Bank of Åland Plc STOCK EXCHANGE RELEASE 11.05.2009 09.00 hrs
Interim report for January - March 2009
The report period in brief
-Consolidated net operating profit increased by 11 per cent to 6.3 million
euros
(January - March 2008: EUR 5.7 M)
-Ålandsbanken Sverige AB, the Bank's new subsidiary in Sweden, was consolidated
for the first time on March 31, 2009, which means that the company is included
in the statement of financial position, while consolidated earnings do not
include effects generated by Ålandsbanken Sverige
-Net interest income decreased by 10 per cent to EUR 9.1 M (10.1)
-Commission income decreased by 2 per cent to EUR 5.0 M (5.1)
-Net income from securities transactions and foreign exchange dealing rose to
EUR
3.1 M (0.7)
-Total income increased by 12 per cent to EUR 20.4 M (18.1)
-Expenses rose by 10 per cent to EUR 13.8 M (12.5)
-Loan losses amounted to EUR 0.4 M (0.0)
-Lending volume increased by 15 per cent to EUR 2,416 M (March 2008: 2,109)
-Deposits increased by 15 per cent to EUR 2,354 M (March 2008: 2,042)
-Mutual fund assets under management amounted to EUR 542 M (340)
-Return on equity after taxes (ROE) was 13.1 per cent (12.1)
-The expense/income ratio was 69 per cent (69)
-The total capital ratio in compliance with Basel 2 amounted to 12.4 (12.3) per
cent
-Earnings per share after taxes amounted to EUR 0.37 (0.34)
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”. Ålandsbanken Sverige AB, the Bank's new subsidiary in
Sweden, was consolidated for the first time on March 31, 2009, which means that
the company is included in the statement of financial position, while
consolidated earnings do not include effects generated by Ålandsbanken Sverige.
Earnings summary for the report period
During January-March 2009, the consolidated net operating profit of the Bank of
Åland Group increased by 111 per cent to EUR 6.3 M (5.7 in the corresponding
period of 2008). Net interest income was lower than in the corresponding period
last year as a consequence of sharply falling interest rates. Commission income
and expenses for the period were at the same level, but net income from
securities transactions and foreign exchange dealing as well as other operating
income were higher than last year.
Income increased by 12 per cent to EUR 20.4 M (18.1), while expenses rose by 10
per cent to EUR 13.8 M (12.5). Return on equity after taxes (ROE) increased to
13.1 (12.1) per cent, and earnings per share to EUR 0.37 (0.34).
Net interest income
During the report period, consolidated net interest income decreased by 10 per
cent to EUR 9.1 M (10.1) as a result of lower interest rates, despite a higher
volume of both deposits and lending. During the period, margins on lending
showed a positive trend. Lending volume rose by 15 per cent to EUR 2,416 M
(2,109), while deposit volume increased by 15 per cent to EUR 2,354 M (2,042).
Other income
Commission income fell by 2 per cent to EUR 5.0 M (5.1). Securities commissions
and lending commissions rose, while income from mutual fund and management
commissions declined.
Net income from securities trading for the Bank's own account was EUR 2.7 M
(0.4). Valuation and realisation of value increases in interest rate hedging
derivatives (the Bank of Åland does not apply hedge accounting) resulted in a
positive nonrecurring effect of EUR 2.4 M. Net income from dealing in the
foreign exchange market increased to EUR 0.5 M (0.3). Net income from financial
assets available for sale was EUR 0.0 M (0.0), and net income from investment
properties was EUR 0.2 M (0.1).
Other operating income increased to EUR 3.4 M (2.6) as a consequence of higher
income from the sale and development of information technology (IT) systems.
During the report period, the Bank of Åland Plc bought Kaupthing Bank Sverige AB
in Sweden, now Ålandsbanken Sverige AB (encompassing Kaupthing Bank Sverige AB,
Kaupthing Fonder AB and Alpha Management Company S.A). A preliminary acquisition
analysis showed that the net assets acquired after restructuring expenses
amounted to EUR 56.2 M and the cost of the shares, including the purchase price
and acquisition-related expenses, amounted to EUR 34.3 M. An adjusted
acquisition analysis will be made later during 2009, and at that time negative
goodwill of about EUR 20-25 M will be recognised as income. For detailed
information about the acquisition analysis, see Note 4 under “Notes to the
consolidated interim report” on page 12.
The Group's total income increased by 12 per cent to EUR 20.4 M (18.1).
Expenses
Staff costs rose by 7 per cent to EUR 7.6 M (7.1) as a consequence of salary
hikes as provided by collective agreements, as well as continued investments in
human resource development in the Group. Changes in the Bank's pension fund,
Ålandsbanken Abp:s Pensionsstiftelse, according to the corridor approach
affected staff costs in the amount of EUR 0.0 M (-0.0).
Other administrative expenses (office, marketing, communications and IT)
increased to EUR 2.9 M (2.7). Production for own use totalled EUR -0.2 M (-0.2)
and was related to expenses for computer software, which in accordance with
IFRSs must be capitalised. Depreciation/amortisation decreased to EUR 1.4 M
(1.5). Other operating expenses amounted to EUR 2.0 M (1.4).
The Group's total expenses rise by 10 per cent to EUR 13.8 M (12.5).
Impairment losses on loans and other commitments
Loan losses amounted to EUR 0.4 M (0.0).
Balance sheet total and off-balance sheet obligations
At the end of the report period, the Group's balance sheet total was EUR 3,104 M
(2,732). Off-balance sheet obligations rose to EUR 257 M (170).
Personnel
Hours worked in the Group, recalculated to full-time equivalent positions,
totalled 492 (493) during January-march 2009. This represented a decrease of one
position compared to the year-earlier period. The number of employees at
Ålandsbanken Sverige AB on March 31, 2009 was 174.
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| Bank of Åland Group | Mar 31 | Mar 31 |
| | 2009 | 2008 |
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| Ålandsbanken Abp | 305 | 318 |
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| Ab Compass Card Oy Ltd | 6 | 5 |
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| Crosskey Banking Solutions Ab Ltd | 154 | 145 |
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| Ålandsbanken Asset Management Ab | 16 | 13 |
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| Ålandsbanken Fondbolag Ab | 6 | 7 |
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| Ålandsbanken Equities Ab | 5 | 0 |
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| Ålandsbanken Veranta Ab | 0 | 5 |
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| Total number of full-time equivalent positions, | 492 | 493 |
| recalculated from hours worked | | |
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Expense/income ratio
Efficiency measured as expenses divided by income, including and excluding loan
losses, respectively:
--------------------------------------------------------------------------------
| Bank of Åland Group | Mar 31 | Mar 31 |
| | 2009 | 2008 |
--------------------------------------------------------------------------------
| Including loan losses | 0.69 | 0.69 |
--------------------------------------------------------------------------------
| Excluding loan losses | 0.67 | 0.69 |
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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 March 2009 was 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 | Mar 31 | Mar 31 | Dec 31 |
| | 2009 | 2008 | 2008 |
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| Capital base, EUR M |
--------------------------------------------------------------------------------
| Core capital 1 | 127.0 | 103.5 | 112.4 |
--------------------------------------------------------------------------------
| Supplementary capital | 70.2 | 49.6 | 53.4 |
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| Total capital base | 197.2 | 153.1 | 165.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Capital requirement for credit risks | 109.7 | 90.6 | 95.9 |
--------------------------------------------------------------------------------
| Capital requirement for operational risks | 16.7 | 9.3 | 9.3 |
--------------------------------------------------------------------------------
| Capital requirement for market risks | 0.5 | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| Total capital requirement | 126.9 | 99.8 | 105.1 |
--------------------------------------------------------------------------------
| Total capital ratio, % | 12.4 | 12.3 | 12.6 |
--------------------------------------------------------------------------------
| Core capital ratio, % | 8.0 | 8.3 | 8.6 |
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| 1 Includes preliminary negative goodwill from the acquisition of Kaupthing |
| Bank Sverige AB and profit for the period minus estimated dividends paid. |
--------------------------------------------------------------------------------
Deposits
Deposits from the public, including bonds and certificates of deposit issued,
continued to increase during January-March 2009. On March 31, 2009, deposits
totalled EUR 2,354 M (2,042), an increase of 15 per cent, of which EUR 200 M
consisted of deposits in Ålandsbanken Sverige AB. Deposit accounts rose by 24
per cent to EUR 1,946 M (1,566). Bonds and certificates of deposit issued to the
public decreased by 14 per cent to EUR 407 M (476). During the report period,
debenture loans totalling EUR 16.9 M were issued.
Lending
During the 12 months to March 31, 2009, the volume of lending to the public
increased by 15 per cent to EUR 2,416 M (2,109). The volume of lending at
Ålandsbanken Sverige was EUR 209 M. Lending to households increased by 14 per
cent to EUR 1,663 M (1,455). Households accounted for 69 (69) per cent of the
Group's total lending volume. Lending to companies rose by 16 per cent to EUR
727 M.
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 is in its start-up phase and did not have operating
income during the report period. 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 as 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 Ålands Penningautomatförening. Crosskey currently has 165
employees 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 company currently has about 450 customers and EUR 700 M in managed assets.
Despite the market situation, the company's earnings was at a higher level
than in the year-earlier period.
Ålandsbanken Equities Ab
Ålandsbanken Equities is a subsidiary of the Bank of Åland Plc. The company
offers equity analysis and stock brokerage services to institutional investors.
The company has an office in Helsinki.
Ålandsbanken Fondbolag Ab
Ålandsbanken Fondbolag Ab is a wholly-owned subsidiary of the Bank of Åland Abp.
At the end of the report period, mutual fund assets under management totalled
EUR 211 M (EUR 340 M on March 31, 2008), down 38 per cent from one year earlier.
The decrease was due to a downturn in valuations, especially in equity mutual
funds, due to the very weak market situation during 2008, as well as
customer redemption of mutual fund units. The number of unit holders totalled
14,441 (14,344 in March 31, 2008), an increase of 0.7 per cent.
Ålandsbanken Sverige AB
Ålandsbanken Sverige AB is a wholly-owned subsidiary of the Bank of Åland Plc.
The company has operations in private banking, asset management, stock brokerage
and institutional equities trading. Ålandsbanken Sverige AB has EUR 200 M in
deposits from the public, EUR 209 M in loan volume and EUR 331 M in managed
mutual fund assets. Ålandsbanken Sverige AB currently has 174 employees and
offices in Stockholm, Gothenburg and Malmö, Sweden.
Annual General Meeting
The Annual General Meeting of Shareholders (AGM) of the Bank of Åland on March
26, 2009 approved the Board of Directors' proposal for the distribution of a
dividend of EUR 0.50 per share for 2008. The dividend was distributed on April
7, 2009.
The AGM unanimously re-elected Sven-Harry Boman, Kent Janér, Agneta Karlsson,
Göran Lindholm, Leif Nordlund, Teppo Taberman and Anders Wiklöf as members of
the Board of Directors.
Important events after the close of the report period
No important events have occurred after the close of the report period.
On May 4, 2009, the Bank of Åland published a stock exchange release containing
a positive profit warning: the earnings forecast for 2009 was changed from
“better” to “substantially better” than in 2008.
Outlook for 2009
Two thousand nine will be very challenging for all financial market players.
The Bank of Åland expects it operating earnings to fall as a consequence of
further weakening of net interest income, due to very low interest rates and
continued low activity in capital markets.
The acquisition of Kaupthing Bank Sverige will have a significant positive
nonrecurring effect on the Group's earnings during the year. Operational
activities in Sweden will be included in earnings during 2009. Overall, we
expect consolidated earnings to be substantially better than in 2008.
It should again be emphasised that great uncertainty prevails in the global
financial system. Combined with the acquisition of Kaupthing, this means that
the outlook for the future is burdened with greater uncertainty than normal.
The Group's assessment of the outlook for 2009 is based on its assumptions
about future developments in the fixed income and financial markets. However,
general interest rates, the demand for lending, the trend of the capital and
financial markets and the competitive situation, as well as the general
economic situation, are factors that the Group cannot influence.
Financial information in 2009
Interim reports will be published as follows during 2009.
January-June 2009 Monday, August 24,2009
January-September 2009 Monday, October 26,2009
Mariehamn, May 11, 2009
THE BOARD OF DIRECTORS
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| FINANCIAL RATIOS ETC. |
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| Bank of Åland Group | Jan-Mar | Jan-Mar | Full year |
| | 2009 | 2008 | 2008 |
--------------------------------------------------------------------------------
| Earnings per share before dilution, | 0.37 | 0.34 | 1.22 |
| EUR 1 | | | |
--------------------------------------------------------------------------------
| Earnings per share after dilution, | 0.37 | 0.34 | 1.22 |
| EUR 2 | | | |
--------------------------------------------------------------------------------
| Market price per share, end of period, EUR |
--------------------------------------------------------------------------------
| Series A | 25.00 | 31.80 | 26.60 |
--------------------------------------------------------------------------------
| Series B | 19.00 | 26.06 | 17.24 |
--------------------------------------------------------------------------------
| Equity capital per share, EUR 3 | 11.78 | 11.91 | 11.87 |
--------------------------------------------------------------------------------
| Return on equity after taxes, % (ROE) | 13.1 | 12.1 | 10.7 |
| 4 | | | |
--------------------------------------------------------------------------------
| Return on total assets, % (ROA) 5 | 0.6 | 0.6 | 0.5 |
--------------------------------------------------------------------------------
| Equity/assets ratio, % 6 | 4.4 | 5.1 | 5.0 |
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| Total lending volume, EUR M | 2,416 | 2,109 | 2,193 |
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| Total deposits from the public, EUR M | 2,354 | 2,042 | 2,126 |
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| Equity capital, EUR M | 137 | 138 | 138 |
--------------------------------------------------------------------------------
| Balance sheet total, EUR M | 3,104 | 2,732 | 2,770 |
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| Expense/income ratio |
--------------------------------------------------------------------------------
| Including loan losses | 0.69 | 0.69 | 0.73 |
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| Excluding loan losses | 0.67 | 0.69 | 0.70 |
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| 1 Profit for the period before dilution / Average number of shares |
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| 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 STATEMENT OF FINANCIAL POSITION |
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| Bank of Åland Group | Mar 31 | Mar 31 | Dec 31 |
| | 2009 | 2008 | 2008 |
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| EUR M |
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| ASSETS |
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| Cash | 44 | 38 | 79 |
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| Debt securities eligible for | 132 | 177 | 146 |
| refinancing with central banks | | | |
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| Claims on credit institutions | 246 | 214 | 123 |
--------------------------------------------------------------------------------
| Claims on the public and public sector | 2,416 | 2,109 | 2,193 |
| entities | | | |
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| Debt securities | 97 | 87 | 131 |
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| Shares and participations | 27 | 3 | 3 |
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| Shares and participations in | 1 | 1 | 1 |
| associated companies | | | |
--------------------------------------------------------------------------------
| Derivative instruments | 17 | 21 | 15 |
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| Intangible assets | 5 | 6 | 5 |
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| Tangible assets | 36 | 28 | 36 |
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| Other assets | 57 | 24 | 11 |
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| Accrued income and prepayments | 24 | 23 | 25 |
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| Deferred tax assets | 1 | 1 | 1 |
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| TOTAL ASSETS | 3,104 | 2,732 | 2,770 |
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--------------------------------------------------------------------------------
| LIABILITIES |
--------------------------------------------------------------------------------
| Liabilities to credit institutions | 89 | 52 | 71 |
--------------------------------------------------------------------------------
| Liabilities to the public and public | 1,947 | 1,567 | 1,758 |
| sector entities | | | |
--------------------------------------------------------------------------------
| Debt securities issued to the public | 692 | 811 | 665 |
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| Derivative instruments | 12 | 2 | 6 |
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| Other liabilities | 81 | 66 | 41 |
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| Accrued expenses and prepaid income | 68 | 26 | 18 |
--------------------------------------------------------------------------------
| Subordinated liabilities | 60 | 52 | 53 |
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| Deferred tax liabilities | 20 | 16 | 19 |
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| TOTAL LIABILITIES | 2,967 | 2,594 | 2,631 |
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| |
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| EQUITY CAPITAL AND MINORITY INTERESTS |
--------------------------------------------------------------------------------
| Share capital | 23 | 23 | 23 |
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| Share premium account | 33 | 33 | 33 |
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| Reserve fund | 25 | 25 | 25 |
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| Fair value reserve | 2 | 1 | 2 |
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| Retained earnings | 52 | 55 | 54 |
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| Equity capital attributable to owners | 136 | 137 | 137 |
| of the parent | | | |
--------------------------------------------------------------------------------
| Equity capital attributable to | 1 | 1 | 2 |
| minority interests | | | |
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| TOTAL EQUITY CAPITAL | 137 | 138 | 138 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL LIABILITIES AND EQUITY CAPITAL | 3,104 | 2,732 | 2,770 |
--------------------------------------------------------------------------------
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| SUMMARY STATEMENT OF COMPREHENSIVE INCOME |
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| Bank of Åland Group | Jan-Mar | Jan-Mar | Full year |
| | 2009 | 2008 | 2008 |
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| EUR M |
--------------------------------------------------------------------------------
| Net interest income | 9.1 | 10.1 | 42.1 |
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| Income from equity instruments | 0.0 | 0.0 | 0.0 |
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| Commission income | 5.0 | 5.1 | 18.6 |
--------------------------------------------------------------------------------
| Commission expenses | -0.5 | -0.5 | -2.2 |
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| Net income from securities transactions | 3.1 | 0.7 | 3.3 |
| and foreign exchange dealing | | | |
--------------------------------------------------------------------------------
| Net income from financial assets | 0.0 | 0.0 | -0.1 |
| available for sale | | | |
--------------------------------------------------------------------------------
| Net income from investment properties | 0.2 | 0.1 | 0.1 |
--------------------------------------------------------------------------------
| Other operating income | 3.4 | 2.6 | 12.4 |
--------------------------------------------------------------------------------
| Total income | 20.4 | 18.1 | 74.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Staff costs | -7.6 | -7.1 | -28.3 |
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| Other administrative expenses | -2.9 | -2.7 | -11.0 |
--------------------------------------------------------------------------------
| Production for own use | 0.2 | 0.2 | 0.5 |
--------------------------------------------------------------------------------
| Depreciation/amortisation | -1.4 | -1.5 | -5.9 |
--------------------------------------------------------------------------------
| Other operating expenses | -2.0 | -1.4 | -7.4 |
--------------------------------------------------------------------------------
| Total expenses | -13.8 | -12.5 | -52.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Impairment losses on loans and other | -0.4 | 0.0 | -2.3 |
| commitments | | | |
--------------------------------------------------------------------------------
| Share of profit/loss in associated | 0.1 | 0.1 | 0.2 |
| companies | | | |
--------------------------------------------------------------------------------
| Net operating profit | 6.3 | 5.7 | 20.0 |
--------------------------------------------------------------------------------
| |
--------------------------------------------------------------------------------
| Income taxes | -1.8 | -1.5 | -5.4 |
--------------------------------------------------------------------------------
| Profit for the period | 4.5 | 4.2 | 14.6 |
--------------------------------------------------------------------------------
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| Other comprehensive income |
--------------------------------------------------------------------------------
| Assets available for sale | 0.6 | 0.5 | 1.8 |
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| Income tax on other comprehensive | -0.2 | -0.1 | -0.5 |
| income | | | |
--------------------------------------------------------------------------------
| Total comprehensive income for the | 5.0 | 4.5 | 15.9 |
| period | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit attributable to: |
--------------------------------------------------------------------------------
| Owners of the parent | 4.3 | 3.9 | 14.0 |
--------------------------------------------------------------------------------
| Minority interests | 0.2 | 0.2 | 0.6 |
--------------------------------------------------------------------------------
| Total | 4.5 | 4.2 | 14.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total comprehensive income for the period attributable to: |
--------------------------------------------------------------------------------
| Owners of the parent | 4.7 | 4.3 | 15.3 |
--------------------------------------------------------------------------------
| Minority interests | 0.2 | 0.2 | 0.6 |
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| Total | 5.0 | 4.5 | 15.9 |
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| Earnings per share |
--------------------------------------------------------------------------------
| Earnings per share before dilution, EUR | 0.37 | 0.34 | 1.22 |
| 1 | | | |
--------------------------------------------------------------------------------
| Earnings per share after dilution, EUR | 0.37 | 0.34 | 1.22 |
| 2 | | | |
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| 1 Profit for the period before dilution /Average number of shares |
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| 2 Profit for the period after dilution / (Average number of shares + shares |
| outstanding) |
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| QUARTERLY DATA, EARNINGS |
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| Bank of Åland Group | Q I | Q IV | Q III | Q II | Q I |
| | 2009 | 2008 | 2008 | 2008 | 2008 |
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| EUR M euro |
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| Net interest income | 9.1 | 10.7 | 10.5 | 10.7 | 10.1 |
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| Income from equity instruments | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| Commission income | 5.0 | 4.6 | 3.8 | 5.1 | 5.1 |
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| Commission expenses | -0.5 | -0.6 | -0.5 | -0.6 | -0.5 |
--------------------------------------------------------------------------------
| Net income from securities | 3.1 | 2.4 | -0.1 | 0.4 | 0.7 |
| transactions and foreign | | | | | |
| exchange dealing | | | | | |
--------------------------------------------------------------------------------
| Net income from financial assets | 0.0 | -0.3 | 0.0 | 0.1 | 0.0 |
| available for sale | | | | | |
--------------------------------------------------------------------------------
| Net income from investment | 0.2 | 0.0 | 0.0 | 0.1 | 0.1 |
| properties | | | | | |
--------------------------------------------------------------------------------
| Other operating income | 3.4 | 3.4 | 3.2 | 3.1 | 2.6 |
--------------------------------------------------------------------------------
| Total income | 20.4 | 20.3 | 16.9 | 19.0 | 18.1 |
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| |
--------------------------------------------------------------------------------
| Staff costs | -7.6 | -7.4 | -6.8 | -7.1 | -7.1 |
--------------------------------------------------------------------------------
| Other administrative expenses | -2.9 | -3.1 | -2.3 | -2.9 | -2.7 |
--------------------------------------------------------------------------------
| Production for own use | 0.2 | 0.2 | 0.1 | 0.1 | 0.2 |
--------------------------------------------------------------------------------
| Depreciation/amortisation | -1.4 | -1.5 | -1.6 | -1.3 | -1.5 |
--------------------------------------------------------------------------------
| Other operating expenses | -2.0 | -2.9 | -1.5 | -1.6 | -1.4 |
--------------------------------------------------------------------------------
| Total expenses | -13.7 | -14.6 | -12.2 | -12.8 | -12.5 |
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| |
--------------------------------------------------------------------------------
| Impairment losses on loans and | -0.4 | -1.9 | -0.2 | -0.2 | 0.0 |
| other commitments | | | | | |
--------------------------------------------------------------------------------
| Share of profit/loss in | 0.1 | -0.1 | 0.0 | 0.1 | 0.1 |
| associated companies | | | | | |
--------------------------------------------------------------------------------
| Net operating profit | 6.3 | 3.7 | 4.5 | 6.1 | 5.7 |
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CASH FLOW STATEMENT
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| Bank of Åland Group | Jan-Mar | Jan-Mar |
| | 2009 | 2008 |
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| Cash flow from operating activities |
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| Net operating profit | 6.3 | | 5.7 | |
--------------------------------------------------------------------------------
| Adjustment for net operating profit | 3.7 | | 1.9 | |
| items not affecting cash flow | | | | |
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| Gains/losses from investing activities | -0.2 | | -0.1 | |
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| Income taxes paid | -1.1 | | -0.1 | |
--------------------------------------------------------------------------------
| Changes in assets and liabilities in | -8.7 | -0.1 | 134.8 | 142,3 |
| operating activities | | | | |
--------------------------------------------------------------------------------
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| Cash flow from investing activities | | 30.0 | | -3.1 |
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| Cash flow from financing activities | | -17.3 | | -1.9 |
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| Change in cash and cash equivalents | | 12.6 | | 137.3 |
--------------------------------------------------------------------------------
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| Cash and cash equivalents, January 1 | | 323.5 | | 255.0 |
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| Cash and cash equivalents, March 31 | | 336.1 | | 392.2 |
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| STATEMENT OF CHANGES IN EQUITY |
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| Bank of Åland | Share| Share |Reserve| Fair | Retai | Total | Minor | Total |
| Group | capi |premium| fund | value | ned | before| ity | |
| | tal |account| |reserve| earni |minor | inter | |
| | | | | | ngs | ity | ests | |
| | | | | | | inter | | |
| | | | | | | ests | | |
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| EUR M |
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| Equity | 23.3 | 33.3 | 25.1 | 0.4 | 51.1 | 133.1 | 1.8 | 135.0 |
| capital, Dec | | | | | | | | |
| 31, 2007 | | | | | | | | |
--------------------------------------------------------------------------------
| Comprehensive | | | | 0.3 | 3.9 | 4.3 | 0.2 | 4.5 |
| income for | | | | | | | | |
| the period | | | | | | | | |
--------------------------------------------------------------------------------
| Dividend paid | | | | | 0.0 | 0.0 | -1.0 | -1.0 |
--------------------------------------------------------------------------------
| Equity | 23.3 | 33.3 | 25.1 | 0.7 | 55.0 | 137.4 | 1.1 | 138.5 |
| capital, Mar | | | | | | | | |
| 31, 2008 | | | | | | | | |
--------------------------------------------------------------------------------
| Comprehensive | | | | 1.0 | 10.1 | 11.1 | 0.4 | 11.4 |
| income for | | | | | | | | |
| the period | | | | | | | | |
--------------------------------------------------------------------------------
| Dividend paid | | | | | -11.5 | -11.5 | 0.0 | -11.5 |
--------------------------------------------------------------------------------
| Other changes | | | | | | 0.0 | 0.1 | 0.1 |
| in equity | | | | | | | | |
| capital | | | | | | | | |
| attributable | | | | | | | | |
| to minority | | | | | | | | |
| interests | | | | | | | | |
--------------------------------------------------------------------------------
| Equity | 23.3 | 33.3 | 25.1 | 1.7 | 53.6 | 136.9 | 1.6 | 138.5 |
| capital, Dec | | | | | | | | |
| 31, 2008 | | | | | | | | |
--------------------------------------------------------------------------------
| Comprehensive | | | | 0.4 | 4.3 | 4.7 | 0.2 | 5.0 |
| income for | | | | | | | | |
| the period | | | | | | | | |
--------------------------------------------------------------------------------
| Dividend paid | | | | | -5.8 | -5.8 | -0.9 | -6.6 |
--------------------------------------------------------------------------------
| Equity | 23.3 | 33.3 | 25.1 | 2.1 | 52.1 | 135.9 | 1.0 | 136.8 |
| capital, Mar | | | | | | | | |
| 31, 2009 | | | | | | | | |
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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 27 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 shares of the Bank of Åland Plc are traded on the Nasdaq OMX Helsinki Oy
(Helsinki Stock Exchange).
The Interim Report for the financial period January 1-March 31, 2009 was
approved by the Board of Directors on May 8, 2009.
2. BASIS FOR PREPARATION AND ESSENTIAL ACCOUNTING PRINCIPLES
Basis for preparation
This Year-end 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”.
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, 2008.
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, 2008, 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.
New accounting norms and standards in effect starting in 2009:
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 is presenting its financial
statements in compliance with the revised IAS 1 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 8 replaces IAS 14, “Segment
Reporting”. The Group is presenting its financial statements in compliance with
IFRS 8 for the financial period that begins on January 1, 2009.
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. BUSINESS COMBINATIONS
During the report period, the Bank of Åland Group made the following
acquisitions of companies, which are reported in compliance with IFRS 3,
“Business Combinations”. This is a preliminary compilation based on a
purchase price that has not been finally settled, preliminary fair values
for identified assets and liabilities, and which lacks a valuation of
customer relationships. An adjusted estimate will be made in conjunction
with settlement of the purchase price.
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| Names of companies | Sector | Date of | Share of | Cost |
| | | acquisiti | equity capital | |
| | | on | | |
--------------------------------------------------------------------------------
| EUR M |
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| Kaupthing Bank | Asset manager | March 27, | 100% | |
| Sverige Ab | | 2009 | | |
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| Kaupthing Fonder | Mutual fund | March 27, | 100% | |
| AB | manager | 2009 | | |
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| Alpha Management | Mutual fund | March 27, | 100% | |
| Company S.A. | manager | 2009 | | |
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| Kaupthing Bank | | | | 34.3 |
| Sverige | | | | |
--------------------------------------------------------------------------------
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| Allocation of cost |
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| | Kaupthing Bank |
| | Sverige |
| EUR M | |
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| Cash | 35.2 |
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| Direct acquisition-related expenses | 3.6 |
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| Estimated purchase price settlement1 | -4.5 |
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| | 34,3 |
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1 Settlement items known at the close of the report period; final settlement
will occur during 2009.
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| Net assets acquired |
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| | Kaupthing Bank Sverige |
| EUR M | |
--------------------------------------------------------------------------------
| | Fair value | Carrying |
| | | amount |
--------------------------------------------------------------------------------
| Claims on credit institutions | 84.9 | 84.9 |
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| Claims on the public | 208.4 | 208.9 |
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| Shares and participations | 24.6 | 24.6 |
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| Other assets | 42.2 | 42.2 |
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| Liabilities | 303.9 | 303.0 |
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| Net assets acquired | 56.2 | |
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| Preliminary negative goodwill | 21.9 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| The acquisition analysis will be completed during 2009. Preliminary negative |
| goodwill has been recognised as an accrued expense. |
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| Ålandsbanken Sverige has not had any effect on earnings, since the |
| acquisition was completed on March 27. |
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| Goodwill |
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| EUR | 2009 | 2008 |
--------------------------------------------------------------------------------
| Opening balance |
--------------------------------------------------------------------------------
| Gross | 1,372,988 | 1,405,260 |
--------------------------------------------------------------------------------
| | 1,372,988 | 1,405,260 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Goodwill recognised during the report period | 0 | 34,373 |
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| Impairment | 0 | -66,645 |
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| Closing balance | 1,372,988 | 1,372,988 |
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5. OPERATING SEGMENTS
The Bank of Åland Group reports operating segments in compliance with IFRS 8,
which means that operating segments reflect the information that the Group's
Executive Team receives. The Finland segment includes the Bank of Åland Plc, Ab
Compass Card Oy Ltd, Ålandsbanken Asset Management Ab, Ålandsbanken Equities Ab,
Ålandsbanken Fondbolag Ab and Ålandsbanken Veranta Ab. The Crosskey segment
includes Crosskey Banking Solutions Ab and S-Crosskey Ab. The Sweden segment
includes Ålandsbanken Sverige AB, Ålandsbanken Fonder AB and Alpha Management
Company S.A. In each operating segment, “Other staff costs” are recognised as
staff costs while in the external financial statements they are recognised as
“Other administrative expenses” and IT depreciation/amortisation is recognised
as “Other expenses” while in the external financial statements they are
recognised as “Depreciation/amortisation”.
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| Bank of Åland Group | Jan-Mar 2009 |
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| EUR M | Finland | Sweden | Crosskey | Eliminati | Total |
| | | | | ons | |
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| Deposits, lending | 11.3 | 0.0 | 0.0 | 0.0 | 11.3 |
| and portfolio | | | | | |
| management | | | | | |
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| of which impairment | -0.4 | 0.0 | 0.0 | 0.0 | -0.4 |
| losses, loans | | | | | |
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| Capital market | 4.2 | 0.0 | 0.0 | 0.0 | 4.2 |
| products/services | | | | | |
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| Other income | 1.0 | 0.0 | 6.6 | -3.3 | 4.4 |
--------------------------------------------------------------------------------
| Staff costs | -5.2 | 0.0 | -2.7 | 0.0 | -7.9 |
--------------------------------------------------------------------------------
| Other expenses | -4.3 | 0.0 | -2.7 | 2.3 | -4.8 |
--------------------------------------------------------------------------------
| Depreciation/amortis | -0.9 | 0.0 | -0.2 | 0.2 | -1.0 |
| ation | | | | | |
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| NET OPERATING PROFIT | 6.1 | 0.0 | 1.0 | -0.8 | 6.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Assets | 2,720.0 | 360.6 | 13.0 | 10.7 | 3,104.3 |
--------------------------------------------------------------------------------
| Liabilities | 2,697.3 | 303.0 | 9.2 | -42.0 | 2,967.4 |
--------------------------------------------------------------------------------
| Equity capital | 41.8 | 57.6 | 3.8 | 33.6 | 136.8 |
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6. INCOME TAXES
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| Bank of Åland Group | Mar 31 | Mar 31 |
| | 2009 | 2008 |
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| EUR M |
--------------------------------------------------------------------------------
| Taxes for the report period and earlier report | 1.8 | 1.3 |
| periods | | |
--------------------------------------------------------------------------------
| Change in deferred tax assets/liabilities | -0.0 | 0.2 |
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| Income taxes | 1.8 | 1.5 |
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7. DIVIDEND
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| Bank of Åland Group | 2008 | 2007 |
| | | |
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| EUR |
--------------------------------------------------------------------------------
| Final dividend for 2008: EUR 0.50 per share | 5,768,061 | |
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| Final dividend for 2007: EUR 1.00 per share | | 11,536,122 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| The dividend for 2008 was adopted by the Annual General Meeting on March 26, |
| 2009. The record date was March 31 and the distribution date was April 7. |
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8. DEPOSITS FROM THE PUBLIC AND PUBLIC SECTOR,
--------------------------------------------------------------------------------
| including bonds and certificates of deposit issued |
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| Bank of Åland Group | Mar 31 | Mar 31 | Dec 31 |
| | 2009 | 2008 | 2008 |
--------------------------------------------------------------------------------
| EUR M |
--------------------------------------------------------------------------------
| Deposit accounts from the public and public sector |
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| Demand deposit accounts | 294 | 197 | 127 |
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| Current accounts | 251 | 216 | 233 |
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| Environmental and Savings Accounts | 74 | 78 | 73 |
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| Prime Accounts | 723 | 527 | 652 |
--------------------------------------------------------------------------------
| Time deposits | 520 | 486 | 578 |
--------------------------------------------------------------------------------
| Total deposit accounts in euros | 1,863 | 1,504 | 1,661 |
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| Deposit accounts in other currencies | 84 | 62 | 95 |
--------------------------------------------------------------------------------
| Total deposit accounts | 1,946 | 1,566 | 1,757 |
--------------------------------------------------------------------------------
| Bonds and subordinated debentures* | 226 | 221 | 224 |
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| Certificates of deposit issued to the public* | 181 | 255 | 145 |
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| Total bonds and certificates of deposit | 407 | 476 | 369 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total deposits | 2,354 | 2,042 | 2,126 |
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| * This item does not include debt securities subscribed by credit |
| institutions. |
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9. LENDING TO THE PUBLIC AND PUBLIC SECTOR BY PURPOSE
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| Bank of Åland Group | Mar 31 | Mar 31 | Dec 31 |
| | 2009 | 2008 | 2008 |
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| EUR M |
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| COMPANIES |
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| Shipping | 83 | 110 | 79 |
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| Wholesale and retail trade | 61 | 55 | 59 |
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| Housing operations | 65 | 57 | 64 |
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| Other real estate operations | 138 | 108 | 113 |
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| Financial and insurance operations | 214 | 167 | 190 |
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| Hotel and restaurant operations | 15 | 13 | 14 |
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| Other service operations | 85 | 64 | 79 |
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| Agriculture, forestry and fishing | 7 | 6 | 7 |
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| Construction | 29 | 20 | 23 |
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| Other industry and crafts | 32 | 30 | 31 |
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| | 727 | 629 | 661 |
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| PRIVATE INDIVIDUALS |
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| Home loans | 1,089 | 1,049 | 1,083 |
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| Securities and other investments | 296 | 241 | 249 |
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| Business operations | 192 | 83 | 92 |
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| Other household purposes | 86 | 82 | 84 |
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| | 1,663 | 1,455 | 1,508 |
--------------------------------------------------------------------------------
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| PUBLIC SECTOR AND NON-PROFIT ORGANISATIONS | 25 | 25 | 25 |
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| |
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| TOTAL LENDING | 2,416 | 2,109 | 2,193 |
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10. OFF-BALANCE SHEET COMMITMENTS
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| Bank of Åland Group | Mar 31 | Mar 31 | Dec 31 |
| | 2009 | 2008 | 2008 |
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| EUR M |
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| Guarantees and pledges | 32 | 21 | 16 |
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| Other commitments | 225 | 149 | 149 |
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| | 257 | 170 | 165 |
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11. DERIVATIVE CONTRACTS
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| Bank of Åland Group | Mar 31, 2009 | Mar 31, 2008 |
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| | For | | For | |
| EUR M | hedging | Other | hedging | Other |
| | purposes | | purposes | |
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| Value of underlying property |
--------------------------------------------------------------------------------
| Interest rate derivatives |
--------------------------------------------------------------------------------
| Forward contracts | 3 | 0 | 0 | 0 |
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| Swap contracts | 592 | 7 | 353 | 9 |
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| Option contracts | | | | |
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| Purchased | 67 | 24 | 0 | 0 |
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| Exercised | 24 | 67 | 0 | 0 |
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| Currency derivatives | | | | |
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| Forward contracts | 93 | 12 | 22 | 20 |
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| Interest rate and currency | 0 | 4 | 0 | 0 |
| swap contracts | | | | |
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| Equity derivatives |
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| Option contracts |
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| Purchased | 149 | 0 | 170 | 0 |
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| | 928 | 114 | 545 | 29 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equivalent credit value of the contract |
--------------------------------------------------------------------------------
| Interest rate derivatives | 11 | | 5 | |
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| Currency derivatives | 3 | | 0 | |
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| Equity derivatives | 19 | | 35 | |
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| | 33 | | 40 | |
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| The equity derivatives that were purchased mainly hedge option structures |
| that are embedded in bonds issued to the public. |
--------------------------------------------------------------------------------
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| 12. MATURITY BREAKDOWN OF CLAIMS AND LIABILITIES |
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| Bank of Åland Group | Mar 31, 2009 |
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| EUR M | < 3 mo | 3 - 12 | 1 - 5 yrs | 5 - yrs | Total |
| | | mo | | | |
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| Claims |
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| Debt securities | 5.7 | 13.0 | 112.8 | 0.0 | 131.5 |
| eligible for | | | | | |
| refinancing in | | | | | |
| central banks | | | | | |
--------------------------------------------------------------------------------
| Credit institutions | 246.4 | 0.0 | 0.0 | 0.0 | 246.4 |
| and central banks | | | | | |
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| The public and public | 304.5 | 245.1 | 909.2 | 956.9 | 2,415.7 |
| sector entities | | | | | |
--------------------------------------------------------------------------------
| Other debt securities | 69.6 | 21.7 | 6.0 | 0.0 | 97.3 |
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| | 626.2 | 279.8 | 1,028.0 | 956.9 | 2,890.9 |
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| Liabilities |
--------------------------------------------------------------------------------
| Credit institutions | 57.8 | 21.0 | 10.0 | 0.0 | 88.8 |
| and central banks | | | | | |
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| The public and public | 1,789.2| 156.2 | 1.2 | 0.0 | 1,946.6 |
| sector entities | | | | | |
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| Debt securities | 91.3 | 264.8 | 335.6 | 0.0 | 691.7 |
| issued to the public | | | | | |
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| Subordinated | 17.8 | 11.9 | 30.8 | -0.8 | 59.6 |
| liabilities | | | | | |
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| | 1,956.2| 453.9 | 377.5 | -0.8 | 2,786.8 |
| | | | | | |
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No estimates of maturity dates have been made. Spot deposits, for example, are
found in the category <3 months.
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| 13. INTEREST RATE REFIXING PERIODS |
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| Bank of Åland Group | Mar 31, 2009 |
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| EUR M | < 3 mo | 3-6 mo | 6-12 | 1-5 | > 5 yrs | Total |
| | | | mo | yrs | | |
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| Assets | 2,497 | 214 | 334 | 528 | 50 | 3,623 |
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| Liabilities | 2,536 | 273 | 292 | 361 | 51 | 2,513 |
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| Difference between | -40 | -58 | 42 | 167 | -1 | 110 |
| assets and | | | | | | |
| liabilities | | | | | | |
--------------------------------------------------------------------------------
| Shows the Bank's interest rate-related assets and reliabilities, including |
| derivatives, according to the interest rate refixing date as of December 31, |
| 2009. Volume that fall due for new interest rate refixing in each respective |
| time interval. |
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| Bank of Åland Group | Mar 31, 2008 |
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| EUR M | < 3 mo | 3-6 mo | 6-12 | 1-5 | > 5 yrs | Total |
| | | | mo | yrs | | |
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| Assets | 2,032 | 215 | 419 | 279 | 39 | 2,984 |
--------------------------------------------------------------------------------
| Liabilities | 2,184 | 132 | 257 | 229 | 40 | 2,842 |
--------------------------------------------------------------------------------
| Difference between | -152 | 84 | 162 | 50 | -1 | 143 |
| assets and | | | | | | |
| liabilities | | | | | | |
--------------------------------------------------------------------------------
| Shows the Bank's interest rate-related assets and reliabilities, including |
| derivatives, according to the interest rate refixing date as of December 31, |
| 2008. |
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Review Report, Bank of Åland Plc Interim Report for January 1 - March 31, 2009
To the Board of Directors of the Bank of Åland Plc
Introduction
We have reviewed the consolidated summary statement of financial position of the
Bank of Åland Plc on March 31, 2009, the consolidated summary statement of
comprehensive income, the summary statement showing changes in consolidated
equity capital and the consolidated summary cash flow statements for the
three-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 March 31, 2009 and its operating results and cash flows during
the three-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, May 11, 2009
Leif Hermans
Authorised Public Accountant
Terhi Mäkinen
Authorised Public Accountant
Bengt Nyholm
Authorised Public Accountant
