Bank of Åland Plc STOCK EXCHANGE RELEASE 27.02.2007 09.00 hrs
Year-end report for the period January - December 2006
The year in brief
-Consolidated net operating profit rose by 13 per cent to 21.1 million euros
(2005: EUR -18.7 M)
-Net interest income increased by 4 per cent to EUR 32.7 M (31.4)
-Commission income increased by 14 per cent to EUR 18.4 M (16.1)
-Other operating income climbed 167 per cent to EUR 9.4 M (3.5)
-Lending volume increased by 6 per cent to EUR 1,912 M (1,796)
-Deposits decreased by 2 per cent to EUR 1,599 M (1,631)
-Mutual fund capital under management rose by 32 percent to EUR 355 M (269)
-Return on equity after taxes (ROE) was 13.3 per cent (12.5)
-The total capital ratio amounted to 11.4 per cent (11.3)
-Earnings per share after taxes amounted to EUR 1.29 (1.24)
-The Board of Directors proposes a dividend of EUR 1.00 (1.00) per share
EARNINGS AND PROFITABILITY
This Year-end Report has been reported according to the International Financial
Reporting Standards (IFRSs) approved by the European Union, as well as in
compliance with IAS 34, “Interim Financial Reporting”.
Summary of 2006 results
The Bank of Åland Group had a successful year in 2006, with strong performance
in its asset management and information technology (IT) operations. The Group's
earnings were its best ever. Consolidated net operating profit rose by 13 per
cent to EUR 21.1 M (18.7). Income rose by 18 per cent to EUR 61.6 M (52.0),
while expenses rose to EUR 40.9 M (33.2). Return on equity after taxes (ROE)
rose to 13.3 (12.5) per cent, and earnings per share after taxes rose to EUR
1.29 (1.24).
Income
Net interest income amounted to EUR 32.7 M (31.4). Increased lending volume as
well as higher interest rates contributed to the improvement, while continued
pressure on margins had an offsetting effect.
Commission income rose by 14 per cent to EUR 18.4 M (16.1). Most of the increase
in income came from asset management and from providing capital market products.
Net income from securities trading for the Bank's own account was EUR 1.2 M
(0.6). Net income from dealing in the foreign exchange market amounted to EUR
1.0 M (0.9).
Net income from financial assets available for sale was EUR 0.3 M (1.1).
Comparability is affected by a capital gain of EUR 1.2 M from the divestment of
the Bank's holding in the Åland-based food processing company Chips Abp during
2005. Net income from investment properties amounted to EUR 0.2 M, which arose
from divestment of properties.
Other operating income rose by 167 per cent to EUR 9.4 M, compared to EUR 3.5 M
the preceding year. The increase mainly came from higher revenue in the Group's
IT operations.
Total income rose by 18 per cent to EUR 61.6 M (52.0).
Expenses
Staff costs rose by 27 per cent to EUR 22.5 M (17.8). Most of the increase was
due to new recruitments at
Crosskey Banking Solutions Ab Ltd. Changes in pension liabilities and fair value
in the Bank's pension fund, Ålandsbanken Abps Pensionsstiftelse, reduced staff
costs by EUR 0.2 M (2.4).
Other administrative expenses (office costs, marketing, telecommunications and
computer costs) rose to EUR 9.4 M (8.5). Production for own use amounted to EUR
0.5 M (1.1) and was related to expenses for computer software, which in
accordance with IFRS must be capitalised. Depreciation/amortisation rose to EUR
4.0 M (3.9).
Other operating expenses amounted to EUR 5.4 M (4.2).
Total expenses, including planned depreciation/amortisation, rose by 23 per cent
to EUR 40.9 M (33.2).
Impairment loss on loans and other commitments
Net impairment losses on loans and other commitments amounted to EUR 0.0 M (0.3)
Earnings structure
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| Bank of Åland Group | 2006 | 2005 |
--------------------------------------------------------------------------------
| EUR M | | |
--------------------------------------------------------------------------------
| Banking operations | 17.1 | 15.2 |
--------------------------------------------------------------------------------
| IT operations | 4.2 | 1.6 |
--------------------------------------------------------------------------------
| Other (treasury, portfolio management) | -0.3 | 1.7 |
--------------------------------------------------------------------------------
| Net operating profit | 21.1 | 18.7 |
--------------------------------------------------------------------------------
Balance sheet total
The balance sheet total rose to EUR 2,189 M (2,170).
Personnel
Hours worked in the Group, recalculated to full-time equivalent positions,
totalled 437 during 2006 (411). This represented an increase of 26 positions,
compared to 2005.
--------------------------------------------------------------------------------
| | 2006 | 2005 |
--------------------------------------------------------------------------------
| Bank of Åland Plc | 295 | 298 |
--------------------------------------------------------------------------------
| Crosskey Banking Solutions Ab Ltd | 117 | 93 |
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| Ålandsbanken Asset Management Ab | 13 | 12 |
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| Ålandsbanken Fondbolag Ab | 7 | 5 |
--------------------------------------------------------------------------------
| Ålandsbanken Kapitalmarknadstjänster Ab | 5 | 3 |
--------------------------------------------------------------------------------
| Total number of employees: | 437 | 411 |
--------------------------------------------------------------------------------
Profit margin
Profit margin calculated as net operating profit minus standard tax as a
percentage of total income. The profit margin of the Bank of Åland Group fell to
24.5 per cent from 25.5 per cent.
Expense/income ratio
Efficiency measured as expenses divided by income, including and excluding loan
losses, respectively:
--------------------------------------------------------------------------------
| Bank of Åland Group | 2006 | 2005 |
--------------------------------------------------------------------------------
| including loan losses | 0.66 | 0.64 |
--------------------------------------------------------------------------------
| excluding loan losses | 0.66 | 0.64 |
--------------------------------------------------------------------------------
Capital adequacy
Capital adequacy rules require that the capital base in the form of equity
capital and reserves total at least 8 per cent of risk-weighted receivables and
contingent liabilities. At the end of 2006, the Group's capital adequacy
according to the Credit Institutions Act was 11.4 (11.3) per cent. To strengthen
the capital base in the form of supplementary capital, risk debenture loans
totalling EUR 11.4 M were issued during the year.
--------------------------------------------------------------------------------
| Bank of Åland Group | Dec 31 | Dec 31 |
--------------------------------------------------------------------------------
| EUR thousand unless otherwise stated | 2006 | 2005 |
--------------------------------------------------------------------------------
| Core capital | 91,596 | 83,783 |
--------------------------------------------------------------------------------
| Of which unrealised gains on investment properties | 2,426 | 1,759 |
| and financial assets and liabilities carried via | | |
| the income statement | | |
--------------------------------------------------------------------------------
| Supplementary capital | 55,081 | 51,346 |
--------------------------------------------------------------------------------
| Of which unrealised gains due to the fair value | 9,283 | 9,454 |
| reserve and recognition of unrealised gains | | |
| directly in equity capital upon transition to IFRS | | |
--------------------------------------------------------------------------------
| Capital requirement for market risks | 9 | 5 |
--------------------------------------------------------------------------------
| Total capital base | 146,677 | 135,129 |
--------------------------------------------------------------------------------
| Risk-weighted receivables, investments and | 1,289,492 | 1,192,697 |
| off-balance sheet obligations | | |
--------------------------------------------------------------------------------
| Total capital ratio, % | 11.37 | 11.33 |
--------------------------------------------------------------------------------
| Core capital as a percentage of risk-weighted | 7.10 | 7.02 |
| volume | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Recognised equity capital | 122,168 | 113,336 |
--------------------------------------------------------------------------------
| Difference between capital base and recognised | 24,509 | 21,794 |
| equity capital | | |
--------------------------------------------------------------------------------
The main reasons for the difference between the capital base and recognised
equity capital are that subordinated liabilities may be counted in the capital
base and that the proposed dividend may not be included in the capital base.
Standardised approach, Basel II
According to preliminary calculations, the total capital ratio will rise by
about two percentage points when the capital requirement for credit risk is
calculated according to the standardised approach in Pillar 1.
Cash flow statement
--------------------------------------------------------------------------------
| Bank of Åland Group | Jan-Dec | Jan-Dec |
--------------------------------------------------------------------------------
| EUR M | 2006 | 2005 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash and cash equivalents, January 1 | | 217.4 | | 252.2 |
--------------------------------------------------------------------------------
| Cash flow from operating activities | | | | |
--------------------------------------------------------------------------------
| | Net operating profit | 21.1 | | 18.7 | |
--------------------------------------------------------------------------------
| | Adjustment for net operating | 6.5 | | 6.7 | |
| | profit items not affecting | | | | |
| | cash flow | | | | |
--------------------------------------------------------------------------------
| | Gains from investing | -1.1 | | -3.5 | |
| | activities | | | | |
--------------------------------------------------------------------------------
| | Income taxes paid | -5.0 | | -3.5 | |
--------------------------------------------------------------------------------
| | Changes in assets and | -125.0 | -103.5 | -188.6 | -170.2 |
| | liabilities in operating | | | | |
| | activities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from investing activities | | -2.0 | | 0.5 |
--------------------------------------------------------------------------------
| Cash flow from financing activities | | 18.4 | | 134.9 |
--------------------------------------------------------------------------------
| Cash and cash equivalents, December | | 130.2 | | 217.4 |
| 31 | | | | |
--------------------------------------------------------------------------------
Deposits
During 2006, deposits from the public including bonds issued and certificates of
deposit decreased by 2.0 per cent to EUR 1,599 M (1,631). Deposit accounts
decreased by 3.2 per cent to EUR 1,259 M (1,300). Time deposits as a share of
total deposit accounts rose to 21 (18) per cent. Bonds and certificates of
deposit issued to the public rose by 2.7 per cent to EUR 340 M (331).
Lending
During 2006, the volume of lending to the public rose by 6.5 per cent to EUR
1,912 M (1,796). Most of the increase went towards residential financing.
Lending to private households rose by 9.0 per cent to EUR 1,347 M (1,236).
Private households accounted for 70.5 (68.8) per cent of the Group's total
lending. Lending for business and professional activities rose by 0.9 per cent
to EUR 538 M (533). Lending to the public sector and non-profit organisations
decreased somewhat.
Changes in Group structure
During 2006, the Bank of Åland Plc established the subsidiary Ab Compass Card Oy
Ltd, of which it holds 66 per cent ownership. The company's field of operations
is the issuance of credit and debit cards to individual and institutional
customers.
Important events after the close of the financial year
No important events have occurred after the close of the financial year.
Proposed distribution of profit
The Board of Directors proposes that the Annual General Meeting approve a
dividend of EUR 1.00 per share, which is equivalent to a total amount of EUR
11.5 M.
Outlook for 2007
The potential for an earnings improvement during 2007 is considered good. The
Group's assessment of the outlook for 2007 is based on its assumptions about
future developments in the fixed-income and financial markets. The Group
predicts continued tough competition in the market with regard to lending
margins, a continued positive trend in the mutual fund and capital markets as
well as growth in the Group's IT operations. The cost level in the Group is
expected to rise moderately. General interest rates, the demand for lending, the
trend of the capital and financial markets and the competitive situation are
factors that the Group cannot influence.
Long-term financial targets
The Board of Directors of the Bank of Åland has adopted the following long-term
financial targets for the Group:
The Bank of Åland endeavours to earn a return on equity that will exceed the
unweighted average of a defined group of Nordic banks.
The total capital ratio shall amount to at least 10 per cent, and core capital
shall amount to at least 7 per cent of risk-weighted volume.
In a medium-term perspective, the Bank's income/expense ratio shall continuously
improve to 2 (expense/income ratio 0.5).
The Bank of Åland endeavours to pursue a dividend policy in which an increasing
percentage of after-tax profit is retained in the Bank, in order to safeguard
its sound business development. This is expected to result in a dividend that
approaches the industry standard for Nordic banks as a percentage of earnings.
It implies a dividend which, in a medium-term perspective, on average will
remain at today's level in euro terms.
Ab Compass Card Oy Ltd
Ab Compass Card Oy Ltd is a subsidiary of the Bank of Åland Plc (Ålandsbanken
Abp). The mission of the company is to issue credit and debit cards to private
and institutional customers. The company is in the start-up phase and is
expected to be in full operation by late 2007.
Crosskey Banking Solutions Ab Ltd
Crosskey Banking Solutions Ab Ltd is a wholly-owned subsidiary of the bank of
Åland Plc. The mission of the company is to develop, sell and maintain banking
computer systems − either as whole systems or in modules − to small and
medium-sized banks in Europe, as well as sell operational services. Among
Crosskey's current customers are Tapiola Bank, DnB NOR, S-Bank, the Bank of
Åland, eQ Bank and EGET. Crosskey currently has 132 employees and offices in
Mariehamn, Turku, Helsinki and Stockholm.
Ålandsbanken Asset Management Ab
Ålandsbanken Asset Management Ab is a subsidiary of the Bank of Åland Plc. The
company offers discretionary and consultative asset management services to
institutions and private individuals. The company also manages all of the Bank
of Åland's mutual funds. The company currently has about 300 customers and EUR
700 M in managed assets. The company has strong growth in the form of new
customers.
Ålandsbanken Fondbolag Ab
Ålandsbanken Fondbolag Ab is a wholly-owned subsidiary of the Bank of Åland Plc.
The mutual funds (unit trusts) that the company manages are registered in
Finland and comply with the Act on Mutual Funds. At year-end 2006, the total
assets under management amounted to EUR 355 M (269), an increase of EUR 86 M or
32 per cent since one year earlier. The number of unit holders rose by 32 per
cent to 12,508 (9,443) during 2006.
Ålandsbanken Kapitalmarknadstjänster Ab
Ålandsbanken Kapitalmarknadstjänster Ab (Allcap Ab) is a subsidiary of the Bank
of Åland Plc. The company provides discretionary asset management as well as
consulting services related to securities and financing. The value of
discretionarily managed mandates totalled EUR 125 M at year-end, an increase of
39 per cent. The company has more than 200 customers, with an aggregate
portfolio value of EUR 460 M.
Annual General Meeting and financial information in 2007
The Annual General Meeting will be held on March 22, 2007.
The Annual Report will be published in the official Swedish version on March 13,
2007 and in Finnish and English soon afterward.
Interim reports during 2007
January-March 2007 April 23, 2007
January-June 2007 July 23, 2007
January-September 2007 October 22, 2007
The figures in this Year-end Report are unaudited.
Mariehamn, February 26, 2007
THE BOARD OF DIRECTORS
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| FINANCIAL RATIOS ETC |
--------------------------------------------------------------------------------
| Bank of Åland Group | Jan-Dec | Jan-Dec |
--------------------------------------------------------------------------------
| | 2006 | 2005 |
--------------------------------------------------------------------------------
| | | |
--------------------------------------------------------------------------------
| Earnings per share before dilution, EUR 1 | 1.29 | 1.24 |
--------------------------------------------------------------------------------
| Earnings per share after dilution, EUR 2 | 1.29 | 1.21 |
--------------------------------------------------------------------------------
| Market price per share, year-end, EUR | | |
--------------------------------------------------------------------------------
| Series A | 26.50 | 24.00 |
--------------------------------------------------------------------------------
| Series B | 24.50 | 24.00 |
--------------------------------------------------------------------------------
| Equity capital per share, EUR 3 | 10.86 | 10.32 |
--------------------------------------------------------------------------------
| Return on equity after taxes, % (ROE) 4 | 13.3 | 12.5 |
--------------------------------------------------------------------------------
| Return on total assets (ROA), % 5 | 0.7 | 0.7 |
--------------------------------------------------------------------------------
| Equity/assets ratio, % 6 | 5.58 | 5.22 |
--------------------------------------------------------------------------------
| Total lending volume, EUR M | 1,912 | 1,796 |
--------------------------------------------------------------------------------
| Total deposits from the public, EUR M | 1,599 | 1,631 |
--------------------------------------------------------------------------------
| Equity capital, EUR M, | 122 | 113 |
--------------------------------------------------------------------------------
| Balance sheet total, EUR M | 2,189 | 2,170 |
--------------------------------------------------------------------------------
| Expense/income ratio | | |
--------------------------------------------------------------------------------
| Including loan losses | 0.66 | 0.64 |
--------------------------------------------------------------------------------
| Excluding loan losses | 0.66 | 0.64 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1 Profit for the year before dilution/ Average number of shares |
--------------------------------------------------------------------------------
| 2 Profit for the year after dilution / Average number of shares + shares |
| outstanding |
--------------------------------------------------------------------------------
| 3 Equity capital / Number of shares on balance sheet date |
--------------------------------------------------------------------------------
| 4 Net operating profit - taxes / Average equity capital |
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| 5 Net operating profit - taxes / Average balance sheet total |
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| 6 Equity capital / Total assets |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| SUMMARY BALANCE SHEET |
--------------------------------------------------------------------------------
| Bank of Åland Group | Dec.31 | Dec.31 |
--------------------------------------------------------------------------------
| (EUR M) | 2006 | 2005 |
--------------------------------------------------------------------------------
| | | |
--------------------------------------------------------------------------------
| ASSETS | | |
--------------------------------------------------------------------------------
| Liquid assets | 65 | 78 |
--------------------------------------------------------------------------------
| Debt securities eligible for refinancing with | 57 | 96 |
| central banks | | |
--------------------------------------------------------------------------------
| Claims on credit institutions | 60 | 128 |
--------------------------------------------------------------------------------
| Claims on the public and public sector entities | 1,912 | 1,796 |
--------------------------------------------------------------------------------
| Debt securities | 0 | 0 |
--------------------------------------------------------------------------------
| Shares and participations | 4 | 5 |
--------------------------------------------------------------------------------
| Shares and participations in associated companies | 2 | 2 |
--------------------------------------------------------------------------------
| Derivative instruments | 27 | 15 |
--------------------------------------------------------------------------------
| Intangible assets | 5 | 4 |
--------------------------------------------------------------------------------
| Tangible assets | 23 | 24 |
--------------------------------------------------------------------------------
| Other assets | 17 | 9 |
--------------------------------------------------------------------------------
| Accrued income and prepayments | 16 | 14 |
--------------------------------------------------------------------------------
| Deferred tax assets | 1 | 1 |
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| | | |
--------------------------------------------------------------------------------
| TOTAL ASSETS | 2,189 | 2,170 |
--------------------------------------------------------------------------------
| | | |
--------------------------------------------------------------------------------
| LIABILITIES AND EQUITY CAPITAL | | |
--------------------------------------------------------------------------------
| Liabilities to credit institutions | 62 | 73 |
--------------------------------------------------------------------------------
| Liabilities to the public and public sector | 1,261 | 1,303 |
| entities | | |
--------------------------------------------------------------------------------
| Debt securities issued to the public | 597 | 558 |
--------------------------------------------------------------------------------
| Derivative instruments | 26 | 15 |
--------------------------------------------------------------------------------
| Other liabilities | 35 | 30 |
--------------------------------------------------------------------------------
| Accrued expenses and prepaid income | 12 | 11 |
--------------------------------------------------------------------------------
| Subordinated liabilities | 60 | 55 |
--------------------------------------------------------------------------------
| Deferred tax liabilities | 13 | 12 |
--------------------------------------------------------------------------------
| TOTAL LIABILITIES | 2,066 | 2,057 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EQUITY CAPITAL AND MINORITY INTEREST | | |
--------------------------------------------------------------------------------
| Share capital | 23 | 22 |
--------------------------------------------------------------------------------
| Share issue | 0 | 0 |
--------------------------------------------------------------------------------
| Share premium account | 29 | 26 |
--------------------------------------------------------------------------------
| Reserve fund | 25 | 25 |
--------------------------------------------------------------------------------
| Fair value reserve | 0 | 0 |
--------------------------------------------------------------------------------
| Retained earnings | 28 | 25 |
--------------------------------------------------------------------------------
| Profit for the year | 15 | 14 |
--------------------------------------------------------------------------------
| Minority interest in capital | 2 | 1 |
--------------------------------------------------------------------------------
| TOTAL EQUITY CAPITAL | 122 | 113 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL LIABILITIES AND EQUITY CAPITAL | 2,189 | 2,170 |
--------------------------------------------------------------------------------
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| SUMMARY INCOME STATEMENT |
--------------------------------------------------------------------------------
| Bank of Åland Group | Jan-Dec | Jan-Dec |
--------------------------------------------------------------------------------
| (EUR M) | 2006 | 2005 |
--------------------------------------------------------------------------------
| | | |
--------------------------------------------------------------------------------
| Net interest income | 32.7 | 31.4 |
--------------------------------------------------------------------------------
| Income from equity instruments | 0.0 | 0.1 |
--------------------------------------------------------------------------------
| Commission income | 18.4 | 16.1 |
--------------------------------------------------------------------------------
| Commission expenses | -1.7 | -2.0 |
--------------------------------------------------------------------------------
| Net income from securities transactions and | 2.3 | 1.5 |
| foreign exchange dealing | | |
--------------------------------------------------------------------------------
| Net income from financial assets available for | 0.3 | 1.1 |
| sale | | |
--------------------------------------------------------------------------------
| Net income from investment properties | 0.2 | 0.3 |
--------------------------------------------------------------------------------
| Other operating income | 9.4 | 3.5 |
--------------------------------------------------------------------------------
| Total income | 61.6 | 52.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Staff costs | -22.5 | -17.8 |
--------------------------------------------------------------------------------
| Other administrative expense | -9.4 | -8.5 |
--------------------------------------------------------------------------------
| Production for own use | 0.5 | 1.1 |
--------------------------------------------------------------------------------
| Depreciation/amortisation | -4.0 | -3.9 |
--------------------------------------------------------------------------------
| Other operating expenses | -5.4 | -4.2 |
--------------------------------------------------------------------------------
| Total expenses | -40.9 | -33.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Loan and guarantee losses | 0.0 | -0.3 |
--------------------------------------------------------------------------------
| Share of income in associated companies | 0.3 | 0.2 |
--------------------------------------------------------------------------------
| Net operating profit | 21.1 | 18.7 |
--------------------------------------------------------------------------------
| | | |
--------------------------------------------------------------------------------
| Income taxes | -5.4 | -4.6 |
--------------------------------------------------------------------------------
| Minority share of profit for the year | -1.0 | -0.5 |
--------------------------------------------------------------------------------
| Profit for the year | 14.7 | 13.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| INCOME STATEMENT BY QUARTER 1 |
--------------------------------------------------------------------------------
| Bank of Åland Group | Q IV | Q III | Q II | Q I | Q IV |
--------------------------------------------------------------------------------
| (EUR M) | 2006 | 2006 | 2006 | 2006 | 2005 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net interest income | 8.6 | 8.2 | 7.8 | 8.1 | 7.9 |
--------------------------------------------------------------------------------
| Income from equity | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| instruments | | | | | |
--------------------------------------------------------------------------------
| Commission income | 4.9 | 4.3 | 4.9 | 4.4 | 4.4 |
--------------------------------------------------------------------------------
| Commission expenses | -0.5 | -0.4 | -0.4 | -0.4 | -0.6 |
--------------------------------------------------------------------------------
| Net income from | 0.8 | 0.1 | 0.6 | 0.7 | 0.4 |
| securities transactions | | | | | |
| and foreign exchange | | | | | |
| dealing | | | | | |
--------------------------------------------------------------------------------
| Net income from | 0.1 | 0.0 | -0.1 | 0.3 | -0.4 |
| financial assets | | | | | |
| available for sale | | | | | |
--------------------------------------------------------------------------------
| Net income from | 0.2 | 0.1 | 0.0 | 0.0 | 0.0 |
| investment properties | | | | | |
--------------------------------------------------------------------------------
| Other operating income | 2.8 | 2.4 | 2.0 | 2.3 | 1.0 |
--------------------------------------------------------------------------------
| Total income | 16.8 | 14.6 | 14.6 | 15.5 | 12.7 |
--------------------------------------------------------------------------------
| | | | | | |
--------------------------------------------------------------------------------
| Staff costs | -6.5 | -5.2 | -5.6 | -5.3 | -3.1 |
--------------------------------------------------------------------------------
| Other administrative | -3.1 | -1.8 | -2.5 | -1.9 | -2.1 |
| expenses | | | | | |
--------------------------------------------------------------------------------
| Production for own use | 0.1 | 0.1 | 0.1 | 0.1 | -0.2 |
--------------------------------------------------------------------------------
| Depreciation/amortisatio | -1.0 | -1.0 | -1.0 | -1.0 | -1.3 |
| n | | | | | |
--------------------------------------------------------------------------------
| Other operating expenses | -1.9 | -1.2 | -1.2 | -1.1 | -1.1 |
--------------------------------------------------------------------------------
| Total expenses | -12.4 | -9.1 | -10.2 | -9.3 | -7.7 |
--------------------------------------------------------------------------------
| | | | | | |
--------------------------------------------------------------------------------
| Loss impairment on loans | -0,1 | 0,0 | 0,1 | 0,0 | 0,0 |
| and other commitments | | | | | |
--------------------------------------------------------------------------------
| Share of income in | 0.1 | 0.0 | 0.1 | 0.1 | -0.1 |
| associated companies | | | | | |
--------------------------------------------------------------------------------
| Net operating profit | 4.5 | 5.6 | 4.6 | 6.4 | 4.9 |
--------------------------------------------------------------------------------
| 1 Quarterly figures for 2005 have been adjusted for the effect of the “fair |
| value option” introduced in Q IV 2005. |
--------------------------------------------------------------------------------
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| CHANGES IN EQUITY CAPITAL |
--------------------------------------------------------------------------------
| Bank of Åland | Shar | Share | Share | Legal | Fair | Retai | Minor | Total |
| Group | e | issue | premi | reser | value | ned | ity | |
| | capi | | um | ve | reser | earni | inter | |
| | tal | | accou | | ve | ngs | est | |
| | | | nt | | | | | |
--------------------------------------------------------------------------------
| EUR M | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity | 22.2 | 0.0 | 25.5 | 25.1 | 0.0 | 34.5 | 0.5 | 107.8 |
| capital, | | | | | | | | |
| December 31, | | | | | | | | |
| 2004 | | | | | | | | |
--------------------------------------------------------------------------------
| Introduction | | | 0.5 | | 1.1 | 1.6 | 0.0 | 3.3 |
| of IAS 39 | | | | | | | | |
| incl. fair | | | | | | | | |
| value option | | | | | | | | |
--------------------------------------------------------------------------------
| Equity | 22.2 | 0.0 | 26.0 | 25.1 | 1.1 | 36.1 | 0.5 | 111.1 |
| capital, | | | | | | | | |
| January 1, | | | | | | | | |
| 2005 | | | | | | | | |
--------------------------------------------------------------------------------
| Dividend to | | | | | | -11.0 | | -11.0 |
| shareholders | | | | | | | | |
--------------------------------------------------------------------------------
| Conversion of | 0.0 | | 0.1 | | | | | 0.1 |
| capital loan | | | | | | | | |
--------------------------------------------------------------------------------
| Change in | | | | | -0.8 | | | -0.8 |
| fair value | | | | | | | | |
--------------------------------------------------------------------------------
| Change in | | | | | | | 0.3 | 0.3 |
| minority | | | | | | | | |
| interest of | | | | | | | | |
| equity | | | | | | | | |
| capital | | | | | | | | |
--------------------------------------------------------------------------------
| Profit for | | | | | | 13.6 | | 13.6 |
| the year | | | | | | | | |
--------------------------------------------------------------------------------
| Equity | 22.2 | 0.0 | 26.1 | 25.1 | 0.4 | 38.7 | 0.9 | 113.3 |
| capital, | | | | | | | | |
| December 31, | | | | | | | | |
| 2005 | | | | | | | | |
--------------------------------------------------------------------------------
| Dividend to | | | | | | -11.0 | | -11.0 |
| shareholders | | | | | | | | |
| 1 | | | | | | | | |
--------------------------------------------------------------------------------
| Conversion of | 0.5 | 0.3 | 3.1 | | | | | 3.9 |
| capital loan | | | | | | | | |
| 2 | | | | | | | | |
--------------------------------------------------------------------------------
| Change in | | | | | 0.0 | | | 0.0 |
| fair value | | | | | | | | |
--------------------------------------------------------------------------------
| Change in | | | | | | | 1.2 | 1.2 |
| minority | | | | | | | | |
| interest of | | | | | | | | |
| equity | | | | | | | | |
| capital | | | | | | | | |
--------------------------------------------------------------------------------
| Profit for | | | | | | 14.7 | | 14.7 |
| the year | | | | | | | | |
--------------------------------------------------------------------------------
| Equity | 22.7 | 0.3 | 29.2 | 25.1 | 0.4 | 42.4 | 2.1 | 122.2 |
| capital, | | | | | | | | |
| December 31, | | | | | | | | |
| 2006 | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1 Dividend payment for Series A shares EUR 5.2 M and for Series B shares |
| EUR 5.8 M. |
--------------------------------------------------------------------------------
| 2 During 2006, 239,649 new Series B shares subscribed in exchange for |
| convertible loan certificates were recorded in the Finnish Trade Registry. |
| This was equivalent to an increase in equity capital of EUR 0.5 M and an |
| increase in the share premium account by EUR 2.8 M. |
| During the period December 1-31, 2006, an additional 19,869 Series B shares |
| were subscribed in exchange for convertible loan certificates. This was |
| equivalent to an increase in recognised equity capital of EUR 0.04 M and an |
| increase in the share premium account by EUR 0.3 M. During the period |
| January 1-31, 2007, 289,932 more Series B shares were subscribed in exchange |
| for convertible loan certificates. This was equivalent to an increase in |
| equity capital of EUR 0.6 M and an increase in the share premium account by |
| EUR 3.8 M. |
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| SEGMENT REPORT |
--------------------------------------------------------------------------------
| Bank of Åland Group | 2006 |
--------------------------------------------------------------------------------
| EUR M | Bankin | Informa | Other | Eliminat | Total |
| | g | tion | | ions | |
| | operat | technol | | | |
| | ions | ogy | | | |
| | | operati | | | |
| | | ons | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| External income | 49.4 | 8.5 | 3.8 | 0.0 | 61.6 |
--------------------------------------------------------------------------------
| Internal income | 0.8 | 9.9 | 0.0 | -10.7 | 0.0 |
--------------------------------------------------------------------------------
| Total income | 50.2 | 18.3 | 3.8 | -10.7 | 61.6 |
--------------------------------------------------------------------------------
| Costs incl. depreciation | -33.1 | -14.1 | -4.4 | 10.7 | -40.9 |
| etc. | | | | | |
--------------------------------------------------------------------------------
| Loan losses | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| Share of income in | 0.0 | 0.0 | 0.3 | 0.0 | 0.3 |
| associated companies | | | | | |
--------------------------------------------------------------------------------
| Net operating profit | 17.1 | 4.2 | -0.3 | 0.0 | 21.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Assets | 1,915 | 8 | 270 | -2 | 2,191 |
--------------------------------------------------------------------------------
| Liabilities | -1,858 | -5 | -206 | 0 | -2,069 |
--------------------------------------------------------------------------------
| Equity capital | | | | | 122 |
--------------------------------------------------------------------------------
| | | | | | |
--------------------------------------------------------------------------------
| Depreciation/amortisation | 3 | 1 | 0 | 0 | 4 |
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| Increases in tangible and | 3 | 2 | 0 | 0 | 5 |
| intangible assets | | | | | |
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| Bank of Åland Group | 2005 |
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| EUR M | Bankin | Informa | Other | Eliminat | Total |
| | g | tion | | ions | |
| | operat | technol | | | |
| | ions | ogy | | | |
| | | operati | | | |
| | | ons | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| External income | 44.1 | 3.1 | 4.8 | 0.0 | 52.0 |
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| Internal income | 0.9 | 10.6 | 0.0 | -11.5 | 0.0 |
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| Total income | 45.0 | 13.8 | 4.8 | -11.5 | 52.0 |
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| Costs incl. depreciation | -29.5 | -12.2 | -3.1 | 11.5 | -33.2 |
| etc. | | | | | |
--------------------------------------------------------------------------------
| Loan losses | -0.3 | 0.0 | 0.0 | 0.0 | -0.3 |
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| Share of income in | 0.0 | 0.0 | 0.2 | 0.0 | 0.2 |
| associated companies | | | | | |
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| Net operating profit | 15.2 | 1.6 | 1.9 | 0.0 | 18.7 |
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| Assets | 1,799 | 5 | 368 | -2 | 2,170 |
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| Liabilities | -1,861 | -3 | -194 | 1 | -2,057 |
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| Equity capital | | | | | 113 |
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| | | | | | |
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| Depreciation/amortisation | 3 | 1 | 0 | 0 | 4 |
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| Increases in tangible and | 4 | 1 | 0 | 0 | 5 |
| intangible assets | | | | | |
--------------------------------------------------------------------------------
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| LENDING TO THE PUBLIC AND PUBLIC SECTOR ENTITIES BY PURPOSE |
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| Bank of Åland Group | Dec.31 | Dec.31 |
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| (EUR M) | 2006 | 2005 |
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| BUSINESS AND PROFESSIONAL ACTIVITIES | | |
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| Service sector | | |
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| Shipping | 60 | 60 |
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| Hotels, restaurants, tourist cottages etc. | 12 | 11 |
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| Wholesale and retail trade | 47 | 46 |
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| Housing corporations | 54 | 40 |
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| Real estate operations | 96 | 95 |
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| Financial operations | 126 | 137 |
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| Other service business | 83 | 78 |
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| | 477 | 467 |
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| Production sector | | |
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| Agriculture. forestry and fishing | 20 | 21 |
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| Food processing etc | 7 | 9 |
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| Construction | 22 | 27 |
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| Other industry and crafts | 11 | 9 |
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| | 60 | 66 |
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| HOUSEHOLDS | | |
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| Home loans | 1,063 | 977 |
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| Studies | 14 | 13 |
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| Other purposes | 271 | 246 |
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| | 1,347 | 1,236 |
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| | | |
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| PUBLIC SECTOR AND NON-PROFIT ORGANISATIONS | 27 | 28 |
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| | | |
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| TOTAL LENDING | 1,912 | 1,796 |
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| DEPOSITS FROM THE PUBLIC AND PUBLIC SECTOR ENTITIES, |
--------------------------------------------------------------------------------
| including bonds issued and certificates of deposit |
--------------------------------------------------------------------------------
| Bank of Åland Group | Dec.31 | Dec.31 |
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| (EUR M) | 2006 | 2005 |
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| Deposit accounts from the public and public | | |
| sector entities | | |
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| Demand deposit accounts | 180 | 187 |
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| Current accounts | 199 | 197 |
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| Environmental and Savings Accounts | 99 | 109 |
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| Prime Accounts | 445 | 494 |
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| Time deposits | 268 | 228 |
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| Total deposit accounts in euros | 1,191 | 1,214 |
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| Deposit accounts in other currencies | 67 | 85 |
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| Total deposit accounts | 1,259 | 1,300 |
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| | | |
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| Bonds and subordinated debentures * | 180 | 174 |
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| Certificates of deposit issued to the public | 160 | 157 |
| * | | |
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| Bonds and certificates of deposit | 340 | 331 |
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| | | |
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| Total deposits | 1,599 | 1,631 |
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* This item does not include debt securities subscribed by credit institutions
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| DERIVATIVE CONTRACTS |
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| Bank of Åland Group | Dec 31.2006 | Dec 31.2005 |
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| (EUR M) | For | Other | For | Other |
| | hedging | | hedging | |
| | purposes | | purposes | |
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| Value of underlying property | | | | |
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| Interest rate derivatives | | | | |
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| Interest rate swap contracts | 342 | 8 | 288 | 5 |
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| Currency derivatives | | | | |
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| Forward contracts | 7 | 7 | 3 | 3 |
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| Interest rate and currency swap | 0 | 1 | 0 | 1 |
| contracts | | | | |
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| Equity derivatives | | | | |
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| Option contracts | | | | |
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| Purchased | 151 | 0 | 147 | 0 |
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| Written | 0 | 151 | 0 | 147 |
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| | 500 | 168 | 438 | 156 |
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| Equivalent credit values of the | | | | |
| contracts | | | | |
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| Interest rate derivatives | 4 | | 2 | |
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| Currency derivatives | 0 | | 0 | |
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| Equity derivatives | 35 | | 25 | |
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| | 40 | | 27 | |
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| OFF-BALANCE SHEET COMMITMENTS |
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| Bank of Åland Group | Dec.31 | Dec.31 |
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| (EUR M) | 2006 | 2005 |
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| Guarantees and pledges | 16 | 13 |
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| Other commitments | 154 | 132 |
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| | 170 | 145 |
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