by
19.9% to EUR 3,752 million (EUR 3,130 million at 31 December 2008).
The Group's total lending to the public amounted to EUR 5,820 (EUR 5,426 million
at 31 December 2008) at the end of the period, representing an increase of EUR
394 million (+7.3 %). Loans to private households accounted for EUR 4,682
million, or 80.4% of the total loan stock. Of these loans to households, 86.4%
were secured against real estate collateral (in accordance with Basel 2).
Excluding the mortgages brokered by savings and local cooperative banks that the
local banks are committed to capitalise, the Group's lending increased by EUR
225 million (+5.1%) from the year-end.
The housing loan stock totalled EUR 4,354 million (EUR 4,036 million at 31
December 2008), of which mortgages granted by Aktia Real Estate Mortgage Bank
plc made up EUR 2,288 million (EUR 1,968 million at 31 December 2008). In all,
housing loans increased by 7.9%. Corporate lending continued to be moderate,
totalling EUR 814 million (EUR 804 million at 31 December 2008) at the end of
June.
Interest-bearing financial assets available for sale increased by 8.2% to EUR
3,039 million (EUR 2,808 million at 31 December 2008). These assets mainly
consist of the banking business' liquidity reserve.
Deposits from the public and public sector entities decreased marginally (-0.6%)
from the year-end to EUR 3,080 million (EUR 3,098 million at 31 December 2008).
Aktia Real Estate Mortgage Bank plc issued two covered bonds during the first
half of the year. In February, a bond of 125 million was issued with a floating
interest rate and three-year maturity. In June, a bond of EUR 600 million was
issued with a fixed interest rate and five-year maturity. Outstanding Aktia Bank
certificates of deposit amounted to EUR 266 million at the end of the period and
issued bonds EUR 2,302 million, which represents an increase of EUR 450 million
during the first six months. Aktia Bank also issued new debentures and
index-linked loans with a total value of EUR 45 million.
Life insurance provisions amounted to EUR 768 million (EUR 777 million at 31
December 2008).
Non-life insurance provisions stood at EUR 117 million (EUR 99 at 1 January
2009) at the end of the period.
Off-balance sheet commitments increased by EUR 88 million from the year-end and
amounted to EUR 617 million (EUR 529 million at 31 December 2008). This increase
was largely due to growth in unused credit facilities (loan promises) and high
liquidity commitments with the local banks.
The Group's equity amounted to EUR 396 million (EUR 317 million at 31 December
2008) at the end of the period. The Group's fund at fair value amounted to EUR
-7.1 million (EUR -36 million at 31 December 2008) and showed an improvement of
EUR 35 million on the first quarter.
Capital adequacy and solvency
The Banking Group's capital adequacy amounted to 14.7% compared to 13.7% at
year-end. The Tier 1 capital ratio was 9.2% (9.3% at 31 December 2008). The
capital adequacy calculated in accordance with the Basel 2 rules improved as a
result of Aktia Bank disposing of Aktia Life Insurance from the Banking Group in
March to the parent company Aktia plc, thanks to the positive result during the
first six months and higher valuations of financial assets which brought about
an improvement in the fund at fair value. The capital adequacy of the Banking
Group remains at a good level, achieving the capital adequacy target and clearly
exceeding regulatory requirements.
The life insurance company's working capital amounted to EUR 65.6 million and
solvency 11.2% (8.5% at 31 December 2008). The share risk in the investment
portfolio has continued to decrease.
The non-life insurance company's working capital was EUR 17.7 million. It
reported solvency of 78.9% (risk carrying capacity).
Capital adequacy for the conglomerate amounted to 144.2% (135.2% at 31 December
2008). The statutory minimum stipulated in the Act on the Supervision of
Financial and Insurance Conglomerates is 100%.
Rating
Aktia Bank plc's credit rating by the international credit rating agency Moody's
Investors Service has been confirmed as the best classification, P-1
(unchanged), for short-term borrowing. The credit ratings for long-term
borrowing and financial strength were the same, at A1 and C respectively (both
unchanged), all with a stable outlook.
The covered bonds issued by subsidiary Aktia Real Estate Mortgage Bank plc have
a Moody's credit rating of Aa1 (previously Aaa) as of 25 May 2009.
Valuation of financial assets
Value changes reported via the fund at fair value
Impairments in interest-bearing securities where the issuer has not announced an
inability to pay and value impairments in shares and participations which are
not deemed to be long-term or significant are reported in the fund at fair
value, which, taking cash flow hedging for the Group into consideration,
amounted to EUR -7.1 million after deferred tax, compared to EUR -36.4 million
at 31 December 2008. The cash flow hedging which comprises the market value for
interest rate derivative contracts which have been acquired for the purposes of
hedging the banking business' net interest income amounted to EUR 18.2 million
(EUR 12.4 million at 31 December 2008).
Of the fund at fair value as at 30 June 2009, EUR 27.3 million was attributable
to the negative valuation difference of interest-bearing securities including
fund-units in interest-bearing funds which is mainly due to continued poor
market liquidity and investors' demands for high returns as a result of the
general uncertainty in the financial markets. The negative value changes in
interest-bearing securities will not materialise provided that the issuer does
not become unable to pay or the security is cashed in before its maturity.
Specification of the fund at fair value
--------------------------------------------------------------------------------
| EUR million | 30.6.2009 | 31.12.2008 | Change |
--------------------------------------------------------------------------------
| Shares and participations | | |
--------------------------------------------------------------------------------
| Banking business | 2.3 | -1.5 | 3.8 |
--------------------------------------------------------------------------------
| Life insurance | -0.2 | -2.9 | 2.7 |
| business | | | |
--------------------------------------------------------------------------------
| Non-life insurance | -0.1 | - | -0.1 |
| business | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Direct interest-bearing securities |
--------------------------------------------------------------------------------
| Banking business | -16.3 | -26.2 | 9.9 |
--------------------------------------------------------------------------------
| Life insurance | -9.2 | -18.2 | 9.0 |
| business | | | |
--------------------------------------------------------------------------------
| Non-life insurance | -1.8 | - | -1.8 |
| business | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow hedging | 18.2 | 12.4 | 5.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Fund at fair value, total | -7.1 | -36.4 | 29.3 |
--------------------------------------------------------------------------------
Value changes reported via income statement
Write-downs for the period amounted to EUR 20.7 million (EUR 39.2 million at 31
December 2008) as a result of significant or long-term impairment of shares and
share funds as well as interest-bearing securities where the issuer has
announced an inability to pay. Of the total write-downs EUR 20.3 million are
attributable to the life insurance company. Of the write-downs EUR 6.9 million
was attributable to shares and participations in the investment portfolio of the
life insurance company and EUR 13.8 million to interest-bearing securities after
the accounting principles had been defined more precisely. Defining the
principles more precisely primarily affected the assessment of securities with
subordinate right of priority.
Write-downs on financial assets
--------------------------------------------------------------------------------
| EUR million | 1-6 2009 | 1-12 2008 |
--------------------------------------------------------------------------------
| Interest-bearing securities | | |
--------------------------------------------------------------------------------
| | Banking business | 0.4 | 3.6 |
--------------------------------------------------------------------------------
| | Life insurance business | 13.4 | 5.1 |
--------------------------------------------------------------------------------
| | Non-life insurance business | - | - |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Shares and participations | | |
--------------------------------------------------------------------------------
| | Banking business | - | 1.0 |
--------------------------------------------------------------------------------
| | Life insurance business | 6.9 | 29.4 |
--------------------------------------------------------------------------------
| | Non-life insurance business | - | - |
--------------------------------------------------------------------------------
| Total | 20.7 | 39.2 |
--------------------------------------------------------------------------------
Write-downs of loan and guarantee claims
Write-downs based on individual examination of loan and guarantee claims
totalled EUR -17.8 million. Reversals of losses from previous years came to EUR
0.2 million so that the cost effect on the profit for the period was EUR -17.5
million.
Of the total write-downs, corporate loans accounted for EUR -16.9 million, of
which EUR -10 million can be attributed to one major customer entity whose
operating conditions have worsened considerably as a result of liquidity
problems and the declining market. The financier has shares in subsidiaries as
well as floating charges as collateral. The customer constitutes Aktia's largest
credit exposure which is not secured against real estate, shares in listed
companies or guarantees from financial institutions.
Write-downs of household loans amounted to EUR 0.9 million, EUR 0.5 million of
which was accounted for by unsecured consumer loans.
In addition to individual write-downs, group write-downs were made for
households and small companies, taking the economic situation into
consideration, where there were objective reasons to believe there was
uncertainty in relation to the repayment of claims in underlying credit
portfolios. Group write-downs for households and small companies remained
unchanged and amounted to EUR 7.4 million at the end of the period.
Segment overview
Aktia plc's new division into business segments was changed from 1 January 2009
so that the segments Retail Banking and Corporate Banking & Treasury are
combined into a segment entitled Banking Business. The other segments are Asset
Management, Life Insurance, Non-Life Insurance and Miscellaneous. The
Miscellaneous segment includes Group administration, certain administrative
functions and return on equity.
Comparative figures for 2008 relating to the new segmentation were published on
8 April 2009.
Banking business
The operating profit of the banking business during the first six months was EUR
23.8 million (EUR 19.0 million). The operating profit for April - June was EUR
11.7 million (EUR 10.4 million).
Operating income totalled EUR 93.7 million (EUR 67.8 million). The improvement
is mainly attributable to net interest income which increased to EUR 68.9
million (EUR 46.2 million). The decrease in short market rates of interest has
had a positive effect on net interest income through lower re-financing costs,
hedging derivative instruments and fixed-rate investments in the liquidity
portfolio. Increased risk premiums (credit spreads) have allowed better returns
from new investments in the liquidity portfolio, which has had a positive effect
on net interest income. During April - June net interest income continued to
improve from the strong level reached in the first quarter. Net commission
income fell to EUR 15.0 million (EUR 16.0 million). During April - June net
commission income improved somewhat on the first quarter.
Operating expenses rose to EUR 52.3 million (EUR 48.7 million). The increase in
costs includes an increased payment to the Deposit Guarantee Fund as well as
increased rents as a result of selling off office premises during 2008.
The economic situation has brought about a sharp increase in loan losses,
particularly among corporate customers.
The banking business' growth is primarily driven by retail customers. Sales
activities are supported by the Aktia Dialogue concept whereby customers' needs
are mapped out and Aktia's whole service portfolio is presented. The appearance
of the branch offices has also been standardised. The customer base of the
banking business increased by 4,400 private customers during the first six
months. The number of Internet banking agreements rose by 4.2% from the start of
the year, amounting to 112,429.
Aktia's lending to private households, including the mortgages brokered by
Aktia, increased by 5.3 % to EUR 3,523 million (EUR 3,346 million at 31 December
2008). Mortgage loans brokered by Aktia amounted to EUR 1,237 million (EUR 1,069
million at 31 December 2008). Aktia's market share in housing loans amounted to
4.2%. Aktia's total lending to private households made up 80.4% of the loan
stock. The proportion of the total credit stock accounted for by corporate loans
fell as planned from 14.8% at the year-end to 14.0% at the end of the period.
Total savings by households amounted to EUR 2,972 million (EUR 2,907 million at
31 December 2008), of which household deposits were EUR 2,380 million (EUR 2,359
at 31 December 2008) and savings by households in mutual funds stood at EUR 592
million (EUR 548 million at 31 December 2008). The outward flow from the funds
has stopped and household savings showed an increase of 2.2% during the first
six months.
Aktia Real Estate Mortgage Bank plc showed continued growth. The total credit
stock grew by 16.3% to EUR 2,409 million. Of the growth in the credit stock,
51.4% was brokered by Aktia's branch offices and 48.6% by savings banks and
local co-operative banks. In February, Aktia Real Estate Mortgage Bank plc
issued a covered bond worth EUR 125 million with a three-year maturity. Another
bond was issued in June worth EUR 600 million with a fixed interest rate and
five-year maturity.
The operating profit of the real estate agency business developed favourably and
amounted to EUR 0.6 million (EUR -0.2 million), mainly as a result of cost
adjustment measures and slightly more activity on the market during the second
quarter.
Asset Management
Operating profit for Aktia's asset management business fell to EUR 0.1 million
(EUR 2.1 million) during the first six months. The market situation became more
positive during the second quarter. Aktia fared relatively well in the market.
The operating profit for the period includes non-recurring items, mainly capital
losses of approximately EUR 0.4 million. During April - June the operating
profit amounted to EUR 0.4 million (EUR 1.1 million).
The Asset Management segment has continued to focus on private banking
operations and institutional investors. In December 2008, Aktia acquired
Kaupthing's Finnish asset management business, now Aktia Invest. This
acquisition strengthened Aktia's service portfolio, representing expertise which
has been very much appreciated by institutional investors in Finland in recent
years. Increased investment of resources in the private banking business has
been initiated in Aktia's branch offices.
Operating income, i.e. income after reversals to the Group's other units and
business partners, was EUR 6.4 million (EUR 7.3 million). The business
environment was challenging throughout the period as a whole. Operating expenses
increased by EUR 1.2 million to EUR 6.4 million, of which staff costs
constituted EUR 3.6 million. This increase in costs is due to greater investment
of resources in the private banking business and institutional investment
activities.
The volume of funds managed and brokered by Aktia was EUR 2,927 million (EUR
2,490 million at 31 December 2008). Aktia's market share was 6.4% (6.0%) at the
end of the period - this includes the share of brokered funds. The total market
is based on information from the Finnish Association of Mutual Funds. Assets
managed by Aktia, including Asset Management and Aktia Invest, increased and
amounted to EUR 5,083 million (EUR 4,538 at 31 December 2008). The customer
assets of Private Banking totalled EUR 871 million (EUR 738 million). The number
of customers in Private Banking increased by approximately 4% over the period.
Life Insurance
The contribution of the life insurance business to the Group's operating profit
was EUR 0.2 million (EUR 3.7 million). The contribution to the Group's operating
profit for April - June was EUR -1.8 million (EUR 1.1 million).
The segment's operating result for both the previous year and the reporting
period include non-recurring items that make comparison difficult. Such items
include write-downs of the investment portfolio, changes in the discount rate
for the interest-based provisions and capital gains from real estate holding
divestments in 2008.
Premium income was EUR 35.9 million (EUR 48.2 million). The decrease in premium
income is mainly due to the fact that the sales of large single premium policies
paid for in one payment have decreased. Premium volumes from unit-linked pension
insurance schemes and risk insurance policies increased. Of the premium volume,
unit-linked insurance accounted for approximately 37% (44%).
Insurance claims and benefits totalled EUR 43.8 million (EUR 37.7 million).
Increased payment of insurance benefits resulted primarily from the surrender of
savings policies and single premium policies as well as increased pension and
health insurance payments.
The operating expenses totalled EUR 6.6 million (EUR 6.7 million). Within the
life insurance business, steps to streamline operations have continued, as has
work to improve cost efficiency. The operating costs include EUR 0.8 million
(EUR 0.1 million) of the Group's administration costs. The increase is due to
the change in allocation principles within the Group. The cost ratio worsened to
106.3% compared with 104.1% for the corresponding period the year before. The
sales organisation of the life insurance segment was transferred to Aktia
Non-Life Insurance on 1 March 2009 and the coordination of sales distribution is
expected to bring continued cost benefits.
The return on the company's investments based on market value was 0.9% (-3.2%).
In order to enable a secure and long-term investment portfolio, the risks in the
portfolio have been reduced, primarily through the continued selling off of
holdings in the share portfolio. Net income from investment business has been
adversely affected by write-downs entered against income of EUR 20.3 million.
Technical provisions totalled EUR 768 million (EUR 777 million at 31 December
2008), of which unit-linked insurance policies represented EUR 169 million (EUR
150 million at 31 December 2008). Interest-based provisions totalled EUR 599
million (EUR 628 million). The discount rate for certain elements of these
provisions was increased, resulting in an average discount rate for all
interest-bearing provisions of 3.6%. This increase reduced provisions by EUR
19.8 million and had a positive impact on the profit for the period.
The company's solvency amounted to 11.2% compared to 8.5% at the year-end.
Non-Life Insurance
Aktia Non-Life Insurance was merged with Aktia plc on 1 January 2009. In 2008
and in previous years, the company has applied Finnish accounting principles
(FAS). In conjunction with the merger, the company has, for consolidation
reasons, started applying IFRS reporting principles. An opening balance
according to IFRS was prepared as at 1 January 2009. The company's opening
balance according to IFRS includes equity amounting to EUR 31.9 million,
technical provisions amounting to EUR 99.1 million, while the balance sheet
total stood at EUR 155.3 million.
The contribution of the non-life insurance business to the Group's operating
profit for the first six months was EUR -2.8 million. During April - June the
contribution to the Group's operating profit was EUR 0.6 million. Comparative
figures for the corresponding period in 2008 are not available.
Insurance premium income for Aktia Non-Life Insurance increased by approximately
5% on the corresponding period last year. This increase is well above the
average growth in the market and is attributable to both private and corporate
customers. Premium income before the reinsurers' share was EUR 44.0 million.
Premium income for the period after the reinsurers' share and change of premium
liabilities amounted to EUR 29.3 million. Claim expenditure amounted to a total
of EUR 23.5 million. Operating costs totalled EUR 9.9 million and include loan
losses totalling EUR 0.3 million. The operating costs include EUR 0.7 million of
the Group's administration costs. The total cost ratio amounted to 114%
(compared to 122% in the first quarter).
Net income from investment business amounted to EUR 0.9 million. The result from
investment business was adversely affected by net capital losses totalling EUR
-1.2 million which resulted from consciously reducing the level of risk in the
investment portfolio and selling off all the company's stock market investments
during the first quarter.
Of the company's total provisions of EUR 116.8 million (EUR 99.1 million at 1
January 2009), the actual provisions for pay-out claims stood at EUR 84.5
million (EUR 79.4 million at 1 January 2009). The market value of the company's
investment portfolio was EUR 139.0 million (EUR 130.7 million at 1 January 2009)
and the company's risk carrying capacity was 78.9%.
The integration of Aktia Non-Life Insurance's distribution channels into Aktia's
branch office network has increased customer activity particularly in the
private customer sector.
Miscellaneous
The operating profit of the Miscellaneous segment was EUR 2.8 million (EUR 6.6
million). The profit for the corresponding period in 2008 includes non-recurring
items amounting to EUR 2.3 million. During 2008 much of Aktia's real estate
holdings were disposed of which generated capital gains. Profit was also
adversely affected by reduced rental incomes and increased rental costs to an
overall effect of EUR -1.9 million.
The Group's risk management
Risk exposure
The banking business includes Retail Banking (including financing company
operations), Corporate Banking, Treasury and Asset Management. Life insurance
business is carried out by Aktia Life Insurance, and non-life insurance business
by Aktia Non-Life Insurance.
Lending-related risks within banking
There were no significant changes to the structure of the credit portfolio
during the first six months. Loans for housing purposes increased 7.9% to EUR
4,354 million, accounting for 74.8% (74.4% at 31 December 2008) of the total
credit stock. Mortgage lending for housing purposes totalled EUR 2,288 million
(EUR 1,968 million at 31 December 2008), of which EUR 1,113 million was brokered
by savings and local co-operative banks. Overall, the proportion of household
loans in the total credit stock increased to 80.4% (80.0% at 31 December 2008).
Of the household loans, 86.5% are secured against adequate collateral in
accordance with Basel 2.
The proportion of the total credit stock accounted for by corporate loans fell
as planned from 14.8% at the year-end to 14.0% at the end of the period.
Lending to the general public secured against collateral objects or unsecured
within the framework of the financing companies Aktia Corporate Finance and
Aktia Card & Finance totalled EUR 78.8 million (EUR 63.8 million at 31 December
2008), representing 1.4% of total lending.
Credit stock by sector
--------------------------------------------------------------------------------
| EUR million | 30.6.2009 | 31.12.2008 | Change | Percentage |
--------------------------------------------------------------------------------
| Corporate | 814 | 804 | 10 | 14.0 |
--------------------------------------------------------------------------------
| Housing | 260 | 220 | 40 | 4.5 |
| associations | | | | |
--------------------------------------------------------------------------------
| Public sector | 12 | 12 | 0 | 0.2 |
| entities | | | | |
--------------------------------------------------------------------------------
| Non-profit | 52 | 47 | 5 | 0.9 |
| organisations | | | | |
--------------------------------------------------------------------------------
| Households | 4,682 | 4,343 | 338 | 80.4 |
--------------------------------------------------------------------------------
| Total | 5,820 | 5,426 | 394 | 100.0 |
--------------------------------------------------------------------------------
Loans with payments 1-30 days overdue increased during the period from 3.40% to
4.09% of the credit stock, including off-balance sheet guarantee commitments.
Loans with payments 31-90 days overdue increased from 0.87% to 0.95 %, totalling
approximately EUR 56 million. Non-performing loans more than 90 days overdue,
including loans for collection, totalled approximately EUR 44 million,
corresponding to 0.74% (0.48% at 31 December 2008) of the entire credit stock
plus bank guarantees.
Undischarged debts by time overdue
(EUR million)
--------------------------------------------------------------------------------
| Days | 30.6.2009 | % of the | 31.12.2008 | % of the |
| | | credit stock | | credit stock |
--------------------------------------------------------------------------------
| 1-30 | 240.8 | 4.09 | 186.6 | 3.53 |
--------------------------------------------------------------------------------
| of which | 131.6 | 2.23 | 110.3 | 2.01 |
| households | | | | |
--------------------------------------------------------------------------------
| 31-90 | 55.6 | 0.95 | 47.8 | 0.87 |
--------------------------------------------------------------------------------
| of which | 47.1 | 0.8 | 34.5 | 0.63 |
| households | | | | |
--------------------------------------------------------------------------------
| 91- | 43.6 | 0.74 | 26.2 | 0.48 |
--------------------------------------------------------------------------------
| of which | 22.1 | 0.37 | 16.1 | 0.29 |
| households | | | | |
--------------------------------------------------------------------------------
The Group's financing and liquidity risks and the actuarial risks in non-life
insurance business
Within the banking business, financing and liquidity risks are defined as the
availability of refinancing plus the differences in maturity between assets and
liabilities. The financing and liquidity risks are dealt with at legal company
level, and there are no financing commitments between the Banking Group and the
insurance companies. The objective in the Banking Group is to be able to cover
one year's financing requirements using existing liquidity. Despite considerable
uncertainty in the financial markets, the liquidity status remained good and
this aim was achieved.
Within the life insurance business, liquidity risks are defined as the
availability of financing for paying out claims, savings sums and surrenders,
and pensions. The need for liquidity is satisfied mainly through the inward flow
of cash and a portfolio of investment certificates which has been adapted in
line with varying needs, while any unforeseen significant need for liquidity is
taken care of through the liquid portfolio of bonds and shares.
The actuarial risk in the non-life insurance business is related to the
sufficiency of premium volumes in relation to claims expenditure. Since claims
expenditure depends on the number of accidents and their scale, this may cause
major fluctuations in the liquidity and financial performance of non-life
insurance business. In order to reduce the actuarial volatility, Aktia Non-Life
Insurance has underwritten re-insurance cover for both major individual damages
and an unexpected abundance of damages of moderate scale.
The re-insurance cover also reduces the company's liquidity risk as the
liquidity needs are catered for by cash flow and an adapted portfolio of bank
deposits, investment certificates and government bonds
Counterparty risks
Counterparty risks within Group Treasury's liquidity management operations
The banking business' liquidity portfolio - which is managed by Group Treasury -
stood at EUR 2,425 million at 30 June 2009 (EUR 2,290 at 31 December 2008).
Counterparty risks arising in relation to liquidity management operations and
entry into derivative contracts are managed through the requirement for
high-level external ratings (minimum A3 rating from Moody's or equivalent) and
the conservative allocation and active selection of investment assets as well as
the rules regarding maximum exposure for each counterparty and asset category.
Of the financial assets available for sale, 52% (49% at 31 December 2008) were
investments in covered bonds, 36% (45% at 31 December 2008) were investments in
banks, 10% (3% at 31 December 2008) were investments in state-guaranteed bonds
and approximately 2% (3% at 31 December 2008) were investments in public sector
entities and companies. Of the financial assets, 1.3% did not meet the internal
rating requirements, while eight securities with a total market value of EUR 32
million were no longer eligible for refinancing with the central bank.
During the period, write-offs totalling EUR 0.4 million were realised as a
result of the issuer announcing its inability to pay.
Rating distribution for banking business
--------------------------------------------------------------------------------
| | 30.6.2009 | 31.12.2008 |
--------------------------------------------------------------------------------
| Aaa | 55.1% | 49.4% |
--------------------------------------------------------------------------------
| Aa1-Aa3 | 35.2% | 42.3% |
--------------------------------------------------------------------------------
| A1-A3 | 8.3% | 4.9% |
--------------------------------------------------------------------------------
| Baa1-Baa3 | 0.5% | 0.9% |
--------------------------------------------------------------------------------
| Ba1-Ba3 | 0.2% | 0.0% |
--------------------------------------------------------------------------------
| B1-B3 | 0.0% | 0.0% |
--------------------------------------------------------------------------------
| Caa1 or lower | 0.0% | 0.0% |
--------------------------------------------------------------------------------
| No rating | 0.7% | 2.5% |
--------------------------------------------------------------------------------
| Total | 100.0% | 100.0% |
--------------------------------------------------------------------------------
Counterparty risks in the life insurance business
The direct interest rate investments in the life insurance company's investment
business increased as a result of continued reallocation, primarily from share
investments, and totalled EUR 465 million (EUR 449 million) at the end of the
period. Counterparty risks arising in connection with the life insurance
company's investments are managed by the requirement for at least an “Investment
grade” external rating (rating class Baa3 from Moody's or equivalent) and by
rules concerning the maximal exposure for each counterparty and asset category.
At the end of the period, 46% (48% at 31 December 2008) of these direct interest
rate investments were receivables from public sector entities, 18% (20% at 31
December 2008) were receivables from companies and 36% (32% at 31 December 2008)
were receivables from banks and covered bonds.
1.1% of the direct interest rate investments did not meet the internal rating
requirements at the end of the period.
During the period, write-downs totalling EUR -13.4 million were realised as a
result of the issuers announcing an inability to pay, EUR -9.1 million of which
is attributable to the second quarter after the accounting principles have been
defined more precisely.
Distribution of ratings for life insurance
business
--------------------------------------------------------------------------------
| | 30.6.2009 | 31.12.2008 |
--------------------------------------------------------------------------------
| Aaa | 54.9% | 53.7% |
--------------------------------------------------------------------------------
| Aa1-Aa3 | 15.2% | 17.3% |
--------------------------------------------------------------------------------
| A1-A3 | 17.8% | 14.8% |
--------------------------------------------------------------------------------
| Baa1-Baa3 | 6.5% | 5.7% |
--------------------------------------------------------------------------------
| Ba1-Ba3 | 0.5% | 0.8% |
--------------------------------------------------------------------------------
| B1-B3 | 0.6% | 0.2% |
--------------------------------------------------------------------------------
| Caa1 or lower | 0.4% | 0.0% |
--------------------------------------------------------------------------------
| No rating | 4.0% | 7.6% |
--------------------------------------------------------------------------------
| Total | 100.0% | 100.0% |
--------------------------------------------------------------------------------
Counterparty risks in the non-life insurance business
A conservative investment policy is observed in the non-life insurance business,
and at the end of the period, 60% (80% at 31 December 2008) of these direct
interest rate investments were receivables from public sector entities, 8% (4%
at 31 December 2008) were receivables from companies and 33% (16% at 31 December
2008) were receivables from banks and covered bonds.
During the second quarter no write-downs were realised as a result of issuers
announcing an inability to pay.
Rating distribution for non-life insurance business
--------------------------------------------------------------------------------
| | 30.6.2009 | 31.12.2008 |
--------------------------------------------------------------------------------
| Aaa | 53.3% | 65% |
--------------------------------------------------------------------------------
| Aa1-Aa3 | 21.5% | 23% |
--------------------------------------------------------------------------------
| A1-A3 | 18.4% | 10% |
--------------------------------------------------------------------------------
| Baa1-Baa3 | 1.5% | 0% |
--------------------------------------------------------------------------------
| Ba1-Ba3 | 0.5% | 0% |
--------------------------------------------------------------------------------
| B1-B3 | 0.0% | 0% |
--------------------------------------------------------------------------------
| Caa1 or lower | 0.0% | 0% |
--------------------------------------------------------------------------------
| No rating | 4.8% | 1% |
--------------------------------------------------------------------------------
| Total | 100.0% | 100% |
--------------------------------------------------------------------------------
The Group has no counterparty whose total exposure exceeds 10% of the financial
and insurance conglomerate's equity calculated in compliance with the official
directives.
Market risks
Both the financial assets within the banking business and the investment assets
within the life and non-life insurance businesses are invested in securities
with access to market prices on an active market, and are valued in accordance
with official quoted prices. Any significant or long-term impairment of market
value compared to the acquisition price is shown in the income statement, while
interest-rate fluctuations are reported under the fund at fair value after the
deduction of deferred tax.
Market value and structural interest rate risk within the banking business
Market value interest rate risk refers to changes in value as a result of
interest rate fluctuations in financial assets available for sale. The net
change in the fund at fair value relating to market value interest rate risk
posted during the period totalled EUR +9.9 million after the deduction of
deferred tax. With an interest rate increase of one percentage point for
financial assets available for sale, the net change of the fund at fair value at
30 June 2009 would be EUR -26.9 million (EUR -27.2 million at 31 December 2008)
after the deduction of deferred tax.
Structural interest rate risk arises as a result of an imbalance between
interest rate ties and the re-pricing of assets and liabilities, and affects net
interest income. To reduce the volatility in the net interest income, structural
interest rate risk is primarily contained through the use of hedging derivative
instruments.
A parallel upward shift in the interest rate curve of one percentage point would
reduce the net interest income of the banking business for the next 12 months by
-0.9% (-5.4% at 31 December 2008) while the target for structural interest rate
risk management is a maximum of -6%. For the next 12-24 months, the net interest
income of the banking business would increase by +3.9% (-6.0% at 31 December
2008) while the target for structural interest rate risk management is a maximum
of -8%.
A parallel downward shift in the interest rate curve of one percentage point
would reduce the net interest income of the banking business for the next 12
months by -2.9% (+6.3% at 31 December 2008), while the target for structural
interest rate risk management is a maximum of -6%. For the next 12-24 months,
the net interest income of the banking business would reduce by -3.4% (+7.9% at
31 December 2008), while the target for structural interest rate risk management
is a maximum of -8%.
Other market risks within the banking business and the parent company
No equity trading or investments in, or ownership of real estate is carried out
in the banking business, including the parent company. At the end of the year,
real estate assets totalled EUR 3.5 million (EUR 3.6 million at 31 December
2008). The investments in shares which are necessary or strategic to the
business totalled EUR 24.5 (EUR 21.9 million at 31 December 2008). At the end of
the period, the fund at fair value related to the above strategic share
investments amounted to EUR 2.3 million after the deduction of deferred tax.
Investment risks in the life insurance business
The policyholder bears the investment risk of the investments that provide cover
for unit-linked insurance policies. These investments are valuated on an ongoing
basis at fair value and any changes in value are posted to provisions for
unit-linked insurance policies.
The investment portfolio covering interest-based technical provisions is
measured on an ongoing basis at market value. During the reporting period
write-downs affecting profit were posted which were attributable to shares and
participations totalling EUR -6.9 million, EUR 1.9 million of which was
attributable to the second quarter. The net change in the fund at fair value
after acquisition eliminations posted during the period totalled EUR -0.2
million after the deduction of deferred tax.
As the economic situation made the investment market extremely challenging, the
share risks have been reduced further and at the end of the period share
holdings amounted to EUR 8 million (EUR 39 million at 31 December 2008).
The net change in the fund at fair value for interest-bearing securities posted
during the period totalled EUR -9.2 million after the deduction of deferred tax.
The risks in the investment portfolio, such as credit risks, interest rate
risks, currency risks, share risks and real estate risks, are measured and
contained using different stress models including a VaR (Value at Risk) model,
assuming maximum loss for 12 months and applying a probability level of 97.5%.
Allocation of holdings in the life insurance company's investment portfolio
--------------------------------------------------------------------------------
| EUR million | 30.6.2009 | 30.6.2009 | 31.12.2008 |
--------------------------------------------------------------------------------
| Shares | 8 | 1.3% | 6% |
--------------------------------------------------------------------------------
| Bonds | 539 | 79.8% | 69% |
--------------------------------------------------------------------------------
| Money market | 48 | 7.0% | 12% |
--------------------------------------------------------------------------------
| Real estate | 41 | 6.1% | 6% |
--------------------------------------------------------------------------------
| Other | 40 | 5.8% | 7% |
--------------------------------------------------------------------------------
Investment risks in the non-life insurance business
The investment portfolio covering the technical provisions is measured on an
ongoing basis at market value. In order to further reduce the level of risk in
the investment portfolio, all listed share holdings were sold off during the
reporting period.
During the period no write-downs affecting profit were posted that were
attributable to shares and participations.
As the economic situation made the investment market extremely challenging, the
decision was taken not to take share risks in the investment business of the
non-life insurance company until further notice.
Allocation of holdings in the non-life insurance company's investment portfolio
--------------------------------------------------------------------------------
| EUR million | 30.6.2009 | 30.6.2009 | 31.12.2008 |
--------------------------------------------------------------------------------
| Shares | 0 | 0.0% | 18% |
--------------------------------------------------------------------------------
| Bonds | 101 | 68.0% | 51% |
--------------------------------------------------------------------------------
| Money market | 16 | 10.9% | 9% |
--------------------------------------------------------------------------------
| Real estate | 29 | 19.5% | 20% |
--------------------------------------------------------------------------------
| Other | 3 | 1.7% | 2% |
--------------------------------------------------------------------------------
Operational risks
Operational risks refer to loss risks arising as a result of unclear or
incomplete instructions, activities carried out contrary to instructions,
unreliable information, deficient systems or actions taken by staff members. If
an operational risk is realised, this can result in direct or indirect financial
losses or tarnish the corporate image to the extent that the bank's credibility
in the marketplace suffers. No significant incidents were recorded during the
reporting period.
Personnel
Converted into full-time employees, the number of people employed by the Group
increased during the period by 164 to 1,216. The average number of full-time
employees during the first six months was 1,213 (992). At the end of June, Aktia
Non-Life Insurance, consolidated in the Aktia Group from 1 January 2009, had 234
full-time employees.
Group structure
The merger of Veritas Mutual Non-Life Insurance Company with Aktia plc was
implemented in accordance with the merger plan approved by both companies'
Annual General Meetings and registered in the Trade Register on 1 January 2009.
The non-life company continues its business in the Aktia Group under the name
Aktia Non-Life Insurance Company Ltd.
The Financial Supervisory Authority announced on 28 April 2009 that it was
approving Aktia Bank plc's sale of its shares in Aktia Life Insurance to the
Group's parent company Aktia plc. The transaction did not affect the operative
business of Aktia Life Insurance. The contract price corresponded to the
reported net asset value of the life insurance company which stood at EUR 45.5
million on 28 February 2009. The effect of the transaction is eliminated at
Group level.
Shares and ownership
At the end of June 2009, the paid-up share capital of Aktia plc as entered in
the Finnish Trade Register was EUR 93,873,816, divided into 46,936,908 series A
shares and 20,050,850 series R shares. During the period, of the merger
compensation of 6,800,000 shares, 5,613,088 new series A shares have been
registered on the book-entry account. The number of shareholders at the end of
the period was 50,423. The inspection and registration of outstanding shares
continues. Aktia estimates that the final number of shareholders might reach
approximately 70,000.
Aktia's holding of treasury shares amounted to 536,288 shares, corresponding to
0.8% of all shares.
At an Extraordinary General Meeting of 21 December 2006, the Board of Directors
was authorised to issue a maximum of 1,000,000 shares in order to create a
share-based incentive scheme for key personnel in the Group. On 30 March 2009,
on the basis of the authorisations given, the Board of Aktia plc implemented a
directed share issue to designated persons in the company's executive
management. In the issue, 12,490 new series A shares were issued at a
subscription price of EUR 6.00 per share. The new shares in Aktia plc were
registered in the Trade Register on 29 May 2009.
Resolutions by the AGM
The Annual General Meeting of Aktia Plc held on 30 March 2009 adopted the
financial statements of the parent company and the consolidated financial
statements and discharged the Board of Supervisors, the Board of Directors, the
Managing Director and his deputy from liability.
In accordance with the proposal of the Board of Directors, the Annual General
Meeting decided to distribute a dividend of EUR 0.15 per share totalling EUR
10,046,290.20 for the financial period 1 January - 31 December 2008.
The Annual General Meeting established the number of members on the Board of
Supervisors to be thirty-five. The following nine members of the Board of
Supervisors, whose term expired at the Annual General Meeting, were re-elected
for a three-year period:
Harriet Ahlnäs, Principal, M.Sc.(Eng.), Porvoo
Roger Broo, Administrative Director, M.Sc. (Pol.), Turku
Christoffer Grönholm, Chief Secretary, D.Sc. (Pol.), Helsinki
Kari Kyttälä, LL.M., Nummi-Pusula
Per Lindgård, Teacher, Bromarv
Henrik Rehnberg, Farmer, Engineer, Siuntio
Henrik Sundbäck, Consultant, M.Sc.(Agriculture and Forestry), Porvoo
Sture Söderholm, Lic. Odont., Hanko
Henry Wiklund, Chamber Counsellor, M.Sc.(Econ.), Helsinki
The following new members of the Board of Supervisors were elected for a
three-year term ending at the close of the AGM in 2012:
Anna Bertills, Political Adviser, M.Sc. (Pol.), Vöyri/Helsingfors
Gun Kapténs, Municipal Manager, M.Sc. (Pol.), Luoto
Bo Linde, Ombudsman, M.Sc.(Econ.), Vaasa
The following new members of the Board of Supervisors were elected for a
two-year term ending at the close of the AGM in 2011:
Bengt Sohlberg, Agricultural Entrepreneur, Agrologist, Siuntio
The following new members of the Board of Supervisors were elected for a
one-year term ending at the close of the AGM in 2010:
Jan-Erik Stenman, Managing Director, LL.M., Turku
The Annual General Meeting established the number of auditors as one.
PricewaterhouseCoopers Ab was re-appointed auditor for the financial year
starting on 1 January 2009, with Jan Holmberg, APA, as the auditor in charge.
The AGM adopted the proposal of the Board of Directors regarding resolutions for
share issue authorisations. The proposal has been published at www.aktia.fi.
Listing on the Stock Exchange
Aktia plc's Board of Directors has decided to seek a listing of Aktia plc's
series A and R shares on the list of NASDAQ OMX Helsinki Ltd. The listing should
take place in September 2009. The purpose of the listing is to increase both the
possibilities of shareholders to trade in Aktia's shares and the interest for
Aktia among investors, to enable effective price establishment for Aktia's
shares and improve chances to develop Aktia's capital structure when required as
well as to strengthen Aktia's brand.
Important events after the end of the reporting period
Aktia Non-Life Insurance Company Ltd starts co-operation negotiations in order
to reorganise business operations and rationalise them for financial and
productional reasons.
The aim is to adjust the company's cost structure to the current market
situation, and to enable stable development of the company. The total savings
requirement is approx. EUR 2.5 million per annum. This equals a reduction of the
number of personnel with about 40 persons.
The planned savings can be reached through a more effective production system,
synergies within the Group, and reduced personnel costs.
Outlook for the rest of the year
The Group's operating profitability during 2009 is expected to remain at a
stable level. A sustained good credit rating and the Group's strengthened
capital base are expected to enable refinancing and moderate growth even in the
current market situation.
The current economic situation causes increased loan losses. A continued
difficult financial situation could lead to permanent reductions in the value of
individual investments that are currently deemed to be of good quality. This
would have a negative effect on the Group's result. In addition, a requirement
for higher returns among investors may lead to a general price decrease in
financial assets, which would have a negative effect on Aktia's capital
adequacy.
The importance of cost effectiveness will further increase in the current
economic and competitive situation.
Key figures and basis of calculation of key figures at the end of each reporting
period
Key figures
--------------------------------------------------------------------------------
| | 1-6 | 1-3 | 1-12 | 1-9 | 1-6 |
| | 2009 | 2009 | 2008 | 2008 | 2008 |
--------------------------------------------------------------------------------
| Earnings per share, EUR | 0.26 | 0.11 | 0.09 | 0.47 | 0.37 |
--------------------------------------------------------------------------------
| Equity per share, EUR | 5.51 | 4.83 | 4.85 | 4.28 | 4.55 |
--------------------------------------------------------------------------------
| Return on equity (ROE), % | 9.2 | 8.7 | 1.8 | 12.5 | 14.6 |
--------------------------------------------------------------------------------
| Earnings per share excluding | 0.70 | 0.02 | -0.22 | -0.79 | -0.54 |
| negative goodwill recorded as | | | | | |
| income and including the fund | | | | | |
| at fair value, EUR | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Capital adequacy ratio, % | 144.2 | 133.1 | 135.2 | 113.8 | 115.1 |
| (conglomerate) | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Average number of shares, | 67.0 | 67.0 | 60.2 | 60.2 | 60.2 |
| million | | | | | |
--------------------------------------------------------------------------------
| Number of shares at end of | 67.0 | 67.0 | 60.2 | 60.2 | 60.2 |
| period, million | | | | | |
--------------------------------------------------------------------------------
| Personnel (FTEs), average | 1,213 | 1,204 | 1,010 | 1,001 | 992 |
| number of employees from the | | | | | |
| beginning of the financial year | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Banking business (incl. Private | | | | | |
| Banking) | | | | | |
--------------------------------------------------------------------------------
| Cost-to-income ratio | 0.57 | 0.70 | 0.65 | 0.66 | 0.69 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Borrowing from the public, EUR | 3,080 | 3,088 | 3,098 | 3,072 | 3,069 |
| million | | | | | |
--------------------------------------------------------------------------------
| Lending to the public, EUR | 5,820 | 5,592 | 5,426 | 5,287 | 5,082 |
| million | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Capital adequacy ratio, % | 14.7 | 14.2 | 13.7 | 12.0 | 12.8 |
--------------------------------------------------------------------------------
| Tier 1 capital ratio, % | 9.2 | 9.0 | 9.3 | 9.9 | 10.1 |
--------------------------------------------------------------------------------
| Risk-weighted commitments, EUR | 3,395 | 3,335 | 3,313 | 3,247 | 3,229 |
| million | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Asset Management | | | | | |
--------------------------------------------------------------------------------
| Mutual fund volume, EUR million | 2,927 | 2,415 | 2,490* | 1,709 | 1,858 |
--------------------------------------------------------------------------------
| Managed and brokered assets, | 5,083 | 4,515 | 4,538 | 3,586 | 3,722 |
| EUR million | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Life Insurance | | | | | |
--------------------------------------------------------------------------------
| Premium income before | 36.0 | 20.6 | 91.4 | 65.1 | 48.2 |
| reinsurers' share, EUR million | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Expense ratio, % | 106.3 | 115.4 | 99.0 | 99.1 | 104.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Working capital, EUR million | 65.6 | 40.0 | 50.4 | 52.9 | 82.6 |
--------------------------------------------------------------------------------
| Solvency ratio, % | 11.2 | 7.1 | 8.5 | 8.4 | 12.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Investments at fair value, EUR | 813.1 | 774.8 | 804.6 | 879.0 | 921.8 |
| million | | | | | |
--------------------------------------------------------------------------------
| Technical provisions for | 599.1 | 614.5 | 627.6 | 654.9 | 655.8 |
| interest-linked policies, EUR | | | | | |
| million | | | | | |
--------------------------------------------------------------------------------
| Technical provisions for | 168.6 | 146.5 | 149.6 | 171.9 | 191.7 |
| unit-linked policies, EUR | | | | | |
| million | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-Life Insurance | | | | | |
--------------------------------------------------------------------------------
| Premium income before | 44.0 | 28.8 | - | - | - |
| reinsurers' share, EUR million | | | | | |
--------------------------------------------------------------------------------
| Premium income, EUR million | 29.3 | 13.9 | - | - | - |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Operating cost percetage, % | 26.1 | 28.9 | - | - | - |
--------------------------------------------------------------------------------
| Loss ratio, % | 88.2 | 93.5 | - | - | - |
--------------------------------------------------------------------------------
| Total cost percentage, % | 114.3 | 122.4 | - | - | - |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Technical provisions before | 116.8 | 114.7 | - | - | - |
| reinsurers' share, EUR million | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Solvency capital, EUR million | 46.9 | 48.0 | - | - | - |
--------------------------------------------------------------------------------
| Solvency ratio of technical | 42.6 | 43.7 | - | - | - |
| provisions, % | | | | | |
--------------------------------------------------------------------------------
| Solvency percentage (risk | 78.9 | 80.8 | - | - | - |
| carrying capacity), % | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
*) Including fund volume of Aktia Invest from December 2008.
Basis of calculation for key figures
--------------------------------------------------------------------------------
| Earnings per share, EUR |
--------------------------------------------------------------------------------
| Profit for the year after taxes attributable to the shareholders of Aktia |
| Plc |
| Average number of shares over the period (adjusted for share issue) |
--------------------------------------------------------------------------------
| Equity per share, EUR |
--------------------------------------------------------------------------------
| Equity attributable to the shareholders of Aktia Plc |
| Number of shares at the end of the period |
--------------------------------------------------------------------------------
| Return on equity (ROE), % |
--------------------------------------------------------------------------------
| Profit for the period (on annual basis) x 100 |
| Average equity |
--------------------------------------------------------------------------------
| Capital adequacy ratio, % - Financial and Insurance Conglomerate |
--------------------------------------------------------------------------------
| The total capital base of the conglomerate (equity including sector-specific |
| assets and deductions) x 100 |
| Minimum requirement for the conglomerate's own assets (credit institution + |
| insurance business) |
| The capital adequacy of the conglomerate is regulated by section 3 of the |
| Act on the Supervision of Financial and Insurance Conglomerates and its |
| related decree. |
--------------------------------------------------------------------------------
| Banking business |
| Cost/income ratio, figure |
--------------------------------------------------------------------------------
| Total operating expenses |
| Total operating income |
--------------------------------------------------------------------------------
| Risk-weighted commitments |
--------------------------------------------------------------------------------
| Total assets in the balance sheet and off-balance sheet items, including |
| derivatives valued and risk-weighted in accordance with regulation 4.3 |
| issued by the Finnish Financial Supervisory Authority. The capital |
| requirements for operative risks have been calculated in accordance with |
| regulation 4.3i issued by the Finnish Financial Supervisory Authority. |
--------------------------------------------------------------------------------
| Capital adequacy ratio, % |
--------------------------------------------------------------------------------
| Capital base (Tier 1 capital + Tier 2 capital) x 100 |
| Risk-weighted commitments |
| The capital base is calculated in accordance with standard 4.3a issued by |
| the Finnish Financial Supervisory Authority. |
--------------------------------------------------------------------------------
| Tier 1 Capital ratio, % |
--------------------------------------------------------------------------------
| Tier 1 capital x 100 |
| Risk-weighted commitments |
--------------------------------------------------------------------------------
| Life Insurance |
| Expense ratio, % |
--------------------------------------------------------------------------------
| (Operating costs+ cost of claims paid) x 100 |
| Total expense loadings |
| Total expense loadings are a position which, according to actuarial |
| calculations, should cover the costs. |
| The operating costs do not include the re-insurers' provisions. The total |
| expense loadings include all payment positions. |
--------------------------------------------------------------------------------
| Solvency ratio, % |
--------------------------------------------------------------------------------
| Solvency capital x 100 |
| Technical provision - equalisation provision - 75% of provisions for |
| unit-linked insurance |
| The technical provision is calculated after deduction of the re-insurers' |
| share. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-Life Insurance |
| Loss ratio (excluding discounting of pension liabilities), % |
--------------------------------------------------------------------------------
| Claims paid and claim processing costs x 100 |
| Premium income |
--------------------------------------------------------------------------------
| Operating cost percentage, % |
--------------------------------------------------------------------------------
| Operating costs excl. claim processing costs x 100 |
| Premium income |
--------------------------------------------------------------------------------
| Total cost percentage % |
--------------------------------------------------------------------------------
| Risk percentage + Expense ratio |
| Loss ratio + operating cost percentage |
| The non-life insurance key indicators for loss ratio and operating cost |
| percentage have been calculated on the basis of function-specific costs and |
| cannot therefore be calculated directly from the consolidated or segment's |
| profit and loss statement |
--------------------------------------------------------------------------------
| Solvency ratio of provisions, % |
--------------------------------------------------------------------------------
| Solvency capital |
| Technical provisions after reinsurers' share - equalisation provisions |
--------------------------------------------------------------------------------
| Solvency percentage (risk carrying capacity), % |
--------------------------------------------------------------------------------
| Solvency capital |
| Premium income for the last 12 months |
--------------------------------------------------------------------------------
Consolidated financial statements for the Aktia Group
Consolidated income sheet
--------------------------------------------------------------------------------
| (EUR million) | 1-6 2009 | 1-6 2008 | Change | 1-12 2008 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net interest income | 71.9 | 49.1 | 46.4% | 101.0 |
--------------------------------------------------------------------------------
| Dividends | 0.6 | 1.3 | -55.0% | 1.4 |
--------------------------------------------------------------------------------
| Commission income | 27.6 | 25.7 | 7.3% | 48.7 |
--------------------------------------------------------------------------------
| Commission expenses | -7.0 | -3.3 | 110.3% | -7.7 |
--------------------------------------------------------------------------------
| Net commission income | 20.6 | 22.4 | -8.1% | 41.0 |
--------------------------------------------------------------------------------
| Net income for life insurance | 7.0 | 11.2 | -36.8% | -33.8 |
--------------------------------------------------------------------------------
| Net income for non-life | 7.4 | - | N/A | - |
| insurance | | | | |
--------------------------------------------------------------------------------
| Net income from financial | 5.3 | 2.9 | 86.0% | -3.4 |
| transactions | | | | |
--------------------------------------------------------------------------------
| Net income from investment | 0.2 | 1.6 | -85.4% | 6.0 |
| properties | | | | |
--------------------------------------------------------------------------------
| Other operating income | 1.8 | 3.9 | -53.4% | 15.0 |
--------------------------------------------------------------------------------
| Total operating income | 114.9 | 92.4 | 24.4% | 127.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Staff costs | -39.2 | -32.7 | 19.8% | -60.6 |
--------------------------------------------------------------------------------
| Other administrative expenses | -22.3 | -19.5 | 14.5% | -38.4 |
--------------------------------------------------------------------------------
| Negative goodwill recorded as | 0.1 | - | N/A | - |
| income | | | | |
--------------------------------------------------------------------------------
| Depreciation of tangible and | -3.5 | -2.8 | 23.2% | -5.7 |
| intangible assets | | | | |
--------------------------------------------------------------------------------
| Other operating expenses | -10.6 | -8.2 | 29.7% | -16.2 |
--------------------------------------------------------------------------------
| Total operating expenses | -75.4 | -63.2 | 19.4% | -120.9 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Impairment and reversing | -0.2 | 0.8 | -129.4% | 0.7 |
| items of tangible and | | | | |
| intangible assets | | | | |
--------------------------------------------------------------------------------
| Write-downs of credits and | -17.8 | 0.0 | N/A | -0.7 |
| other commitments | | | | |
--------------------------------------------------------------------------------
| Share of profit from | 0.6 | -0.1 | -848.0% | 0.2 |
| associated companies | | | | |
--------------------------------------------------------------------------------
| Operating profit | 22.0 | 29.9 | -26.3% | 6.6 |
--------------------------------------------------------------------------------
| Taxes | -5.5 | -7.0 | -21.4% | -0.8 |
--------------------------------------------------------------------------------
| Profit for the reporting | 16.5 | 22.8 | -27.8% | 5.8 |
| period | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Attributable to: | | | | |
--------------------------------------------------------------------------------
| Shareholders in Aktia plc | 17.3 | 22.2 | -21.9% | 5.2 |
--------------------------------------------------------------------------------
| Minority interest | -0.8 | 0.6 | -231.0% | 0.6 |
--------------------------------------------------------------------------------
| Total | 16.5 | 22.8 | -27.8% | 5.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share, EUR, | 0.26 | 0.37 | | 0.09 |
| attributable to shareholders | | | | |
| in Aktia plc | | | | |
--------------------------------------------------------------------------------
| Earnings per share, EUR, | 0.26 | 0.37 | | 0.09 |
| after dilution | | | | |
--------------------------------------------------------------------------------
Consolidated comprehensive income
--------------------------------------------------------------------------------
| (EUR million) | 1-6 | 1-6 2008 | Change | 1-12 2008 |
| | 2009 | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit for the reporting period | 16.5 | 22.8 | -27.8% | 5.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other comprehensive income after | | | | |
| taxes: | | | | |
--------------------------------------------------------------------------------
| Change in valuation of fair | 19.9 | -53.3 | -137.4% | -57.7 |
| value for financial assets | | | | |
| available for sale | | | | |
--------------------------------------------------------------------------------
| Change in valuation of fair | 5.8 | -1.8 | -429.4% | 13.6 |
| value for cash flow hedging | | | | |
--------------------------------------------------------------------------------
| Transferred to the income | 3.7 | 0.0 | N/A | 25.4 |
| statement for financial assets | | | | |
| available for sale | | | | |
--------------------------------------------------------------------------------
| Transferred to the income | - | - | N/A | -0.3 |
| statement for cash flow hedging | | | | |
--------------------------------------------------------------------------------
| Total comprehensive income for | 45.9 | -32.1 | -242.7% | -13.1 |
| the period | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total comprehensive income | | | | |
| attributable to: | | | | |
--------------------------------------------------------------------------------
| Shareholders in Aktia plc | 46.6 | -32.6 | -243.0% | -13.2 |
--------------------------------------------------------------------------------
| Minority interest | -0.7 | 0.5 | -264.9% | 0.1 |
--------------------------------------------------------------------------------
| Total | 45.9 | -32.1 | -242.7% | -13.1 |
--------------------------------------------------------------------------------
Consolidated balance sheet
--------------------------------------------------------------------------------
| (EUR million) | 30.6.20 | 31.12.20 | Change | 30.6.200 |
| | 09 | 08 | | 8 |
--------------------------------------------------------------------------------
| Assets | | | | |
--------------------------------------------------------------------------------
| Cash and balances with central | 288.7 | 506.3 | -43.0% | 242.8 |
| banks | | | | |
--------------------------------------------------------------------------------
| Financial assets reported at fair | 25.5 | 19.5 | 30.9% | 27.4 |
| value through profit and loss | | | | |
--------------------------------------------------------------------------------
| Interest-bearing securities | 3,039.5 | 2,808.5 | 8.2% | 2,466.6 |
--------------------------------------------------------------------------------
| Shares and participations | 204.8 | 228.9 | -10.5% | 400.8 |
--------------------------------------------------------------------------------
| Financial assets available for sale | 3,244.2 | 3,037.3 | 6.8% | 2,867.5 |
--------------------------------------------------------------------------------
| Financial assets held until | 30.9 | 35.9 | -13.9% | 45.8 |
| maturity | | | | |
--------------------------------------------------------------------------------
| Derivative instruments | 198.7 | 137.0 | 45.0% | 68.6 |
--------------------------------------------------------------------------------
| Lending to credit institutions | 119.2 | 100.5 | 18.6% | 86.0 |
--------------------------------------------------------------------------------
| Lending to the public and public | 5,820.0 | 5,425.7 | 7.3% | 5,082.5 |
| sector entities | | | | |
--------------------------------------------------------------------------------
| Loans and other receivables | 5,939.3 | 5,526.2 | 7.5% | 5,168.5 |
--------------------------------------------------------------------------------
| Investments for unit-linked | 168.1 | 148.1 | 13.5% | 191.3 |
| provisions | | | | |
--------------------------------------------------------------------------------
| Investments in associated companies | 4.7 | 4.5 | 5.0% | 4.2 |
--------------------------------------------------------------------------------
| Intangible assets | 12.5 | 10.4 | 20.5% | 8.0 |
--------------------------------------------------------------------------------
| Tangible assets | 36.4 | 9.8 | 272.8% | 38.4 |
--------------------------------------------------------------------------------
| Accrued income and advance payments | 67.2 | 79.1 | -15.1% | 66.8 |
--------------------------------------------------------------------------------
| Other assets | 71.0 | 7.2 | 887.0% | 27.5 |
--------------------------------------------------------------------------------
| Total other assets | 138.1 | 86.3 | 60.0% | 94.3 |
--------------------------------------------------------------------------------
| Income tax receivables | 3.7 | 2.4 | 55.5% | 4.7 |
--------------------------------------------------------------------------------
| Deferred tax receivables | 13.7 | 15.6 | -12.1% | 14.7 |
--------------------------------------------------------------------------------
| Tax receivables | 17.4 | 18.0 | -3.1% | 19.4 |
--------------------------------------------------------------------------------
| Assets classified as held for sale | 0.8 | 0.8 | 0.0% | 6.8 |
--------------------------------------------------------------------------------
| Total assets | 10,105. | 9,540.1 | 5.9% | 8,783.1 |
| | 4 | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Liabilities | | | | |
--------------------------------------------------------------------------------
| Liabilities to credit institutions | 1,597.9 | 1,916.9 | -16.6% | 1,124.1 |
--------------------------------------------------------------------------------
| Liabilities to the public and | 3,079.9 | 3,098.3 | -0.6% | 3,069.0 |
| public sector entities | | | | |
--------------------------------------------------------------------------------
| Deposits | 4,677.8 | 5,015.3 | -6.7% | 4,193.1 |
--------------------------------------------------------------------------------
| Financial liabilities reported at | - | 4.6 | N/A | - |
| fair value through profit and loss | | | | |
--------------------------------------------------------------------------------
| Derivative instruments | 127.7 | 84.7 | 50.7% | 75.8 |
--------------------------------------------------------------------------------
| Debt securities issued | 2,568.7 | 2,118.7 | 21.2% | 2,038.6 |
--------------------------------------------------------------------------------
| Subordinated liabilities | 243.8 | 246.9 | -1.2% | 206.6 |
--------------------------------------------------------------------------------
| Other liabilities to credit | 742.4 | 502.1 | 47.9% | 742.7 |
| institutions | | | | |
--------------------------------------------------------------------------------
| Other liabilities to the public and | 197.5 | 262.8 | -24.8% | 153.2 |
| public sector entities | | | | |
--------------------------------------------------------------------------------
| Other financial liabilities | 3,752.5 | 3,130.5 | 19.9% | 3,141.0 |
--------------------------------------------------------------------------------
| Technical provision | 726.7 | 627.6 | 15.8% | 655.8 |
--------------------------------------------------------------------------------
| Technical provisions for | 168.6 | 149.6 | 12.7% | 191.7 |
| unit-linked insurances | | | | |
--------------------------------------------------------------------------------
| Accrued expenses and income | 68.8 | 81.2 | -15.2% | 85.6 |
| received in advance | | | | |
--------------------------------------------------------------------------------
| Other liabilities | 126.8 | 87.8 | 44.4% | 111.0 |
--------------------------------------------------------------------------------
| Total other liabilities | 195.6 | 169.0 | 15.8% | 196.6 |
--------------------------------------------------------------------------------
| Provisions | 0.9 | 0.9 | -2.8% | 1.2 |
--------------------------------------------------------------------------------
| Income tax liabilities | 4.6 | 3.0 | 53.8% | 5.7 |
--------------------------------------------------------------------------------
| Deferred tax liabilities | 54.4 | 38.0 | 43.3% | 33.6 |
--------------------------------------------------------------------------------
| Tax liabilities | 59.0 | 40.9 | 44.0% | 39.3 |
--------------------------------------------------------------------------------
| Liabilities for assets classified | 0.2 | 0.2 | 0.0% | 0.3 |
| as held for sale | | | | |
--------------------------------------------------------------------------------
| Total liabilities | 9,709.0 | 9,223.3 | 5.3% | 8,494.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity | | | | |
--------------------------------------------------------------------------------
| Restricted equity | 97.3 | 54.3 | 79.2% | 21.5 |
--------------------------------------------------------------------------------
| Unrestricted equity | 268.9 | 237.5 | 13.2% | 252.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Shareholders' share of equity | 366.1 | 291.8 | 25.5% | 273.9 |
--------------------------------------------------------------------------------
| Minority interest's share of equity | 30.2 | 25.0 | 21.0% | 14.3 |
--------------------------------------------------------------------------------
| Equity | 396.3 | 316.8 | 25.1% | 288.2 |
--------------------------------------------------------------------------------
| Total liabilities and equity | 10,105. | 9,540.1 | 5.9% | 8,783.1 |
| | 4 | | | |
--------------------------------------------------------------------------------
Consolidated cash flow statement
--------------------------------------------------------------------------------
| (EUR million) | 1-6 | 1-6 2008 | 1-12 |
| | 2009 | | 2008 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from operating activities | | | |
--------------------------------------------------------------------------------
| Operating profit | 22.0 | 29.9 | 6.6 |
--------------------------------------------------------------------------------
| Adjustment items not included in cash flow | 35.5 | 1.0 | 34.2 |
| for the period | | | |
--------------------------------------------------------------------------------
| Paid income taxes | -7.8 | -12.7 | -16.1 |
--------------------------------------------------------------------------------
| Cash flow from operating activities before | 49.8 | 18.2 | 24.7 |
| change in operating receivables and | | | |
| liabilities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Increase (-) or decrease (+) in receivables | -547.6 | -845.1 | -1,331.0 |
| from operating activities | | | |
--------------------------------------------------------------------------------
| Increase (+) or decrease (-) in liabilities | 296.2 | 865.5 | 1,515.0 |
| from operating activities | | | |
--------------------------------------------------------------------------------
| Total cash flow from operating activities | -201.6 | 38.6 | 208.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from investing activities | | | |
--------------------------------------------------------------------------------
| Financial assets held until maturity | 5.0 | - | 10.0 |
--------------------------------------------------------------------------------
| Acquisation and divestment of subsidiaries | -24.4 | -28.2 | -28.2 |
| and associated companies *) | | | |
--------------------------------------------------------------------------------
| Investments in and proceeds from sale of | -2.5 | 3.4 | 41.9 |
| tangible and intangible assets | | | |
--------------------------------------------------------------------------------
| Share issue of Aktia Real Estate Mortgage | 6.6 | 3.8 | 3.8 |
| Bank Plc to the minority | | | |
--------------------------------------------------------------------------------
| Total cash flow from investing activities | -15.3 | -21.0 | 27.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from financing activities | | | |
--------------------------------------------------------------------------------
| Subordinated liabilities | -2.4 | 15.5 | 55.3 |
--------------------------------------------------------------------------------
| Increase of share capital | 13.6 | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| Increase of unrestricted equity reserve | 27.2 | 0.1 | 0.1 |
--------------------------------------------------------------------------------
| Paid dividends | -10.0 | -20.1 | -20.1 |
--------------------------------------------------------------------------------
| Total cash flow from financing activities | 28.4 | -4.4 | 35.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in cash and cash equivalents | -188.5 | 13.2 | 271.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash and cash equivalents at the beginning | 512.4 | 240.8 | 240.8 |
| of the year | | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents at the end of the | 323.9 | 253.9 | 512.4 |
| year | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash and cash equivalents in the cash flow | | | |
| statement consist of the following items: | | | |
--------------------------------------------------------------------------------
| Cash in hand | 9.2 | 9.3 | 10.0 |
--------------------------------------------------------------------------------
| Insurance operation's cash and cash | 4.0 | 1.5 | 3.7 |
| equivalents | | | |
--------------------------------------------------------------------------------
| Bank of Finland current account | 275.5 | 232.0 | 492.6 |
--------------------------------------------------------------------------------
| Loans to credit institutions repayable on | 35.2 | 11.1 | 6.0 |
| demand | | | |
--------------------------------------------------------------------------------
| Total | 323.9 | 253.9 | 512.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Adjustment items not included in cash flow for the | | |
| period consist of: | | |
--------------------------------------------------------------------------------
| Write-downs of financial assets | 20.7 | - | 39.2 |
--------------------------------------------------------------------------------
| Write-downs of credits and other commitments | 17.5 | 0.0 | 0.7 |
--------------------------------------------------------------------------------
| Change in fair value | -6.1 | 0.0 | 2.0 |
--------------------------------------------------------------------------------
| Depreciation, amortisation and impairment of | 3.7 | 2.8 | 6.0 |
| tangible and intangible assets | | | |
--------------------------------------------------------------------------------
| Share of profit from associated companies | -0.3 | 0.1 | -0.2 |
--------------------------------------------------------------------------------
| Capital gains and losses from the sale of | -0.1 | -2.3 | -12.5 |
| tangible and intangible assets | | | |
--------------------------------------------------------------------------------
| Negative goodwill recorded as income | 0.1 | - | - |
--------------------------------------------------------------------------------
| Other adjustments | 0.0 | 0.3 | -1.0 |
--------------------------------------------------------------------------------
| Total | 35.5 | 1.0 | 34.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| *) The amount for 2008 includes the additional | | |
| contract price for the acquisition of Aktia Life | | |
| Insurance Ltd. | | |
--------------------------------------------------------------------------------
Change in Aktia Group's equity
--------------------------------------------------------------------------------
| (EUR | Share | Other | Fund | Unres | Retai | Shareh | Minori | Total |
| million) | capit | restr | at | trict | ned | olders | ty | equity |
| | al | icted | fair | ed | earni | ' | intere | |
| | | equit | value | equit | ngs | share | st | |
| | | y | | y | | of | share | |
| | | | | | | equity | of | |
| | | | | | | | equity | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity as | 80.2 | 10.4 | -36.4 | 45.4 | 192.1 | 291.8 | 25.0 | 316.8 |
| at 1 | | | | | | | | |
| January | | | | | | | | |
| 2009 | | | | | | | | |
--------------------------------------------------------------------------------
| Share | 13.6 | | | 27.2 | | 40.9 | | 40.9 |
| issue | | | | | | | | |
--------------------------------------------------------------------------------
| Acquisiti | | | | | -3.2 | -3.2 | | -3.2 |
| on of own | | | | | | | | |
| shares | | | | | | | | |
--------------------------------------------------------------------------------
| Dividends | | | | | -10.0 | -10.0 | | -10.0 |
| to | | | | | | | | |
| sharehold | | | | | | | | |
| ers | | | | | | | | |
--------------------------------------------------------------------------------
| Total | | | 29.4 | | 17.2 | 46.6 | -0.7 | 45.9 |
| comprehen | | | | | | | | |
| sive | | | | | | | | |
| income | | | | | | | | |
| for the | | | | | | | | |
| period | | | | | | | | |
--------------------------------------------------------------------------------
| Other | | 0.1 | | | | 0.1 | 6.0 | 6.1 |
| change in | | | | | | | | |
| equity | | | | | | | | |
--------------------------------------------------------------------------------
| Equity as | 93.9 | 10.5 | -7.0 | 72.7 | 196.1 | 366.1 | 30.2 | 396.3 |
| at 30 | | | | | | | | |
| June 2009 | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity as | 80.2 | 10.0 | -18.0 | 45.3 | 207.0 | 324.5 | 14.5 | 339.0 |
| at 1 | | | | | | | | |
| January | | | | | | | | |
| 2008 | | | | | | | | |
--------------------------------------------------------------------------------
| Share | 0.0 | | | | | 0.0 | | 0.0 |
| issue | | | | | | | | |
--------------------------------------------------------------------------------
| Acquisiti | | | | | | 0.0 | | 0.0 |
| on of own | | | | | | | | |
| shares | | | | | | | | |
--------------------------------------------------------------------------------
| Dividends | | | | | -20.1 | -20.1 | | -20.1 |
| to | | | | | | | | |
| sharehold | | | | | | | | |
| ers | | | | | | | | |
--------------------------------------------------------------------------------
| Total | | | -55.0 | | 22.4 | -32.6 | 0.5 | -32.1 |
| comprehen | | | | | | | | |
| sive | | | | | | | | |
| income | | | | | | | | |
| for the | | | | | | | | |
| period | | | | | | | | |
--------------------------------------------------------------------------------
| Other | | 4.0 | | 0.1 | -2.1 | 2.0 | -0.7 | 1.3 |
| change in | | | | | | | | |
| equity | | | | | | | | |
--------------------------------------------------------------------------------
| Equity as | 80.2 | 14.0 | -73.0 | 45.4 | 207.2 | 273.9 | 14.3 | 288.2 |
| at 30 | | | | | | | | |
| June 2008 | | | | | | | | |
--------------------------------------------------------------------------------
In the acquisition of Veritas Mutual Non-Life Insurance Company compensation for
the merger was given in the form of 6,800,000 A-shares with a nominal value of
EUR 2.00 per share and a subscription price of EUR 6.00 per share. Of the
compensation for merger EUR 13.6 million was entered under share capital and EUR
27.2 million under unrestricted equity reserve. The company continues to operate
within the Aktia Group under the name Aktia Non-Life Insurance Ltd.
The Board of Directors has an authorisation from the extraordinary General
Meeting on 21.12.2006 to issue new shares as incentives for key personnel in the
Group. On 30 March 2009, Aktia's Board of Directors decided, supported by this
authorisation to issue shares, on a directed share issue to named persons in the
company's senior executive management. Hereby 12,490 new A-shares were issued to
a subscription price of EUR 6.00 per share and a nominal value of EUR 2.00 per
share. Of the EUR 75,000 compensation for merger EUR 25,000 was entered under
share capital and EUR 50,000 under unrestricted equity reserve.
Quarterly trends in Aktia Group
--------------------------------------------------------------------------------
| (EUR million) | Q2 | Q1 | Q4 | Q3 2008 | Q2 2008 |
| | 2009 | 2009 | 2008 | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net interest income | 39.4 | 32.5 | 26.7 | 25.2 | 25.3 |
--------------------------------------------------------------------------------
| Dividends | 0.5 | 0.1 | 0.1 | 0.0 | 1.3 |
--------------------------------------------------------------------------------
| Net commission income | 11.0 | 9.5 | 9.3 | 9.4 | 11.8 |
--------------------------------------------------------------------------------
| Net income for life insurance | 1.7 | 5.4 | -42.9 | -2.0 | 5.1 |
--------------------------------------------------------------------------------
| Net income for non-life | 5.5 | 2.0 | - | - | - |
| insurance | | | | | |
--------------------------------------------------------------------------------
| Net income from financial | 5.7 | -0.4 | -3.2 | -3.0 | 1.7 |
| transactions | | | | | |
--------------------------------------------------------------------------------
| Net income from investment | 0.1 | 0.1 | 3.1 | 1.3 | 0.4 |
| properties | | | | | |
--------------------------------------------------------------------------------
| Other operating income | 1.0 | 0.8 | 8.0 | 3.0 | 2.1 |
--------------------------------------------------------------------------------
| Total operating income | 65.0 | 50.0 | 1.0 | 33.9 | 47.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Staff costs | -18.9 | -20.3 | -15.2 | -12.7 | -16.7 |
--------------------------------------------------------------------------------
| Other administrative expenses | -11.6 | -10.7 | -10.1 | -8.8 | -10.2 |
--------------------------------------------------------------------------------
| Negative goodwill recorded as | - | 0.1 | - | - | - |
| income | | | | | |
--------------------------------------------------------------------------------
| Depreciation of tangible and | -1.7 | -1.8 | -1.3 | -1.6 | -1.5 |
| intangible assets | | | | | |
--------------------------------------------------------------------------------
| Other operating expenses | -5.2 | -5.4 | -4.4 | -3.6 | -4.4 |
--------------------------------------------------------------------------------
| Total operating expenses | -37.4 | -38.0 | -31.0 | -26.7 | -32.9 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Impairment and reversing | -0.2 | 0.0 | -0.3 | 0.3 | 0.8 |
| items of tangible and | | | | | |
| intangible | | | | | |
| assets | | | | | |
--------------------------------------------------------------------------------
| Write-downs of credits and | -16.2 | -1.6 | -0.4 | -0.3 | 0.0 |
| other commitments | | | | | |
--------------------------------------------------------------------------------
| Share of profit from | 0.5 | 0.0 | 0.0 | 0.3 | 0.1 |
| associated companies | | | | | |
--------------------------------------------------------------------------------
| Operating profit | 11.7 | 10.3 | -30.7 | 7.4 | 15.7 |
--------------------------------------------------------------------------------
Notes to the Interim Report
Note 1 Basis for preparing interim reports and important accounting principles
Basis for preparing the interim report
Aktia plc's consolidated financial statement is prepared in accordance with
International Financial Reporting Standards (IFRS) as approved by the EU.
The interim report for the period 1 January - 30 June 2009 has been prepared in
accordance with IAS 34 “Interim Financial Reporting”. The interim financial
report does not contain all the information and notes required for an annual
report and should therefore be read together with the Group's annual report of
31 December 2008.
Aktia plc's financial statement and interim reports can be downloaded from
Aktia's website at www.aktia.fi.
The interim report for the period 1 January - 30 June 2009 was approved by the
Board of Directors on 20 August 2009.
Substantial accounting policies
In preparing this interim report the Group has, for the most part, followed the
accounting principles applicable to the annual report of 31 December 2008.
The presentation of profit and loss account has changed so that the net income
from insurance business including insurance premium income, net income from
investment activities, claims paid out and change in provisions is reported as
net income under operating income. This net amount is shown separately for the
life insurance business (Net income for life insurance) and for the non-life
insurance business (Net income for non-life insurance).
The subsidiaries Aktia Card & Finance Ab, Aktia Corporate Finance Ab and Aktia
Asset Management Oy Ab have certain redemption clauses, and they have been
transferred from minority interests to liabilities in accordance with IAS
32.25(a) as of 31 December 2008. This change in liabilities is reported in the
income statement as personnel costs in 2009.
The main principle is that value changes in interest-based investments are
reported via the fund at fair value and write-downs are reported when the
issuer's financial situation is severely impaired.
The accounting principles have also been defined more precisely with regard to
interest-bearing securities. In addition to default, interest-bearing securities
are reviewed individually to assess the need for write-downs in the event that
the price of the security has fallen by more than 50% and the instrument rating
has fallen below investment grade (BB+, Ba1 or lower). These more precise
accounting principles lead to write-downs of EUR 9.1 million in the second
quarter of 2009.
New accounting standards valid from 2009:
IAS 1 Presentation of Financial Statements (revised)
This standard has been revised in order to provide better information for
analysing and comparing companies. From 1 January 2009, the Group publishes a
profit and loss statement and a statement of comprehensive income. The change in
the Group's equity includes transactions with owners.
IFRIC 13 Customer Loyalty Programmes
This interpretation deals with reporting on customer loyalty programmes. The
Group operates one bonus scheme, Aktia Kortbonus. This bonus scheme has already
been dealt with in the accounts in accordance with IFRIC 13 which is why the
introduction of this standard will not affect the Group's financial results or
standing. Bonus liabilities for the comparison year 2008 have been moved from
other liabilities to accruals.
Note 2 Segment reporting
Business areas
From 1 January 2009, the reported segments are Banking Business, Asset
Management, Life Insurance, Non-Life Insurance and Miscellaneous. Comparative
figures for 2008 relating to the new segmentation were published on 8 April
2009.
The Banking Business segment includes Aktia Bank plc's branch office operation,
corporate banking and treasury as well as subsidiaries Aktia Real Estate
Mortgage Bank plc, Aktia Card & Finance, Aktia Corporate Finance Ab and the real
estate agencies. Asset Management includes Aktia Bank plc's private bank in
Helsinki and the subsidiaries Aktia Fund Management Ltd and Aktia Asset
Management Oy Ab. Life Insurance includes Aktia Life Insurance Ltd. Non-Life
Insurance includes Aktia Non-Life Insurance Company Ltd. Miscellaneous includes
Group management in Aktia plc and certain administrative functions in Aktia Bank
plc that are not allocated to the various business areas. This business area
also includes Vasp-Invest Ab.
Allocation principles
Net interest income in the various segments, especially in banking business,
includes the margins on volumes of borrowing and lending. Reference interest
rates for borrowing and lending and the interest rate risk that arises because
of new pricing being out of step are transferred to Treasury in accordance with
the Group's internal pricing. Treasury assumes responsibility for the Group's
interest rate risk, liquidity and balance protection measures for which
management has issued authority. The various business areas receive, or are
charged with, internal interest based on the average surplus or deficit in
liquidity during the period. The costs of central support functions are
allocated to the business areas in accordance with various allocation rules.
Until further notice, Aktia is not allocating equity to the various business
areas. Miscellaneous consists of any items in the income statement and balance
sheet that are not allocated to the various business areas. Internal Group
transactions between legal entities are eliminated and reported within each
business area if the legal entities are in the same business area. Internal
Group transactions between legal entities in different segments are included in
the eliminations. The share of profits in associated undertakings and the
minority interest's share are included in the eliminations.
Group's segment reporting
--------------------------------------------------------------------------------
| Income | Banki | Asset | Life | Non-Lif | Miscell | Elimina | Total |
| statemen | ng | Manage | Insuran | e | aneous | tions | Group |
| t | busin | ment | ce | Insuran | | | |
| | ess | | | ce | | | |
| | | | | | | | |
--------------------------------------------------------------------------------
| (EUR | 1 | 1 | 1 | 1- | 1- | 1- | 1- | 1- | 1- | 1- | 1- | 1- | 1- | 1-6 |
| million) | - | - | - | 6 | 6 | 6 | 6 | 6 | 6 | 6 | 6 | 6 | 6 | 200 |
| | 6 | 6 | 6 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 8 |
| | 2 | 2 | 2 | 08 | 09 | 08 | 09 | 08 | 09 | 08 | 09 | 08 | 09 | |
| | 0 | 0 | 0 | | | | | | | | | | | |
| | 0 | 0 | 0 | | | | | | | | | | | |
| | 9 | 8 | 9 | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Net | 6 | 4 | 1 | 0. | - | - | - | - | 1. | 2. | 0. | -0 | 71 | 49. |
| interest | 8 | 6 | . | 9 | | | | | 6 | 2 | 4 | .2 | .9 | 1 |
| income | . | . | 0 | | | | | | | | | | | |
| | 9 | 2 | | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Dividend | 0 | 0 | 0 | 0. | - | - | - | - | 1. | 2. | -1 | -1 | 0. | 1.3 |
| s | . | . | . | 1 | | | | | 8 | 3 | .3 | .3 | 6 | |
| | 1 | 2 | 0 | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Net | 1 | 1 | 5 | 5. | - | - | - | - | 2. | 1. | -3 | -1 | 20 | 22. |
| commissi | 5 | 6 | . | 8 | | | | | 9 | 9 | .0 | .3 | .6 | 4 |
| on | . | . | 6 | | | | | | | | | | | |
| income | 0 | 0 | | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Net | - | - | - | - | 11 | 36 | - | - | - | - | -4 | -2 | 7. | 11. |
| income | | | | | .9 | .0 | | | | | .9 | 4. | 0 | 2 |
| from | | | | | | | | | | | | 8 | | |
| life-ins | | | | | | | | | | | | | | |
| urance | | | | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Net | - | - | - | - | - | - | 6. | - | - | - | 0. | - | 7. | - |
| income | | | | | | | 7 | | | | 7 | | 4 | |
| from | | | | | | | | | | | | | | |
| non-life | | | | | | | | | | | | | | |
| insuranc | | | | | | | | | | | | | | |
| e | | | | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Net | 6 | 2 | - | 0. | -0 | - | - | - | 0. | 0. | - | - | 5. | 2.9 |
| income | . | . | 0 | 4 | .5 | | | | 0 | 0 | | | 3 | |
| from | 0 | 4 | . | | | | | | | | | | | |
| financia | | | 2 | | | | | | | | | | | |
| l | | | | | | | | | | | | | | |
| transact | | | | | | | | | | | | | | |
| ions | | | | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Net | 0 | 0 | - | - | - | - | - | - | 0. | 1. | 0. | 0. | 0. | 1.6 |
| income | . | . | | | | | | | 3 | 7 | 0 | 0 | 2 | |
| from | 0 | 0 | | | | | | | | | | | | |
| investme | | | | | | | | | | | | | | |
| nt | | | | | | | | | | | | | | |
| properti | | | | | | | | | | | | | | |
| es | | | | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Other | 3 | 2 | 0 | 0. | - | - | 0. | - | 1. | 3. | -3 | -2 | 1. | 3.9 |
| operatin | . | . | . | 1 | | | 0 | | 1 | 7 | .0 | .8 | 8 | |
| g income | 6 | 9 | 1 | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Total | 9 | 6 | 6 | 7. | 11 | 36 | 6. | 0. | 7. | 11 | -1 | -3 | 11 | 92. |
| operatin | 3 | 7 | . | 3 | .5 | .0 | 7 | 0 | 6 | .8 | 1. | 0. | 4. | 4 |
| g income | . | . | 4 | | | | | | | | 0 | 5 | 9 | |
| | 7 | 8 | | | | | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Staff | - | - | - | -2 | -3 | -3 | -6 | - | -8 | -7 | 0. | - | -3 | -32 |
| costs | 1 | 1 | 3 | .9 | .0 | .7 | .1 | | .3 | .1 | 0 | | 9. | .7 |
| | 8 | 9 | . | | | | | | | | | | 2 | |
| | . | . | 6 | | | | | | | | | | | |
| | 1 | 0 | | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Other | - | - | - | -1 | -3 | -3 | -3 | - | 9. | 6. | 5. | 4. | -2 | -19 |
| administ | 2 | 2 | 2 | .8 | .6 | .0 | .5 | | 1 | 0 | 7 | 3 | 2. | .5 |
| rative | 8 | 5 | . | | | | | | | | | | 3 | |
| expenses | . | . | 0 | | | | | | | | | | | |
| | 1 | 0 | | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Negative | - | - | - | - | - | - | - | - | - | - | 0. | - | 0. | - |
| goodwill | | | | | | | | | | | 1 | | 1 | |
| recorded | | | | | | | | | | | | | | |
| as | | | | | | | | | | | | | | |
| income | | | | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Deprecia | - | - | - | -0 | -0 | -0 | -0 | - | -0 | -0 | -0 | -0 | -3 | -2. |
| tion of | 1 | 0 | 0 | .2 | .2 | .2 | .3 | | .9 | .7 | .5 | .7 | .5 | 8 |
| tangible | . | . | . | | | | | | | | | | | |
| and | 2 | 9 | 4 | | | | | | | | | | | |
| intangib | | | | | | | | | | | | | | |
| le | | | | | | | | | | | | | | |
| assets | | | | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Other | - | - | - | -0 | - | - | 0. | - | -4 | -4 | -0 | 0. | -1 | -8. |
| operatin | 4 | 3 | 0 | .3 | | | 1 | | .8 | .1 | .7 | 0 | 0. | 2 |
| g | . | . | . | | | | | | | | | | 6 | |
| expenses | 9 | 8 | 4 | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Total | - | - | - | -5 | -6 | -7 | -9 | 0. | -4 | -5 | 4. | 3. | -7 | -63 |
| operatin | 5 | 4 | 6 | .2 | .9 | .0 | .7 | 0 | .9 | .9 | 7 | 6 | 5. | .2 |
| g | 2 | 8 | . | | | | | | | | | | 4 | |
| expenses | . | . | 4 | | | | | | | | | | | |
| | 3 | 7 | | | | | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Impairme | - | - | - | - | - | - | - | - | - | 0. | -0 | - | -0 | 0.8 |
| nt and | | | | | | | | | | 8 | .2 | | .2 | |
| reversin | | | | | | | | | | | | | | |
| g items | | | | | | | | | | | | | | |
| of | | | | | | | | | | | | | | |
| tangible | | | | | | | | | | | | | | |
| and | | | | | | | | | | | | | | |
| intangib | | | | | | | | | | | | | | |
| le | | | | | | | | | | | | | | |
| assets | | | | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Write-do | - | 0 | - | - | - | - | -0 | - | - | - | - | - | -1 | 0.0 |
| wns of | 1 | . | | | | | .3 | | | | | | 7. | |
| credits | 7 | 0 | | | | | | | | | | | 8 | |
| and | . | | | | | | | | | | | | | |
| other | 5 | | | | | | | | | | | | | |
| commitm | | | | | | | | | | | | | | |
| ents | | | | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Share of | - | - | - | - | - | - | - | - | - | - | 0. | -0 | 0. | -0. |
| profit | | | | | | | | | | | 6 | .1 | 6 | 1 |
| from | | | | | | | | | | | | | | |
| associat | | | | | | | | | | | | | | |
| ed | | | | | | | | | | | | | | |
| companie | | | | | | | | | | | | | | |
| s | | | | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Operatin | 2 | 1 | 0 | 2. | 4. | 29 | -3 | 0. | 2. | 6. | -6 | -2 | 22 | 29. |
| g profit | 3 | 9 | . | 1 | 6 | .0 | .2 | 0 | 8 | 6 | .0 | 6. | .0 | 9 |
| | . | . | 1 | | | | | | | | | 9 | | |
| | 8 | 0 | | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Contribu | | | | | 0. | 3. | -2 | - | | | | | | |
| tion of | | | | | 2 | 7 | .8 | | | | | | | |
| insuranc | | | | | | | | | | | | | | |
| e | | | | | | | | | | | | | | |
| business | | | | | | | | | | | | | | |
| to the | | | | | | | | | | | | | | |
| Group's | | | | | | | | | | | | | | |
| operatin | | | | | | | | | | | | | | |
| g profit | | | | | | | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Bala | Banking | Asset | Life | Non-Lif | Miscell | Elimina | Total |
| nce | busines | Managem | Insuran | e | aneous | tions | Group |
| shee | s | ent | ce | Insuran | | | |
| t | | | | ce | | | |
--------------------------------------------------------------------------------
| (EUR | 30 | 31 | 30 | 31 | 30 | 31 | 30 | 31 | 30 | 31 | 30 | 31 | 30. | 31. |
| mill | .6 | .1 | .6 | .1 | .6 | .1 | .6 | .1 | .6 | .1 | .6 | .1 | 6.2 | 12. |
| ion) | .2 | 2. | .2 | 2. | .2 | 2. | .2 | 2. | .2 | 2. | .2 | 2. | 009 | 200 |
| | 00 | 20 | 00 | 20 | 00 | 20 | 00 | 20 | 00 | 20 | 00 | 20 | | 8 |
| | 9 | 08 | 9 | 08 | 9 | 08 | 9 | 08 | 9 | 08 | 9 | 08 | | |
--------------------------------------------------------------------------------
| Cash | 28 | 50 | 0. | 0. | 5. | 13 | 7. | - | - | - | -9 | -9 | 288 | 506 |
| and | 4. | 2. | 1 | 1 | 9 | .4 | 9 | | | | .7 | .7 | .7 | .3 |
| bala | 6 | 5 | | | | | | | | | | | | |
| nces | | | | | | | | | | | | | | |
| with | | | | | | | | | | | | | | |
| cent | | | | | | | | | | | | | | |
| ral | | | | | | | | | | | | | | |
| bank | | | | | | | | | | | | | | |
| s | | | | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Fina | 3. | 4. | - | - | 9. | 14 | 11 | - | - | - | - | - | 25. | 19. |
| ncia | 9 | 5 | | | 9 | .9 | .7 | | | | | | 5 | 5 |
| l | | | | | | | | | | | | | | |
| asse | | | | | | | | | | | | | | |
| ts | | | | | | | | | | | | | | |
| repo | | | | | | | | | | | | | | |
| rted | | | | | | | | | | | | | | |
| at | | | | | | | | | | | | | | |
| fair | | | | | | | | | | | | | | |
| valu | | | | | | | | | | | | | | |
| e | | | | | | | | | | | | | | |
| thro | | | | | | | | | | | | | | |
| ugh | | | | | | | | | | | | | | |
| prof | | | | | | | | | | | | | | |
| it | | | | | | | | | | | | | | |
| and | | | | | | | | | | | | | | |
| loss | | | | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Fina | 2, | 2, | 6. | 13 | 65 | 64 | 10 | - | 42 | 37 | -2 | -1 | 3,2 | 3,0 |
| ncia | 46 | 35 | 3 | .2 | 3. | 8. | 1. | | .2 | .0 | 0. | 6. | 44. | 37. |
| l | 1. | 5. | | | 0 | 6 | 6 | | | | 1 | 4 | 2 | 3 |
| asse | 2 | 0 | | | | | | | | | | | | |
| ts | | | | | | | | | | | | | | |
| avai | | | | | | | | | | | | | | |
| labl | | | | | | | | | | | | | | |
| e | | | | | | | | | | | | | | |
| for | | | | | | | | | | | | | | |
| sale | | | | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Loan | 5, | 5, | 23 | 17 | - | - | - | - | 0. | 0. | -5 | -1 | 5,9 | 5,5 |
| s | 97 | 52 | .5 | .6 | | | | | 1 | 1 | 6. | 1. | 39. | 26. |
| and | 1. | 0. | | | | | | | | | 0 | 7 | 3 | 2 |
| othe | 6 | 2 | | | | | | | | | | | | |
| r | | | | | | | | | | | | | | |
| rece | | | | | | | | | | | | | | |
| ivab | | | | | | | | | | | | | | |
| les | | | | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Inve | - | - | - | - | 16 | 14 | - | - | - | - | - | - | 168 | 148 |
| stme | | | | | 8. | 8. | | | | | | | .1 | .1 |
| nts | | | | | 1 | 1 | | | | | | | | |
| for | | | | | | | | | | | | | | |
| unit | | | | | | | | | | | | | | |
| -lin | | | | | | | | | | | | | | |
| ked | | | | | | | | | | | | | | |
| prov | | | | | | | | | | | | | | |
| isio | | | | | | | | | | | | | | |
| ns | | | | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Othe | 61 | 46 | 7. | 7. | 17 | 21 | 46 | - | 81 | 12 | -3 | -3 | 439 | 302 |
| r | 7. | 5. | 3 | 2 | .2 | .5 | .3 | | .6 | 0. | 30 | 12 | .5 | .6 |
| asse | 5 | 9 | | | | | | | | 4 | .3 | .3 | | |
| ts | | | | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Tota | 9, | 8, | 37 | 38 | 85 | 84 | 16 | 0. | 12 | 15 | -4 | -3 | 10, | 9,5 |
| l | 33 | 84 | .2 | .1 | 4. | 6. | 7. | 0 | 4. | 7. | 16 | 50 | 105 | 40. |
| asse | 8. | 8. | | | 0 | 6 | 4 | | 0 | 4 | .1 | .2 | .4 | 1 |
| ts | 9 | 1 | | | | | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Depo | 4, | 4, | 14 | 13 | - | - | - | - | 2. | 1. | -1 | -1 | 4,6 | 5,0 |
| sits | 54 | 89 | 4. | 0. | | | | | 0 | 6 | 5. | 5. | 77. | 15. |
| | 6. | 8. | 3 | 1 | | | | | | | 1 | 2 | 8 | 3 |
| | 6 | 8 | | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Debt | 2, | 2, | - | - | - | - | - | - | - | - | -1 | -1 | 2,5 | 2,1 |
| secu | 58 | 13 | | | | | | | | | 9. | 5. | 68. | 18. |
| riti | 8. | 4. | | | | | | | | | 5 | 3 | 7 | 7 |
| es | 2 | 1 | | | | | | | | | | | | |
| issu | | | | | | | | | | | | | | |
| ed | | | | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Tech | - | - | - | - | 76 | 77 | 11 | - | - | - | 10 | - | 895 | 777 |
| nica | | | | | 7. | 7. | 6. | | | | .8 | | .3 | .2 |
| l | | | | | 7 | 2 | 8 | | | | | | | |
| prov | | | | | | | | | | | | | | |
| isio | | | | | | | | | | | | | | |
| n | | | | | | | | | | | | | | |
| for | | | | | | | | | | | | | | |
| life | | | | | | | | | | | | | | |
| insu | | | | | | | | | | | | | | |
| ranc | | | | | | | | | | | | | | |
| e | | | | | | | | | | | | | | |
| busi | | | | | | | | | | | | | | |
| ness | | | | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Othe | 1, | 1, | 6. | 15 | 16 | 11 | 23 | - | 29 | 22 | -1 | -1 | 1,5 | 1,3 |
| r | 37 | 17 | 7 | .9 | .2 | .1 | .7 | | 5. | 8. | 52 | 17 | 67. | 12. |
| liab | 8. | 4. | | | | | | | 0 | 0 | .6 | .4 | 2 | 1 |
| ilit | 3 | 5 | | | | | | | | | | | | |
| ies | | | | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Tota | 8, | 8, | 15 | 14 | 78 | 78 | 14 | 0. | 29 | 22 | -1 | -1 | 9,7 | 9,2 |
| l | 51 | 20 | 1. | 6. | 3. | 8. | 0. | 0 | 6. | 9. | 76 | 48 | 09. | 23. |
| liab | 3. | 7. | 0 | 1 | 9 | 3 | 5 | | 9 | 6 | .4 | .0 | 0 | 3 |
| ilit | 1 | 4 | | | | | | | | | | | | |
| ies | | | | | | | | | | | | | | |
--------------------------------------------------------------------------------
Note 3 Derivatives and off-balance sheet commitments
Derivative instruments at 30 June 2009 (EUR million)
--------------------------------------------------------------------------------
| Hedging derivative instruments | Total, | Assets, | Liabiliti |
| | nominal | fair | es, |
| | amount | value | fair |
| | | | value |
--------------------------------------------------------------------------------
| Fair value hedging | | | |
--------------------------------------------------------------------------------
| Interest rate-related | 2,113.5 | 51.0 | 17.8 |
--------------------------------------------------------------------------------
| Total | 2,113.5 | 51.0 | 17.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow hedging | | | |
--------------------------------------------------------------------------------
| Interest rate-related | 960.0 | 37.2 | 1.2 |
--------------------------------------------------------------------------------
| Total | 960.0 | 37.2 | 1.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Derivative instruments valued through profit and | | |
| loss for other reasons | | |
--------------------------------------------------------------------------------
| Interest rate-related *) | 7,037.1 | 104.9 | 103.1 |
--------------------------------------------------------------------------------
| Currency-related | 191.9 | 1.9 | 1.9 |
--------------------------------------------------------------------------------
| Equity-related **) | 120.3 | 3.3 | 3.3 |
--------------------------------------------------------------------------------
| Other derivative instruments **) | 6.3 | 0.3 | 0.3 |
--------------------------------------------------------------------------------
| Total | 7,355.6 | 110.4 | 108.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total derivative instruments | | | |
--------------------------------------------------------------------------------
| Interest rate-related | 10,110.6 | 193.2 | 122.2 |
--------------------------------------------------------------------------------
| Currency-related | 191.9 | 1.9 | 1.9 |
--------------------------------------------------------------------------------
| Equity-related | 120.3 | 3.3 | 3.3 |
--------------------------------------------------------------------------------
| Other derivative instruments | 6.3 | 0.3 | 0.3 |
--------------------------------------------------------------------------------
| Total | 10,429.1 | 198.7 | 127.7 |
--------------------------------------------------------------------------------
| *) Interest-linked derivatives include interest rate hedging provided for |
| local banks which after back-to-back hedging with third parties amounted to |
| EUR 6,730.6 million. |
--------------------------------------------------------------------------------
| **) All equity-related and other derivative instruments relate to the |
| hedging of structured debt products. |
--------------------------------------------------------------------------------
Derivative instruments at 30 June 2008 (EUR million)
--------------------------------------------------------------------------------
| Hedging derivative instruments | Total, | Assets, | Liabiliti |
| | nominal | fair | es, |
| | amount | value | fair |
| | | | value |
--------------------------------------------------------------------------------
| Fair value hedging | | | |
--------------------------------------------------------------------------------
| Interest rate-related | 2,494.0 | 10.6 | 16.2 |
--------------------------------------------------------------------------------
| Total | 2,494.0 | 10.6 | 16.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow hedging | | | |
--------------------------------------------------------------------------------
| Interest rate-related | 480.0 | 0.6 | 4.9 |
--------------------------------------------------------------------------------
| Total | 480.0 | 0.6 | 4.9 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Derivative instruments valued through profit and | | |
| loss for other reasons | | |
--------------------------------------------------------------------------------
| Interest rate-related *) | 6,512.3 | 51.2 | 48.8 |
--------------------------------------------------------------------------------
| Currency-related | 189.0 | 1.8 | 2.0 |
--------------------------------------------------------------------------------
| Equity-related **) | 163.2 | 2.6 | 2.1 |
--------------------------------------------------------------------------------
| Other derivative instruments **) | 8.6 | 1.8 | 1.8 |
--------------------------------------------------------------------------------
| Total | 6,873.1 | 57.4 | 54.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total derivative instruments | | | |
--------------------------------------------------------------------------------
| Interest rate-related | 9,486.3 | 62.4 | 69.9 |
--------------------------------------------------------------------------------
| Currency-related | 189.0 | 1.8 | 2.0 |
--------------------------------------------------------------------------------
| Equity-related | 163.2 | 2.6 | 2.1 |
--------------------------------------------------------------------------------
| Other derivative instruments | 8.6 | 1.8 | 1.8 |
--------------------------------------------------------------------------------
| Total | 9,847.1 | 68.6 | 75.8 |
--------------------------------------------------------------------------------
| *) Interest-linked derivatives include interest rate hedging provided for |
| local banks which after back-to-back hedging with third parties amounted to |
| EUR 6,014.9 million. |
--------------------------------------------------------------------------------
| **) All equity-related and other derivative instruments relate to the |
| hedging of structured debt products. |
--------------------------------------------------------------------------------
Off-balance sheet commitments
--------------------------------------------------------------------------------
| (EUR million) | 30.6.20 | 31.12.200 | 30.6.200 |
| | 09 | 8 | 8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Commitments provided to a third party on | | | |
| behalf of customers | | | |
--------------------------------------------------------------------------------
| Guarantees | 58.3 | 54.8 | 57.9 |
--------------------------------------------------------------------------------
| Other commitments provided to a third party | 7.6 | 7.5 | 6.8 |
--------------------------------------------------------------------------------
| Irrevocable commitments provided on behalf | | | |
| of customers | | | |
--------------------------------------------------------------------------------
| Unused credit arrangements | 538.7 | 454.5 | 576.2 |
--------------------------------------------------------------------------------
| Other irrevocable commitments *) | 12.8 | 12.1 | 154.5 |
--------------------------------------------------------------------------------
| Off-balance sheet commitments | 617.4 | 528.8 | 795.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| *) Credit equivalents for derivatives are not included in off-balance sheet |
| commitments as their market values are included in the balance sheet. |
--------------------------------------------------------------------------------
Note 4 Risk exposure
Consolidated capital adequacy for banking business
--------------------------------------------------------------------------------
| Summary (EUR million) | 30.6.200 | 31.12.2008 |
| | 9 | |
--------------------------------------------------------------------------------
| Tier 1 capital | 312.9 | 309.0 |
--------------------------------------------------------------------------------
| Tier 2 capital | 185.1 | 143.4 |
--------------------------------------------------------------------------------
| Capital base | 498.0 | 452.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Risk-weighted amount for credit and counterparty | 3,122.2 | 3,040.5 |
| risks | | |
--------------------------------------------------------------------------------
| Risk-weighted amount for market risks 1) | - | - |
--------------------------------------------------------------------------------
| Risk-weighted amount for operational risks 2) | 272.7 | 272.7 |
--------------------------------------------------------------------------------
| Total risk-weighted commitments | 3,394.8 | 3,313.2 |
--------------------------------------------------------------------------------
| Capital adequacy ratio, % | 14.7 | 13.7 |
--------------------------------------------------------------------------------
| Tier 1 capital ratio, % | 9.2 | 9.3 |
--------------------------------------------------------------------------------
| Minimum capital requirement | 271.6 | 265.1 |
--------------------------------------------------------------------------------
| Capital buffer (difference between capital base and | 226.4 | 187.3 |
| minimum requirement) | | |
--------------------------------------------------------------------------------
1) No capital requirement due to minor trading book and when total of net
currency items are less than 2% of capital base.
2) The capital requirement of 15% is calculated using the definition of average
gross income during the last three years (EUR 145.4 millions) x risk-weighted
factor of 12.5.
--------------------------------------------------------------------------------
| Capital base (EUR million) | 30.6.200 | 31.12.2008 |
| | 9 | |
--------------------------------------------------------------------------------
| Share capital | 163.0 | 163.0 |
--------------------------------------------------------------------------------
| Funds | 44.6 | 44.6 |
--------------------------------------------------------------------------------
| Minority share | 30.2 | 24.9 |
--------------------------------------------------------------------------------
| Retained earnings | 70.7 | 93.5 |
--------------------------------------------------------------------------------
| Profit for the reporting period | 17.4 | 9.2 |
--------------------------------------------------------------------------------
| ./. provision for dividends to shareholders | -5.0 | -0.6 |
--------------------------------------------------------------------------------
| Total | 320.8 | 334.7 |
--------------------------------------------------------------------------------
| ./. intangible assets | -8.0 | -8.6 |
--------------------------------------------------------------------------------
| ./. shares in insurance companies | 0.0 | -17.1 |
--------------------------------------------------------------------------------
| Tier 1 capital | 312.9 | 309.0 |
--------------------------------------------------------------------------------
| Fund at fair value | -16.3 | -47.5 |
--------------------------------------------------------------------------------
| Other Tier 2 capital | 45.0 | 45.0 |
--------------------------------------------------------------------------------
| Risk debentures | 156.4 | 163.0 |
--------------------------------------------------------------------------------
| ./. shares in insurance companies | 0.0 | -17.1 |
--------------------------------------------------------------------------------
| Tier 2 capital | 185.1 | 143.4 |
--------------------------------------------------------------------------------
| Total capital base | 498.0 | 452.4 |
--------------------------------------------------------------------------------
Risk-weighted commitments, credit and counterparty risks
--------------------------------------------------------------------------------
| (EUR million) | Balance | Off- | In total | Risk-weighted |
| | sheet | balance | | commitments, Basel 2 |
| | assets | sheet | | |
--------------------------------------------------------------------------------
| Risk-weight | | | | 30.6.2009 | 31.12.2008 |
--------------------------------------------------------------------------------
| 0% | 974.6 | 26.0 | 1,000.5 | - | - |
--------------------------------------------------------------------------------
| 10% | 1,015.6 | - | 1,015.6 | 101.6 | 80.3 |
--------------------------------------------------------------------------------
| 20% | 1,401.0 | 278.7 | 1,679.7 | 291.8 | 335.3 |
--------------------------------------------------------------------------------
| 35% | 4,291.5 | 120.8 | 4,412.3 | 1,516.6 | 1,421.4 |
--------------------------------------------------------------------------------
| 50% | 6.7 | 0.8 | 7.5 | 3.5 | 2.5 |
--------------------------------------------------------------------------------
| 75% | 565.0 | 69.7 | 634.7 | 447.2 | 426.7 |
--------------------------------------------------------------------------------
| 100% | 649.2 | 112.1 | 761.3 | 702.5 | 720.8 |
--------------------------------------------------------------------------------
| 150% | 21.2 | 1.3 | 22.5 | 32.7 | 11.3 |
--------------------------------------------------------------------------------
| Total | 8,924.6 | 609.3 | 9,534.0 | 3,096.0 | 2,998.4 |
--------------------------------------------------------------------------------
| Derivatives *) | | 258.4 | 258.4 | 26.2 | 42.1 |
--------------------------------------------------------------------------------
| Total | 8,924.6 | 867.7 | 9,792.4 | 3,122.2 | 3,040.5 |
--------------------------------------------------------------------------------
*) derivative agreements credit conversion factor
Risk-weighted amount for operational risks
--------------------------------------------------------------------------------
| | Risk-weighted amount, |
| | Basel 2 |
--------------------------------------------------------------------------------
| Year | 2006 | 2007 | 2008 | 30.6.2009 | 31.12.200 |
| | | | | | 8 |
--------------------------------------------------------------------------------
| Gross income | 140.6 | 145.2 | 150.5 | | |
--------------------------------------------------------------------------------
| - average 3 | | | 145.4 | | |
| years | | | | | |
--------------------------------------------------------------------------------
| Indicator 15% | | | 21.8 | | |
--------------------------------------------------------------------------------
| Capital requirement for | | 21.8 | 272.7 | 272.7 |
| operational risk | | | | |
--------------------------------------------------------------------------------
Conglomerate's capital adequacy
--------------------------------------------------------------------------------
| | | | | 30.6.2009 | 31.12.2008 |
--------------------------------------------------------------------------------
| Tier 1 capital for the group | 378.5 | 359.7 |
--------------------------------------------------------------------------------
| Sector-specific assets | 178.2 | 161.4 |
--------------------------------------------------------------------------------
| Intangible assets and other specific deductions | -93.0 | -101.9 |
--------------------------------------------------------------------------------
| Other sector-specific not transferrable assets | - | - |
--------------------------------------------------------------------------------
| Conglomerate´s total capital base | 463.7 | 419.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Capital requirement for banking business | 273.8 | 266.6 |
--------------------------------------------------------------------------------
| Capital requirement for insurance business | 47.9 | 43.5 |
--------------------------------------------------------------------------------
| Minimum amount for capital base | 321.6 | 310.1 |
--------------------------------------------------------------------------------
| Conglomerate´s capital adequacy | 142.1 | 109.1 |
--------------------------------------------------------------------------------
| Capital adequacy ratio, % | 144.2 | 135.2 |
--------------------------------------------------------------------------------
The conglomerate's capital adequacy is based on the consolidation method and is
calculated according to FICO rules and the standards of the Financial
Supervisory Authority.
Note 5 Businesses acquired
The merger with Veritas Non-Life Insurance was completed 1 January 2009 in
accordance with the merger plan approved. From 1 January 2009 onwards, non-life
insurance business is operated by the 100% Aktia plc-owned subsidiary Aktia
Non-Life Insurance Ltd.
As compensation for the merger, Aktia plc has issued 6,800,000 new shares in
accordance with the approved merger plan. The evaluation of the issued shares
was based on trading at the end of the year.
Customer related immaterial rights were examined when constructing the
acquisition balance sheet. The client base of Veritas Non-Life Insurance was
70,000 at the time of acquisition. Estimated value of each client was EUR 20
leading to value of EUR 1,400,000 of immaterial rights. This value will be
depreciated during the next two years. Other immaterial asset has valued to zero
in the acquisition balance.
Current values of technical provisions were adjusted based on assessments at
fair value according to IFRS 4.32 and 4.31. After deductions for deferred tax,
the equalisation provision included in technical provision was also entered as
shareholders' equity according to IFRS rules.
Net assets in the preliminary acquisition balance were higher than the total
acquisition price. That led to a preliminary negative goodwill of EUR 139,856.09
at the time of acquisition which is recognised in the income statement for the
first quarter of 2009.
Aktia Non-Life Insurance total operating income was EUR 6.7 million and
operating profit was EUR -2.3 million during the first half of the year.
--------------------------------------------------------------------------------
| (EUR million) | | 1 January | |
| | | 2009 | |
--------------------------------------------------------------------------------
| | Veritas | Fair value | Veritas Mutual |
| | Mutual | adjustments | Non- |
| | Non-Life | | Life |
| | Insurance | | Insurances' |
| | Company | | acquisition |
| | | | balance sheet |
--------------------------------------------------------------------------------
| Assets | | | |
--------------------------------------------------------------------------------
| Cash and bank balances | 18.0 | | 18.0 |
--------------------------------------------------------------------------------
| Interest-bearing securities | 75.8 | | 75.8 |
--------------------------------------------------------------------------------
| Shares and participations | 30.1 | 2.2 | 32.3 |
--------------------------------------------------------------------------------
| Financial assets available | 105.9 | 2.2 | 108.1 |
| for sale | | | |
--------------------------------------------------------------------------------
| Real estates | 11.1 | 15.1 | 26.2 |
--------------------------------------------------------------------------------
| Intangible assets | 1.7 | 1.4 | 3.1 |
--------------------------------------------------------------------------------
| Tangible assets | 0.8 | | 0.8 |
--------------------------------------------------------------------------------
| Other assets | 22.7 | | 22.7 |
--------------------------------------------------------------------------------
| Deferred tax receivables | 1.4 | | 1.4 |
--------------------------------------------------------------------------------
| Total assets | 161.5 | 18.7 | 180.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Liabilities | | | |
--------------------------------------------------------------------------------
| Provisions for life | 99.1 | 12.0 | 111.1 |
| insurance business | | | |
--------------------------------------------------------------------------------
| Other liabilities | 13.9 | 0.7 | 14.6 |
--------------------------------------------------------------------------------
| Deferred tax liabilities | 10.3 | 1.6 | 11.9 |
--------------------------------------------------------------------------------
| Total liabilities | 123.4 | 14.2 | 137.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net assets according to IFRS | 38.1 | | 42.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Compensation for the merger | | | 40.8 |
--------------------------------------------------------------------------------
| Activated acquisition costs | | | 1.6 |
--------------------------------------------------------------------------------
| Acquisition price | | | 42.4 |
--------------------------------------------------------------------------------
| - of which paid in cash | | | 1.6 |
--------------------------------------------------------------------------------
| - of which 6,800,000 shares in Aktia plc at | | 40.8 |
| EUR 6 per share have been given as | | |
| compensation for the merger. | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Difference = negative | | | 0.1 |
| goodwill | | | |
--------------------------------------------------------------------------------
Helsinki, 20 August 2009
AKTIA PLC
Board of Directors
Review report on the interim report of Aktia P.l.c. as of 30.6.2009
To the Board of Directors of Aktia p.l.c.
Introduction
We have reviewed the balance sheet as of 30.6.2009, the income statement, the
statement of changes in equity and the cash flow statement of Aktia p.l.c. for
the six-month period then ended, as well as a summary of significant accounting
policies and other explanatory notes to the financial statements. The Board of
Directors and the Managing Director are responsible for the preparation and fair
presentation of this interim financial information in accordance with the
International Financial Reporting Standards (IFRS), as adopted by the EU, and
other Finnish rules and regulations governing the preparation of interim
reports. At the request of the Board of Directors we issue our opinion on the
interim report.
Scope of review
We conducted our review in accordance with the Standard on Review Engagements
2410, Review of Interim Financial Information Performed by the Independent
Auditor of the Entity. A review of interim financial information consists of
making inquiries, primarily of persons responsible for financial accounting
matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with the
standards on auditing and other generally accepted auditing practices, and
therefore the procedures performed in a review do not enable to obtain a level
of assurance that would make us aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.
Opinion
Based on our review, nothing has come to our attention that causes us to believe
that the Interim Report does not give a true and fair view of the entity's
financial position as of 30 June 2009 and the result of its operations and cash
flows for the six-month period then ended, in accordance with the International
Financial Reporting Standards (IFRS), as adopted by the EU and other applicable
rules and regulations governing interim financial reporting preparation in
Finland.
Helsinki, 20 August 2009
PricewaterhouseCoopers Oy
Authorised Public Accountants
Jan Holmberg
Authorised Public Accountant
AKTIA PLC
For further information, please contact:
Jussi Laitinen, CEO, Tel. +358 10 247 6210
Stefan Björkman, CFO, +358 10 247 6595
From:
Malin Pettersson
Head of Communications
Tel. +358 10 247 6369
Distribution:
Nasdaq OMX Helsinki Ltd
News media
www.aktia.com
Pressconference today 20.8.2009 at 12 noon, Aktia Plc, mannerheimintie 14 A 3rd
floor, Helsinki
