Bank of Åland Plc STOCK EXCHANGE RELEASE 27.10.2008 15.00 hrs
The report period in brief
Consolidated net operating profit decreased by 20 per cent to 16.3 million euros
(January - September 2007: EUR 20.5 M)
Net interest income increased by 9 per cent to EUR 31.4 M (28.8)
Commission income decreased by 8 per cent to EUR 14.0 M (15.2)
Total income decreased by 1 per cent to EUR 54.0 M (54.4)
Expenses increased by 13 per cent to EUR 37.5 M (33.2)
Loan losses amounted to EUR 0.5 M (0.9)
Lending volume increased by 6 per cent to EUR 2,168 M (September 2007: 2,048)
Deposits increased by 14 per cent to EUR 2,074 M (September 2007: 1,817)
Mutual fund capital under management decreased by 28 per cent to EUR 284 M (406)
Return on equity after taxes (ROE) was 11.8 (16.1) per cent
The expense/income ratio deteriorated to 70 (62) per cent
The total capital ratio in compliance with Basel 2 amounted to 12.2 (12.4) per
cent
Earnings per share after taxes amounted to EUR 0.99 (1.26)
EARNINGS AND PROFITABILITY
This Interim Report has been prepared in compliance with the International
Financial Reporting Standards (IFRSs) that have been adopted by the European
Union, as well as with International Accounting Standard (IAS) 34, “Interim
Financial Reporting”.
Earnings summary for the report period
During January-September 2008, the consolidated net operating profit of the Bank
of Åland Group decreased by 20 per cent to EUR 16.3 M (20.5). During the report
period, the Group's net interest income showed positive growth, while commission
income and net income from securities trading were down compared to the same
period last year.
Income decreased by 1 per cent to EUR 54.0 M (54.4), while expenses increased by
13 per cent to EUR 37.5 M (33.2). Return on equity after taxes (ROE) fell to
11.8 (16.1) per cent, and earnings per share to EUR 0.99 (1.26).
Net interest income
Due to higher interest rates and larger volume of both deposits and lending,
consolidated net interest income rose by 9 per cent to EUR 31.4 M (28.8) during
the report period. Lending volume increased by 6 per cent to EUR 2,168 M
(2,048), and deposit volume increased by 14 per cent to EUR 2,074 M (1,817).
Other income
Commission income fell by 8 per cent to EUR 14.0 M (15.2). Income on securities
brokerage rose, while decreased managed assets meant lower income on mutual fund
and asset management.
Net income from securities trading for the Bank's own account was EUR 0.2 M
(2.1). This low income was partly due to an impairment loss of EUR 0.6 M on
option receivables from Lehman Brothers, which is equivalent to 90 per cent of
the receivables. Net income from dealing in the foreign exchange market improved
to EUR 0.7 M (0.6). Net income from financial assets available for sale was EUR
0.1 M (0.9), and net income from investment properties was EUR 0.1 M (0.6).
Other operating income increased to EUR 8.9 M (7.6) as a consequence of higher
income from the sale and development of information technology (IT) systems.
The Group's total income decreased by 1 per cent to EUR 54.0 M (54.4).
Expenses
Staff costs rose by 9 per cent to EUR 21.0 M (19.3). The increase was due to
employee recruitment and salary hikes as provided by collective agreements.
Changes in the Bank's pension fund, Ålandsbanken Abp:s Pensionsstiftelse,
according to the corridor approach affected staff costs in the amount of EUR 0.1
M (0.2).
Other administrative expenses (office, marketing, communications and IT)
increased to EUR 7.9 M (6.4).This was mainly because of higher external IT
expenses at Crosskey. Production for own use totalled EUR 0.3 M (0.3) and was
related to expenses for computer software, which in accordance with IFRSs must
be capitalised. Depreciation/amortisation increased to EUR 4.4 M (3.6). Other
operating expenses increased to EUR 4.5 M (4.2), as a consequence of rising
property rents for the Group.
The Group's total expenses rose by 13 per cent to EUR 37.5 M (33.2).
Impairment losses on loans and other commitments
Loan losses amounted to EUR 0.5 M (0.9).
Third quarter of 2008
Compared to the third quarter of 2007, the Group's net operating profit fell by
7 per cent to EUR 4.5 M (Q III 2007: 4.9).
Income
Total income increased by 2 per cent to EUR 16.9 M (16.5). Higher deposit and
lending volume and higher interest rates resulted in an increase in net interest
income of 6 per cent to EUR 10.5 M (9.9).
Commission income deteriorated, amounting to EUR 3.8 M (4.6), due to lower
commissions on mutual funds, asset management and securities brokerage. Net
income from securities trading and foreign exchange operations fell to EUR -0.1
M (0.1), as a consequence of an impairment loss of EUR 0.6 M. Other operating
income increased to EUR 3.2 M (2.3) thanks to higher income from IT operations.
Expenses
Total expenses during the quarter increased by 9 per cent to EUR 12.2 M (11.1).
During the quarter, staff costs amounted to EUR 6.8 M (6.5). The number of
employees in the Group increased, and salary hikes were implemented as provided
by collective agreements. Other administrative expenses increased to EUR 2.3 M
(2.1) during the third quarter. Due to increased property expenses and rents,
other operating expenses rose to EUR 1.5 M (1.4).
Balance sheet total and off-balance sheet obligations
At the end of the report period, the Group's balance sheet total was EUR 2,728 M
(2,569). Off-balance sheet obligations decreased to EUR 165 M (192).
Personnel
Hours worked in the Group, recalculated to full-time equivalent positions,
totalled 503 (460) during January-September 2008. This represented an increase
of 43 positions compared to the year-earlier period.
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| Bank of Åland Group | Sep 30 | Sep 30 |
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| | 2008 | 2007 |
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| Bank of Åland Plc | 329 | 306 |
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| Ab Compass Card Oy Ltd | 6 | 4 |
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| Crosskey Banking Solutions Ab Ltd | 139 | 124 |
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| Ålandsbanken Asset Management Ab | 14 | 13 |
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| Ålandsbanken Fondbolag Ab | 6 | 8 |
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| Ålandsbanken Kapitalmarknadstjänster Ab, until | 0 | 5 |
| September 30, 2007 | | |
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| Ålandsbanken Veranta Ab | 9 | 1 |
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| Total number of full-time equivalent positions, | 503 | 460 |
| recalculated from hours worked | | |
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Expense/income ratio
Efficiency measured as expenses divided by income, including and excluding loan
losses, respectively:
--------------------------------------------------------------------------------
| | Sep 30 | Sep 30 |
--------------------------------------------------------------------------------
| Bank of Åland Group | 2008 | 2007 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Including loan losses | 0.70 | 0.62 |
--------------------------------------------------------------------------------
| Excluding loan losses | 0.69 | 0.61 |
--------------------------------------------------------------------------------
Capital adequacy
The Group is reporting capital adequacy in accordance with Pillar 1 in the Basel
2 regulations. According to Pillar 1 of Basel 2, the Group's total capital ratio
at the end of September 2008 was 12.2 (12.4) per cent. The capital requirement
for credit risks has been calculated according to the standardised approach, and
the capital requirement for operational risks has been calculated according to
the basic indicator approach in the Basel 2 regulations.
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| Capital adequacy | | |
--------------------------------------------------------------------------------
| Bank of Åland Group | Sep 30 | Sep 30 | Dec 31 |
--------------------------------------------------------------------------------
| | 2008 | 2007 | 2007 |
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| | | | |
--------------------------------------------------------------------------------
| Capital base, EUR M | | | |
--------------------------------------------------------------------------------
| Core capital | 104.1 | 95.2 | 103.3 |
--------------------------------------------------------------------------------
| Supplementary capital | 52.6 | 51.4 | 51.3 |
--------------------------------------------------------------------------------
| Total capital base | 156.7 | 146.6 | 154.6 |
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
| Capital requirement for credit risks | 93.3 | 86.9 | 88.5 |
--------------------------------------------------------------------------------
| Capital requirement for operational risks | 9.3 | 8.0 | 8.0 |
--------------------------------------------------------------------------------
| Total capital requirement | 102.5 | 94.9 | 96.5 |
--------------------------------------------------------------------------------
| Total capital ratio, % | 12.2 | 12.4 | 12.8 |
--------------------------------------------------------------------------------
| Core capital ratio, % | 8.1 | 8.0 | 8.6 |
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Deposits
Deposits from the public, including bonds and certificates of deposit issued,
increased during the 12 months to September 30, 2008 by 14 per cent to EUR 2,074
M (1,817). Deposit accounts increased by 20 per cent to EUR 1,695 M (1,415).
Bonds and certificates of deposit issued to the public fell by 6 per cent to EUR
379 M (402).
During the third quarter, the Bank chose to reduce its counterparty risks by
decreasing its deposits in other banks, and by concentrating them mainly in
Nordic counterparties. Since liquidity was and is very good, the Bank has not
chosen to match all price competition in the market. One consequence of this is
that deposits from institutional investors declined by about EUR 50 M.
Traditional deposits from the public increased by about EUR 15 M during the
third quarter.
Lending
The volume of lending to the public increased during the 12 months to September
30, 2008 by 6 per cent to SEK 2,168 M (2,048). Lending to households increased
by 3 per cent to EUR 1,467 M (1,421). Households accounted for 68 (69) per cent
of the Group's total lending. Lending to the service sector rose by 14 per cent
to EUR 619 M (543), while lending to the production sector rose by 3 per cent to
EUR 58 M (57).
Ab Compass Card Oy Ltd
Ab Compass Card Oy Ltd is a subsidiary of the Bank of Åland Plc. The mission of
the company is to issue credit and debit cards to private and institutional
customers. The company currently has 6 employees and offices in Mariehamn and
Helsinki.
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 DnB NOR, S-Bank, Tapiola Bank, the Bank of
Åland, eQ Bank and EGET. Crosskey currently has 155 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 asset management services to institutions and private
individuals. The company also manages all of the Bank of Åland's mutual funds.
The year 2008 has been dominated by the global financial market crisis, and it
has been challenging to maintain portfolio values. However, due to the company's
conservative investment strategy, disruptions in the investment environment
primarily represented opportunities for buyers to take advantage of bargains in
the markets. Despite the market situation, the company maintained the same level
of profitability as the year before. The company currently has about 350
customers and EUR 800 M in managed assets.
Ålandsbanken Fondbolag Ab
Ålandsbanken Fondbolag Ab is a wholly-owned subsidiary of the Bank of Åland Plc.
The company's strategy is to ensure that the mutual funds (unit trusts) that it
manages are competitive and tailored to the financial investment needs of Bank
of Åland customers. On September 30, 2008, assets under management totalled EUR
284 M (406 on September 30, 2007), down 28 per cent. The decrease was due to
both a downturn in valuations, especially in equity mutual fund investments, and
customer redemptions of units, as a consequence of the generally uncertain
market situation. The number of unit holders was 14,079 (14,261 on September 30,
2007), a decrease of 1 per cent.
Important events after the close of the report period
In the Bank's assessment, given the prevailing market situation it is very
difficult to achieve profitability in estate agency. During October, the Bank
decided to discontinue its involvement in this business.
Outlook for 2008
The recent times have been characterized by a high degree of turbulence in the
international banking system. The Bank of Åland has not directly been affected
by this, although it is becoming increasingly clear that the bank crisis will
lead to a downturn in the global business cycle. Profitability in deposits and
the capital market is expected to decrease, while on the other hand lending
margins are trending higher. The extreme situation on the financial markets has
had an adverse effect throughout the banking industry. Based on these factors,
and taking into account that 2007 earnings included large nonrecurring items,
the Group's operating income is expected to be lower than in 2007.
It should again be emphasized that at present there is great uncertainty in the
global financial system. Hence, the outlook for the future is fraught with
greater uncertainty than normal. In a long-term perspective, however, business
opportunities for a cautious bank that is close to its customers may even
improve in this market situation.
The Group's assessment of the outlook for 2008 is based on its assumptions
about future developments in the fixed income and financial markets. General
interest rates, the demand for lending, the current trend of the capital and
financial markets, the competitive situation and the business cycles are
factors that the Group cannot influence.
Mariehamn, October 27, 2008
THE BOARD OF DIRECTORS
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| FINANCIAL RATIOS ETC |
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| Bank of Åland Group | Jan-Sep | Jan-Sep | Jan-Dec |
--------------------------------------------------------------------------------
| | 2008 | 2007 | 2007 |
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
| Earnings per share before dilution, | 0.99 | 1.26 | 1.75 |
| EUR 1 | | | |
--------------------------------------------------------------------------------
| Earnings per share after dilution, | 0.99 | 1.26 | 1.75 |
| EUR 2 | | | |
--------------------------------------------------------------------------------
| Market price per share, end of | | | |
| period. EUR | | | |
--------------------------------------------------------------------------------
| Series A | 28.25 | 33.00 | 37.00 |
--------------------------------------------------------------------------------
| Series B | 21.75 | 26.53 | 27.80 |
--------------------------------------------------------------------------------
| Equity capital per share, EUR 3 | 11.53 | 11.05 | 11.54 |
--------------------------------------------------------------------------------
| Return on equity after taxes, % (ROE) | 11.8 | 16.1 | 16.4 |
| 4 | | | |
--------------------------------------------------------------------------------
| Return on total assets, % (ROA) 5 | 0.7 | 0.9 | 0.9 |
--------------------------------------------------------------------------------
| Equity/assets ratio, % 6 | 4.9 | 5.0 | 5.2 |
--------------------------------------------------------------------------------
| Total lending volume, EUR M | 2,168 | 2,048 | 2,104 |
--------------------------------------------------------------------------------
| Total deposits from the public, EUR M | 2,110 | 1,817 | 1,921 |
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| Equity capital, EUR M | 134 | 129 | 135 |
--------------------------------------------------------------------------------
| Balance sheet total, EUR M | 2,728 | 2,569 | 2,592 |
--------------------------------------------------------------------------------
| Expense/income ratio | | | |
--------------------------------------------------------------------------------
| Including loan losses | 0.70 | 0.62 | 0.62 |
--------------------------------------------------------------------------------
| Excluding loan losses | 0.69 | 0.61 | 0.61 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1 Profit for the period before dilution / Average number of shares |
--------------------------------------------------------------------------------
| 2 Profit for the period after dilution / Average number of shares + shares |
| outstanding |
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| 3 Equity capital - minority share of capital / Number of shares on balance |
| sheet date |
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| 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 / Balance sheet total |
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| SUMMARY BALANCE SHEET |
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| Bank of Åland Group | Sep 30 | Sep 30 | Dec 31 |
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| EUR M | 2008 | 2007 | 2007 |
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| | | | |
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| ASSETS | | | |
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| Cash | 84 | 40 | 39 |
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| Debt securities eligible for | 131 | 134 | 132 |
| refinancing with central banks | | | |
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| Claims on credit institutions | 135 | 181 | 153 |
--------------------------------------------------------------------------------
| Claims on the public and public sector | 2,168 | 2,048 | 2,104 |
| entities | | | |
--------------------------------------------------------------------------------
| Debt securities | 76 | 50 | 50 |
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| Shares and participations | 3 | 3 | 3 |
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| Shares and participations in | 2 | 2 | 2 |
| associated companies | | | |
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| Derivative instruments | 15 | 32 | 34 |
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| Intangible assets | 5 | 5 | 6 |
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| Tangible assets | 31 | 26 | 26 |
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| Other assets | 52 | 24 | 21 |
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| Accrued income and prepayments | 24 | 23 | 21 |
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| Deferred tax assets | 1 | 1 | 1 |
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| | | | |
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| TOTAL ASSETS | 2,728 | 2,569 | 2,592 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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| LIABILITIES | | | |
--------------------------------------------------------------------------------
| Liabilities to credit institutions | 63 | 124 | 53 |
--------------------------------------------------------------------------------
| Liabilities to the public and public | 1,696 | 1,417 | 1,534 |
| sector entities | | | |
--------------------------------------------------------------------------------
| Debt securities issued to the public | 671 | 737 | 739 |
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| Derivative instruments | 4 | 30 | 3 |
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| Other liabilities | 62 | 43 | 39 |
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| Accrued expenses and prepaid income | 28 | 24 | 21 |
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| Subordinated liabilities | 54 | 52 | 52 |
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| Deferred tax liabilities | 16 | 13 | 16 |
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| TOTAL LIABILITIES | 2,594 | 2,440 | 2,457 |
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| | | | |
--------------------------------------------------------------------------------
| EQUITY CAPITAL AND MINORITY INTEREST | | | |
--------------------------------------------------------------------------------
| Share capital | 23 | 23 | 23 |
--------------------------------------------------------------------------------
| Share premium account | 33 | 33 | 33 |
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| Reserve fund | 25 | 25 | 25 |
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| Fair value reserve | 0 | 0 | 0 |
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| Retained earnings | 51 | 31 | 51 |
--------------------------------------------------------------------------------
| Shareholders' interest in equity | 133 | 15 | 133 |
| capital | | | |
--------------------------------------------------------------------------------
| Minority interest in capital | 1 | 2 | 2 |
--------------------------------------------------------------------------------
| TOTAL EQUITY CAPITAL | 134 | 129 | 135 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL LIABILITIES AND EQUITY CAPITAL | 2,728 | 2,569 | 2,592 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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| SUMMARY INCOME STATEMENT |
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| Bank of Åland Group | Jan-Sep | Jan-Sep | Jan-Dec |
--------------------------------------------------------------------------------
| EUR M | 2008 | 2007 | 2007 |
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
| Net interest income | 31.4 | 28.8 | 39.3 |
--------------------------------------------------------------------------------
| Income from equity instruments | 0.0 | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| Commission income | 14.0 | 15.2 | 20.3 |
--------------------------------------------------------------------------------
| Commission expenses | -1.6 | -1.5 | -2.0 |
--------------------------------------------------------------------------------
| Net income from securities transactions | 1.0 | 2.7 | 4.2 |
| and foreign exchange dealing | | | |
--------------------------------------------------------------------------------
| Net income from financial assets | 0.1 | 0.9 | 1.1 |
| available for sale | | | |
--------------------------------------------------------------------------------
| Net income from investment properties | 0.1 | 0.6 | 0.6 |
--------------------------------------------------------------------------------
| Other operating income | 8.9 | 7.6 | 11.9 |
--------------------------------------------------------------------------------
| Total income | 54.0 | 54.4 | 75.4 |
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| | | | |
--------------------------------------------------------------------------------
| Staff costs | -21.0 | -19.3 | -26.2 |
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| Other administrative expenses | -7.9 | -6.4 | -10.3 |
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| Production for own use | 0.3 | 0.3 | 1.0 |
--------------------------------------------------------------------------------
| Depreciation/amortisation | -4.4 | -3.6 | -4.9 |
--------------------------------------------------------------------------------
| Other operating expenses | -4.5 | -4.2 | -5.6 |
--------------------------------------------------------------------------------
| Total expenses | -37.5 | -33.2 | -46.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Impairment losses on loans and other | -0.5 | -0.9 | -1.0 |
| commitments | | | |
--------------------------------------------------------------------------------
| Share of profit/loss in associated | 0.3 | 0.3 | 0.2 |
| companies | | | |
--------------------------------------------------------------------------------
| Net operating profit | 16.3 | 20.5 | 28.6 |
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
| Income taxes | -4.4 | -5.4 | -7.6 |
--------------------------------------------------------------------------------
| Profit for the period | 11.9 | 15.1 | 21.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Shareholders' interest in profit for | 11.5 | 14.5 | 20.2 |
| the period | | | |
--------------------------------------------------------------------------------
| Minority interest in profit for the | 0.5 | 0.6 | 0.8 |
| period | | | |
--------------------------------------------------------------------------------
| Total | 11.9 | 15.1 | 21.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share |
--------------------------------------------------------------------------------
| Earnings per share before dilution, EUR | 0.99 | 1.26 | 1.75 |
| 1 | | | |
--------------------------------------------------------------------------------
| Earnings per share after dilution, EUR | 0.99 | 1.26 | 1.75 |
| 2 | | | |
--------------------------------------------------------------------------------
| 1 Profit for the period before dilution / Average number of shares |
--------------------------------------------------------------------------------
| 2 Profit for the period / Average number of shares + shares outstanding |
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| INCOME STATEMENT BY QUARTER |
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| Bank of Åland Group | Q III | Q II | Q I | Q IV | Q III |
--------------------------------------------------------------------------------
| EUR M | 2008 | 2008 | 2008 | 2007 | 2007 |
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| | | | | | |
--------------------------------------------------------------------------------
| Net interest income | 10.5 | 10.7 | 10.1 | 10.5 | 9.9 |
--------------------------------------------------------------------------------
| Income from equity instruments | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| Commission income | 3.8 | 5.1 | 5.1 | 5.1 | 4.6 |
--------------------------------------------------------------------------------
| Commission expenses | -0.5 | -0.6 | -0.5 | -0.5 | -0.5 |
--------------------------------------------------------------------------------
| Net income from securities | -0.1 | 0.4 | 0.7 | 1.5 | 0.1 |
| transactions and foreign | | | | | |
| exchange dealing | | | | | |
--------------------------------------------------------------------------------
| Net income from financial assets | 0.0 | 0.1 | 0.0 | 0.2 | 0.0 |
| available for sale | | | | | |
--------------------------------------------------------------------------------
| Net income from investment | 0.0 | 0.1 | 0.1 | 0.1 | 0.0 |
| properties | | | | | |
--------------------------------------------------------------------------------
| Other operating income | 3.2 | 3.1 | 2.6 | 4.2 | 2.3 |
--------------------------------------------------------------------------------
| Total income | 16.9 | 19.0 | 18.1 | 21.0 | 16.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Staff costs | -6.8 | -7.1 | -7.1 | -7.0 | -6.5 |
--------------------------------------------------------------------------------
| Other administrative expenses | -2.3 | -2.9 | -2.7 | -3.9 | -2.1 |
--------------------------------------------------------------------------------
| Production for own use | 0.1 | 0.1 | 0.2 | 0.7 | 0.1 |
--------------------------------------------------------------------------------
| Depreciation/amortisation | -1.6 | -1.3 | -1.5 | -1.3 | -1.3 |
--------------------------------------------------------------------------------
| Other operating expenses | -1.5 | -1.6 | -1.4 | -1.4 | -1.4 |
--------------------------------------------------------------------------------
| Total expenses | -12.2 | -12.8 | -12.5 | -12.8 | -11.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Impairment losses on loans and | -0.2 | -0.2 | 0.0 | -0.1 | -0.6 |
| other commitments | | | | | |
--------------------------------------------------------------------------------
| Share of profit/loss in | 0.0 | 0.1 | 0.1 | 0.0 | 0.0 |
| associated companies | | | | | |
--------------------------------------------------------------------------------
| Net operating profit | 4.5 | 6.1 | 5.7 | 8.1 | 4.9 |
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CASH FLOW STATEMENT
--------------------------------------------------------------------------------
| Bank of Åland Group | Jan-Sep | Jan-Sep |
--------------------------------------------------------------------------------
| EUR M | 2008 | 2007 |
--------------------------------------------------------------------------------
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| Cash flow from operating activities | | | | |
--------------------------------------------------------------------------------
| | Net operating profit | 16.3 | | 20.5 | |
--------------------------------------------------------------------------------
| | Adjustment for net operating profit | 7.3 | | 5.6 | |
| | items not affecting cash flow | | | | |
--------------------------------------------------------------------------------
| | Gains/losses from investing | -0.3 | | -1.0 | |
| | activities | | | | |
--------------------------------------------------------------------------------
| | Income taxes paid | -2.4 | | -3.6 | |
--------------------------------------------------------------------------------
| | Changes in assets and liabilities in | 36.7 | 57.6 | 61.2 | 82.7 |
| | operating activities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from investing activities | | -8.9 | | -6.5 |
--------------------------------------------------------------------------------
| Cash flow from financing activities | | -39.4 | | 92.2 |
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| Change in cash and cash equivalents | | 9.3 | | 168.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash and cash equivalents, January 1 | | 255.0 | | 130.2 |
--------------------------------------------------------------------------------
| Cash and cash equivalents, September | | 264.2 | | 298.6 |
| 301.3 | | | | |
--------------------------------------------------------------------------------
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| CHANGES IN EQUITY CAPITAL |
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| Bank of Åland Group |
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| EUR M |
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| | Share| Share| Share| Rese | Fair | Reta | Total| Mino | Total |
| | capi-| issue| prem | rve | value ined |before| rity | |
| | tal | | ium | fund | rese | earn | mino | inte | |
| | | | acco | | rve | ings | rity | rest | |
| | | | unt | | | | inte | | |
| | | | | | | | rest | | |
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|
| | | | | | | | | |
--------------------------------------------------------------------------------
| Equity | 22.7 | 0.3 | 29.2 | 25.1 | 0.4 | 42.4 | 120. | 2.1 | 122.2 |
| capital. Dec | | | | | | | 1 | | |
| 31, 2006 | | | | | | | | | |
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| Financial | | | | | | | | | |
| assets | | | | | | | | | |
| available | | | | | | | | | |
| for sale: | | | | | | | | | |
--------------------------------------------------------------------------------
| -changes in | | | | | 0.1 | | 0.1 | | 0.1 |
| fair value | | | | | | | | | |
--------------------------------------------------------------------------------
| -transferred | | | | | -0.2 | | -0.2 | | -0.2 |
| to income | | | | | | | | | |
| statement | | | | | | | | | |
--------------------------------------------------------------------------------
| Profit for | | | | | | 14.5 | 14.5 | 0.6 | 15.1 |
| the period | | | | | | | | | |
--------------------------------------------------------------------------------
| Total | | | | | 0.1 | 14.5 | 14.6 | 0.6 | 15.3 |
| recognised | | | | | | | | | |
| income and | | | | | | | | | |
| expenses | | | | | | | | | |
| during the | | | | | | | | | |
| period | | | | | | | | | |
--------------------------------------------------------------------------------
| Dividend to | | | | | | -11. | -11. | -1.0 | -12.6 |
| shareholders | | | | | | 5 | 5 | | |
| 1 | | | | | | | | | |
--------------------------------------------------------------------------------
| Conversion | 0.6 | -0.3 | 4.1 | | | | 4.4 | | 4.4 |
| of capital | | | | | | | | | |
| loan | | | | | | | | | |
--------------------------------------------------------------------------------
| Other change | | | | | | | | | |
| in minority | | | | | | | | | |
| share | | | | | | | | | |
--------------------------------------------------------------------------------
| of equity | | | | | | | | 0.0 | 0.0 |
| capital | | | | | | | | | |
--------------------------------------------------------------------------------
| Equity | 23.3 | 0.0 | 33.3 | 25.1 | 0.4 | 45.4 | 127. | 1.6 | 129.1 |
| capital. Sep | | | | | | | 4 | | |
| 30, 2007 | | | | | | | | | |
--------------------------------------------------------------------------------
| Financial | | | | | | | | | |
| assets | | | | | | | | | |
| available | | | | | | | | | |
| for sale: | | | | | | | | | |
--------------------------------------------------------------------------------
| -changes in | | | | | 0,0 | | 0.0 | | 0.0 |
| fair value | | | | | | | | | |
--------------------------------------------------------------------------------
| -transferred | | | | | 0,0 | | 0.0 | | 0.0 |
| to income | | | | | | | | | |
| statement | | | | | | | | | |
--------------------------------------------------------------------------------
| Profit for | | | | | | 5.7 | 5.7 | 0.2 | 5.9 |
| the period | | | | | | | | | |
--------------------------------------------------------------------------------
| Total | | | | | 0.0 | 5.7 | 5.7 | 0.2 | 5.9 |
| recognised | | | | | | | | | |
| income and | | | | | | | | | |
| expenses | | | | | | | | | |
| during the | | | | | | | | | |
| period | | | | | | | | | |
--------------------------------------------------------------------------------
| Equity | 23.3 | 0.0 | 33.3 | 25.1 | 0.4 | 51.1 | 133. | 1.8 | 135.0 |
| capital. Dec | | | | | | | 1 | | |
| 31, 2007 | | | | | | | | | |
--------------------------------------------------------------------------------
| Financial | | | | | | | | | |
| assets | | | | | | | | | |
| available | | | | | | | | | |
| for sale: | | | | | | | | | |
--------------------------------------------------------------------------------
| -changes in | | | | | -0.3 | | -0.3 | | -0.3 |
| fair value | | | | | | | | | |
--------------------------------------------------------------------------------
| -transferred | | | | | 0.3 | | 0.3 | | 0.3 |
| to income | | | | | | | | | |
| statement | | | | | | | | | |
--------------------------------------------------------------------------------
| Profit for | | | | | | 11.5 | 11.5 | 0.5 | 11.9 |
| the period | | | | | | | | | |
--------------------------------------------------------------------------------
| Total | | | | | 0.1 | 11.5 | 11.5 | 0.5 | 12.0 |
| recognised | | | | | | | | | |
| income and | | | | | | | | | |
| expenses | | | | | | | | | |
| during the | | | | | | | | | |
| period | | | | | | | | | |
--------------------------------------------------------------------------------
| Dividend to | | | | | | -11. | -11. | -1.0 | -12.6 |
| shareholders | | | | | | 6 | 6 | | |
--------------------------------------------------------------------------------
| Equity | 23.3 | 0.0 | 33.3 | 25.1 | 0.4 | 50.9 | 133. | 1.3 | 134.4 |
| capital. Sep | | | | | | | 1 | | |
| 30, 2008 | | | | | | | | | |
--------------------------------------------------------------------------------
| 1 Dividend payment for Series A shares EUR 5.2 M and for Series B shares EUR |
| 6.3 M. |
--------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED INTERIM REPORT
1. CORPORATE INFORMATION
The Bank of Åland Plc (Ålandsbanken Abp) is a Finnish public company, organised
in compliance with Finnish legislation and with its Head Office in Mariehamn.
The Bank of Åland Plc is a commercial bank with a total of 25 offices. Through
its subsidiary Crosskey Banking Solutions Ab Ltd. the Bank of Åland Group is
also a supplier of modern banking computer systems for small and medium-sized
banks.
The Head Office has the following address:
Bank of Åland Plc
Nygatan 2
AX-22100 Mariehamn, Åland, Finland
The Bank of Åland Plc is listed on the Nasdaq OMX Helsinki Oy.
This Interim Report for the financial period January 1-September 30, 2008 was
approved by the Board of Directors on October 27, 2008.
2. BASIS FOR PREPARATION AND ESSENTIAL ACCOUNTING PRINCIPLES
Basis for preparation
The Interim Report for the period January 1-September 30, 2008 has been prepared
in compliance with the International Financial Reporting Standards (IFRSs) that
have been adopted by the European Union, as well as with International
Accounting Standard (IAS) 34. “Interim Financial Reporting”.
The Interim Report does not contain all information and notes required in annual
financial statements and should be read together with the consolidated financial
statements for the year ending December 31, 2007.
Essential accounting principles
The essential accounting principles used in preparing the Interim Report are the
same as the essential accounting principles used in preparing the financial
statements for the year ending December 31, 2007, except for the introduction of
new standards and interpretations, which are described below. The introduction
of new standards and interpretations has not materially affected the Group's
results or financial position.
An addition to the accounting policies has been made in the third quarter as an
amendment to IAS 39 and IFRS 7 has been published in October, but will be
effective from 1 July 2008. The impact from this amendment is that financial
assets can, in certain circumstances, be reclassified out of the fair value
through profit or loss category if the assets are no longer held for the purpose
of selling or repurchasing in the near term. Ålandsbanken has not made any
reclassifications as a result of this amendment in the third quarter.
New accounting standards and interpretations in effect starting in 2008:
IAS 1, “Presentation of Financial Statements”
The standard has been revised in order to provide better information for
analysis and comparison of companies. The Group will present its financial
statements in compliance with the revised IAS 1 no later than for the financial
period that begins on January 1, 2009.
IFRS 8, “Operating Segments”
The standard requires that a company provide financial and descriptive
disclosures about its operating segments. IFRS replaces IAS 14, “Segment
Reporting”. The Group will present its financial statements in compliance with
IFRS 8 no later than for the financial period that begins on January 1, 2009.
IFRIC 14, “The Limit on a Defined Benefit Asset. Minimum Funding Requirements
and their Interaction”
This interpretation clarifies the limit on asset value in case of a pension plan
surplus, as well as how minimum pension plan funding requirements affect this
value. The Group is applying IFRIC 14 beginning on January 1, 2008.
The Group is not affected by amendments to the following:
IAS 23, “Borrowing Costs”
IFRIC 12, “Service Concession Arrangement”
IFRIC 13, “Customer Loyalty Programmes”
3. ESTIMATES AND JUDGEMENTS
Preparation of financial statements in compliance with IFRSs requirements the
company's Executive Team to make estimates and judgements that affect the
recognised amounts of assets and liabilities, income and expenses as well as
disclosures about commitments. Although these estimates are based on the best
knowledge of the Executive Team on current events and measures, the actual
outcome may diverge from these estimates.
4. SEGMENT REPORT
The Bank of Åland Group reports the various business segments as primary
segments. A business segment is a group of departments and companies that supply
products or services that have risks and returns that diverge from other
business segments. Intra-Group transactions occur at market prices. The Bank of
Åland Group does not report geographic segments as secondary segments, since all
operations occur in Finland.
--------------------------------------------------------------------------------
| Bank of Åland | Jan-Sep 2008 |
| Group | |
--------------------------------------------------------------------------------
| EUR M | Banking | Informat | Other |Eliminations| Total |
| | operations| ion | | | |
| | |technology| | | |
| | |operations| | | |
--------------------------------------------------------------------------------
| |
--------------------------------------------------------------------------------
| External income | 41.2 | 8.3 | 4.5 | 0.0 | 54.0 |
--------------------------------------------------------------------------------
| Internal income | -0.3 | 7.5 | 0.0 | -7.2 | 0.0 |
--------------------------------------------------------------------------------
| Total income | 40.8 | 15.8 | 4.5 | -7.2 | 54.0 |
--------------------------------------------------------------------------------
| Costs including | -27.1 | -14.3 | -3.3 | 7.2 | -37.5 |
| depreciation etc. | | | | | |
--------------------------------------------------------------------------------
| Loan losses | | | | 0.0 | |
--------------------------------------------------------------------------------
| Share of profit in | | 0.0 | | 0.0 | |
| associated | | | | | |
| companies | | | | | |
--------------------------------------------------------------------------------
| Net operating | 13.3 | 1.6 | 1.5 | 0.0 | 16.3 |
| profit | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Assets | 2,171.6 | 9.7 | 547.7 | -1.0 | 2,728.0 |
--------------------------------------------------------------------------------
| Liabilities | -2,367.5 | -5.1 | -221.9 | 0.8 | -2,593.6 |
--------------------------------------------------------------------------------
| Equity capital | | | | | 134.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Bank of Åland | Jan-Sep 2007 |
| Group | |
--------------------------------------------------------------------------------
| EUR M | Banking | Informat | Other |Eliminations| Total |
| | operations| ion | | | |
| | |technology| | | |
| | |operations| | | |
--------------------------------------------------------------------------------
| |
--------------------------------------------------------------------------------
| External income | 42.5 | 7.3 | 4.5 | | 54.4 |
--------------------------------------------------------------------------------
| Internal income | 0.6 | 7.3 | | -7.9 | 0.0 |
--------------------------------------------------------------------------------
| Total income | 43.1 | 14.6 | 4.5 | -7.9 | 54.4 |
--------------------------------------------------------------------------------
| Costs including | -26.4 | -11.5 | -3.2 | 7.9 | -33.2 |
| depreciation etc. | | | | | |
--------------------------------------------------------------------------------
| Loan losses | -0.9 | | | | -0.9 |
--------------------------------------------------------------------------------
| Share of profit in | | | 0.3 | | 0.3 |
| associated | | | | | |
| companies | | | | | |
--------------------------------------------------------------------------------
| Net operating | 15.8 | 3.1 | 1.6 | 0.0 | 20.5 |
| profit | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Assets | 2,050.4 | 9.4 | 510.1 | -0.6 | 2,569.3 |
--------------------------------------------------------------------------------
| Liabilities | -2,154.1 | -4.8 | -281.8 | 0.7 | -2,440.2 |
--------------------------------------------------------------------------------
| Equity capital | | | | | 129.1 |
--------------------------------------------------------------------------------
The “Banking operations” segment includes banking and investment operations
carried out at 25 bank offices plus the subsidiaries Ab Compass Card Oy Ltd.
Ålandsbanken Asset Management Ab, Ålandsbanken Fondbolag Ab, Ålandsbanken
Kapitalmarknadstjänster Ab (until Sep 30. 2007) and Ålandsbanken Veranta Ab.
Reported in “IT operations” are Crosskey Banking Solutions Ab Ltd and S-Crosskey
Ab, which supply modern banking computer systems to small and medium-sized
banks. Reported in “Other” are the results of Treasury and portfolio management
as well as the Group's management and related corporate expenses.
5. INCOME TAXES
--------------------------------------------------------------------------------
| Bank of Åland Group | Sep 30 | Sep 30 |
--------------------------------------------------------------------------------
| EUR K | 2008 | 2007 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Taxes for the report period and earlier report | 4,417 | 5,653 |
| periods | | |
--------------------------------------------------------------------------------
| Change in deferred tax assets/liabilities | -19 | -283 |
--------------------------------------------------------------------------------
| Income taxes | 4,399 | 5,370 |
--------------------------------------------------------------------------------
6. DIVIDEND
--------------------------------------------------------------------------------
| Bank of Åland Group | 2007 | 2006 |
--------------------------------------------------------------------------------
| EUR | | |
--------------------------------------------------------------------------------
| | | |
--------------------------------------------------------------------------------
| Final dividend for 2007: EUR 1.00 per share | 11,536,122 | |
--------------------------------------------------------------------------------
| Final dividend for 2006: EUR 1.00 per share | | 11,536,122 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| The dividend for 2007 was adopted by the Annual General Meeting on April 10, |
| 2008. |
| The record date was April 15 and the payment date was April 22. |
--------------------------------------------------------------------------------
7. DEPOSITS FROM THE PUBLIC AND PUBLIC SECTOR
--------------------------------------------------------------------------------
| Including bonds and certificates of deposit issued |
--------------------------------------------------------------------------------
| Bank of Åland Group | Sep 30 | Sep 30 | Dec 31 |
--------------------------------------------------------------------------------
| EUR M | 2008 | 2007 | 2007 |
--------------------------------------------------------------------------------
| Deposit accounts from the public and public | | | |
| sector | | | |
--------------------------------------------------------------------------------
| Demand deposit accounts | 142 | 151 | 153 |
--------------------------------------------------------------------------------
| Cheque accounts | 236 | 212 | 213 |
--------------------------------------------------------------------------------
| Environmental and Savings Accounts | 74 | 87 | 84 |
--------------------------------------------------------------------------------
| Prime Accounts | 535 | 487 | 566 |
--------------------------------------------------------------------------------
| Time deposits | 621 | 412 | 449 |
--------------------------------------------------------------------------------
| Total deposit accounts in euros | 1,607 | 1,349 | 1,465 |
--------------------------------------------------------------------------------
| Deposit accounts in other currencies | 88 | 67 | 67 |
--------------------------------------------------------------------------------
| Total deposit accounts | 1,695 | 1,415 | 1,532 |
--------------------------------------------------------------------------------
| Bonds and subordinated debentures * | 214 | 208 | 226 |
--------------------------------------------------------------------------------
| Certificates of deposit issued to the public * | 166 | 194 | 163226 |
--------------------------------------------------------------------------------
| Total bonds and certificates of deposit | 379 | 402 | 389163 |
--------------------------------------------------------------------------------
| | | | 389 |
--------------------------------------------------------------------------------
| Total deposits | 2,074 | 1,817 | |
| | | | 1,921 |
--------------------------------------------------------------------------------
| * This item does not include debt securities subscribed by credit |
| institutions. |
--------------------------------------------------------------------------------
8. LENDING TO THE PUBLIC AND PUBLIC SECTOR BY PURPOSE
--------------------------------------------------------------------------------
| Bank of Åland Group | Sep 30 | Sep 30 | Dec 31 |
--------------------------------------------------------------------------------
| EUR M | 2008 | 2007 | 2007 |
--------------------------------------------------------------------------------
| BUSINESS AND PROFESSIONAL ACTIVITIES | | | |
--------------------------------------------------------------------------------
| Service sector | | | |
--------------------------------------------------------------------------------
| Shipping | 84 | 77 | 97 |
--------------------------------------------------------------------------------
| Hotels, restaurants, tourist cottages etc. | 14 | 12 | 12 |
--------------------------------------------------------------------------------
| Wholesale and retail trade | 61 | 57 | 57 |
--------------------------------------------------------------------------------
| Housing corporations | 65 | 52 | 56 |
--------------------------------------------------------------------------------
| Real estate operations | 116 | 107 | 113 |
--------------------------------------------------------------------------------
| Financial operations | 182 | 154 | 169 |
--------------------------------------------------------------------------------
| Other service business | 97 | 85 | 86 |
--------------------------------------------------------------------------------
| | 619 | 543 | 589 |
--------------------------------------------------------------------------------
| Production sector | | | |
--------------------------------------------------------------------------------
| Agriculture, forestry and fishing | 18 | 20 | 20 |
--------------------------------------------------------------------------------
| Food processing etc. | 7 | 6 | 6 |
--------------------------------------------------------------------------------
| Construction | 23 | 21 | 20 |
--------------------------------------------------------------------------------
| Other industry and crafts | 11 | 11 | 10 |
--------------------------------------------------------------------------------
| | 58 | 57 | 55 |
--------------------------------------------------------------------------------
| HOUSEHOLDS | | | |
--------------------------------------------------------------------------------
| Home loans | 1,128 | 1,103 | 1,113 |
--------------------------------------------------------------------------------
| Studies | 13 | 13 | 13 |
--------------------------------------------------------------------------------
| Other household purposes | 327 | 305 | 308 |
--------------------------------------------------------------------------------
| | 1,467 | 1,421 | 1,434 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| PUBLIC SECTOR AND NON-PROFIT ORGANISATIONS | 24 | 26 | 25 |
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
| TOTAL LENDING | 2,168 | 2,048 | 2,104 |
--------------------------------------------------------------------------------
9. OFF-BALANCE SHEET COMMITMENTS
--------------------------------------------------------------------------------
| Bank of Åland Group | Sep 30 | Sep 30 | Dec 31 |
--------------------------------------------------------------------------------
| EUR M | 2008 | 2007 | 2007 |
--------------------------------------------------------------------------------
| Guarantees and pledges | 17 | 31 | 25 |
--------------------------------------------------------------------------------
| Other commitments | 148 | 161 | 143 |
--------------------------------------------------------------------------------
| | 158 | 163 | 143 |
--------------------------------------------------------------------------------
| | 165 | 192 | 168 |
--------------------------------------------------------------------------------
10. DERIVATIVE CONTRACTS
--------------------------------------------------------------------------------
| Bank of Åland Group | Sep 30, | | Sep 30, | |
| | 2008 | | 2007 | |
--------------------------------------------------------------------------------
| | For | | For | |
| | hedging | | hedging | |
--------------------------------------------------------------------------------
| EUR M | purpose | Other | purposes | Other |
--------------------------------------------------------------------------------
| Value of underlying | | | | |
| property | | | | |
--------------------------------------------------------------------------------
| Interest rate derivatives | | | | |
--------------------------------------------------------------------------------
| Interest rate swap | 422 | 7 | 332 | 9 |
| contracts | | | | |
--------------------------------------------------------------------------------
| Currency derivatives | | | | |
--------------------------------------------------------------------------------
| Forward contracts | 32 | 22 | 15 | 6 |
--------------------------------------------------------------------------------
| Interest rate and currency | 0 | 0 | 0 | 0 |
| swap contracts | | | | |
--------------------------------------------------------------------------------
| Equity derivatives | | | | |
--------------------------------------------------------------------------------
| Option contracts | | | | |
--------------------------------------------------------------------------------
| Purchased | 163 | 0 | 167 | 0 |
--------------------------------------------------------------------------------
| | 617 | 29 | 504 | 15 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equivalent credit values of | | | | |
| the contracts | | | | |
--------------------------------------------------------------------------------
| Interest rate derivatives | 6 | | 6 | |
--------------------------------------------------------------------------------
| Currency derivatives | 2 | | 0 | |
--------------------------------------------------------------------------------
| Equity derivatives | 23 | | 39 | |
--------------------------------------------------------------------------------
| | 31 | | 46 | |
--------------------------------------------------------------------------------
| The Group does not apply hedge accounting to derivative contracts. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 11. MATURITY BREAKDOWN OF CLAIMS AND LIABILITIES |
--------------------------------------------------------------------------------
| Bank of Åland Group | Sep 30, 2008 |
--------------------------------------------------------------------------------
| EUR M | < 3 mo | 3 - 12 | 1 - 5 | Over 5 | Total |
| | | mo | yrs | yrs | |
--------------------------------------------------------------------------------
| Claims | | | | | |
--------------------------------------------------------------------------------
| Debt securities | | | | | |
| eligible for | | | | | |
--------------------------------------------------------------------------------
| refinancing in central | 0 | 24 | 107 | 1 | 131 |
| banks | | | | | |
--------------------------------------------------------------------------------
| Credit institutions and | 136 | 0 | 0 | 0 | 136 |
| central banks | | | | | |
--------------------------------------------------------------------------------
| The public and public | 217 | 209 | 772 | 971 | 2 169 |
| sector entities | | | | | |
--------------------------------------------------------------------------------
| Other debt securities | 80 | 1 | 0 | | 81 |
--------------------------------------------------------------------------------
| | 433 | 233 | 879 | 972 | 2 517 |
--------------------------------------------------------------------------------
| Liabilities | | | | | |
--------------------------------------------------------------------------------
| Credit institutions and | 46 | 17 | | | 63 |
| central banks | | | | | |
--------------------------------------------------------------------------------
| The public and public | 1,515 | 179 | 2 | 0 | 1,697 |
| sector entities | | | | | |
--------------------------------------------------------------------------------
| Debt securities issued | 106 | 101 | 458 | | 665 |
| to the public | | | | | |
--------------------------------------------------------------------------------
| Subordinated | | 13 | 5 | 36 | 54 |
| liabilities | | | | | |
--------------------------------------------------------------------------------
| | 1,667 | 310 | 465 | 37 | 2,479 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
No estimates of maturity dates have been made. Spot deposits, for example, are
found in the category < 3 months.
--------------------------------------------------------------------------------
| Bank of Åland Group | Sep 30, 2007 |
--------------------------------------------------------------------------------
| EUR M | < 3 mo | 3 - 12 | 1 - 5 | Over 5 | Total |
| | | mo | yrs | yrs | |
--------------------------------------------------------------------------------
| Claims | | | | | |
--------------------------------------------------------------------------------
| Debt securities | | | | | |
| eligible for | | | | | |
--------------------------------------------------------------------------------
| refinancing in central | 123 | 6 | 54 | 0 | 184 |
| banks | | | | | |
--------------------------------------------------------------------------------
| Credit institutions and | 181 | 0 | 0 | 0 | 181 |
| central banks | | | | | |
--------------------------------------------------------------------------------
| The public and public | 174 | 196 | 743 | 935 | 2,048 |
| sector entities | | | | | |
--------------------------------------------------------------------------------
| Other debt securities | 0 | 0 | 0 | 0 | 0 |
--------------------------------------------------------------------------------
| | 479 | 202 | 797 | 935 | 2,413 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Liabilities | | | | | |
--------------------------------------------------------------------------------
| Credit institutions and | 94 | 0 | 30 | 0 | 124 |
| central banks | | | | | |
--------------------------------------------------------------------------------
| The public and public | 1,309 | 95 | 12 | 1 | 1,417 |
| sector entities | | | | | |
--------------------------------------------------------------------------------
| Debt securities issued | 456 | 169 | 112 | 0 | 737 |
| to the public | | | | | |
--------------------------------------------------------------------------------
| Subordinated | 0 | 2 | 17 | 33 | 52 |
| liabilities | | | | | |
--------------------------------------------------------------------------------
| | 1,859 | 267 | 172 | 34 | 2,331 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 12. INTEREST RATE REFIXING PERIODS |
--------------------------------------------------------------------------------
| Bank of Åland Group | Sep 30, 2008 |
--------------------------------------------------------------------------------
| EUR M | < 3 mo | 3-6 mo | 6-12 | 1-5 | > 5 yrs | Total |
| | | | mo | yrs | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Assets | 1,998 | 218 | 368 | 393 | 41 | 3,017 |
--------------------------------------------------------------------------------
| Liabilities | 2,236 | 228 | 180 | 249 | 18 | 2,911 |
--------------------------------------------------------------------------------
| Difference between | -238 | -10 | 187 | 144 | 23 | 106 |
| assets and | | | | | | |
| liabilities | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Shows the Bank's interest rate-related assets and liabilities, including |
| derivatives, according to the interest rate refixing date as of September |
| 30, 2008. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Bank of Åland Group | Sep 30, 2007 |
--------------------------------------------------------------------------------
| EUR M | < 3 mo | 3-6 mo | 6-12 | 1-5 | > 5 yrs | Total |
| | | | mo | yrs | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Assets | 1,827 | 226 | 423 | 262 | 45 | 2,783 |
--------------------------------------------------------------------------------
| Liabilities | 2,078 | 136 | 204 | 214 | 43 | 2,675 |
--------------------------------------------------------------------------------
| Difference between | -251 | 90 | 219 | 47 | 2 | 108 |
| assets and | | | | | | |
| liabilities | | | | | | |
--------------------------------------------------------------------------------
Review Report, Bank of Åland Plc Interim Report for January 1 - September 30,
2008
To the Board of Directors of the Bank of Åland Plc
Introduction
We have reviewed the consolidated summary balance sheet of the Bank of Åland Plc
on September 30, 2008, the consolidated summary income statement, the summary
statement showing changes in consolidated equity capital and the consolidated
summary cash flow statements for the nine-month period ending on the
above-mentioned date, as well as the summary of essential accounting principles
and other disclosures in the notes. The Board of Directors and the Managing
Director and Chief Executive are responsible for preparing the Interim Report
and for providing accurate and sufficient information in compliance with
International Financial Reporting Standards (IFRSs) as adopted by the European
Union (EU) as well as in accordance with the other prevailing laws and
regulations in Finland concerning the preparation of interim reports. On the
basis of the review we have performed, at the request of the Board we are
issuing our statement of opinion on the Interim Report in compliance with the
Finnish Securities Markets Act, Chapter 2, Section 5a, Paragraph 7.
Scope of a review
This review was conducted in compliance with the standard on review engagements,
Standard 2410, “Review of Interim Financial Information Performed by the
Independent Auditor of the Company”. A review consists of making inquiries,
primarily of persons chiefly responsible for financial and accounting matters,
and applying analytical and other review procedures. A review is substantially
more limited in scope than an audit, which must be conducted in accordance with
generally accepted auditing standards and recommendations. It is consequently
not possible for us to gain confirmation that we are obtaining information about
all those significant circumstances that might be identified in an audit. We are
thus not issuing an audit report.
Statement of opinion
On the basis of our review, to our knowledge no circumstances have emerged that
would give us reason to believe that the Interim Report does not provide
accurate and sufficient disclosures about the financial position of the Bank of
Åland Group on September 30, 2008 and its operating results and cash flows
during the nine-month period ending on that date, in compliance with IFRSs as
adopted by the EU and in accordance with the other prevailing laws and
regulations in Finland concerning the preparation of interim reports.
Mariehamn/Helsinki, October 27, 2008
Ernst & Young Ab
Authorised Public Accountants
Leif Hermans
Authorised Public Accountant
Marja Tikka
Authorised Public Accountant
Terhi Mäkinen
Authorised Public Accountant