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  • United Bankers Plc’s Half-Year Financial Report 1 Jan – 30 June 2022: Positive performance in a difficult market environment – real estate and forest funds supported the company’s profit growth

United Bankers Plc’s Half-Year Financial Report 1 Jan – 30 June 2022: Positive performance in a difficult market environment – real estate and forest funds supported the company’s profit growth

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United Bankers Plc

STOCK EXCHANGE RELEASE 26 August 2022 at 09:00 EEST

 

United Bankers Plc’s Half-Year Financial Report 1 Jan – 30 June 2022: Positive performance in a difficult market environment – real estate and forest funds supported the company’s profit growth

 

This stock exchange release is a summary of the United Bankers’ Half-Year Financial Report 1 Jan – 30 June 2022. The complete Half-Year Financial Report 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–June 2022 in brief

 

  • The Group’s revenue (income from operations) in the review period amounted to EUR 23.4 million (EUR 21.0 million in 1–6/2021), an increase of 11.0%.
  • The Group’s adjusted EBITDA in the review period amounted to EUR 8.4 million (EUR 7.3 million in 1–6/2021), an increase of 15.7% and adjusted operating profit amounted to EUR 7.4 million (EUR 6.4 million in 1–6/2021), an increase of 16.4%.
  • The Group’s operating profit for the review period amounted to EUR 7.4 million (EUR 6.3 million in 1–6/2021), an increase of 18.2% and the profit for the review period amounted to EUR 5.8 million (EUR 4.9 million in 1–6/2021), an increase of 18.1%.
  • Earnings per share were EUR 0.53 (EUR 0.43 in 1–6/2021), an increase of 23.1%.
  • Gross fee income from wealth management increased during the review period to EUR 22.5 million (EUR 18.8 million), a growth of 19.7% from the comparison period. Gross fee income from capital markets services amounted to EUR 1.1 million (EUR 1.8 million), decreasing by 40.8%.
  • Assets under management decreased to EUR 4,626 million (EUR 4,800 million on 31 December 2021), decreasing by 3.6%.
  • In the challenging market environment, United Bankers’ funds received positive net subscriptions in the amount of EUR 71.3 million.
  • Despite the poor performance of the investment market, the wealth management business segment continued to evolve positively. Particularly the favourable return performance of forest and real estate funds, as well as the continued strong demand for same supported the growth of the fee income generated by the funds.
  • The EBITDA of wealth management segment for the review period grew to EUR 9.4 million (EUR 6.9 million 1–6/2021), an increase of 36.4%.
  • The result of the Group’s capital markets services segment decreased from the comparison period, with economic uncertainty hampering the activity level in the market.
  • The cost-to-income ratio improved from the comparison period to 0.67 (0.69).
  • Guidance for 2022: Albeit market outlook remains uncertain for the end of the year, the company reiterates its guidance concerning the operating profit announced in its Financial Statements Release on 18 February 2022. Supported by positive development at the beginning of the year the company estimates that its operating profit for 2022 will remain close to the level of 2021.

 

Consolidated Key Figures (The figures are presented in more detail in the appendix of the half-year financial report)

 

1-6/2022

1-6/2021

change %*

1-12/2021

Key Income Statement Figures

 

 

 

 

Revenue, MEUR

23.4

21.0

11.0

43.8

Adjusted EBITDA, MEUR

8.4

7.3

15.7

16.3

Adjusted operating profit, MEUR

7.4

6.4

16.4

14.4

Adjusted operating profit, % of revenue

31.8

30.3

 

32.9

Operating profit, MEUR

7.4

6.3

18.2

14.3

Profit for the period, MEUR

5.8

4.9

18.1

11.2

Profitability

 

 

 

 

Return on Equity (ROE), %

28.4

18.9

 

26.9

Return on Assets (ROA), %

17.0

12.0

 

16.4

Key Balance Sheet Figures

 

 

 

 

Equity ratio, %

63.5

59.8

 

56.7

Capital adequacy ratio, %

25.7

26.6

 

24.9

Key Figures Per Share

 

 

 

 

Earnings per share, EUR

0.53

0.43

23.1

1.00

Earnings per share, EUR (diluted)

0.52

0.43

22.0

0.98

Equity per share, EUR

3.82

3.64

 

4.19

Dividend per share**

 

 

 

0.80**

Other Key Figures

 

 

 

 

Cost-to-income ratio

0.67

0.69

 

0.66

Asset under management at the end of the period, MEUR

4,626

4,194

-3.6

4,800

Number of clients at the end of the period

14,200

13,600

 

14,100

Personnel at the end of the period (FTE)***

149

137

 

137

 

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

** 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 to celebrate United Bankers’ 35th anniversary.

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

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 half-year financial report.

 

Group revenue and profit performance for January-June 2022

(comparison figures 1-6/2021)

Once again, United Bankers’ strategy focusing on real asset investment solutions proved itself in the early part of 2022 and the Group managed to increase its revenue and adjusted operating profit despite the extremely challenging market environment. During the review period, the revenue of the United Bankers Group (income from operations) increased to EUR 23.4 million (EUR 21.0 million), entailing an increase of 11.0 per cent from the comparison period. The Group’s adjusted EBITDA for the review period increased by 15.7 per cent to EUR 8.4 million (EUR 7.3 million). The adjusted operating profit increased to EUR 7.4 million (EUR 6.4 million), with an increase of 16.4 per cent from the comparison period. The Group’s operating profit amounted to EUR 7.4 million (EUR 6.3 million) and it increased by 18.2 per cent from the comparison period in the preceding year. Earnings per share amounted to EUR 0.53 (EUR 0.43).

The percentage of income from funds out of all of the fee income of the Group continued to rise. Net income from funds already accounted for 86 per cent of the net fee income of the wealth management business and 82 per cent of the entire net fee income within the Group. The amount of management fees increased, even though fund capitals as a whole decreased somewhat from the level at the turn of the year. The underlying reason for this was the transfer of capitals to funds more profitable for the company, particularly into real estate and forest funds. Indeed, their capitals increased by over one third from the comparison period. A considerable portion of management fees accrued specifically from real estate and forest funds.

The positive results performance of the wealth management business was also impacted by the strong growth in the fund performance fees. In the difficult market environment, real estate and forest funds offered positive returns while simultaneously the returns from the equity and fixed-income markets on average remained markedly negative in the first part of the year. The fees from asset management, including discretionary asset management, decreased to a level slightly below the preceding year, while in relation to structured investment products, the market conditions were more favourable for the issuance of new products, and the fee income received from same increased during the review period.

The revenue and profit of the capital markets services segment declined relative to the strong comparison period, as the uncertain market conditions were reflected in the service demand. Furthermore, the dwindling operations of UB Finance Ltd, providing an online corporate lending platform, continued to impair the profitability of the business segment.

As a whole, the company’s expenditure increased from the comparison period. Administrative costs, including personnel and other administrative costs, amounted to a total of EUR 12.0 million (EUR 10.6 million), a growth of 13.2 per cent. Personnel costs increased by 5.5 per cent from the comparison period, to EUR 8.6 million (EUR 8.2 million). The personnel costs increased particularly as a result of an increase in fixed salaries, with variable salaries decreasing from the comparison period. The number of personnel, converted into full-time employees, increased and amounted to 149 persons at the end of June (137 persons as at 31 December 2021). Of this number, a total of 9 persons were fixed-term personnel (8 persons as at 31 December 2021).

United Bankers’ investments in building its international sales network and launching the operations of its private equity fund investing in the forestry sector are reflected in the growth of both personnel and other costs. These investments that support future growth are expected to generate income flows starting from the latter part of the year. In the spring, United Bankers renewed its online services where customers can follow the performance of their investment portfolios and do electronic transactions. An extensive technical reform was conducted within the service, enabling the increasingly efficient and flexible further development of the service. United Bankers is continuing to further develop its IT systems and digital services, with the aim of optimising business operations and creating first-class client experiences. The company is also continuing with its work in the sphere of sustainable investment regulation and advancing the responsibility of funds. The cost-to-income ratio improved from the comparison period to 0.67 (0.69).

 

CEO’s review

Patrick Anderson

The start of the year 2022 turned our sights from the pandemic towards a cruel war in the middle of Europe. The barbaric attack on Ukraine was a shock to the entire civilized world and we have for our part, both as a company and as individuals, sought to support the Ukrainians amidst the war. Alongside immeasurable human suffering, the war has major political and economic impacts. During the first part of the year, the equity and fixed-income markets declined severely, while inflation, propelled particularly by energy prices, soared to its highest level in decades. Interest rate hikes by central banks, the gradual abatement of the expansionary monetary policy and real interest rates plummeting ever deeper below zero are an actual fact. For European wealth management companies, this new operating environment has on average been fairly challenging.  Alongside a discernible decline in asset values, equity and fixed income wealth managers have witnessed exceptionally sizeable redemptions. From funds registered in Finland alone, more than EUR 3.2 billion worth of assets were redeemed in the first part of the year. For wealth management companies offering alternative solutions, on the other hand, the novel operating environment has offered opportunities for growth – both in relative and in absolute terms. Indeed, for United Bankers, the first part of the year 2022 marked the second-best half-year period over its operating history of 35 years and the best first part of the year ever. Bearing in mind the exceptional circumstances, this is a great achievement. Our business is no longer fluctuating alongside stock market, as it did back in the days, instead it today correlates increasingly with the performance of the real estate and timberland markets.

The revenue of the United Bankers Group increased in the first part of the year by 11.0 per cent, to EUR 23.4 million. Our adjusted operating profit, in turn, increased by 16.4 per cent, to EUR 7.4 million, and earnings per share grew by 23.1 per cent, to EUR 0.53.  Our cost-to-income ratio improved to 0.67 (0.69). In the wealth management segment, net fee income increased by 24.2 per cent, to EUR 20.0 million, with the EBITDA increasing by 36.4 per cent, to EUR 9.4 million. The net fee income of the capital markets services segment, in turn, declined by 37.6 per cent, to EUR 1.0 million, with the EBITDA plunging by 86.2 per cent, to EUR 0.1 million. Even amidst the uncertainty, we succeeded in gaining net subscriptions totalling EUR 71.3 million for our funds, but our assets under management decreased, nevertheless, owing to the adverse market environment of the first part of the year, by 3.6 per cent, to EUR 4.6 billion. Despite the decline in assets under management, the net income from funds increased by 28.6 per cent from the comparison period. The proportion of real asset funds from the fund capital also reached a new record, increasing from 60 per cent to 67 per cent.

In spite of the colossal redemptions within the Finnish fund market, our clients swam upstream and increased their investments both in our funds and in our asset management, amidst the turmoil. Both real estate and forest offered our clients predictable positive returns during the review period, which was rewarded with positive net subscriptions worth a total of EUR 145 million in these two fund families. Indeed, the evolution of assets under management has been positive specifically in our real estate and forest funds offering returns steadier than the equity market. The amount of the assets invested in these funds increases the potential for performance fees going forward, but also reduces the fluctuation of the key figures of our company thanks to the growing management fees. All and all, our strategic focus on real assets signified, in addition to growing customer demand, growth both in the company’s revenue and in its profitability.

Real asset investment solutions comprise one of the most profitable segments of the company’s wealth management business. Alongside the development that has remained strong, they also provide the company’s business operations exceptionally good built-in protection against inflation. With inflation elevating real asset values, this entails a growth both in the returns received by our clients and in the performance fees accrued by the company.

Also the company’s expenditure increased during the first part of the year. In addition to the growth in the number of personnel, costs were increasingly incurred during the first part of the year also from investments in internationalization, our new private equity fund, as well as responsibility. These investments are expected to generate new cash flows as of the second half of the current year. Thanks to the positive development of the company’s business in the first part of the year, our near-future outlook remains stable, and we are not making any changes to the financial guidance for the entire year concerning the level of the company’s adjusted operating profit: We continue to estimate, as we did in February, that our adjusted operating profit will remain somewhere close to the record-breaking level of 2021.

I would like to extend my gratitude to United Bankers’ clients and shareholders for their enduring trust also in the current year. I am also incredibly thankful to our highly committed UB team for going out of their way for our clients. The efforts we have exerted in the first part of 2022 have laid down an excellent foundation for continuing to create value for our clients and other stakeholders, as well as for ensuring the continued profitable growth of our company for the remainder of the year and in the years to come.

 

Financial guidance

Albeit market outlook remains uncertain for the end of the year, the company reiterates its guidance concerning the operating profit announced in its Financial Statements Release on 18 February 2022. Supported by positive development at the beginning of the year the company estimates that its operating profit for 2022 will remain close to the level of 2021.

Financial statements release

The financial statements release of the United Bankers Group for the financial period 2022 will be published on or about 17 February 2023 and will be available on the company’s website under the “Investors” section at www.unitedbankers.fi.

 

Press conference

Result presentation to analysts and press will be held at the company headquarters, Aleksanterinkatu 21 A, 4th floor, 00100 Helsinki on Friday 26 August 2022 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
patrick.anderson@unitedbankers.fi
Tel. +358 400 244 544, +358 9 25 380 236

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 specializes in real asset investments. United Bankers Plc is majority-owned by its key personnel and the Group employs 149 employees (FTE) and 31 agents (30 June 2022). In 2021, the United Bankers Group’s revenue totalled EUR 43.8 million and its adjusted operating profit amounted to EUR 14.4 million. The Group’s assets under management amount to approximately EUR 4.6 billion (30 June 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

Main media

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