Evli Bank Plc’s Half Year Financial Report January-June 2020

Helsinki, FINLAND



Financial performance January-June 2020

  • Net revenue was EUR 33.0 million (1-6/2019: EUR 35.1 million)
  • Operating profit was EUR 8.6 million (EUR 9.5 million)
  • The Wealth Management and Investor Clients segment’s operating profit increased and was EUR 10.1 million (EUR 6.9 million)
  • The Advisory and Corporate Clients segment’s operating profit declined and was EUR 0.9 million (EUR 1.0 million)
  • The return from own balance sheet items declined as a consequence of the market collapse and were EUR -0.8 million (EUR 2.5 million), which resulted in a weaker operating profit in the Group Operations segment
  • Net assets under management amounted to EUR 12.9 billion (EUR 13.3 billion) at the end of June
  • Evli’s diluted earnings per share were EUR 0.25 (EUR 0.29) and return on equity was 17.3 percent (19.8%)
  • Proportion of recurring revenue to operating costs was 121 percent (113%).

Financial performance April-June 2020

  • The Group's net revenue was EUR 18.8 million (EUR 18.3 million)
  • The Group's operating profit was EUR 6.5 million (EUR 5.2 million)
  • Earnings per share amounted to EUR 0.18 (EUR 0.16).

Outlook for 2020

In the current market environment, we estimate that the operating profit for 2020 will be clearly positive. In a situation where market conditions would deteriorate from the current situation, we estimate the operating profit to be positive.

Despite the challenging market environment, the view is supported by a high ratio of recurring revenue to operating costs, as well as sales of alternative investment products, which have brought new, stable revenue. In addition, the company took a number of adjustment measures during March to ease the cost structure. As part of the measures, the Board of Directors and the Executive Group as well as some employees voluntarily reduced salaries and fees on a temporary basis, among other things. As a result of the rapid market recovery, the adjustment measures will be dissolved during the third quarter.

Key Figures

Income statement key figures   
Operating income, M€
Operating profit/loss, M€8.69.524.1
Operating profit margin, %
Profit/loss for the financial year, M€6.77.318.7
Profitability key figures   
Return on equity (ROE), %17.319.823.4
Return on assets (ROA), %
Balance sheet key figures   
Equity-to-assets ratio, %
Group capital adequacy ratio, %15.314.715.1
Key figures per share   
Earnings per Share (EPS), fully diluted, €
Comprehensive Earnings per Share (EPS), fully diluted, €
Dividend per share, €  0.66*
Equity per share, €3.052.963.40
Share price at the end of the period, €8.587.7810.40
Other key figures   
Expense ratio (operating costs to net revenue)0.740.730.68
Recurring revenue ratio, %121113124
Personnel at the end of the period248263249
Market value, M€205.1186.0248.6

*Approved by the Annual General Meeting. The dividend was paid on March 18, 2020.

Maunu Lehtimäki, CEO

The spread of the coronavirus into a global pandemic was reflected in Evli’s operations and financial performance in the second quarter. The recovery of the equity and corporate bond markets from the market collapse in March restored investor confidence, and the substantial net redemptions witnessed in the first quarter decreased significantly. Evli’s commission income declined from the previous year, but the operating profit improved as a result of lower costs and improved return from own balance sheet items.

In order to ensure uninterrupted continuation of our operations, we switched over to remote working at the end of the first quarter. This was continued until the end of May, after which it has been possible to return to the office. Despite the exceptional circumstances our operations run smoothly during the first half of the year and we focused on active client communications and on impeccable implementation of administrative duties, including legal and official requirements. Evli’s staff adjusted well to the exceptional circumstances and, based on the results of a personnel survey, plans to increase remote working possibilities under normal conditions were launched.

In the second quarter, Evli’s net sales remained at the previous year’s level, but the operating profit increased by 25 percent on the previous year. Due to the market collapse, brokerage and fund fees fell short of the comparison period, however, net income from securities trading and foreign exchange dealing over doubled and totalled EUR 2.9 million (EUR 1.3 million). Evli’s return on equity was 17.3 percent (19.8%), and the proportion of recurring revenue to operating expenses increased to 121 percent (113%).

The Wealth Management and Investor Clients segment’s revenue decreased by seven percent to EUR 13.3 million (EUR 14.4 million). At the end of June, assets under management were EUR 12.9 billion (EUR 13.3 billion) and Evli Fund Management Company’s fund capital was EUR 8.0 billion (EUR 9.0 billion). Net subscriptions during the quarter were EUR -71.6 million. The redemptions were focused on fixed income funds, as in the previous quarter.

The Advisory and Corporate Clients segment’s revenue declined by nine percent to EUR 2.3 million (EUR 2.5 million). The Corporate Finance unit’s invoicing fell below the previous year’s level after several advisory projects were suspended as a result of the crisis. The unit’s mandate base has decreased, and the execution and timetable of mandates are uncertain. The incentive systems management business continued to grow as in previous quarters.

Evli’s strategic focus areas – international fund sales and sales of alternative investment products – showed contrasting performance. International fund sales developed less favourably than we had expected, as international clients redeemed more than EUR 250 million from our mutual funds in the second quarter. However, we expect this trend to remain temporary and subscriptions to increase again as the global economic picture becomes clearer, especially with respect to European and Nordic corporate bonds, which are critical for international fund sales. Net sales of alternative investment products were EUR 73 million during the second quarter and combined investment assets grew by 30 percent year-on-year to around EUR 1 billion. Alternative investment product fees’ share of all fund fees exceeded 20 percent, and we expect this share to grow further in the future. This view is supported by investors’ interest shifting to non-traditional asset classes and the expectation that interest rates will remain low far into the future. Our aim is to present new alternative investment solutions this year and next year to complement our current product portfolio.

At the end of the first quarter, we launched a series of cost adjustment measures aimed at boosting Evli’s profitability. Almost all of these measures were implemented during the first half of the year and their positive cost impact has already been noticeable. Since the operating environment recovered faster than we expected, the adjustment measures will be dissolved during the third quarter and we will continue the development work started earlier to streamline Evli’s processes and further improve client satisfaction.

I would like to thank our clients and shareholders for their trust and our employees for their hard and successful work in this exceptional environment.


For additional information, please contact:

Maunu Lehtimäki, CEO, Evli Bank Plc, tel. +358 (0)50 553 3000, maunu.lehtimaki@evli.com
Juho Mikola, CFO, Evli Bank Plc, tel. +358 (0)40 717 8888, juho.mikola@evli.com

Evli Bank Plc

Evli is a bank specialized in investments that helps institutions, corporations and private persons increase their wealth. The product and service offering includes mutual funds, asset management and capital markets services, alternative investment products, equity research, the administration of incentive programs and Corporate Finance services. The company also offers banking services that support clients' investment operations. Evli is the highest ranked and most used institutional asset manager in Finland*.

Evli has a total of EUR 12.9 billion in client assets under management (net 6/2020). Evli Group's equity capital totals EUR 72.7 million and its BIS capital adequacy ratio is 15.3 percent (June 30, 2020). The company has around 250 employees. Evli Bank Plc's B shares are listed on Nasdaq Helsinki Ltd.

*KANTAR SIFO Prospera External Asset Management Finland 2015, 2016, 2017, 2018, 2019 and SFR Scandinavian Financial Research Institutional Investment Services, Finland 2015, 2016, 2017, 2018.

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


Evli Bank Plc Half Year Financial Report 1-6/2020