EVLI BANK PLC STOCK EXCHANGE RELEASE JANUARY 25, 2022 AT 12.30 PM (EET/EEST)
RECORD RESULT ̶ OPERATING PROFIT INCREASED BY MORE THAN 80 PERCENT
Financial performance January-December 2021
- Operating income was EUR 115.6 million (1-12/2020: EUR 79.7 million)
- Operating profit was EUR 53.0 million (EUR 29.1 million)
- Operating result of the Wealth Management and Investor Clients segment increased to EUR 44.8 million (EUR 27.7 million)
- Operating result of the Advisory and Corporate Clients segment increased to EUR 7.4 million (EUR 1.8 million)
- Revenue from own balance sheet developed positively and amounted to EUR 3.5 million (EUR 2.4 million)
- At the end of December, assets under management amounted to EUR 17.5 billion (EUR 14.1 billion) on net basis.
- Diluted earnings per share were EUR 1.47 (EUR 0.87) and return on equity was 40.3 percent (23.4%)
- The ratio of recurring revenues to operational costs was 130 percent (128%).
- The Board of Directors proposes that a dividend of EUR 1.06 per share (EUR 0.73) be paid for the financial year 2021. The company estimates that capital committed to the current business will be freed up through the demerger and the concentration on the asset management business. With regard to the capital released, the company will assess the possibility of investing it or distributing it to shareholders at a later stage.
- In the partial demerger, Evli Bank's shareholders will also retain ownership of shares in Fellow Bank created by the arrangement. In the merger with Fellow Bank, Evli Bank will retain an amount of own funds equivalent to approximately EUR 0.27 per share.
Financial performance October-December 2021
- The Group's net revenue was EUR 35.0 million (EUR 28.1 million)
- The Group's operating profit was EUR 16.1 million (EUR 13.6 million)
- Diluted earnings per share amounted to EUR 0.46 (EUR 0.42).
Outlook for 2022
The year 2022 has started on a challenging note for markets, with heightened interest rate and inflation fears, increased geopolitical risks and a drop in the markets.
With the demerger planned for 2022, Evli will be able to better focus on developing both its wealth management and banking businesses. Growth prospects for the asset management business, which includes products and services for investors and corporates, are stable. However, there are always risks associated with the general development of the equity and fixed income markets. A possible fall in share prices or a reduction in investors' risk appetites would have a negative impact on the company's performance. The Group's assets under management reached a new record level at the end of 2021 and the product range has expanded, in particular in alternative investment products, which will mitigate the negative impact on results from a possible market turnaround.
The banking business will be clearly strengthened by the merger of Fellow Finance Plc with Evli Bank Plc, which will result in positive growth prospects for this business. However, there is considerable uncertainty about the development of the loan and deposit portfolio, which is critical for the business. These will have a direct impact on the company's short-term performance.
In view of the above, the outlook for the banking operations will become clearer once the demerger and merger are completed. For the asset management business, we expect the operating result to be at a good level. The outlook for asset management will be further specified after the completion of the demerger and during the year as the outlook for market developments becomes clearer.
Key figures describing the Group´s financial performance
| 1-12/2021 | 1-12/2020 | ||||
| Income statement key figures | |||||
| Operating income, M€ | 115.6 | 79.7 | |||
| Operating profit/loss, M€ | 53.0 | 29.1 | |||
| Operating profit margin, % | 45.9 | 36.5 | |||
| Profit/loss for the financial year, M€ | 43.0 | 23.2 | |||
| Profitability key figures | |||||
| Return on equity (ROE), % | 40.3 | 26.2 | |||
| Return on assets (ROA), % | 5.6 | 2.7 | |||
| Balance sheet key figures | |||||
| Equity-to-assets ratio, % | 15.6 | 12.3 | |||
| Group capital adequacy ratio, % | 15.4 | 15.2 | |||
| Key figures per share | |||||
| Earnings per Share (EPS), fully diluted, € | 1.47 | 0.87 | |||
| Comprehensive Earnings per Share (EPS), fully diluted, € | 1.48 | 0.88 | |||
| Dividend proposal per share, €* | 1.06 | 0.73 | |||
| Equity per share, € | 4.73 | 3.86 | |||
| Share price at the end of the period, € | 26.20 | 12.20 | |||
| Other key figures | |||||
| Expense ratio (operating costs to net revenue) | 0.54 | 0.63 | |||
| Recurring revenue ratio, % | 130 | 128 | |||
| Personnel at the end of the period | 290 | 261 | |||
| Market value, M€ | 631.7 | 294.1 | |||
*The board's proposal for the annual general meeting.
Maunu Lehtimäki, CEO
In the fourth quarter, capital markets continued to develop positively, and stock prices rose globally. The positive performance of equity markets was supported by strong global economic growth, improved corporate earnings, accommodative fiscal policies and easy monetary policy by central banks, and the gradual easing of the coronavirus pandemic as vaccination coverage increased.
The emergence of the omicron variant at the end of the year reversed the downward trend in infection rates. The milder symptoms of the variant have so far helped avoid large-scale restriction measures that would have crippled society and the economy. However, high valuation levels, prevailing inflationary pressures and rising interest rate expectations do not leave room for any disappointment in economic growth prospects. China's strict zero-covid policy will contribute to the risk of disruptions to global flows and supply chains, which, if they materialise, will also affect corporate earnings prospects.
In the fourth quarter, Evli's business developed excellently. Operating income grew by 25 percent year-on-year to EUR 35 million, while Group operating profit increased by 18 percent to EUR 16.1 million, driven by revenue growth in all key business areas and the accrual of performance fees on the back of strong portfolio management performance. The result was negatively impacted by external expert expenses related to the merger announced in the summer, as a result of which Evli Bank Plc will be split into a new listed asset management company and a company continuing its banking operations, to which Fellow Finance Plc will be merged.
For the full year, Evli's turnover increased by 45 percent to EUR 116 million and operating profit almost doubled to EUR 53 million. Evli's return on equity was 40 percent (26%) and the ratio of recurring income to operating expenses was 130% (128%). The strong growth in returns is the result of investments in new product development, active client acquisition both at home and abroad, increased demand for business services and excellent portfolio management performance across the board.
Operating income in the Wealth Management and Investor Clients segment increased by 23 percent compared to the last quarter of the previous year and amounted to EUR 28.8 million. Client assets under management reached a new record of EUR 17.5 billion (EUR 14.1 billion) and Evli Fund Management Company’s mutual fund capital amounted to EUR 10.6 billion (EUR 8.7 billion). Net subscriptions amounted to almost EUR 1.2 billion, mainly in Nordic and European corporate bonds. The segment's income growth was positively influenced by higher fee income from traditional and alternative funds and increased brokerage fees. New client wins, additional investments from existing clients and the positive market impact increased the assets under management in private and institutional mandates to a new record. The segment's positive performance was underpinned by good portfolio management results and success in independent competitor benchmarking in both wealth management and fund management.
Operating income in the Advisory and Corporate Clients segment increased by 65 percent in the fourth quarter to EUR 5.4 million. Invoicing in the Corporate Finance unit increased clearly from the comparison period to EUR 2.8 million (EUR 1.2 million). The unit's mandate base is at a good level and the outlook for the year ahead is favourable. As in the first half of the year, income from the Incentives business increased to EUR 2.8 million (EUR 2.1 million). The company has continued to win new incentive plan design and administration clients during the latter part of the year and the outlook is also good. New demand for the company's services has been created by the active Finnish IPO market, the change in the law on the tax treatment of employee shareholdings in unlisted companies and marketing to Swedish listed companies.
The key drivers of Evli's strategy, international sales and alternative investment products, developed as planned during the quarter and throughout the year. International sales have performed well despite travel restrictions, with net subscriptions since the beginning of the year totalling EUR 737 million and international clients accounting for more than 27% of total Evli assets under management, including alternative investment products.
Alternative investment products were sold for a total of EUR 171 million in the last quarter and EUR 498 million for the full year. New products launched in the last quarter were Evli Private Equity III and Evli Residential II, for which a total of EUR 92 million was raised for the first closing. A total of five new alternative investment products were launched during 2021. The expertise and ability to create new alternative investment products is key to our objective of offering our clients a comprehensive and well-diversified wealth management strategy, combining both traditional and alternative asset classes.
Evli Bank's Extraordinary General Meeting held on December 22, 2021, confirmed the demerger of Evli Bank Plc and the merger of the remaining part of Evli Bank with Fellow Finance Plc. The result of the arrangement will be a new Fellow Bank Plc based on a scalable and digital service concept and an Evli Plc that has an even stronger focus than before on asset management and advisory services. The arrangement creates the conditions to grow both the banking and asset management businesses as independent entities. The transaction is expected to be completed at the beginning of the second quarter. Evli Plc aims to become the leading Nordic asset manager with a broader international business footprint. Growth, profitability, and responsibility will be the guiding themes of its operations. The company aims to achieve a return on equity of more than 25% and an operating profit margin of more than 30% over the business cycle and to increase the assets under management to 30 billion in the long term.. In addition, the company aims to increase the ratio of recurring income to operating costs to over 130%. The Board of Directors of the new Evli will further specify its financial objectives after the implementation of the split.
In the area of responsible investing, work in the last quarter of the year was largely focused on influencing climate goals. Climate advocacy is part of Evli's roadmap for climate targets and, in the first phase, targets high emitting companies that, for example, do not have emission reduction or climate targets. Evli's sustainability work was also praised by clients, who rated the company as the best in Finland for responsible investing in an institutional asset management client survey by SFR Scandinavian Financial Research.
I would like to thank our clients and shareholders for their trust in Evli, and our employees for their great and successful work in 2021.
EVLI BANK PLC
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
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 as well as Corporate Finance services. The company also offers banking services that support clients' investment operations. Evli is ranked as the best* and most used** institutional asset manager in Finland. Evli also has Finland's best expertise in responsible investment.***
Evli has a total of EUR 17.5 billion in client assets under management (net 12/2021). Evli Group's equity capital totals EUR 118.1 million and its BIS capital adequacy ratio is 15.4 percent (December 31, 2021). The company has around 290 employees. Evli Bank Plc’s B shares are listed on Nasdaq Helsinki Ltd.
*Kantar Prospera External Asset Management Finland 2015, 2016, 2017, 2018, 2019, 2021, Kantar Prospera Private Banking 2019, 2020 Finland **Kantar Prospera External Asset Management Finland 2017, 2018, 2019, 2020, 2021 ***SFR Scandinavian Financial Research Institutional Investment Services Finland 2021
Distribution: Nasdaq Helsinki Ltd, main media, www.evli.com
