Evli Bank Plc’s Half Year Financial Report January-June 2019

EVLI BANK PLC STOCK EXCHANGE RELEASE JULY 12, 2019, AT 11.00 AM.

ASSETS UNDER MANAGEMENT EXCEEDED EUR 13 BILLION

• The Wealth Management and Investor Clients segment's operating profit declined and was EUR 6.9 million (1-6/2018: EUR 9.1 million)
• The Advisory and Corporate Clients segment's operating profit of EUR 1.0 million remained at same level as in the comparison period (EUR 0.8 million)
• The return from own balance sheet items developed favourably and totaled EUR 2.5 million (EUR 0.4 million) improving operating profit in the Group Operations segment
• According to strategy, Evli's assets under management in alternative investment products increased during the review period and were about EUR 800 million (about EUR 180 million).

January-June 2019

• Net revenue was EUR 35.1 million (EUR 34.9 million)
• Operating profit was EUR 9.5 million (EUR 10.4 million)
• Profit for the financial year was EUR 7.3 million (EUR 10.3 million). Profit for the comparison period includes EUR 2.1 million of the share of the associated company
• Evli's diluted earnings per share were EUR 0.29 (EUR 0.41) and return on equity was 19.8 percent (28.8%)
• Net assets under management grew and totaled record-high EUR 13.3 billion (EUR 11.9 billion) at the end of June
• Proportion of recurring revenue to operating costs was 113 percent (113%).

April-June 2019

• The Group's net revenue was EUR 18.3 million (EUR 18.0 million)
• The Group's operating profit was EUR 5.2 million (EUR 5.2 million)
• Earnings per share amounted to EUR 0.16 (EUR 0.17).

Outlook for 2019 unchanged

The risks associated with the general trend in the equity and fixed income markets are high due to the prevailing uncertainty on the markets. A possible continued decline in equity prices or a reduction in investors’ risk appetite would have a negative impact on the company’s profit performance. Evli Group’s assets under management have grown substantially in recent years, which softens the result-impact of any reversal of the market. Sales of alternative investment products, in particular, have brought new, stable revenue. Evli has initiated a series of internal, strategy-based actions and cost savings, leading to improvements in the company’s cost effectiveness.

There has been positive development in the demand for advisory services, and its outlook for 2019 is stable. Own balance sheet investments share of Evli’s business decreased during 2018. Nevertheless, it may have a significant impact on the company’s result performance. In the advisory business and in own investment activities, fluctuations in quarterly and annual returns are possible. Customer's demand for Evli's products and services has continued to be good, which has also led to a systematic increase in lending.

Because of profitable and stable development, we estimate that the result for the 2019 financial year, will be clearly positive.

Key Figures

*Dividend for 2018 approved by the Annual General Meeting. The dividend was paid on March 21, 2019.

Maunu Lehtimäki, CEO

An improved market environment caused client activity to increase substantially during the second quarter, which was reflected as growing sales of fund products and discretionary asset management services. In fact, our fund fees were ten percent higher than in the same period a year earlier. On the other hand, brokerage fees declined, as a result of which our net commission income fell short of the previous year’s level. Nevertheless, revenue increased slightly as our own balance sheet produced excellent returns.

In line with Evli’s strategy, we have continued our efforts in development of alternative investment products, international fund sales and projects that enhance the client experience and digitalization.

Regarding alternative investment products, in the second quarter we launched our second fund that invests in private equity funds, Evli Private Equity I Ky, with over EUR 260 million in capital, including investment commitments. In addition, we collected over EUR 30 million in new capital in the Evli Private Equity II Ky fund, which was launched in the first quarter. During the second quarter we collected around EUR 40 million in investments and commitments in our two real estate equity funds, Evli Rental Yield and Evli Residential I Ky. The total alternative investment product capital, including investment commitments, was around EUR 800 million at the end of the review period compared with around EUR 180 million a year earlier.

International fund sales grew by around EUR 300 million during the review period, the majority of which concerned our corporate bond funds, as before. Foreign investors were interested especially in the Evli Nordic Corporate Bond fund, which invests in Nordic corporate bonds, and the fund’s capital increased to almost EUR 800 million at the end of June. Overall, our international fund capital grew to EUR 2.4 billion compared with EUR 1.9 billion a year earlier. Evli’s major markets outside Finland are Sweden and the other Nordic countries and large countries in Central Europe, particularly Germany, France and Spain. In new market opportunities, we also received fund investments from Italy and Portugal.

At home, the sales of fund products and discretionary asset management services developed well and were as planned for both private and institutional clients. Net subscriptions in traditional mutual funds were around EUR 658 million and our fund capital in these funds rose to EUR 8.9 billion. Evli is the fourth-largest fund management company in Finland and its market share was 7.7 percent at the end of June. Our overall client assets under management grew to EUR 13.3 billion.

In the Advisory and Corporate Clients segment the Corporate Finance business area performed in line with expectations and invoicing was at the level of the previous year. The company’s mandate base is stable so the outlook for the coming quarters is also positive. The incentive system management business grew as it has in previous years thanks to new clients and existing clients extending their current incentive systems.

We will continue our resolute work to develop our strategic focus areas in order to reach our target of achieving an even broader selection of funds and more international clientele. By developing new alternative investment products we want to meet client demand even better and strengthen the average margin of our fund products. We will also continue our work to create a unique client experience and to boost the efficiency of our investment processes. We have been investing in the development of our information systems for a long time now. During 2019 our target is to launch new digital services and update our back office systems. We believe this work will have a positive impact on our client satisfaction and profitability.

Finally, I am very pleased that for the fifth consecutive year, Evli was ranked Finland’s best asset manager by institutional clients in the KANTAR SIFO Prospera “External Asset Management 2019 Finland” survey. This is a valuable acknowledgement of the persevering work that we do with the client’s best interests always in mind.

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, administration of incentive programs 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 13.3 billion in client assets under management (net 6/2019). The Evli Group’s equity capital totals EUR 69.6 million and its BIS capital adequacy ratio is 14.7 percent (June 30, 2019). The company has more than 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, SFR Scandinavian Financial Research Institutional Investment Services, Finland 2015, 2016 ,2017, 2018.

Distribution:
Nasdaq Helsinki Ltd, main media, www.evli.com