aktia bank plc interim report january - june 2013
TRANSCRIPT
april-junE 2013: OpEraTinG prOFiT Eur 14.0 (13.0) milliOn
• TheBankGroup’soperatingprofitimprovedtoEUR14.0(13.0)million.• ProfitfortheperiodtotalledEUR10.5(9.8)million.• EarningspersharestoodatEUR3.4(3.2)million.• NetinterestincometotalledEUR28.1(29.5)million.• Write-downsoncreditsandothercommitmentsdecreasedby56%toEUR0.4(1.0)million.
january-junE 2013: OpEraTinG prOFiT Eur 29.4 (25.4) milliOn
• TheBankGroup’soperatingprofitamountedtoEUR29.4(25.4)million.• ProfitfortheperiodtotalledEUR22.2(18.9)million.• EarningspersharestoodatEUR7.3(6.1)million.• Thecapitaladequacyratiostoodat20.3(31December2012;20.2)%andtheTier1capitalratioat12.1(11.8)%.
EquitypersharestoodatEUR134.1(31December2012;141.3)million.• NetinterestincometotalledEUR57.9(59.0)million.• Write-downsoncreditsandothercommitmentsdecreasedby46%toEUR1.5(2.8)million.• OUTLOOK(unchanged):Despitetheprobablypersistentlowinterestratelevel,andone-offcostsfromimplementingthePlanofAction2015,the
Group’soperatingprofitfor2013isexpectedtoreachapproximatelythe2012level.
KEY FIGURES(EUR million) 4-6/2013 4-6/2012 ∆ % 1-6/2013 1-6/2012 ∆ % 1-3/2013 2012Netinterestincome 28.1 29.5 -5% 57.9 59.0 -2% 29.8 116.5Totaloperatingincome 48.5 46.6 4% 97.2 92.3 5% 48.7 183.4Totaloperatingexpenses -34.1 -32.3 6% -66.5 -63.6 5% -32.4 -136.0Operatingprofitbeforewritedownsoncredits 14.5 13.9 4% 31.0 28.3 10% 16.5 45.1Write-downsoncreditsandothercommitments -0.4 -1.0 -56% -1.5 -2.8 -46% -1.1 -6.4Operatingprofit 14.0 13.0 8% 29.4 25.4 16% 15.4 38.8
Cost-to-incomeratio 0.70 0.69 1% 0.68 0.69 -1% 0.67 0.74
Earningspershare(EPS),EUR 3.4 3.2 6% 7.3 6.1 19% 3.9 7.8
Equitypershare(NAV)1),EUR 134.1 127.5 5% 134.1 127.5 5% 134.9 141.3
Returnonequity(ROE),% 8.9 8.8 2% 9.3 9.2 1% 9.8 5.6
Capitaladequacyratio1)% 20.3 18.9 8% 20.3 18.9 8% 20.0 20.2
Tier1capitalratio,%1) 12.1 11.7 3% 12.1 11.7 3% 11.7 11.81)Attheendoftheperiod
The Interim Report January-June 2013 is a translation of the original Swedish version ”Delårsrapport 1.1-30.6.2013”. In case of discrepancies, the Swedish version shall prevail.
Aktia Bank plc Interim Report January - June 2013
nEW parEnT COmpany FOr ThE aKTia GrOup
As from 1 July 2013, Aktia Bank plc is the new listed parent company for the Aktia Group. The former parent company of the Aktia Group, Aktia plc, merged with its subsidiary on 1 July 2013 and was de-listed from the NASDAQ OMX Helsinki exchange. The activities carried out by Aktia Bank plc after the merger are the same and equivalent to the totality operated by Aktia plc up to 30 June 2013. To gain an overall picture of the Aktia Group’s profits and financial position in the period January-June 2013, this interim report should be read alongside Aktia plc’s interim re-port for January-June 2013.
Årsredovisning 2011 1
Profit April - June 4-6/2013
TheBankGroup’soperatingprofitamountedtoEUR14.0(13.0)million.
Income
TheBankGroup’stotalincomeamountedtoEUR48.5(46.6)million.NetinterestincomefromtheBank’sborrowingandlendingamountedtoEUR10.0(15.0)millionandtotalnetinterestincomeamountedtoEUR28.1(29.5)million.Bothderivativesandfixed-rateinstrumentsareutilisedtomanageinterestraterisks.ThesehedgingmeasuresusedbyAktiaBanktolimititsinterestrateriskbroughtnetinterestincomeofEUR10.9million,EUR3.7millionmorethantheyearbefore.NetinterestfromothertreasuryactivitieswasEUR7.2(7.2)million.
Netcommissionincomeincreasedby12%toEUR17.5(15.6)million.Com-missionincometotalledEUR22.4(19.6)million.Cardandotherpaymentservicecommissionsincreasedby4%toEUR4.7(4.5)million.
NetincomefromfinancialtransactionswasEUR1.9(0.2)million,includingadividendofEUR2.0millionfromSuomenLuotto-osuuskuntaarisingfromthesaleofitssubsidiaryNetsOy.
NetincomefromhedgeaccountingwasEUR-0.5(1.3)million.OtheroperatingincomewastoEUR0.8(1.3)million.
Expenses
TheBankGroup’soperatingexpensesincreasedby6%toEUR34.1(32.3)million.Ofthis,staffcostsamountedtoEUR12.6(13.5)million,adecreaseof7%.
TheinvestmentsinmodernisingAktia’sITsystemsincreasedITcoststoEUR6.7(5.3)million.OtheroperatingexpensesincreasedtoEUR14.1(12.7)mil-lion.Inthesecondquarter,thecostofbanktaxcametoEUR0.6million.
Segment overview
Group operating profit by segment
(EUR million) 4-6/2013 4-6/2012 ∆ % BankingBusiness 9.9 12.3 -20%AssetManagement 3.1 2.0 56%Miscellaneous 1.3 -1.3 -Eliminations -0.2 0.0 -Total 14.0 13.0 8%
OperatingprofitfortheBankingBusinesssegmentdecreasedtoEUR9.9(12.3)millionasaresultofhighercosts.OperatingprofitfortheAssetMa-nagementsegmentrosetoEUR3.1(2.0)million.
Aktia plc and Aktia Bank plc merged with effect from 1 July 2013
TheformerparentcompanyoftheAktiaGroup,Aktiaplc,mergedwithitswholly-ownedsubsidiaryAktiaBankplcon1July2013.Followingthemerger,AktiaBankplchasbecometheparentcompanyoftheGroup.ThemergerispartoftheAktiaGroup’sPlanofAction2015,whichaimstosimplifythestructureoftheGroupandincreasecost-effectivenesswithinadministration,processesandcommonfunctions.
Atthetimeofthemerger,shareholdersinAktiaplcreceivedAktiaBankplc’snewlyissuedAandRsharesinconsideration.AnAshareinAktiaplcentitledtheholdertoanewAshareinAktiaBankplcandanRshareinAk-tiaplcentitledtheholdertoanewRshareinAktiaBankplc.Theconside-rationwaspaidbyregisteringthenewly-issuedsharesinAktiaBankplcintheFinnishTradeRegisterandallocatingthemasbook-entrysecuritiesinthebook-entrysystemmaintainedbyEuroclearFinlandOy.Thesharehol-ders’rightsfortheconsiderationsharestookeffectfrom1July2013.Afterthecompletionofthemerger,AktiaBankplc’ssharecapitalcomprisesatotalof46,706,723Asharesand19,872,088Rshares.
ThemergercausednodirectchangesintheAktiaGroup’soperations.ThestaffofthemergedparentcompanyhavetransferredtoAktiaBankplc.
TheorganisationalstructureofAktiaBankplccorrespondstothatofAktiaplcbeforethemerger.ThenewlyappointedBoardofSupervisorsofAktiaBankplctookupitsdutieson1July.
Effect of the merger on the Group’s financial positionAsaresultofthemerger,theBankGroup’sbalance-sheettotalasof1July2013increasedbyEUR1,050milliontoEUR11,359million.Newsubsidia-rieswithintheBankGroupareAktiaLifeInsuranceLtd,AktiaKiinteistönväli-tysOyandVasp-InvestOy,andtheassociatedcompanyFolksamNon-LifeInsuranceCompanyLtd.ThechangesinAktiaBankplc’sbrought-forwardbalance-sheetasof1July2013arepresentedinNote8onpage27oftheinterimreport.
AsaresultofthemergerandthefactthatAktiaBankplchasbecometheparentcompanyoftheGroup,theBankGroup’sequityasof1July2013increasedbyEUR152.8milliontoEUR620.0million.ThepositivedifferenceofEUR53.9millionfromthemerger,whicharosefromconsolidatingAk-tiaplc’sassetsandliabilities,waspostedasanincreaseinAktiaBankplc’sequity.ThechangesintheBankGroup’sequityarepresentedonpage14oftheinterimreport.
ThenewGroupstructure,withAktiaBankplcastheparentcompanyfortheGroup’sinsuranceoperationsalso,affectedtheBankGroup’scapitaladequacyasof1July2013by-0.9percentagepoints.Asthenewparentcompany,AktiaBankplcwillswitchovertothesamesegmentstructurethatAktiaplchadinitsGroupreportingasfrom1July2013.ThefuturesegmentsareBankingBusiness,AssetManagement&LifeInsuranceandMiscellaneous.
profit april - june 2013
2 Aktia Aktia 3
Business environment
Generalinterestratelevelsremainedlowduringtheperiod,whichhashadanegativeimpactonAktia’snetinterestincome.LowinterestrateshaveresultedinhighervaluesforAktia’sfixed-rateinvestments.
AccordingtoStatisticsFinland,inflationeasedto1.4%inJune.InMay,infla-tionwas1.6%andinApril1.5%.InJune2012,inflationstoodat2.8%.
TheindexofconsumerconfidenceintheeconomystrengthenedinJunetoreach8.1(5.8),butfellto5.0(0.1)duringthefirstweeksinJuly.InMayitstoodat5.0(12.0)andinAprilat6.4(10.4).Thelong-termaveragewas12.4.(Statistics Finland)
RealestatepricesinFinlandroseupuntilJune2013by0.7%forthewholecountry,comparedwiththesameperiodin2012.Pricesincreasedby2.6%intheHelsinkiregion,whereastheyfellby0.8%inotherpartsofFinland.Householddebthasrisenmuchfasterthanincomesinrecentyears.Thedebt-equityratioofFinnishhouseholds,i.e.debtinrelationtodisposableincome,stoodat118.8%attheendof2012,comparedto65.1%atthebeginningofthe2000s.(StatisticsFinland).However,thelowinterestratesoverthelastfewyearsallowaconsiderablyhigherlevelofdebtthanbe-forewithoutoverloadingtheabilityofhouseholdstopay.
Unemploymentstoodat7,8%inJune2013,0.1percentagepointslessthanayearago.(StatisticsFinland).
TheNasdaqOMXHelsinki25indexfellby3%intheperiodJanuarytoJune2013.AktiasAsharesroseby14%inthesameperiod.
Key figuresY-o-y, % 2014E* 2013E* 2012GDP growthWorld 3.9 3.2 3.2Euroarea 1.1 -0.6 -0.6Finland 1.6 -0.2 -0.2Consumer price indexEuroarea 1.7 1.6 2.5Finland 2.4 2.2 2.8Other key ratiosDevelopmentofrealvalueofhousinginFinland1 0.0 0.0 3.7UnemploymentinFinland2 8.2 8.4 7.7OMXHelsinki25 - - 11.0Interest rates1
ECB 1.00 0.50 0.7510-yInterestGer(=benchmark) 2.50 2.00 1.32Euribor12months 1.90 1.10 0.54Euribor3months 1.25 0.30 0.19*Aktia’schiefeconomist’sprognosis(4June2013)1attheendoftheyear2annualaverage
Rating
On2July2013,StandardandPoor’sconfirmeditsratingofAktiaBankplc’screditworthiness.Theratingforlong-termborrowingisA-andforshort-termborrowingA2,bothwithanegativeoutlook.
On23April2013,Moody’sInvestorsServiceconfirmeditsratingofAktiaBankplc’screditworthinessforlong-termborrowingasA3,short-termbor-rowingasP-2andfinancialstrengthasC-.Theoutlookfortheseratingsremainednegative.
On25April2013,AktiaBankendeditsratingagreementwithFitch,andonthesamedayFitchaffirmedAktiaBankplc’sratingforcreditworthiness(long-termborrowingBBB+,short-termborrowingF2),bothwithanup-gradedstable(negative)outlook.
Long-term borrowing
Short-term borrowing Outlook Updated
Moody’sInvestorsService A3 P-2 neg 23.4.2013Standard&Poor’s A- A-2 neg 2.7.2013
activity in january - june 2013
2 Aktia Aktia 3
Plan of Action 2015
On8November2012,Aktia’sBoardofDirectorsdecidedtointroduceaplanofactionandupdatedthefinancialobjectivesfortheperiodupuntil2015.Theupdateismotivatedbythenewbusinessclimate,whichischa-racterisedbyextremelylowinterestratesandnewregulations.ThePlanofAction2015includesseveralindividualmeasuresandwillberealisedinphasesthroughto2015.Aktiaisinvestinginanup-to-datecorebankingsystem.Theinvestment,includingmigrationfromthelegacysystem,correspondstooneyearofITcostsforAktia,orapproximatelyEUR25million.Thenewcorebankingsys-temwillresultinmoreefficientprocessesandtangiblesavingsinvariablecostsforIT.Thenewsystemisexpectedtobereadyforusein2015.
TheroleasacentralcreditinstitutionfollowingthenewBaselIIIregulationwouldbeasignificantburdenforAktia,intermsofbothprofitandliquidity.Aktiawillphaseouttheseservices,concludingthematthebeginningof2015.
AktiaBankplcdisposedofitsholding(25.8%)inACHFinlandOy.
AktiaBankwasgrantedamortgagebankconcessioninMarch,andissueditsfirstcoveredbondstothevalueofEUR500millioninJune2013.
AktiaplcmergedwithAktiaBankplcasof1July2013.AspartofthePlanofAction2015,theGrouphasmadeorganisationalchanges,andsince1Ja-nuary2013anewsegmentstructureapplies.Continuingoperationscoverthefollowingthreesegments:BankingBusiness,AssetManagement&LifeInsuranceandMiscellaneous.
Duringtheperiod,AktiaBankmodernisedtheITsystemforcreditcardservices.
Profit January - June 2013
TheBankGroup’soperatingprofitimprovedby16%onthesameperiodtheyearbefore,toEUR29.4(25.4)million.TheBankGroup’sprofittotalledEUR22.2(18.9)miillion.
Income
TheBankGroup’stotalincomeincreasedby5%toEUR97.2(92.3)million.
Despitelowmarketinterestrates,totalnetinterestincomewasstableandstoodatEUR57.9(59.0)million.
Bothderivativesandfixed-rateinstrumentsareutilisedtomanageinterestraterisks.Thesehedgingmeasures,whichareusedbyAktiaBanktolimititsinterestraterisk,broughtnetinterestincomeofEUR22.0(14.4)million.
Netcommissionincomeincreasedby11%till33.3(30.0)million.Commis-sionincomefrommutualfunds,assetmanagementandsecuritiesbroker-ageincreasedby16%toEUR22.5(19.4)million.CardandotherpaymentservicecommissionsfelltoEUR8.8(8.9)million.
NetincomefromfinancialtransactionswasEUR4.1(0.5)million.AktiaBankreceivedanextradividendofEUR2.0millionfromSuomenLuotto-osuus-kuntaforitssharesinthatcompanyasaresultofLuotto-osuuskunta’ssaleofitsshareholdinginNetsOy(formerlyLuottokuntaOy).
OtheroperatingincomewasEUR1.7(2.9)million.
Expenses
TheBankGroup’soperatingexpensesincreasedby5%toEUR66.5(63.6)million.Ofthis,staffcostsamountedtoEUR25.8(26.7)million.ITcostsincreasedby13%toEUR11.5(10.2)million.Theincreasecomesmostlyfromthemodernisationofthecorebankingsystem.
Otheroperatingexpensesincreasedby11%toEUR27.9(25.1)million.Anewcostincurredfrom2013isthebanktaxleviedonFinnishdepositbanks,tobepaidfrom2013-2015.Forthefirsthalf-year,thecostofbanktaxcametoEUR1.2million.
Depreciationoftangibleandintangibleassetsdecreasedby19%toEUR1.3(1.6)million.
Segment overviewAktiaBankplc’soperationsaredividedintothreesegments:BankingBusiness,AssetManagementandMiscellaneous.
Group operating profit by segment
(EUR million) 1-6/2013 1-6/2012 ∆ % BankingBusiness 24.5 23.6 3%AssetManagement 6.0 4.3 39%Miscellaneous -0.8 -1.8 53%Eliminations -0.2 -0.7 78%Total 29.4 25.4 16%
Write-downs on credits and other commitments
Duringthefirsthalf-year,write-downsoncreditsandothercommitmentsdecreasedby46%toEUR1.5(2.8)million.
Balance sheet and off-balance sheet commitments
TheBankGroup’sbalancesheettotalamountedtoEUR10,310(10,216)million.
Liquidity
TheBankGroup’sliquidityportfolio,whichconsistsofinterest-bearingse-curities,amountedtoEUR2,489(1,852)million.TheliquidityportfoliowasfinancedwithrepurchaseagreementstoavalueofEUR41(107)million.Inadditiontothis,theBankholdsotherinterest-bearingsecuritiestoavalueofEUR10(10)million.
AttheendofJune,theBankGroup’sliquiditybuffercoveredapproximately21monthsofmaturingwholesalefunding.
Borrowing
DepositsfromthepublicandpublicsectorentitieswasstableatEUR3,827(3,651)million,correspondingtoamarketsharedepositsof3.6(3.4)%.
Maturingcoveredbondsandcertificatesofdepositincreasedby4.2%toEUR3,697(3,548)million.OfthesebondsEUR2,821(3,104)millionwereco-
4 Aktia Aktia 5
veredbondsissuedbytheAktiaRealEstateMortgageBankplc.Duringtheperiod,AktiaBankplcissueditsfirstlong-termcoveredbondsatavalueofEUR500million.Assecurityfortheissue,loansinthevalueofEUR722millionwerereservedattheendofJuly,allwithaloan-to-valueratiobelow70%ofthemarketvalueofthesecuritiesinaccordancewiththeMortgageBankAct.
OutstandingAktiaBankplccertificatesofdepositamountedtoEUR391millionattheendoftheperiod.Duringtheperiod,AktiaBankplcissuednewsubordinatedloanswithatotalvalueofEUR49million.Duringtheperiod,AktiaBankalsoissuedlong-termcollateralisedbonds(‘Schuldsche-indarlehen’)atavalueofEUR50million.
Lending
TheBankGroup’stotallendingtothepublicamountedtoEUR7,031(7,248)millionattheendofJune,adecreaseofEUR217million.
Loanstoprivatehouseholds,includingmortgagesbrokeredbysavingsbanksandPOPBanks,accountedforEUR6,064(6,222)millionor86.2(86.4)%ofthetotalloanstock.
ThehousingloanstocktotalledEUR5,700(5,850)million,ofwhichtheshareforhouseholdswasEUR5,331(5,458)million.AttheendofJune,Aktia’smarketshareofhousingloanstohouseholdsstoodat4.2(4.3)%.
Corporatelendingaccountedfor9.5(9.8)%ofAktia’screditstock.Totalcor-poratelendingamountedtoEUR667(713)million.
LoanstohousingassociationstotalledEUR257(270)millionandmadeup3.7(3.8)%ofAktia’stotalcreditstock.
Credit stock by sector
(EUR million) 30.6.2013 31.12.2012 ∆ Share, %
Households 6,064 6,222 -158 86,2%Corporate 667 713 -46 9,5%Housingassociations 257 270 -13 3,7%Non-profitorganisa-tions 40 39 1 0,6%Publicsectorentities 4 4 0 0,1%Total 7,031 7,248 -217 100%
Equity
TheBankGroup’sequityattheendoftheperiodtotalledEUR467(489)mil-lion.
Commitments
Off-balancesheetcommitmentsamountedtoEUR335(346)million.
Capital adequacy and solvency
TheBankGroup’scapitaladequacyratiostoodat20.3(31.12.2012;20.2)%andtheTier1capitalratioat12.1(11.8)%.TheBankGroupincludesAktiaBankplcandAktiaRealEstateMortgageBankplc.
AktiaBankplc’scapitaladequacyratiostoodat26.6%comparedto28.1%attheendof2012.TheTier1capitalratiowas15.5(16.1)%.
Capitaladequacyforthebankingbusinessiscurrentlycalculatedusingthestandardmodelforcreditrisk.AnIRBA(InternalRiskBasedApproach)applicationfortheGroup’sretailexposurewassubmittedinAugust2011andiscurrentlybeingprocessedbytheFinancialSupervisoryAuthority.ApplicationoftheIRBAmethodwouldraisetheTier1capitalratiobyatleast4percentagepoints.
Capital adequacy 30.6.2013 31.12.2012Banking Group
Capitaladequacy 20.3% 20.2%
Tier1ratio 12.1% 11.8%Aktia Bank
Capitaladequacy 26.6% 28.1%
Tier1ratio 15.5% 16.1%
Aktia Real Estate Mortgage BankCapitaladequacy 11.3% 11.3%
Tier1ratio 10.6% 9.7%
The Group’s risk exposure
DefinitionsandgeneralprinciplesforassetandriskmanagementcanbefoundinAktiaBankplc’sAnnualReportfor2012innoteG2onpages25-45.
ThebankingbusinessincludesRetailBankingincludingfinancingcom-panyoperations,TreasuryandAssetManagement.
Lending related risks within banking business
Loanswithpayments3–30daysoverduedecreasedtoEUR129(133)mil-lion,equivalentto1.83(1.83)%ofthecreditstock.Loanswithpayments31–89daysoverduedecreasedtoEUR45(51)million,or0.63(0.71)ofthecreditstock.
Non-performingloansmorethan90daysoverdue,includingclaimsonbankruptcompaniesandloansforcollectiondecreasedtoEUR48(50)mil-lion,correspondingto0.67(0.68)%ofthecreditstock.Thecreditstockalsoincludesoff-balancesheetguaranteecommitments.
Non-performingloanstohouseholdsmorethan90daysoverduecorre-spondedto0.43(0.45)%oftheentirecreditstockand0.50(0.53)%ofthehouseholdcreditstock. Non-performing loans by time overdue
(EUR million)Days 30.6.2013
% of credit stock 31.12.2012
% of credit stock
3-30 129 1.83 133 1.83
ofwhichhous-eholds 115 1.63 117 1.61
31-89 45 0.63 51 0.71
ofwhichhous-eholds 41 0.58 42 0.58
90-1 48 0.67 50 0.68
ofwhichhous-eholds 30 0.43 33 0.45
1inAktiaBankfairvalueoftheassetcoversinaverage96%ofdebts
4 Aktia Aktia 5
Write-downs on credits and other commitments
Inthefirsthalf-year,totalwrite-downsoncreditsandothercommitmentsdecreasedbyEUR1.3millioncomparedtothesameperiodlastyear,tostandatEUR1.5(2.8)million.Ofthesewrite-downs,EUR0.3(0.7)millionwereattributabletohouseholds,andEUR1.2(2.1)milliontocompanies.
Totalwrite-downsoncreditsamountedto0.02(0.04)%oftotallendingfortheperiod.Thecorrespondingimpactoncorporateloansamountedto0.2(0.3)%ofthetotalcorporatelending.
Distribution of risk across financial assets
TheBankGroup’sliquidityportfolioactsasabufferagainstshort-termfluctuationsinliquidity.Fixed-rateinvestmentsintheliquidityportfolioarealsousedtoreducethestructuralinterestraterisks.TheliquidityportfolioisfinancedwithrepurchaseagreementstoavalueofEUR41(107)million.
The Bank Group’s liquidity portfolio and other interest-bearing investments
InvestmentswithintheliquidityportfolioandtheBankGroup’sotherinte-rest-bearinginvestmentsincreasedfromtheyear-endbyEUR637million,andamountedtoEUR2,499(1,862)million.Duringtheperiod,investmentsinGIIPScountriesdecreasedbyEUR126millionasplanned,andamountedtoanominalEUR47(173)million.
Rating distribution for banking business’ liquidity portfolio and other fixed income assets
30.6.2013 31.12.2012
(EUR million) 2,499 1,862Aaa 55.6% 64.5%Aa1-Aa3 21.6% 19.1%A1-A3 15.6% 8.9%Baa1-Baa3 0.4% 3.7%Ba1-Ba3 0.8% 1.5%B1-B3 0.0% 0.0%
Caa1orlower 0.0% 0.0%
Finnishmunicipalities(norating) 2.9% 2.2%
Norating 3.1% 0.0%
Total 100.0% 100.0%
Attheendoftheperiod,alllong-termcoveredbondsintheBankGroup’sliquidityportfoliometeligibilityrequirementsforrefinancingatthecen-tralbank.Interest-bearinginvestmentswithoutaratingconsistentirelyofshort-termdomesticcommercialpapers,andastheissuerlacksarating,theydonotmeettheeligibilityrequirementsforrefinancingatthecentralbank.
Aktia Bank Group
Government and Govt. guaranteed
Covered Bonds (CB)
Financial institutions
exkl. CBCorporate
bonds Real estateAlternative
investments Equity Total6/2013 2012 6/2013 2012 6/2013 2012 6/2013 2012 6/2013 2012 6/2013 2012 6/2013 2012 6/2013 2012
EU AAA 101 75 1,073 798 398 226 96 - - - - - - - 1,669 1,098
Finland 89 59 165 117 92 43 96 - - - - - - - 442 218OtherAAA-countries 12 16 908 681 307 182 - - - - - - - - 1,227 880EU < AAA 40 - 314 443 77 5 - - - - - - - - 430 448France* - - 266 270 77 5 - - - - - - - - 344 275Belgium 40 - - - - - - - - - - - - - 40 -Greece - - - - - - - - - - - - - - - -Ireland - - 16 - - - - - - - - - - - 16Italy - - 47 47 - - - - - - - - - - 47 47Portugal - - - 56 - - - - - - - - - - - 56Spain - - - 54 - - - - - - - - - - - 54Othercountries - - - - - - - - - - - - - - - -EuropeexcludingEU - - 212 238 17 20 - - - - - - - - 229 258NorthAmerica - - 12 12 - - - - - - - - - 12 12OtherOECD-countries - - - - - - - - - - - - - - -Supranationals - - - - 159 45 - - - - - - - - 159 45Others - - - - - - - - - - - - - - - -Total 141 75 1,610 1,490 652 297 96 - - - - - - - 2,499 1,862
*FrancefellbelowAAAduring2012
6 Aktia Aktia 7
Exposure in GIIPS countries
TheBankGroup’sinvestmentsintheso-calledGIIPScountriescontinuedtodecreaseduringthefirsthalf-yearaccordingtoplan,andasof30June2013totalledEUR59(189)million.ThetotalunconvertedresultamountedtoEUR1.4(-0.1)million.Theseitemsarereportedunder‘Equityandfundatfairvalue’.Nowrite-downshavebeenpostedfortheseholdingsviatheincomestatement.However,earlydisposalshavebeencarriedoutduringtheperiod,whichbroughtaboutalossfromthesaleofEUR1.4millionbeforetax.AllexposuresrelatingtoGIIPScountriesaremeasuredonanon-goingbasisatcurrentmarketvalue.
Valuation of financial assets
Value changes reported via the fund at fair value
Avalueimpairmentthatisnotreportedintheincomestatement,oranin-creaseinthevalueoffinancialassetsthathasnotbeenrealised,isreportedviathefundatfairvalue.TakingcashflowhedgingfortheGroupintocon-sideration,thefundatfairvalueamountedtoEUR45.4(61.8)millionafterdeferredtax.
Cashflowhedging,whichcomprisesofunwoundinterestratederivativecontractsthathavebeenacquiredforthepurposesofhedgingthebank-ingbusiness’netinterestincome,amountedtoEUR9.8(16.2)million.
The fund at fair value
(EUR million) 30.6.2013 31.12.2012 ∆
Shares and participations
BankingBusiness 2.1 3.6 -1.5
Direct interest-bearing securities
BankingBusiness 33.5 42.0 -8.5
Cashflowhedging 9.8 16.2 -6.4
Fund at fair value, total 45.4 61.8 -16.5
Financial assets held until maturity
InDecember2012,interest-bearingsecuritiestothevalueofEUR340mil-lionwerereclassifiedfromfinancialassetsavailableforsaletofinancialassetshelduntilmaturity.ThereclassifiedsecuritiesallhaveanAAArating.Duringtheperiod,theportfolioofassetshelduntilmaturityincreasedfurther,andasat30June2013itamountedtoEUR356(350)million.
Thepurposeoftheportfolioofassetshelduntilmaturityistoreducevola-tilityinthefundatfairvalue,andtomanagetheregulatoryrisksassociatedwiththeenteringintoforceofBaselIII.Securitieshelduntilmaturityarereportedattheiraccruedacquisitionvalue.
Unwinding of hedging interest-rate derivatives
InNovember2012,thecompanyunwoundofallitsinterestratederivativesforhedgingreasons,i.e.tohedgetheon-demandaccountsandsavingsdeposits(applyingtheEU‘carve-out’tohedgeaccounting).Fortheseinte-rest-ratederivatives,theeffectivepartofthemarketvaluehasbeencom-pensatedbyacorrespondingamountinthebalancesheetitemdeposits.
TheunwindingoftheinterestratederivativesproducedapositivecashfloweffectofEUR92.1million.Hedgeaccountingceasedfollowingtheunwindingofderivatives,andassessmentofdepositswillbedissolvedin2013-2017accordingtotheoriginaldurationoftheinterestratederivati-ves,whichwillhaveapositiveeffectwithinnetinterestincomeofapprox.EUR15.5millionperyear.Theremainingcashflowwillprovideapositivetotalresulteffectofapprox.EUR14millionduringtheyears2018-2019.
Thebankismaintainingitspolicyofactivelyhedgingnetinterestincomewherethisisconsideredjustifiedbythepresentinterestrates.
Operational risks
Nooperationalriskscausingsignificantfinanciallossesoccurredduringthefirsthalfof2013.
Other events during the period
On7May2013,ArjaTalmawaselectedamemberoftheBoardofDirectorsofAktiaplcandAktiaBankplc.
On7March2013,AktiaBankwasgrantedamortgagebankconcessionbytheFinancialSupervisoryAuthority,andmadeitsfirstissueinJune2013.Formorethan10years,AktiaBanksuccessfullyusedcoveredbondsasasourceoffinance,throughitssubsidiaryAktiaRealEstateMortgageBank.AktiaRealEstateMortgageBankisjointlyownedwiththesavingsbanksandthePOPBanks.TheownersofAktiaRealEstateMortgageBankconti-nuetomanagenewloansfromtheirownbalancesheets,andtheactivitiesofAktiaRealEstateMortgageBankwillfocusonthemanagementandrefi-nancingofthecurrentcreditstock.
AllownersofAktiaRealEstateMortgageBankarealsoinfutureresponsibleforcapitalisationandseniorfinancingofthebankinaccordancewiththecurrentshareholders’agreement.AktiaBankprovidesitssubsidiaryAktiaRealEstateMortgageBank’sliquiditylimits,andaimstomanagethemort-gagebankactivitiesinawaythatsecurestheinterestsoffinanciersandinvestorsinAktiaRealEstateMortgageBank.
Inthesecondquarter,AktiaBankplcsolditsholding(25.8%)inACHFin-landOytoPOPPankkiliitto.Thesalehadnosignificanteffectonprofits.
AktiaBankselectedtheEVRYAScardplatformastheprimarysystemforcreditcardservicesandoperations.AktiaBankhasalsoenteredintoanagreementwithNetsOy,toacquireAktia’sVisacreditstockofapprox.EUR55million.TheagreementisplannedtoenterintoeffectinDecember2013.Enhancementofcreditcardoperationsisestimatedtoprovideapo-sitiveincomeeffectofmorethanEUR2millionperyearfrom2014.
On12March2013,NilsLampiresignedfromhispositionasmemberoftheBoardofDirectorsofAktiaplcandAktiaBankplc.
On26February2013,JannicaFagerholmresignedfromherpositionasmemberoftheBoardofDirectorsofAktiaplcandAktiaBankplc.
6 Aktia Aktia 7
Events after the period
On5August2013,AktiasignedaletterofintenttomergewiththesavingsbankSaaristosäästöpankkiOy.
ThemergerofAktiaplc’swithAktiaBankplctookeffecton1July2013.
Personnel
Attheendoftheperiod,thenumberoffull-timeemployeeswas757(30June2012;727).Theaveragenumberoffull-timeemployeesdecreasedby2inthefirsthalfof2013andwas751(31December2012:753).
Personnel fund
Aktiaplc’sBoardofDirectorshasconfirmedthattheprofitsharingprovisiontothepersonnelfundfor2013willbebasedon10%ofthepartofthegroupoperatingprofitexceedingEUR35million.However,iftheGroup’soperatingprofitisEUR35.0-37.5million,asumofEUR250,000willbeaddedtothepersonnelfund.Theprofitsharingprovisioncannot,however,exceedEUR3million.
Incentive scheme for 2013
TheBoardofDirectorsofAktiaplcdecidedin2011onanewshare-basedincentiveschemeforkeypersonnelinAktiaGroup.
ThebonuswillbepaidpartlyasAsharesinAktiaplcandpartlyincash.Theproportiontobepaidincashisintendedforthetaxesandtax-relatedcostsrelatedtothepaymentofthebonus.Theincentiveschemeisdividedintotwoparts.
Thefirstpartoftheschemeisbasedonearningscriteriaandcoversthreeearningsperiods:thecalendaryears2011-2012,2012-2013and2013-2014.Theearningscriteriafortheearningperiod2012-2013and2013-2014arebasedonthedevelopmentoftheAktiaGroup’scumulatedadjustedequity(NAV)(50%weighting),andoftheGroup’stotalnetcommissionandinsu-ranceincome(50%weighting).Theearningscriteriafortheearningperiod2013-2014weredeterminedinJune2013.
Thepotentialbonusforeachearningsperiodwillbepaidoutinfourinstal-mentsaftertheearningsperiod,overaspanofapproximatelythreeyears.Sharespaidoutasarewardonthebasisofearningsperiodswillbesubjecttoawaitingperiodof(1)year,duringwhichtheymaynotbetransferred,placedassecurityorusedinanyotherway.TheBoardofDirectorshasstipulatedamaximumlevelofbonusperkeyperson.Ingeneral,abonusisnotpaidouttoakeypersonwho,atthetimeofpayment,nolongerhasaworkoremploymentrelationshipwiththeAktiaGroup.
ThesecondpartoftheschemeenableskeypersonneltoalsoreceiveaconditionalbonusbasedontheacquisitionofA-sharesinAktiaplcwhentheincentiveschemeisimplemented.TheconditionalbonuswillbepaidtokeypersonsbytheendofApril2016,andwilltaketheformofbothcashandsharesprovidedthatthekeypersonisstillemployedbytheAktiaGroupandthatthesharesearmarkedforpaymentoftheconditionalbo-nushavenotbeentransferredatthetimeofpaymentofrewards.
Keypersonsareobligedtoholdhalfofallsharesreceivedthroughthein-centiveschemeuntilthetotalvalueofthesharesamountstothevalueoftheirgrossannualsalary.ThesepersonsmustretaintheirsharesaslongastheyareemployedbytheGroup.
Thetotalbonuspaidoutthroughtheschemecanamounttoamaximumof401,200A-sharesinAktiaplc,aswellasasumincashcorrespondingtothevalueoftheshares.Theincentiveschemehasbeenpreparedinac-cordancewithnewregulationsconcerningbonusschemesinthefinancialsector.
TheAktiaGroup’sreportontheremunerationpaidtotheExecutiveCom-mitteeandotheradministrativebodiesispublishedontheAktiaplcweb-site(www.aktia.fi).
Board of Directors and Executive Committee
AktiaBankplc’sBoardofDirectorsfortheperiod1January-31December2013:ChairDagWallgren,M.Sc.(Econ.)ViceChairNinaWilkman,LL.M.StenEklundh,M.Sc.HansFrantz,Lic.Soc.Sc.KjellHedman,BusinessEconomistCatharinavonStackelberg-Hammarén,M.Sc.(Econ.)ArjaTalmaM.Sc.(Econ.),eMBA(from7May2013).NilsLampi,B.Sc.(Econ.)(1January-12March2013)JannicaFagerholm,M.Sc.(1January-26February2013)
On11December2012,theBoardofSupervisorsdecidedontheannualremunerationfortheBoardofDirectorsfor2013:-annualremuneration,chair,EUR48,200-annualremuneration,vicechair,EUR26,900-annualremuneration,member,EUR21,300
TheremunerationoftheBoardofDirectorsisunchanged.Theproportionpaidinshareshasbeenincreasedto15(10)%.Theshareswereacquireddirectlyfromthemarketatmarketprices15February2013.
AktiaBank’sExecutiveCommitteecomprisesManagingDirectorJussiLaitinen,DeputyManagingDirectorandproxyJarlSved,DeputyManag-ingDirectorStefanBjörkman,DeputyManagingDirectorTaruNarvanmaa,DirectorFredrikWesterholmandDirectorMagnusWeurlander.
Share and share capital
AfterthecompletionofthemergerwithAktiaplcon1July2013,thenewparentcompanyhassharecapitalofEUR163million,madeupofatotalof46,706,723Asharesand19,872,088Rshares.
AsaresultofthemergerofAktiaplcon1July2013,allsharesinAktiaplcwerede-listedandallsharesinAktiaBankplcwerelistedontheNASDAQOMXHelsinkiexchange.Thetradingcodesremainthesame:AKTAVforAsharesandAKTRVforRshares.Each‘A’shareconfersonevote,andeachRshareconfers20votes.Otherwise,thesharesconferthesamerights.
8 Aktia Aktia 9
Outlook and risks for 2013
Outlook (unchanged)
AktiaBankisstrivingtogrowslightlymorethanthemarketinthesectorsfocusingonprivatecustomersandsmallcompanies.
AktiaBank’sPlanofAction2015includesseveralindividualmeasuresandwillberealisedinstepswiththeaimofreachingthefinancialobjectivesfor2015.
AktiaBank’saimistoimprovecompetitivenessandtobecometheFinnishchampionofcustomerservicesinselectedcustomersegments.AktiaBankwillcontinuetostriveforefficientandcustomer-friendlyservice,andtoprovidefinancialsolutionsforhouseholds,businessowners,smallcompa-niesandinstitutions.
Write-downsoncreditsareexpectedtobeatthesamelevelasin2012.
Asfrom1July2013,AktiaBankplcisthenewlistedparentcompanyfortheAktiaGroup.ThenewparentcompanyfortheGroup,AktiaBankplc,hasthesamefutureoutlookastheformerparentcompanyAktiaplc.Inotherwords,“despitetheprobablylowinterestratelevel,andone-offcostsfromimplementingthePlanofAction2015,theGroup’soperatingprofitfromcontinuingoperationsfor2013isexpectedtoreachapproximatelythe2012level”.
In2012,operatingprofitfortheAktiaGroup’scontinuingoperationsamountedtoEUR56.0million.
Risks
AktiaBank’sfinancialresultisaffectedbymanyfactors,ofwhichthemostimportantarethegeneraleconomicsituation,fluctuationsinshareprices,interestratesandexchangerates,andthecompetitivesituation.Thede-mandforbanking,insurance,assetmanagementandrealestateagencyservicescanbechangedbythesefactors.
Changesininterestrates,yieldcurvesandcreditmarginsarehardtopre-dictandcanaffectAktiaBank’sinterestmarginsandthusprofitability.AktiaBankispursuingproactivemanagementofinterestraterisks.
Anyfuturewrite-downsofloansinAktiaBank’sloanportfoliocouldbeduetomanyfactors,themostimportantofwhicharethegeneraleconomicsituation,interestrates,thelevelofunemploymentandchangesinhouseprices.
TheavailabilityofliquidityonthemoneymarketsisimportantforAktiaBank’srefinancingactivities.Likeotherbanks,Aktiareliesondepositsfromhouseholdstoservicesomeofitsliquidityneeds.
ThemarketvalueofAktiaBank’sfinancialandotherassetscanchange,amongotherthingsasaresultofrequirementsamonginvestorsforhigherreturns.
Thefinancialcrisishasresultedinmanynewinitiativesforregulatingbank-ingandinsurancebusinesses,whichhavebroughtuncertaintyconcerningfutureequityandliquidityrequirements.Theresultsofthenewregulationsarelikelytobehighercapitalrequirements,sharpenedcompetitionfordeposits,higherdemandsonlong-termfinancing,higherfixedcostsand,eventually,highercreditmargins.
Aktia’s financial objectives for 2015 -Increasecross-sellingindexby20%-Increasecommissionincomeby5%p.a.-Cutexpensesby5%p.a.-Tier1capitalratioatleast13%overaneconomiccycle(uponapprovalofinternalrating)-Dividendpay-out40–60%ofprofitaftertaxes
8 Aktia Aktia 9
Key figures for Bank Group
(EUR million) 1-6/2013 1-6/2012 ∆ % 4-6/2013 1-3/2013 10-12/2012 7-9/2012Earningspershare(EPS) 7.3 6.1 19% 3.4 3.9 -0.6 2.3
Equitypershare(NAV)1) 134.1 127.5 5% 134.1 134.9 141.3 139.9Returnonequity(ROE),% 9.3 9.2 1% 8.9 9.8 -1.4 6.1Totalearningspershare 1.8 17.8 -90% -0.9 2.7 1.4 12.4
Numberofsharesattheendoftheperiod1) 3 3 0% 3 3 3 3Personnel(FTEs),averagenumberofemployeesfromthebeginningofthefinancialyear1) 751 764 -2% 751 758 753 753
Banking Business (incl. Private Banking)Cost-to-incomeratio 0.68 0.69 -1% 0.70 0.67 0.89 0.69
Borrowingfromthepublic1) 3,826.9 3,732.5 3% 3,826.9 3,703.4 3,651.4 3,666.1Lendingtothepublic1) 7,031.4 7,269.5 -3% 7,031.4 7,179.1 7,248.1 7,301.0
Capitaladequacyratio,%1) 20.3 18.9 8% 20.3 20.0 20.2 19.9Tier1capitalratio,%1) 12.1 11.7 3% 12.1 11.7 11.8 11.8
Risk-weightedcommitments1) 3,625.3 3,742.0 -3% 3,625.3 3,683.7 3,611.2 3,727.9
Asset ManagementAssetsundermanagement1*) 5,850.8 5,189.3 13% 5,850.8 6,141.0 5,804.5 5,494.7
1)Attheendoftheperiod
*)Assetsundermanagement=AktiaFundManagementCompany’sassetsundermanagementandbrokeredmutualfundsandassetsmanagedbyAktiaInvest,AktiaAssetManagementandAktiaBank’sPrivateBanking
FormulasforkeyfiguresarepresentedinAktiaBankplc’sannualreport2012page9.
10 Aktia Aktia 11
Consolidated income statement for Bank Group
(EUR million) 1-6/2013 1-6/2012 ∆ % 2012Netinterestincome 57.9 59.0 -2% 116.5Dividends 0.1 0.1 74% 0.1Commissionincome 42.8 38.3 12% 76.7
Commissionexpenses -9.5 -8.4 -13% -17.1Net commission income 33.3 30.0 11% 59.6
Netincomefromfinancialtransactions 4.1 0.5 689% 2.9
Netincomefrominvestmentproperties 0.1 0.0 - -0.3Otheroperatingincome 1.7 2.9 -41% 4.7Total operating income 97.2 92.3 5% 183.4
Staffcosts -25.8 -26.7 -3% -52.7IT-expenses -11.5 -10.2 13% -26.4Depreciationoftangibleandintangibleassets -1.3 -1.6 -19% -3.4Otheroperatingexpenses -27.9 -25.1 11% -53.5Total operating expenses -66.5 -63.6 5% -136.0
Write-downsonotherfinancialassets - - - -1.8Write-downsoncreditsandothercommitments -1.5 -2.8 -46% -6.4Shareofprofitfromassociatedcompanies 0.3 -0.5 - -0.4Operating profit 29.4 25.4 16% 38.8Incomeandexpensesfromotheractivities - - - -3.1Taxes -7.3 -6.5 12% -11.4Profit for the period 22.2 18.9 17% 24.3
Attributable to:ShareholdersinAktiaBankplc 21.9 18.4 19% 23.4Non-controllinginterest 0.2 0.5 -54% 0.8
Total 22.2 18.9 17% 24.3
Earningspershare(EPS),EUR 7,315,046.56 6,140,379.76 19% 7,814,312.31Thereisnodilutioneffecttoearningspershare.
10 Aktia Aktia 11
Consolidated comprehensive income statement for Bank Group(EUR million) 1-6/2013 1-6/2012 ∆ % 2012Profitfortheperiod 22.2 18.9 17% 24.3Other comprehensive income after taxes:Changeinvaluationoffairvalueforfinancialassetsavailableforsale -10.5 39.2 - 66.4Changeinvaluationoffairvalueforfinancialassetshelduntilmaturity 2.0 - - 0.3Changeinvaluationoffairvalueforcashflowhedging -5.9 -4.3 -38% -3.3Transferredtotheincomestatementforfinancialassetsavailableforsale -1.5 - - 14.0Transferredtotheincomestatementforcashflowhedging - - - -5.8Comprehensiveincomefromitemswhichcanbetransferredtotheincomestatement -15.9 34.9 - 71.6Definedbenefitplanpensions - - - 0.0Comprehensiveincomefromitemswhichcannotbetransferredtotheincomestatement - - - 0.0Total comprehensive income for the period 6.2 53.8 -88% 95.9
Total comprehensive income attributable to:ShareholdersinAktiaBankplc 5.5 53.4 -90% 94.7Non-controllinginterest 0.8 0.4 110% 1.2Total 6.2 53.8 -88% 95.9
Totalearningspershare,EUR 1,823,331.98 17,803,045.46 -90% 31,556,571.18
Thereisnodilutioneffecttototalearningspershare.
12 Aktia Aktia 13
Consolidated balance sheet for Bank Group(EUR million) 30.6.2013 31.12.2012 ∆ % 30.6.2012AssetsCashandbalanceswithcentralbanks 447.8 585.9 -24% 70.2Financialassetsreportedatfairvalueviatheincomestatement - - - 0.6
Interest-bearingsecurities 2,056.6 1,468.0 40% 1,841.8Sharesandparticipations 3.9 6.1 -36% 1.7
Financialassetsavailableforsale 2,060.5 1,474.2 40% 1,843.5Financialassetshelduntilmaturity 355.7 350.0 2% 15.8Derivativeinstruments 210.5 302.2 -30% 350.2LendingtoBankofFinlandandcreditinstitutions 109.6 158.7 -31% 551.5Lendingtothepublicandpublicsectorentities 7,031.4 7,248.1 -3% 7,269.5
Loansandotherreceivables 7,141.0 7,406.7 -4% 7,821.0Investmentsinassociatedcompanies 0.0 0.8 -100% 2.6Intangibleassets 2.5 2.0 24% 2.4Investmentproperties 0.2 0.5 -62% 0.7Othertangibleassets 4.2 4.4 -3% 4.8
Accruedincomeandadvancepayments 62.1 64.2 -3% 65.0Otherassets 2.9 2.1 36% 103.0
Totalotherassets 65.0 66.3 -2% 168.0Incometaxreceivables 1.2 0.1 996% 4.0Deferredtaxreceivables 21.0 22.7 -7% 0.7
Taxreceivables 22.2 22.8 -2% 4.7Total assets 10,309.5 10,215.8 1% 10,284.6
LiabilitiesLiabilitiestocreditinstitutions 1,051.5 1,057.6 -1% 1,075.6Liabilitiestothepublicandpublicsectorentities 3,826.9 3,651.4 5% 3,732.5
Deposits 4,878.4 4,709.0 4% 4,808.1Derivativeinstruments 145.4 186.4 -22% 181.7Debtsecuritiesissued 3,696.6 3,547.6 4% 3,806.4Subordinatedliabilities 299.7 298.2 1% 293.6Otherliabilitiestocreditinstitutions 518.1 629.6 -18% 442.7Otherliabilitiestothepublicandpublicsectorentities 51.1 146.7 -65% 108.1
Otherfinancialliabilities 4,565.5 4,622.1 -1% 4,650.8Accruedexpensesandincomereceivedinadvance 67.1 88.6 -24% 94.0Otherliabilities 134.2 48.5 177% 71.7
Totalotherliabilities 201.3 137.1 47% 165.7Provisions 6.9 6.9 0% -Incometaxliabilities 0.7 19.7 -96% 0.2Deferredtaxliabilities 44.2 46.1 -4% 31.6
Taxliabilities 45.0 65.7 -32% 31.8
Total liabilities 9,842.4 9,727.2 1% 9,838.2
Equity
Restrictedequity 208.4 224.8 -7% 188.6Unrestrictedequity 193.9 198.9 -3% 193.9Shareholders'shareofequity 402.2 423.8 -5% 382.5Non-controllinginterest'sshareofequity 64.9 64.8 0% 64.0Equity 467.2 488.6 -4% 446.5Total liabilities and equity 10,309.5 10,215.8 1% 10,284.6
12 Aktia Aktia 13
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14 Aktia Aktia 15
Consolidated cash flow statement for Bank Group(EUR million) 1-6/2013 1-6/2012 ∆ % 2012
Cash flow from operating activities
Operatingprofit 29.4 25.4 16% 38.8
Adjustmentitemsnotincludedincashflowfortheperiod -12.4 0.2 - 0.8
Unwoundcashflowhedging - 9.1 - 17.5
Unwoundfairvaluehedging - - - 92.1
Paidincometaxes -22.3 14.5 - 13.5Cash flow from operating activities before change inreceivables and liabilities
-5.3 49.2 - 162.7
Increase(-)ordecrease(+)inreceivablesfromoperatingactivities -327.1 -610.7 46% -15.4
Increase(+)ordecrease(-)inliabilitiesfromoperatingactivities 230.6 149.6 54% -54.3
Total cash flow from operating activities -101.8 -411.9 75% 93.0
Cash flow from investing activitiesFinancialassetshelduntilmaturity -9.2 4.2 - 9.9
Investmentsingroupcompaniesandassociatedcompanies - 0.0 - -
Proceedsfromsaleofgroupcompaniesandassociatedcompanies 0.9 - - 0.0
Investmentintangibleandintangibleassets -1.9 -1.3 -47% -2.4
Disposaloftangibleandintangibleassets 0.7 0.0 - 0.1
Total cash flow from investing activities -9.6 2.9 - 7.6
Cash flow from financing activitiesSubordinatedliabilities 0.2 3.6 -94% 11.1
Increaseinunrestrictedequityreserve - 30.0 - 30.0
Shareissue/dividendofAktiaRealEstateMortgageBankplctothenon-controllinginterest -0.7 5.9 - 5.9
Paiddividends -27.0 -20.0 -35% -20.0
Total cash flow from financing activities -27.5 19.4 - 27.0
Change in cash and cash equivalents -138.8 -389.6 64% 127.6
Cashandcashequivalentsatthebeginningoftheyear 600.5 473.0 27% 473.0
Cashandcashequivalentsattheendoftheperiod 461.7 83.3 454% 600.5
Cash and cash equivalents in the cash flow statement consist of the following items:
Cashinhand 6.6 7.6 -13% 8.0
BankofFinlandcurrentaccount 441.1 62.5 605% 577.9
Repayableondemandreceivablesfromcreditinstitutions 13.9 13.2 6% 14.6Total 461.7 83.3 454% 600.5
Adjustment items not included in cash flow consist of:
Impairmentreversaloffinancialassetsavailableforsale - - - -1.2
Write-downsonotherfinancialassets - - - 1.8
Write-downsoncreditsandothercommitments 1.5 2.8 -46% 6.4
Changeinfairvalues 0.6 0.1 330% -4.6
Depreciationandimpairmentofintangibleandtangibleassets 1.3 1.6 -19% 3.4
Shareofprofitfromassociatedcompanies 0.0 0.9 - 0.8
Salesgainsandlossesfromintangibleandtangibleassets -0.1 0.0 -844% 0.2
Unwoundcashflowhedging -7.8 -5.3 -48% -11.7
Unwoundfairvaluehedging -7.9 - - -1.3
Changeinprovisions - - - 6.9
Changeinfairvaluesofinvestmentproperties - - - 0.3
Total -12.4 0.2 - 0.8
14 Aktia Aktia 15
Quartely trends in Bank Group(EUR million) 4-6/2013 1-3/2013 10-12/2012 7-9/2012 4-6/2012Netinterestincome 28.1 29.8 29.1 28.4 29.5Dividends 0.1 0.0 - 0.0 0.0Netcommissionincome 17.5 15.8 14.7 14.9 15.6Netincomefromfinancialtransactions 1.9 2.2 3.1 -0.7 0.2Netincomefrominvestmentproperties 0.1 0.0 -0.3 0.0 0.0Otheroperatingincome 0.8 0.9 1.1 0.7 1.3Total operating income 48.5 48.7 47.7 43.4 46.6
Staffcosts -12.6 -13.3 -14.2 -11.9 -13.5IT-expenses -6.7 -4.8 -11.3 -4.9 -5.3Depreciationoftangibleandintangibleassets -0.7 -0.7 -1.0 -0.7 -0.8Otheroperatingexpenses -14.1 -13.7 -16.0 -12.4 -12.7Total operating expenses -34.1 -32.4 -42.4 -30.0 -32.3
Write-downsonotherfinancialassets - - - -1.8 -Write-downsoncreditsandothercommitments -0.4 -1.1 -1.7 -1.8 -1.0Shareofprofitfromassociatedcompanies - 0.3 0.0 0.0 -0.4Operating profit 14.0 15.4 3.6 9.8 13.0
Incomeandexpensesfromotheractivities - - -3.1 - -Taxes -3.6 -3.7 -2.2 -2.7 -3.1Profit for the period 10.5 11.7 -1.7 7.1 9.8
Quarterly trends of comprehensive income for Bank Group (EUR million) 4-6/2013 1-3/2013 10-12/2012 7-9/2012 4-6/2012Profitfortheperiod 10.5 11.7 -1.7 7.1 9.8Other comprehensive income after taxes:Changeinvaluationoffairvalueforfinancialassetsavailableforsale -9.1 -1.4 -6.0 33.2 1.1Changeinvaluationoffairvalueforfinancialassetshelduntilmaturity 1.0 1.0 0.3 - -Changeinvaluationoffairvalueforcashflowhedging -3.0 -2.9 3.2 -2.2 -1.3Transferredtotheincomestatementforfinancialassetsavailableforsale -1.5 - 14.0 - -Transferredtotheincomestatementforcashflowhedging - - -5.8 - -
Definedbenefitplanpensions - - 0.0 - -
Total comprehensive income for the period -2.1 8.4 4.0 38.1 9.6
16 Aktia Aktia 17
Notes to the Interim Report
Note 1. Basis for preparing the Interim Report and key accounting principles
Basis for preparing the Interim Report
AktiaBankplc’sconsolidatedfinancialstatementsarepreparedinac-cordancewiththeEU-approvedInternationalFinancialReportingStan-dards(IFRS),asadoptedbytheEU.
TheInterimReportfortheperiod1January–30June2013hasbeenpreparedinaccordancewithIAS34“InterimFinancialReporting”.TheInterimReportdoesnotcontainalltheinformationrequiredforanannualreportandshouldthereforebereadtogetherwiththeGroup’sAnnualReportasof31December2012.
TheInterimReportfortheperiod1January–30June2013wasappro-vedbytheBoardofDirectorson6August2013.
AktiaBankplc’sfinancialstatementsandinterimreportsareavailableonAktia’swebsitewww.aktia.fi.
Key accounting principlesInpreparingtheInterimReporttheGrouphasfollowedtheaccoun-tingprinciplesapplicabletotheannualreportof31December2012.
IFRS7specifiessupplementaryinformationtobedisclosedonnetac-countingforfinancialassetsandliabilitiesasof1January2013.Intheperiod,theGrouphasnotusedtheopportunitytosetofffinancialassetsandliabilitiesincludedinset-offagreements.TheGroupwillre-viewtheuseofset-offcontinuously.
IFRS13includesrulesfordefinitionoffairvalueandspecifiestherequi-rementsondisclosure.TheGrouphascompletedtheInterimreportwiththenewrequirementsondisclosureinNote5.
16 Aktia Aktia 17
Not
e 2.
Ban
k G
roup
’s se
gmen
t rep
ortin
gIn
com
e st
atem
ent
Bank
ing
Busi
ness
A
sset
Man
agem
ent
Mis
cella
neou
s
Elim
inat
ions
Gro
up to
tal
(EU
R m
illio
n)1-
6/20
131-
6/20
121-
6/20
131-
6/20
121-
6/20
131-
6/20
121-
6/20
131-
6/20
121-
6/20
131-
6/20
12Netinterestincome
55.7
57.5
3.0
2.4
-0.8
-0.8
--
57.9
59.0
Dividen
ds0.1
0.0
--
0.0
0.0
--
0.1
0.1
Netcom
missionincome
21.7
19.4
11.1
10.1
0.4
0.4
0.0
-0.1
33.3
30.0
Netincomefro
mfinancialtransactio
ns2.1
0.5
0.0
0.0
2.0
0.0
--
4.1
0.5
Netincomefro
minvestmen
tprope
rties
0.0
0.0
--
0.1
0.0
0.0
0.0
0.1
0.0
Otherincome
1.3
1.8
0.2
0.1
1.2
1.8
-1.0
-0.9
1.7
2.9
Tota
l ope
ratin
g in
com
e80
.879
.314
.412
.63.
01.
4-1
.0-1
.097
.292
.3Staffcosts
-15.9
-16.9
-4.2
-4.0
-5.4
-5.5
-0.4
-0.3
-25.8
-26.7
IT-expen
ses
-7.0
-6.8
-0.8
-1.2
-3.7
-2.2
--
-11.5
-10.2
Dep
reciationoftang
ible
andintang
ibleassets
-0.9
-1.0
-0.1
-0.2
-0.4
-0.4
--
-1.3
-1.6
Otherexpen
ses
-31.1
-28.0
-3.4
-3.0
5.7
5.0
1.0
1.0
-27.9
-25.1
Tota
l ope
ratin
g ex
pens
es-5
4.8
-52.
8-8
.4-8
.3-3
.9-3
.20.
60.
7-6
6.5
-63.
6Write-do
wnson
cred
itsand
othercom
mitm
ents
-1.5
-2.8
--
--
--
-1.5
-2.8
Shareofprofitfrom
associatedcompa
nies
--
--
--
0.3
-0.5
0.3
-0.5
Ope
ratin
g pr
ofit
24.5
23.6
6.0
4.3
-0.8
-1.8
-0.2
-0.7
29.4
25.4
Bala
nce
shee
tBa
nkin
g Bu
sine
ss
Ass
et M
anag
emen
t M
isce
llane
ous
El
imin
atio
ns
G
roup
tota
l
(E
UR
mill
ion)
30.6
.201
331
.12.
2012
30.6
.201
331
.12.
2012
30.6
.201
331
.12.
2012
30.6
.201
331
.12.
2012
30.6
.201
331
.12.
2012
Cashand
balancesw
ithcen
tralbanks
447.7
585.8
0.1
0.1
--
--
447.8
585.9
Financialassetsa
vailableforsale
2,057.2
1,468.9
1.0
1.5
3.3
5.3
-1.0
-1.5
2,060.5
1,474.2
Financialassetsh
eldun
tilm
aturity
355.7
350.0
--
--
--
355.7
350.0
Loansa
ndotherreceivab
les
7,060.9
7,338.7
150.5
153.5
0.2
0.2
-70.5
-85.6
7,141.0
7,406.7
Otherassets
260.5
362.5
6.7
6.6
114.7
107.4
-77.4
-77.5
304.6
399.0
Tota
l ass
ets
10,1
82.0
10,1
05.9
158.
316
1.7
118.
111
2.9
-148
.9-1
64.7
10,3
09.5
10,2
15.8
Dep
osits
4,368.7
4,261.4
580.0
532.5
-0.0
-70.3
-84.9
4,878.4
4,709.0
Deb
tsecuritiesissued
3,697.6
3,549.1
--
--
-1.0
-1.5
3,696.6
3,547.6
Otherliab
ilitie
stocred
itinstitu
tions
518.1
629.6
--
--
--
518.1
629.6
Otherliab
ilitie
s612.6
692.0
9.2
9.6
233.6
237.7
-106.2
-98.3
749.3
841.0
Tota
l lia
bilit
ies
9,19
7.0
9,13
2.0
589.
254
2.2
233.
623
7.7
-177
.4-1
84.7
9,84
2.4
9,72
7.2
18 Aktia Aktia 19
Note 3. Derivatives and off-balance sheet commitments Hedging derivative instruments (EUR million)
30.6.2013Total nominal
amountAssets,
fair valueLiabilities,fair value
Fair value hedgingInterestrate-related 3,266.0 91.0 27.1Total 3,266.0 91.0 27.1
Cash flow hedgingInterestrate-related 75.0 0.3 -Total 75.0 0.3 -
Derivative instruments valued via the income statementInterestrate-related*) 3,755.8 116.9 116.1Currency-related 43.5 0.2 0.1Equity-related**) 72.4 2.1 2.1
Otherderivativeinstruments**) 20.8 0.0 0.0Total 3,892.5 119.2 118.3
Total derivative instrumentsInterestrate-related 7,096.8 208.2 143.2Currency-related 43.5 0.2 0.1Equity-related 72.4 2.1 2.1Otherderivativeinstruments 20.8 0.0 0.0Total 7,233.5 210.5 145.4
Hedging derivative instruments (EUR million)
31.12.2012Total nominal
amountAssets,
fair valueLiabilities,fair value
Fair value hedgingInterestrate-related 2,837.0 149.8 34.3Total 2,837.0 149.8 34.3
Cash flow hedgingInterestrate-related 75.0 0.1 -Total 75.0 0.1 -
Derivative instruments valued via the income statementInterestrate-related*) 4,280.1 150.0 149.1Currency-related 55.6 0.6 1.3Equity-related**) 102.2 1.7 1.7Otherderivativeinstruments**) 20.8 0.1 0.1Total 4,458.6 152.4 152.1
Total derivative instrumentsInterestrate-related 7,192.1 299.8 183.4Currency-related 55.6 0.6 1.3Equity-related 102.2 1.7 1.7Otherderivativeinstruments 20.8 0.1 0.1Total 7,370.6 302.2 186.4*)Interest-linkedderivativesincludeinterestratehedgingprovidedforlocalbankswhichafterback-to-backhedgingwiththirdpartiesamountedtoEUR3,686.0(4,210.0)million.
**)Allequity-relatedandotherderivativeinstrumentsrelatetothehedgingofstructureddebtproducts.
18 Aktia Aktia 19
Off-balance sheet commitments
(EUR million) 30.6.2013 31.12.2012 30.6.2012
Commitments provided to a third party on behalf of the customersGuarantees 33.5 34.6 41.4Othercommitmentsprovidedtoathirdparty 2.4 3.4 4.1Irrevocable commitments provided on behalf of customersUnusedcreditarrangements 298.9 307.6 408.7Off-balance sheet commitments 334.9 345.5 454.2
20 Aktia Aktia 21
Note 4. Bank Group’s risk exposure
Bank Group’s capital adequacy(EUR million)
Summary 6/2013 3/2013 12/2012 9/2012 6/2012
Tier1capital 436.9 432.0 426.4 440.4 437.9Tier2capital 299.0 306.2 303.8 302.1 268.0Capital base 735.9 738.2 730.2 742.5 705.9Risk-weightedamountforcreditandcounterpartrisks 3,263.0 3,321.4 3,248.9 3,355.6 3,369.6Risk-weightedamountformarketrisks1 - - - - -
Risk-weightedamountforoperationalrisks 362.3 362.3 362.3 372.3 372.3Risk-weighted commitments 3,625.3 3,683.7 3,611.2 3,727.9 3,742.0Capital adequacy ratio, % 20.3 20.0 20.2 19.9 18.9Tier 1 Capital ratio, % 12.1 11.7 11.8 11.8 11.7Minimum capital requirement 290.0 294.7 288.9 298.2 299.4Capitalbuffer(differencebetweencapitalbaseandminimumrequirement) 445.8 443.5 441.3 444.3 406.5
1)Nocapitalrequirementduetominortradingbookandwhentotalofnetcurrencypositionsarelessthan2%ofcapitalbase.
Capital base 6/2013 3/2013 12/2012 9/2012
(EUR million) 6/2012
Sharecapital 163.0 163.0 163.0 163.0 163.0Funds 74.6 74.6 74.6 74.6 74.6Non-controllinginterest 64.9 65.1 64.8 64.8 64.0Retainedearnings 97.4 96.0 100.9 100.9 100.9Profitfortheperiod 21.9 11.7 23.4 25.3 18.4
./.provisionfordividendstoshareholders -12.4 -6.2 -28.3 -15.9 -10.6
Capitalloan 30.0 30.0 30.0 30.0 30.0Total 439.3 434.2 428.4 442.8 440.3./.intangibleassets -2.5 -2.2 -2.0 -2.3 -2.4Tier 1 capital 436.9 432.0 426.4 440.4 437.9Fundatfairvalue 35.6 45.2 45.6 36.9 4.4UpperTier2loans 45.0 45.0 45.0 45.0 45.0LowerTier2loans 218.4 216.0 213.2 220.2 218.6
Tier 2 capital 299.0 306.2 303.8 302.1 268.0Total capital base 735.9 738.2 730.2 742.5 705.9
Bank Group’s credit and counterparty risksTotal exposures 6/2013 (EUR million)
Risk-weight Balance sheet assetsOff-balance sheet
commitments Total
0% 1,288.0 23.7 1,311.710% 1,376.0 - 1,376.020% 735.7 138.9 874.635% 5,628.0 51.2 5,679.250% 0.9 - 0.975% 512.7 83.6 596.3100% 537.2 36.9 574.0150% 14.5 0.6 15.1Total 10,093.0 334.9 10,427.8Derivatives*) 248.2 - 248.2Total 10,341.2 334.9 10,676.1
20 Aktia Aktia 21
Risk-weighted exposures (EUR million)
Risk-weight 6/2013 3/2013 12/2012 9/2012 6/2012
0% - - - - -10% 137.6 118.9 125.5 133.6 120.820% 153.0 167.2 120.3 145.6 155.535% 1,976.7 2,011.7 2,025.2 2,023.4 2,008.150% 0.4 0.0 0.1 0.3 0.375% 400.8 418.1 428.9 437.9 439.9100% 555.4 565.8 502.5 567.8 590.0150% 22.2 20.9 25.9 20.3 28.5Total 3,246.2 3,302.5 3,228.3 3,328.8 3,343.2Derivatives*) 16.8 19.0 20.6 26.8 26.5Total 3,263.0 3,321.4 3,248.9 3,355.6 3,369.6*)derivativeagreementscreditconversionfactor
Initscapitaladequacymeasurementtodeterminetheexposure’sriskweight,AktiaappliescreditratingsbyMoody’sInvestorsServiceorStandard&Poor’storeceivablesfromcentral
govermentsandcentralbanks,creditinstitutions,investmentfirms,corporatesandcoveredbonds.Theriskweightforbankexposuresandbondssecuredbyrealestateisdetermined
bythecreditratingofthecountrywheretheinstitutionislocated.
Bank Group’s risk-weighted amount for operational risks
(EUR million)
Year 2012 2011 2010 6/2013 3/2013 12/2012 9/2012 6/2012
Grossincome 183.3 187.8 208.5-average3years 193.2
Capital requirement for operational risk 29.0 29.0 29.0 29.8 29.8Risk-weighted amount 362.3 362.3 362.3 372.3 372.3
Thecapitalrequirementforoperationalriskis15%ofaveragegrossincomeduringthelastthreeyears.
Therisk-weightedamountiscalculatedbydividingthecapitalrequirementby8%.
22 Aktia Aktia 23
Note 5. Financial assets and liabilities
Fair value of financial assets and liabilities
30.6.2013 31.12.2012
Financial assets (EUR million) Book value Fair value Book value Fair value
Cashandbalanceswithcentralbanks 447.8 447.8 585.9 585.9
Financialassetsavailableforsale 2,060.5 2,060.5 1,474.2 1,474.2
Financialassetshelduntilmaturity 355.7 351.9 350.0 349.7
Derivativeinstruments 210.5 210.5 302.2 302.2
Loansandotherreceivables 7,141.0 6,936.9 7,406.7 7,212.2
Total 10,215.5 10,007.6 10,119.0 9,924.1
30.6.2013 31.12.2012
Financial liabilities (EUR million) Book value Fair value Book value Fair value
Deposits 4,878.4 4,808.6 4,709.0 4,641.4
Derivativeinstruments 145.4 145.4 186.4 186.4
Debtsecuritiesissued 3,696.6 3,734.3 3,547.6 3,575.0
Subordinatedliabilities 299.7 303.8 298.2 308.2
Otherliabilitiestocreditinstitutions 518.1 523.3 629.6 642.4
Otherliabilitiestothepublicandpublicsectorentities 51.1 51.0 146.7 146.8
Total 9,589.3 9,566.4 9,517.5 9,500.3
Inthetable,thefairvalueandthebookvalueofthefinancialassetsandliabilities,arepresentedbybalancesheetitem.Thefairvaluesaredeterminedbothfor
agreementswithfixedandvariableinterestrates.Thefairvaluesarecalculatedwithoutaccruedinterestandwithouttheeffectofpossiblehedgingderivatives
attributabletothebalancesheetitem.
Fairvaluesoninvestmentassetsaredeterminedbymarketpricesquotedontheactivemarket.Ifquotedmarketpricesarenotavailable,thevalueofthe
balancesheetitemsismainlydeterminedbydiscountingfuturecashflowusingmarketinterestratesonthedaytheaccountswereclosed.Inadditiontothe
creditriskprofileofcurrentstock,costsforre-financingareconsideredinthediscountratewhendetermingfairvaluesonloans.Forcashandbalanceswith
centralbanks,thenominalvalueisusedasfairvalue.
Fordepositsrepayableondemand,thenominalvalueisassumedtobeequivalenttothefairvalue.Depositswithmaturityaredeterminedbydiscountingfu-
turecashflowatmarketinterestratesonthedaytheaccountswereclosed.Thefairvalueofissueddebtsismainlydeterminedbasedonquotesonthemarket.
Inthediscountrateforunquotedissueddebtsandsubordinatedliabilities,amarginalcorrespondingtheseniorityoftheinstrumentisapplied.
Derivativesarevaluedatfairvaluecorrespondingtoquotesonthemarket.
Thefairvaluescalculatedforthesituationon30Juneinthetableabovearepartlybasedonparametersfrom31May,correspondingtothemarketsituationat
thetimeofreporting.
22 Aktia Aktia 23
Measurement of financial assets at fair value
Level 1consistsoffinancialinstrumentsthatarevaluedusingpriceslistedonanactivemarket.Inanactivemarkettransactionsoccurwithsufficientvolumeandfrequencytoprovidepricinginformationonanongoingbasis.Thiscategoryincludeslistedbondsandothersecurities,listedequityinstrumentsandderivatives,forwhichtradablepricequotesexist.
Level 2consistsoffinancialinstrumentsthatdonothavedirectlyaccessiblelistedpricesfromaneffectivemarket.Thefairvaluehasbeendeterminedbyusingvaluationtechniques,whicharebasedonassumptionssupportedbyobservablemarketprices.Suchmarketinformationmayforexamplebelistedinterestratesorpricesforcloselyrelatedinstruments.ThiscategoryincludesthemajorityofOTCderivativeinstru-ments,aswellasmanyotherinstrumentsthatarenottradedonanactivemarket.
Level 3 consistsoffinancialinstrumentsforwhichthefairvaluecannotbeobtaineddirectlyfromquotedmarketpricesorindirectlybyusingvaluationtechniquesormodelssupportedbyobservablemarketpricesonrates.Thiscategorymainlyincludesunlistedequityinstrumentsandfunds,andotherunlistedfundsandsecuritieswheretherecurrentlyarenofixedprices.
30.6.2013 31.12.2012
Fair value classified into Fair value classified into
Financial instruments measured at fair value (EUR million) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Financial assets valued via the income statement
Interest-bearingsecurities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Sharesandparticipations 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Total 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Financial assets available for sale
Interest-bearingsecurities 1,763.7 245.7 47.1 2,056.6 1,415.5 33.9 18.7 1,468.0
Sharesandparticipations 0.0 0.0 3.9 3.9 0.0 0.0 6.1 6.1
Total 1,763.7 245.7 51.1 2,060.5 1,415.5 33.9 24.8 1,474.2
Derivativeinstrument,net 0.1 65.0 0.0 65.1 -0.7 116.5 0.0 115.8
Totalt 0.1 65.0 0.0 65.1 -0.7 116.5 0.0 115.8
Total 1,763.8 310.7 51.1 2,125.6 1,414.8 150.3 24.8 1,589.9
Transfers between level 1 and 2 Transfersbetweenlevelsmayoccurwhenthereareindicationsofchangesinmarketconditions,e.g.wheninstrumentsceasetobeactivelytraded.Duringthereportingperiodnotransfersbetweenlevel1andlevel2hasoccurred.Theincreaseinlevel2ispurelyduetoanincreaseinbusinessvolumesespeciallyfordomesticcommercialpapersandtosomespecificbankseniorbonds.
AktiaGroup`sRiskcontrolhastheresponsibilityforclassifyingfinancialinstrumentintolevel1,2or3.Thevaluationprocess,whichismadeonanongoingbasis,isthesameforfinancialinstrumentsinalllevels.Theprocessdeterminestowhichlevelafinancialinstrumentwillbeclas-sified.Incaseswhereinternalassumptionshaveamaterialimpactonfairvalue,thefinancialinstrumentisreportedinlevel3.Theprocessalsoincludesanevaluationbasedonthequalityofthevaluationdata,ifaclassoffinancialinstrumentistobetransferredbetweenlevels.
24 Aktia Aktia 25
Changes within level 3
Thefollowingtableshowsareconciliationfromperiodtoperiodoflevel3Financialassetsreportedatfairvalue.
Reconciliation of the changes taken place for financial instru-ments which belong to level 3
Financial assets valued via the income statement
Financial assets available for sale Total
(EUR million)Interest-bearing
securities
Shares and partici-pations Total
Interest-bea-ring securities
Shares and partici-pations Total
Interest-bea-ring securities
Shares and partici-pations Total
Carrying amount 1.1.2013 0.0 0.0 0.0 18.7 6.1 24.8 18.7 6.1 24.8
Newpurchases 0.0 0.0 0.0 25.5 0.0 25.5 25.5 0.0 25.5
Sales 0.0 0.0 0.0 0.0 -2.2 -2.2 0.0 -2.2 -2.2
Maturedduringtheyear 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Realisedvaluechangeintheincomestatement
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Unrealisedvaluechangeintheincomestatement
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Valuechangerecognisedinthetotalcomprehensiveincome
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Transferfromlevel1and2 0.0 0.0 0.0 3.0 0.0 3.0 3.0 0.0 3.0
Transfertolevel1and2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Carrying amount 30.6.2013 0.0 0.0 0.0 47.1 3.9 51.0 47.1 3.9 51.0
Transfersfromlevel1and2refertobondsissuedbydomesticmunicipalswhichwereearlierreportedunderlevel2.Thetransfertolevel3isduetotheil-liquiditythesebondsfaceonthemarket.
Sensitivity analysis for level 3 Financial instruments Thevalueoffinancialinstrumentsreportedatfairvalueinthebalancesheetincludesinstruments,thathavebeenvaluedpartlyorintotal,usingtechni-quesbasedonassumptionsnotsupportedbyobservablemarketprices. Thisinformationshowstheeffectthatrelativeuncertaintycanhaveonthefairvalueoffinancialinstrumentswhosevaluationisdependentonnon-obser-vableparameters.Theinformationshouldnotbeseenaspredictionsorasanindicationoffuturechangesinfairvalue. Thefollowingtableshowsthesensitivityoffairvalueinlevel3instrumentsintheeventofmarketchanges.Interest-bearingsecuritieshavebeentestedbyassuminga3percantagepointsparallelshiftoftheinterestrateinallmaturities.Atthesametimethemarketpricesforsharesandparticipationsareas-sumedtochangeby20%,withexceptionforSuomenLuotto-osuuskunta,whichisvaluedbasedonitslowestestimatedvalueofthereturnofcapitalafterthesaleofitssubsidiaryNetsOy(previouslyknownasLuottokunta).Theseassumptionswouldmeanaresultorvaluationeffectviathefundatfairvaluecorrespondingto0.2(0.1)%oftheGroup’sownfunds.
30.6.2013 31.12.2012
Sensitivity analysis for financial instruments belonging to level 3 Effect at an assumed movement Effect at an assumed movement
Carrying amount Positive Negative
Carrying amount Positive Negative
Financial assets valued via the income statement
Interest-bearingsecurities 0.0 0.0 0.0 0.0 0.0 0.0
Sharesandparticipations 0.0 0.0 0.0 0.0 0.0 0.0
Total 0.0 0.0 0.0 0.0 0.0 0.0
Financial assets available for sale
Interest-bearingsecurities 47.1 1.4 -1.4 18.7 0.6 -0.6
Sharesandparticipations 3.9 0.2 -0.2 6.1 0.2 -0.2
Total 51.1 1.6 -1.6 24.8 0.8 -0.8
Total 51.1 1.6 -1.6 24.8 0.8 -0.8
24 Aktia Aktia 25
Note 6. Net interest income
(EUR million) 1-6/2013 1-6/2012 ∆ % 2012
Depositsandlending 20.4 30.3 -33% 55.1
Hedging,interestrateriskmanagement 22.0 14.4 53% 30.8
Other 15.5 14.2 9% 30.6
Net interest income 57.9 59.0 -2% 116.5
Theimpactoffixedrateinvestmentsisdividedintotwocomponentsconsistingofinterestrateriskandcreditrisk.Theinterestrateriskcomponentisincluded
in”HedgingofInterestraterisk”whereasthecreditriskcomponentisbookedasapartof”Othernetinterestincome”.
Note 7. Gross loans and write-downs
(EUR million) 30.6.2013 31.3.2013 31.12.2012 30.9.2012 30.6.2012
Grossloans 7,096.8 7,244.7 7,312.9 7,364.7 7,334.0
Individualwrite-downs -51.0 -50.8 -50.3 -47.8 -50.2Ofwhichmadetonon-performingloanspastdueatleast90days -40.1 -41.4 -40.1 -39.4 -42.0Ofwhichmadetootherloans -10.9 -9.4 -10.2 -8.4 -8.2Write-downsbygroup -14.5 -14.8 -14.5 -15.9 -14.2
Net loans, balance amount 7,031.4 7,179.1 7,248.1 7,301.0 7,269.5
n
26 Aktia Aktia 27
Note 8. Balance sheet as at 1 July 2013 for Aktia Bank plcThemergerofAktiaplcwithAktiaBankplcisanabsorptionmerger,inwhichtheparentcompanyAktiaplcmergerswiththesubsidiaryAktiaBankplc.Inconnectionwiththeimplementationofthemerger,assetsandliabilitiesaretransferredattheirbookvalue.AktiaBankplcenterstheassetsandliabilitiesreceivedinconnectionwiththeimplementationofthemergerattheirbookvalue.ThemergerinvolvesbookingofamergerdifferenceinAktiaBankplc.ThemergerdifferenceisbasedonAktiaplc’sequity.ThebookvalueoftheownsharesreducesthereceivingcompanyAktiaBankplc’sequity.Themergerdifference,baseduponthebookvaluesoftheparticipatingcompaniesatthetimeofthemerger,amountstoEUR53,876,632.16.Themergerdifferenceisbookedaccordingtoaccountingrulesandisenteredintheunrestrictedequityreserve.ThetablebelowdescribestheeffectsofthemergeronAktiaBankplcGroupbalancesheet1.7.2013.
(EUR million)
Aktia Bank plc Group
before merger
Aktia plc and its
subsidiaries Merger
adjustments Ref.
Aktia Bank plc Group
after merger
Cashandbalanceswithcentralbanks 447.8 14.9 -14.2 a) 448.5
Financialassestsreportedatfairvalueviatheincomestatement - 0.0 - 0.0
Financialassetsavailableforsale 2,060.5 594.3 -7.3 a) 2,647.6
Financialassetshelduntilmaturity 355.7 - - 355.7
Derivativeinstruments 210.5 0.0 0.0 a) 210.5
Loansandotherreceivables 7,141.0 4.3 -50.8 a) 7,094.5
Investmentsforunit-linkedprovisions - 412.7 - 412.7
Investmentsinassociatedcompanies 0.0 17.5 0.8 b) 18.4
Investmentsingroupcompanies - 316.9 -316.9 b) -
Intangibleassets 2.5 12.5 - 15.0
Investmentproperties 0.2 50.8 - 51.0
Othertangibleassets 4.2 1.1 - 5.3
Otherassets 65.0 16.1 -6.2 a) 74.9
Taxreceivables 22.2 1.6 - 23.8
Assetsclassifiedasheldforsale - 2.5 -1.2 a) 1.2
Total assets 10,309.5 1,445.3 -395.7 11,359.2
Deposits 4,878.4 - -19.7 a) 4,858.7
Financialliabilitiesreportedatfairvalueviatheincomestatement - - - -
Derivativeinstruments 145.4 0.0 0.0 a) 145.4
Otherfinancialliabilities 4,565.5 46.5 -83.8 a)b) 4,528.2
Technicalprovisions - 922.5 - 922.5
Otherliabilities 201.3 20.7 -6.2 a) 215.8
Provisions 6.9 - - 6.9
Taxliabilities 45.0 16.5 - 61.5
Liabilitiesforassetsclassifiedasheldforsale - 0.2 - 0.2
Total liabilities 9,842.4 1,006.4 -109.6 10,739.1
Totalrestrictedequity 208.4 63.9 -23.1 b) 249.1
Unrestrictedequity 193.9 375.0 -262.9 b) 306.0
Shareholders’shareofequity 402.2 438.9 -286.0 555.1
Non-controllinginterest’sshareofequity 64.9 - - 64.9
Equity 467.2 438.9 -286.0 620.0
Total liabilities and equity 10,309.5 1,445.3 -395.7 11,359.2
a) Eliminations of intra-group items:
Cashandbalanceswithcentralbanks -14.2
Financialassetsavailableforsale -7.3
Derivativeinstruments 0.0
Loansandotherreceivables -50.8
Otherassets -6.2
Assetsclassifiedasheldforsale -1.2
Assets -79.6
Deposits -19.7
Derivativeinstrument 0.0
Otherfinancialliabilities -53.8
Otherliabilities -6.2
Liabilities -79.6
b) Intra-group equity eliminations
Investmentsinassociatedcompanies 0.8
Investmentsingroupcompanies -316.9
Assets -316.0
Otherfinancialliabilities/Capitalloan -30.0
Mergerdifference 53.9
Otherrestrictedequity -77.0
Unrestrictedequity -262.9
Equity -286.0
Other financial liabilities and equity -316.0
26 Aktia Aktia 27
Helsinki6August2013
AKTIABANKPLC
TheBoardofDirectors
28 Aktia Aktia 29
TRANSLATION
To the Board of Directors of Aktia Bank p.l.c.
Report on review of the interim report of Aktia Bank p.l.c group as of and for the six months period ending June 30, 2013
Introduction
Wehavereviewedthebalancesheetasof30June2013,theincomestatement,thestatementofcomprehensiveincome,thestatementofchangesinequityandthecashflowstatementofAktiaBankp.l.c.groupforthesix-monthperiodthenended,aswellasasummaryofsignificantaccountingpoliciesandotherexplanatorynotestothefinancialstatements.TheBoardofDirectorsandtheManagingDirectorareresponsibleforthepreparationandfairpresentationofthisinterimfinancialinformationinaccordancewiththeInternationalFinancialReportingStandards(IFRS),asadoptedbytheEU,andotherFinnishregulationsgoverningthepreparationofinterimreports.Wewillexpressourconclusionontheinterimreportbasedonourreview.
Scope of review
WeconductedourreviewinaccordancewiththeStandardonReviewEngagements2410,ReviewofInterimFinancialInformationPerformedbytheIndependentAuditoroftheEntity.
Areviewofinterimfinancialinformationconsistsofmakinginquiries,primarilyofpersonsresponsibleforfinancialandaccountingmatters,andapplyinganalyticalandotherreviewprocedures.Areviewissubstantiallylessinscopethananauditconductedinaccordancewiththestandardsonauditingandothergenerallyacceptedauditingpracticesandconsequentlydoesnotenableustoobtainalevelofassurancethatwouldmakeusawareofallsignificantmattersthatmightbeidentifiedinanaudit.Accordingly,wedonotexpressanauditopinion.
Conclusion
Basedonourreview,nothinghascometoourattentionthatcausesustobelievethattheinterimreportdoesnotgiveatrueandfairviewoftheconsolidatedfinancialpositionasat30June2013andtheconsolidatedresultofitsoperationsandcashflowsforthesix-monthperiodthenended,inaccordancewiththeInternationalFinancialReportingStandards(IFRS),asadoptedbytheEUandotherapplicableregulationsgoverninginterimfinancialreportingpreparationinFinland.
Helsinki6August2013
KPMGOyAb
JariHärmälä
Authorized Public Accountant
28 Aktia Aktia 29
7.11.2013 interim report january -September 2013
ContactsAktia Bank plcPO Box 207Mannerheimintie 14, 00101 HelsinkiTel. +358 10 247 5000Fax +358 10 247 6356
Website: www.aktia.fiContact : [email protected]: [email protected] ID: 2181702-8BIC/S.W.I.F.T: HELSFIHH