United Bankers Plc’s Financial Statements Bulletin 2022: Record profit supported by real asset funds

United Bankers Plc

17 February 2023 at 9:00 EET

United Bankers Plc’s Financial Statements Bulletin 2022: Record profit supported by real asset funds

This stock exchange release is a summary of the United Bankers’ Financial Statements Bulletin 1 January – 31 December 2022. The complete Financial Statements Bulletin with tables is attached to this release and is also available on the company’s website at www.unitedbankers.fi.

The figures in this release are unaudited.

January-December 2022 in brief

• The Group’s revenue (income from operations) in the financial period amounted to EUR 48.6 million (EUR 43.8 million in 1–12/2021), an increase of 10.8 %.
• The Group’s adjusted EBITDA amounted to EUR 18.5 million (EUR 16.3 million in 1–12/2021), an increase of 13.7 % and adjusted operating profit amounted to EUR 16.6 million (EUR 14.4 million in 1–12/2021), an increase of 14.9 %.
• The Group’s operating profit amounted to EUR 16.5 million (EUR 14.3 million in 1–12/2021), an increase of 15.3 %.
• The profit for the financial period amounted to EUR 12.9 million (EUR 11.2 million in 1–12/2021), an increase of 14.8 %.
• Earnings per share were EUR 1.19 (EUR 1.00 in 1–12/2021), an increase of 19.3 %.
• Assets under management at the end of the financial period amounted to EUR 4.4 billion (EUR 4.8 billion as at 31 December 2021), a decrease of 8.1 %. The weak market development had a negative impact on the development of the assets under management.
• Net fee income from wealth management in the financial period amounted to EUR 41.4 million (EUR 35.3 million in 1–12/2021), an increase of 17.4 % compared to the preceding year. Despite the challenging market environment, the management and performance fees received from the funds continued to grow.
• Net fee income from capital markets services amounted to EUR 1.7 million (EUR 2.7 million in 1–12/2021), a decrease of 35.6 % compared to the preceding year.
• The cost-to-income ratio at the end of the financial period improved to 0.65 (0.66).
• The Board of Directors proposes a distribution of funds of EUR 0.90 per share (a dividend of EUR 0.75 and an equity repayment of EUR 0.15) be payable for the financial period. It is proposed to distribute the funds in two instalments.
• Guidance for 2023: The company estimates its adjusted operating profit to remain close to the level of 2022. The estimate is conditional upon market conditions not significantly weakening.

July-December 2022 in brief

• The Group’s revenue (income from operations) in the latter half of the year amounted to EUR 25.2 million (EUR 22.8 million in 7–12/2021), an increase of 10.6 %.
• The Group’s adjusted EBITDA in the latter half of the year amounted to EUR 10.1 million (EUR 9.0 million in 7–12/2021), an increase of 12.1 % and adjusted operating profit amounted to EUR 9.1 million (EUR 8.0 million in 7–12/2021), an increase of 13.7 %.
• The Group’s operating profit amounted to EUR 9.1 million (EUR 8.0 million in 7–12/2021), an increase of 12.9 %.
• Earnings per share were EUR 0.65 (EUR 0.56 in 7–12/2021), an increase of 16.3 %.

Consolidated key figures (The figures are presented in more detail in the appendix of the financial statements bulletin)

* The percentage change has been calculated using the actual figures, the figures shown in the table have been rounded

** The Board of Directors’ proposal concerning distribution of funds for the 2022 financial period: a dividend of EUR 0.75 and an equity repayment of EUR 0.15.

*** Dividend for the 2021 financial period confirmed by the Annual General Meeting of Shareholders on 23 March 2022. Ordinary dividend of EUR 0.70 per share and an extra dividend of EUR 0.10.

****The number of personnel stated has been converted to full-time equivalent

As its key financial figures, United Bankers presents adjusted EBITDA and adjusted operating profit, which the company uses to illustrate the profitability and result of the Group’s business operations as a going concern. Adjusted key figures are used to improve comparability between reporting periods. The adjusted key figures are adjusted for the impacts of corporate transactions influencing comparability, as well as certain material non-operating items. More information on the calculation of the key figures is available in the tables section of the financial statements bulletin.

Group revenue and profit performance 2022

(comparison figures as at 31 December 2021)

Despite the headwind in the markets, United Bankers managed yet again to increase its revenue and its profit to a record-breaking level. The revenue of the Group (income from operations) increased during the financial period to EUR 48.6 million (EUR 43.8 million), increasing by 10.8 per cent from the previous year. The Group’s adjusted EBITDA for the financial period increased by 13.7 per cent to EUR 18.5 million (EUR 16.3 million). Return on equity improved to 27.9 per cent (26.9 per cent).

The growth in profits was propelled particularly by the fund performance fees, but also the fund management fees exhibited positive development. The profitability of the Group improved slightly during the financial period, albeit the inflationary environment, the new financial industry regulation and growth investments caused pressure for also United Bankers’ costs to increase. The adjusted operating profit percentage increased during the financial period to 34.1 per cent (32.9 per cent). The Group’s adjusted operating profit amounted to EUR 16.6 million (EUR 14.4 million), a growth of 14.9 per cent compared to the previous year. The operating profit increased by 15.3 per cent to EUR 16.5 million (EUR 14.3 million). Earnings per share were EUR 1.19 (EUR 1.00).

The year 2022 entailed a myriad of challenges for the operating environment. The economic growth outlook became gloomier and the investment market performance was poor both in the equity and in the fixed income markets. The uncertain economic environment was reflected in the demand for the products and services provided by both of the business segments of the Group, wealth management and capital markets services. The prolongation of the war in Ukraine and the rapid rise in interest rates caused growing concerns, especially towards the end of the year, of the economy being plunged into a recession. In the second half of 2022, the growth rate of United Bankers' revenue and earnings, indeed, decelerated somewhat relative to the first half of the year and the very strong comparison period.

United Bankers' fund selection, with its emphasis on real assets, played a key role in the continuation of the favourable earnings development in 2022. Specialisation in real asset investment solutions in wealth management has now proven its effectiveness in many different market conditions. In 2022, investors generally redeemed capital from Finnish funds. In this environment, United Bankers managed to achieve positive net subscriptions. Capital grew particularly in forest and real estate funds, compensating for redemptions from equity and fixed income funds. Indeed, the capital of same increased by more than a quarter from the previous year, which can be considered a very good achievement in the prevailing market conditions. Real estate and forest funds also offered positive returns while the returns of the equity and fixed income markets remained markedly negative throughout the year.

In total, net income from funds grew by over 20 per cent compared to the previous year. Their proportion of the Group's total fee income also continued to increase. The net income from funds accounted for 86 per cent of the net fee income of the wealth management business and 83 per cent of the Group's net fee income. Net income from asset management, including discretionary asset management, declined, on the other hand, to a level slightly lower than in the previous year.

The growth in performance fees received from funds is explained in particular by the strong performance fees of forest funds. The amount of management fees also increased, even though fund capital as a whole, decreased from the comparison period. This was due to the previously mentioned shifting of capital to the funds most profitable for the company.

For structured investment products, the operating environment has been rather difficult in recent years. However, in 2022, the market situation improved markedly due to rising interest rates, which supported the issuance of new products. Indeed, fee income from structured products increased notably during the financial period.

The revenue and profit of the capital markets services business declined considerably from the previous year as the uncertain market conditions were reflected in the demand for services. Furthermore, the shrinking operations of UB Finance Ltd, the provider of an online corporate lending platform, continued to burden the profitability of the segment. New loans are no longer being provided through the online corporate lending platform of UB Finance, and it is the objective of United Bankers to wind down the business operations of UB Finance once the last outstanding loans and the interest on same have been paid to the investors or the loan pool has been sold.

The Group's total expenses increased from the previous financial period. Administrative expenses including personnel and other administrative expenses rose by 11.5 per cent to EUR 24.2 million (EUR 21.7 million). Total personnel expenses increased by 7.8 per cent to EUR 17.5 million. Depreciation, amortisation and impairment remained at the level of the previous year and amounted to EUR 1.9 million. In relation to personnel expenses, variable salaries decreased from the previous year, mitigating the impact of the increase in fixed salaries. The number of personnel converted into full-time employees grew by 8 per cent from the previous year and stood at 148 persons (137 persons) at the end of the year. Of this, a total of 6 persons (8 persons) were fixed-term employees.

Also other administrative expenses increased during the financial period relative to the previous year. They were driven not only by the general increase in the level of costs, but also by United Bankers' investments in building an international sales network, as well as in developing new funds and launching their operations. In addition to developing new products, external consulting services were retained more than usual, for instance, in the business implementation of the EU's Sustainable Finance Regulation that entered into force and in promoting the sustainability of funds. Some of the legal and information security-related consulting expenses were of a non-recurring nature.

In 2022, United Bankers celebrated the 35th anniversary of its operations and organised related events for its clients and personnel. After the long period of remote work during the coronavirus years, the company felt it was important to bring the personnel to joint encounters. The efforts exerted towards promoting the team spirit were also reflected in the good results of the personnel survey.

In the spring, United Bankers renewed its online service where clients can follow the performance of their investment portfolios and do electronic transactions. An extensive technical reform was carried out in the service, enabling the increasingly efficient and flexible further development of the service. United Bankers will continue to develop its IT systems and digital services further with the aim of more efficient business operations and creating first-class customer experiences. The cost-to-income ratio improved from the previous year to 0.65 (0.66). 

CEO Patrick Anderson

Annus horribilis 2022 followed the two consecutive coronavirus years, transforming the geopolitical situation in Europe as well as our interest rate and inflation environment. It was a difficult year for the stock market and a particularly difficult year for the fixed income market. Over EUR 25 billion worth of capital evaporated from the Finnish fund market in the form of redemptions and impairments, rendering it the weakest year ever in the history of the Finnish fund market. For these reasons, the past year was indeed more challenging for asset managers than previous years. Considering the circumstances, United Bankers had a very strong year. Measured by revenue and operating profit, the year was the best in the company's 36-year history and the end of 2022 was the single best half-year period. The year also marked the fourth consecutive year in which our company smashed the previous record result.

Coping with the challenges of annus horribilis was yet again an excellent indication of the company's resilience in exceptional circumstances. The company's business is diversified and inflation is not only a negative phenomenon for the company, thanks to a strong portfolio of real asset investments. Diversification will improve further in the future, as a fourth pillar, private equity, will gradually emerge alongside real estate, forest and listed real estate and infrastructure, on the construction of which considerable time and resources were expended in 2022. The effects on revenue and earnings will begin to be apparent from the financial period 2023 onwards.

The revenue of the United Bankers Group in 2022 increased by 10.8 per cent, amounting to EUR 48.6 million. Our adjusted EBITDA improved by 13.7 per cent, to EUR 18.5 million. In turn, our adjusted operating profit increased by 14.9 per cent to EUR 16.6 million and the profit for the financial year increased by 14.8 per cent to EUR 12.9 million. In the wealth management segment, net fee income increased by 17.4 per cent to EUR 41.4 million, while in capital markets services, net fee income decreased by 35.6 per cent to EUR 1.7 million. Due to the challenging market, our assets under management decreased by 8.1 per cent to EUR 4.4 billion. Net subscriptions for our funds were EUR 48.1 million on the positive side. Our cost-to-income ratio continued to improve to 0.65 (0.66 in 2021).

Although it was an outstanding year in light of the figures, it was also twofold from a business perspective. The returns from our forest funds were excellent and those of our real estate funds were good. The returns of our wealth management models were at the absolute top of the Finnish asset management market, thanks to the positive returns on real assets and successful allocation choices. During the year, real estate and forest funds raised approximately EUR 160 million in net subscriptions and the capital thereof grew by over 26 per cent. Our considerable investments in sustainability began to bear fruit. Following a prolonged quieter period, activity around structured products was also picking up thanks to increased volatility and rising interest rates.

On the other hand, the difficult year significantly slowed down our new sales, and our net subscriptions were exceptionally low, albeit positive. As capital continued to flow into funds investing in real property, nearly the same amount of capital was redeemed from funds investing in equity, fixed income and listed real estate. The year was also more challenging than usual for capital markets services. The company was also not able to escape the effects of inflation, as costs soared due to both external price pressures and our own strategic choices. Had it not been for the strong headwinds in the environment, the year could have become significantly stronger than it did.

In total, net income from funds increased by over 20 per cent compared to the previous year. Their proportion of the Group's total fee income also continued to climb. Net income from funds accounted for 86 per cent of the net fee income of the wealth management segment and 83 per cent of the net fee income of the Group. The growth of over 26 per cent in real estate and forest funds attained in 2022 will further enhance the predictability of fixed fees in the current year.  At the same time, it will also serve to increase the potential for performance-linked fees.

In 2022, we focused on launching the operations of and fundraising for UB Forest Industry Green Growth I (UB FIGG), a private equity fund focused on the transformation of the forest industry.  UB FIGG was able to commence its investment activities in January 2023 having raised in excess of EUR 100 million in capital. The fund's overall target size is EUR 300 million. Indeed, UB FIGG is a strategically significant opening for United Bankers and at the same time, an example of the company's new direction in the alternative investment fund market – a direction that will be continued during 2023. We want to be increasingly involved in solving the challenges of the world while simultaneously delivering excellent risk-adjusted returns for our clients.

In 2022, we accelerated our work to develop both the company’s sustainability and sustainability reporting, and reporting and development of our responsible investment activities. The focus areas of the company's responsibility are a) sustainable products and good stakeholder and client relations, b) meaningful and inspiring work, and c) reliable and transparent governance. The day-to-day activities of United Bankers are guided by our values: client orientation, agility and team spirit. In 2022, we further reinforced our ESG organisation, updated our principles for responsible investment, published the sustainability ratings (SFDR) of our funds, implemented the sustainability preferences of our clients as part of our investment advice and committed to the UN’s human rights principles (UNGP). We also continued to develop the sustainability risk assessment and commenced work on defining our strategic climate targets.

United Bankers will be publishing an even more comprehensive sustainability report for 2022 as part of its annual report. The applied reporting framework consists of the sustainability reporting standards defined by the Global Reporting Initiative (GRI). As part of this report, the company will also for the first time be reporting on the climate risks of its operations in accordance with the recommendations of the TCFD. The above-mentioned measures create a solid foundation for the preparation of the company's climate roadmap and the attainment of future carbon neutrality targets.

Enthusiastic and professional employees are at the heart of United Bankers' sustainability. Based on the results of the 2022 employee survey, United Bankers was for the first time awarded the Most Inspiring Workplaces in Finland 2022 award. The company's Board of Directors also approved the diversity targets set for the Group.

I would like to take this opportunity to thank the stellar UB team for once again managing our clients and our clients' assets commendably, operating in exceptional circumstances for the third consecutive year. I would like to extend my gratitude to all our clients, both institutional and private, both Finnish and international, for their unwavering trust in us during this difficult year. I would also like to thank our partners for all your assistance, support and solid expertise, all of which are essential ingredients in providing excellent services and creating first-class customer experiences. The work carried out in 2022 creates a strong foundation for us to continue creating value for our clients and other stakeholders, albeit there is no absolute certainty of the difficult times being behind us just yet. However, the resilience of the real economy in 2022 and the strong recovery in capital markets in recent months are giving rise to hopes that this crisis, too, shall pass as every previous crisis has. Also going forward, uncertainty within the operating environment will not necessarily be synonymous with an adverse business environment, especially when it comes to a wealth manager specialising in real assets.

Financial guidance for 2023

The company estimates its adjusted operating profit to remain close to the level of 2022. The estimate is conditional upon market conditions not significantly weakening.

Board of Directors’ proposal concerning distribution of funds

United Bankers Plc’s result for the financial period 1 January – 31 December 2022 amounted to EUR 7,520,541.47. The company’s distributable assets as at 31 December 2022 were EUR 33.4 million, of which the appropriations of retained earnings are EUR 8.3 million and the distributable funds in the reserve of invested unrestricted equity fund are EUR 25.2 million.

The Board of Directors proposes to the Annual General Meeting of Shareholders that based on the balance sheet adopted for the financial period ended on 31 December 2022, a total dividend of EUR 0.75 per share be paid and an equity repayment of EUR 0.15 per share be paid from the reserve of invested unrestricted equity fund. The total dividend distribution in accordance with the proposal, calculated at the number of shares outstanding at the date of the financial statements, amounts to EUR 7,971,234.00 and the total equity repayment, calculated at the number of shares outstanding at the date of the financial statements, amounts to EUR 1,594,246.80. No dividend or equity repayment shall be payable on treasury shares held by the company.

The Board of Directors proposes that the distribution of funds would be paid in two instalments so that the dividend would be paid in March and the equity repayment in September. The dividend shall be paid to a shareholder who is registered in the company’s shareholders’ register maintained by Euroclear Finland Ltd on the record date for dividend payment, 24 March 2023. The dividend is proposed to be paid out on 31 March 2023. The equity repayment shall be paid to a shareholder who is registered in the company’s shareholders’ register maintained by Euroclear Finland Ltd on the record date for equity repayment, 22 September 2023. The equity repayment is proposed to be paid out on 29 September 2023. The Board of Directors proposes it be authorised, if necessary, to decide on a new equity repayment record date and payment date, if the rules of Euroclear Finland Ltd or the regulations concerning the Finnish book-entry system change or otherwise require it.

No material changes have taken place in the company’s financial position since the end of the financial year. The proposed dividend distribution and equity repayment do not, according to the Board of Directors, endanger the solvency of the company.

Publication of Financial Statements and the Annual General Meeting 2023

Financial Statements, Operating and Financial Review, Remuneration Report and the Corporate Governance Statement of the United Bankers Group will be published in connection with United Bankers’ Annual Report during week 8.

United Bankers Plc’s Annual General Meeting will be held on Wednesday 22 March 2023 at 14.00 in Helsinki. The company delivers a notice on the website www.unitedbankers.fi no later than three weeks prior to the Annual General Meeting. United Bankers Plc’s Half-Year Financial Report for the period of 1 January through 30 June 2023 will be published on or about 25 August 2023.

Press conference

United Bankers will present the result to analysts and press at the company headquarters, Aleksanterinkatu 21 A, 4th floor, 00100 Helsinki today, on Friday 17 February 2023 at 11.30 am in Finnish. It is also possible to participate the press conference virtually. To participate in the event, please sign up in advance to ir@unitedbankers.fi.

For further information, please contact:

Patrick Anderson, CEO, United Bankers Plc
Email: patrick.anderson@unitedbankers.fi

Telephone: +358 400 244 544, +358 9 25 380 236

Katri Nieminen, CFO, United Bankers Plc
Email: katri.nieminen@unitedbankers.fi

Telephone: +358 50 564 4787, +358 9 25 380 349

Investor Relations: ir@unitedbankers.fi

United Bankers in brief:

United Bankers Plc is a Finnish expert on wealth management and investment markets, established in 1986. United Bankers Group’s business segments include wealth management and capital markets services. In asset management, the Group specialises in real asset investments. United Bankers Plc is majority-owned by its key personnel and the Group employs 148 employees (FTE) and 32 agents (31 December 2022). In 2022, the United Bankers Group’s revenue totalled EUR 48.6 million and its adjusted operating profit amounted to EUR 16.6 million. The Group’s assets under management amount to approximately EUR 4.4 billion (31 December 2022). United Bankers Plc’s shares are listed on Nasdaq Helsinki Ltd. The Group companies are subject to the Finnish Financial Supervisory Authority’s supervision. For further information on United Bankers Group, please visit www.unitedbankers.fi.

DISTRIBUTION:

Nasdaq Helsinki

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