Evli Bank Plc’s Financial Statements Bulletin January-December 2020
EVLI BANK PLC STOCK EXCHANGE RELEASE JANUARY 22, 2021, AT 11.00 AM (EET/EEST)*RECORD RESULT IN A**N* *EXCEPTIONAL** MARKET ENVIRONMENT*
*Financial performance January-**Dece**mber 2020*
· Net revenue was EUR 79.7 million (1-12/2019: EUR 75.8 million)
· Operating profit was EUR 29.1 million (EUR 24.1 million)
· The Wealth Management and Investor Clients segment’s operating profit increased and was EUR 27.7 million (EUR 20.8 million)
· The Advisory and Corporate Clients segment’s operating profit declined and was EUR 1.8 million (EUR 2.8 million)
· The return from own balance sheet items declined during the beginning of the year as a consequence of the market collapse and were EUR 2.4 million (EUR 3.2 million), which resulted in a weaker operating profit in the Group Operations segment
· Net assets under management amounted to EUR 14.1 billion (EUR 14.3 billion) at the end of December
· Evli’s diluted earnings per share were EUR 0.87 (EUR 0.71) and return on equity was 26.2 percent (23.4%)
· Proportion of recurring revenue to operating costs was 124 percent (124%).
· The Board of Directors dividend proposal to the Annual General Meeting is EUR 0.73 per share (EUR 0.66 per share). It is proposed that the Annual General Meeting would authorize the Board of Directors to decide on the payment of the dividend in one or more instalments at a time it deems best, taking into account the current authority recommendations.
*Financial performance **October-Dec**ember 2020*
· The Group's net revenue was EUR 28.1 million (EUR 22.7 million)
· The Group's operating profit was EUR 13.6 million (EUR 8.7 million)
· Earnings per share amounted to EUR 0.42 (EUR 0.24).
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Outlook for 202**1*
We estimate that the operating profit for 2021 will be clearly positive.
The view is supported by a high ratio of recurring revenue to operating costs, as well as sales of alternative investment products, which have brought new, stable revenue.
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*Key Figures* *D**escribing the** G**roup´s Financial Performance*
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*Income statement key figures*
Operating income, M€ 79.7 75.8
Operating profit/loss, M€ 29.1 24.1
Operating profit margin, % 36.5 31.8
Profit/loss for the financial year, M€ 23.2 18.7
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*Profitability key figures* * *
Return on equity (ROE), % 26.2 23.4
Return on assets (ROA), % 2.7 2.1
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*Balance sheet key figures* * *
Equity-to-assets ratio, % 12.3 8.9
Group capital adequacy ratio, % 15.2 15.1
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*Key figures per share*
Earnings per Share (EPS), fully diluted, € 0.87 0.71
Comprehensive Earnings per Share (EPS), fully diluted, € 0.88 0.71
Dividend per share, € 0.73* 0.66
Equity per share, € 3.86 3.40
Share price at the end of the period, € 12.20 10.40
*Other key figures*
Expense ratio (operating costs to net revenue) 0.63 0.68
Recurring revenue ratio, % 124 124
Personnel at the end of the period 261 249
Market value, M€ 294.1 248.6*Dividend for 2020, proposal by the Board of Directors
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*Maunu Lehtimäki, CEO *
The positive development of the capital markets continued in the final quarter, and equity prices rose globally by around ten percent, ending up at a higher level than in the previous year. Market optimism was supported, as in previous quarters, by the extensive economic and monetary policy support measures undertaken by governments as well as the commencement of Covid-19 vaccinations. Investor confidence was also strengthened by expectations of the acceleration of global economic growth as the coronavirus pandemic gradually would slow down, and inflation expectations and thus interest rates remained at a low level.
Evli's operations continued without disruption in the final quarter and we were able to maintain our client activity almost at the level of previous years despite broad remote working. Our determined efforts to develop our information systems and to renew our processes carried out over recent years have improved our capacity to operate in conditions such as the prolonged exceptional circumstances that we are currently experiencing.
In the final quarter, the return from Evli's operations rose by almost a quarter to EUR 28.1 million and operating profit rose by as much as 56 percent to EUR 13.6 million. Full-year revenue amounted to almost EUR 80 million and operating profit was EUR 29.1 million. I believe this is an excellent achievement, considering the dramatic equity price decline that was triggered by the coronavirus crisis in the spring. Net commission income grew by nearly one fifth during the fourth quarter, driven by alternative investment products as well as asset management and mutual fund fees. Evli's return on equity rose to 26.2 percent and the ratio of recurring revenue to operating expenses was 124 percent.
The return from the Wealth Management and Investor Clients segment’s operations increased nine percent and was EUR 67.1 million at the end of the year. At the end of December, client assets under management were EUR 14.1 billion (EUR 14.3 billion) and Evli Fund Management Company's fund capital was EUR 8.7 billion (EUR 9.6 billion). Net subscriptions totalled EUR -1,071 million, mainly due to redemptions from short-duration fixed income fund. Alternative investment products, asset management fees, funds' performance-based fees and brokerage income all had a positive impact on the growth in the segment's earnings. However, the price decline at the beginning of the year and fund redemptions reduced the commission income of traditional funds. Evli's position as the leading asset manager of high-net-worth individuals and institutions in Finland strengthened further, as exemplified by gaining new client relationships.
The Advisory and Corporate Clients segment’s return declined eleven percent and was almost EUR 10 million. The Corporate Finance unit’s invoicing was reduced by delayed advisory projects. However, the incentive business grew as in previous years. The new company Evli Alexander Incentives Oy, which was established as a result of the share exchange that took place at the end of September, has been well-received among clients and employees, and the integration of operations has proceeded according to plan.
Evli’s strategic focus areas – international fund sales and sales of alternative investment products – showed contrasting performance during the year. International sales suffered from market price fluctuations, which was reflected in the form of net redemptions in corporate bond funds. The acquisition of new clients in Europe was also challenging due to extensive travel restrictions. However, the restrictions did not hamper sales of alternative investment products, as the main target group for these products is in Finland. During the year, the new alternative investment products Evli Infrastructure Fund I and Evli Impact Forest Fund I were launched and the raising of capital for both will continue in 2021. The total assets under management of alternative investment products has grown rapidly and exceeded the EUR 1 billion mark in 2020. Our goal is to offer our clients a broad range of varied alternative investment products to support traditional asset classes, enabling the implementation of a comprehensive and well-diversified asset management strategy.
Evli added responsibility to its strategic focus areas at the beginning of the year. We believe responsibility will further increase in importance in the future, and therefore we will focus even more on developing it, for example by setting climate targets and deepening ESG integration in portfolio management.
I would like to thank our clients and shareholders for their trust and our employees for their hard and successful work in the exceptional environmentEVLI BANK PLC
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*For additional information, please contact:*
Maunu Lehtimäki, CEO, Evli Bank Plc, tel. +358 (0)50 553 3000, maunu.lehtimaki@evli.com
Juho Mikola, CFO, Evli Bank Plc, tel. +358 (0)40 717 8888, juho.mikola@evli.com
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*Evli Bank Plc*
Evli is a bank specialized in investments that helps institutions, corporations and private persons increase their wealth. The product and service offering includes mutual funds, asset management and capital markets services, alternative investment products, equity research, incentive plan design and administration and Corporate Finance services. The company also offers banking services that support clients' investment operations. Evli is the highest ranked and most used institutional asset manager in Finland*.
Evli has a total of EUR 14.1 billion in client assets under management (net 12/2020). Evli Group's equity capital totals EUR 95.4 million and its BIS capital adequacy ratio is 15.2 percent (December 31, 2020). The company has around 250 employees. Evli Bank Plc's B shares are listed on Nasdaq Helsinki Ltd.
*KANTAR SIFO Prospera External Asset Management Finland 2015, 2016, 2017, 2018, 2019 and SFR Scandinavian Financial Research Institutional Investment Services, Finland 2015, 2016, 2017, 2018.
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*Distribution:
*Nasdaq Helsinki Ltd, main media, www.evli.com