1472Bank of Åland Plc STOCK EXCHANGE RELEASE
15.08.2003 09.00 hrs
INTERIM REPORT for the period January - June 2003
Earnings
During the report period, consolidated income from financial
operations amounted to EUR 14.8 million. This was EUR 1.0 M or 6.7
per cent lower than during the same period of 2002. The lower
income from financial operations was attributable to narrowing
customer margins due to increasingly tough competition as well as
to poorer return on the Bank's core capital as a consequence of the
low prevailing interest rates.
Dividend income amounted to EUR 0.7 M, which was equivalent
to the year-earlier level. Commission income decreased by EUR
0.8 M to EUR 4.9 M. Net income from the Bank's own securities
trading rose by EUR 0.4 M to EUR 0.5 M. Net income on foreign
exchange dealing, EUR 0.4 M, amounted to the year-earlier
level. Other operating income rose by EUR 1.8 M to EUR 2.5 M.
This included income from the sale of banking computer
systems.
Total income net income from financial operations and other
income rose by EUR 0.3 M to EUR 23.8 M.
New staff recruitments and salary adjustments in compliance
with collective agreements raised staff costs by EUR 0.5 M to
EUR 8.7 M. Other administrative expenses (office costs,
marketing, telecommunications and computer costs) fell by EUR
0.6 M to EUR 3.9 M, mainly due to lower marketing costs.
Depreciation fell by EUR 0.3 M to EUR 1.2 M and other
operating expenses declined by EUR 0.2 M to EUR 1.8 M.
Total expenses including planned depreciation fell by EUR 0.3
M to EUR 16.4 M.
Net loan losses amounted to EUR 0.02 M (recovery) during the
report period, compared to EUR 0.15 M (loss) in the same
period last year.
Taken together, this caused net operating profit to rise by
EUR 0.9 M to EUR 7.7 M.
Return on equity for the report period was 15.6 per cent. The
Bank thus yielded a return on its shareholders' equity at a
level about 12.5 percentage points higher than five-year bond
yields.
Deposits
Deposits from the public, including bonds issued and
certificates of deposit, rose during the 12 months to June
30, 2003 by 2.5 per cent to EUR 1,355 M (1,322). Deposit
accounts rose by 1.2 per cent to EUR 1,085 M (1,072). During
the year, the Bank floated bond issues with a nominal value
of EUR 27.8 M.
Lending
During the 12 months to June 30, 2003, the Bank's volume of
lending to the public increased by 9.0 per cent to EUR 1,275
M (1,169). Most of the increase went towards residential
financing. During the report period, total lending volume
rose by EUR 14.9 M or 1.2 per cent. Private households
accounted for 68.2 (66.9) per cent of the Bank's total loans
outstanding.
Personnel
At the end of June 2003, the number of employees
recalculated as full-time equivalents was 372, compared to
363 on the same date in 2002, that is, an increase of 9
positions.
Insider rules
The Bank has accepted the Helsinki Stock Exchange's insider
regulations and has established trading restrictions by which
a Bank insider is not entitled to trade in the Bank's
securities during a period of 14 days before publication of
the Bank's annual accounts or Interim Report.
Increase in share capital
On June 27, 2003 (recorded in the Finnish Trade Register on
August 13, 2002), the share capital of the Bank increased by
EUR 1,563,966.07, equivalent to 775,132 new Series B shares,
which increased the equity capital of the Bank by EUR 11,486,621.22.
Of the new Series B shares, 772,100 were subscribed by Aktia Savings
Bank (Aktia Sparbank Abp), which exercised the warrants it had
previously purchased. After the increase in share capital,
Aktia Savings Bank's holding amounted to 8.97 per cent of share
capital and 2.72 per cent of voting power in the Bank of Åland Plc
(Ålandsbanken Abp).
Capital adequacy
The Group's capital adequacy according to the Credit
Institutions Act:
Jun 30, 2003 Jun 30, 2002 Dec 31, 2002
Capital base, EUR M
Core capital 86.7 73.5 73.3
Supplementary capital 20.3 23.2 23.2
Total capital base 107.0 96.8 96.5
Risk-weighted volume, EUR M 886.4 838.7 879.4
Total capital ratio, % 12.1 11. 5 11.0
Core capital as % of
risk-weighted volume 9.8 8.8 8.3
Profit for the report period is not included in core capital.
Nonperforming loans, EUR M
Jun 30, 2003 Jun 30, 2002 Dec 31, 2002
2.4 2.3 2.0
Nonperforming loans amounted to 0.2 per cent of total loans
and contingent liabilities.
Financal ratios
Jun 30, 2003 Jun 30, 2002 Dec 31, 2002
Net operating profit per
share, EUR 1 0.51 0.48 1.00
Equity capital per share,
EUR 8.75 8.18 8.69
Income/expense ratio
before loan losses 1.47 1.42 1.45
after loan losses 1.47 1.41 1.42
1 Net operating profit minus imputed taxes/Average number of
shares, adjusted for new issue
2 Equity capital and reserves minus imputed taxes/Number of
shares on balance sheet date, adjusted for new issue
Bank of Åland and Aktia to initiate partnership
On May 26, 2003, Finland's Aktia Savings Bank and the Bank of
Åland signed a letter of intent regarding the establishment of
a joint resources company, to which the banks intend to
outsource part of their administrative functions and capital
market operations. At the same time, Aktia intends to change
its systems supplier by purchasing a licence for the Bank of
Åland banking computer system.
The Bank of Åland is selling a licence that entitles Aktia to
use the banking computer system of the Bank of Åland, including
the Internet banking facility. The joint objective of the banks
is to conclude a final agreement this year and that Aktia will
place the system in operation during the second quarter of 2006.
The value of the contract for delivery of the banking computer
system is expected to exceed EUR 30 M.
Forecast for the year
Due to tough competition and falling interest rates, net income
from financial operations will not reach the level of recent
years. Other income from banking operations and other expenses
are not expected to undergo significant changes. Loan losses
are projected to remain at a low level. Any new licensing
income, or the licensing income from the above-mentioned sale
of banking computer systems, has not been taken into account.
Mariehamn, Åland, August 15, 2003
THE BOARD OF DIRECTORS
Statement of opinion
We have conducted a review of the Interim Report of the Bank
of Åland Plc (Ålandsbanken Abp) for the period January 1
June 30, 2003. This review included an analytical examination
of the balance sheet and income statement items in the
Interim Report. Such a review is significantly more limited
in scope than a statutory audit. Nothing has emerged that
indicates that the Interim Report does not fulfil the
regulations in force.
Mariehamn, August 15, 2003
Leif Hermans
Authorised Public Accountant
Per-Olof Johansson
Authorised Public Accountant
Marja Tikka
Authorised Public Accountant
INCOME STATEMENT (EUR M)
The Group 1-6/03 1-6/02 1-12/02
Net income from financial operations 14.8 15.8 31.5
Income from investment
in form of equity capital 0.7 0.7 0.8
Commission income 4.9 5.7 10.5
Net income from securities trans-
actions and foreign exchange dealing 0.9 0.5 1.2
Other operating income 2.5 0.7 3.9
TOTAL INCOME 23.8 23.5 47.9
Commission expenses -0.8 -0.6 -1.2
Staff costs -8.7 -8.2 -16.4
Other administrative expenses -3.9 -4.5 -8.9
Depreciation -1.2 -1.5 -2.9
Other operating expenses -1.8 -2.0 -3.9
TOTAL EXPENSES -16.4 -16.7 -33. 2
Loan and guarantee losses 0.0 -0.2 -0.7
Write-downs in securities held as
financial fixed assets 0.0 0.0 0.0
Share in operating results of
company consolidated according
to equity method 0.2 0.2 0.3
NET OPERATING PROFIT 7.7 6.8 14.2
PROFIT BEFORE APPRO-
PRIATIONS AND TAXES 7.7 6.8 14.2
Income taxes -2.2 -2.0 -4.2
Share of profit for the financial
year
attributable to minority interests -0.1 -0.2 -0.3
Profit for the year 5.4 4.6 9.7
BALANCE SHEET (EUR M)
The group 06/03 06/02 12/02
ASSETS
Cash 62 61 89
Claims usable as collateral at
central bank 205 168 176
Claims on credit institutions 220 207 202
Claims on the public and
public sector entities 1,275 1,169 1,260
Leasing assets 1 1 1
Debt securities 11 32 26
Shares and participations 17 16 16
Shares and participations in associ-
ated companies and subsidiaries 2 2 2
Intangible assets 4 5 4
Tangible assets 14 15 15
Other assets 28 14 11
Accrued income and
prepayments 7 10 11
TOTAL ASSETS 1,846 1,700 1,813
LIABILITIES AND EQUITY CAPITAL
Liabilities
Liabilities to credit institutions
and
central banks 131 110 112
Lia bilities to the public and
public sector entities 1,091 1,078 1,101
Debt securities issued
to the public 447 348 433
Other liabilities 22 22 24
Accrued expenses and
deferred income 18 20 16
Subordinated liabilities 25 22 22
Imputed taxes due 7 7 7
Minority share of capital 0 1 0
Equity capital
Share capital 21 20 20
New share issue 11
Share premium reserve 15 14 14
Reserve fund 25 25 25
Capital loan 10 10 10
Profit brought forward 18 18 18
Other equity capital 5 5 10
TOTAL LIABILITIES AND EQUITY CAPITAL 1,846 1,700 1,813
OFF-BALANCE SHEET
COMMITMENTS 102 87 93
INCOME STATEMENT (EUR M)
Bank of Åland Plc 1-6/03 1-6/02 1-12/02
Net income from financial operations 14.6 15.7 31.3
Income from investment
in form of equity capital 2.0 1.0 1.0
Commission income 4.0 4.3 8.2
Net income from securities trans-
actions and foreign exchange dealing 0.9 0.5 1.1
Other operating income 2.5 0.7 3.9
TOTAL INCOME 24.1 22.2 45.6
Commission expenses -0.5 -0.6 -1.0
Staff costs -8.4 -7.9 -15.8
Other administrative expenses -3.8 -4.3 -8.7
Depreciation -1.2 -1.4 -2.8
Other operating expenses -1.8 -1.9 -3.8
TOTAL EXPENSES -15.7 -16.2 -32.1
Loan and guarantee losses 0.0 0.1 -0.5
Write-downs in securities held as
financial fixed assets 0.0 0.0 0.4
NET O PERATING PROFIT 8.4 6.1 13.3
PROFIT BEFORE APPRO-
PRIATIONS AND TAXES 8.4 6.1 13.3
Provisions 0.0 0.0 0.7
Income taxes -2.4 -1.8 -4.0
Profit for the year 6.0 1.3 10.0
BALANCE SHEET (EUR M) 06/03 06/02 12/02
Bank of Åland Plc
ASSETS
Cash 62 61 89
Claims usable as collateral at
central bank 205 168 176
Claims on credit institutions 220 207 202
Claims on the public and
public sector entities 1,275 1,169 1,260
Leasing assets 1 1 1
Debt securities 11 31 26
Shares and participations 16 15 16
Shares and participations in associ-
ated companies and subsidiaries 3 2 3
4 4
Intangible assets 14 15 4
Tangible assets 27 14 15
Other assets 11
Accrued income and
prepayments 7 10 10
TOTAL ASSETS 1,845 1,698 1,812
LIABILITIES AND EQUITY CAPITAL
Liabilities
Liabilities to credit institutions
and central banks 131 110 111
Liabilities to the public and
public sector entities 1,091 1,079 1,102
Debt securities issued
to the public 448 348 434
Other liabilities 22 22 24
Accrued expenses and
deferred income 18 19 16
Subordinated liabilities 25 22 22
Imputed taxes due
Accumulated appropriations
Provisions 23 23 23
Equity capital
Share capital 21 20 20
New share issue 11
Share premium reserve 15 14 14
Reserve fund 25 25 25
Capital loan 10 10 10
Profit brought forward 0
Other equity capital 6 4 10
TOTAL LIABILITIES AND EQUITY CAPITAL 1,845 1,698 1,812
OFF-BALANCE SHEET
COMMITMENTS 107 92 93
INCOME STATEMENT (EUR M)
Q2 Q1 Q4 Q3 Q2
The Group 2003 2003 2002 2002 2002
Net income from financial operations 7.4 7.4 7.6 8.1 8.0
Income from investment
in form of equity capital 0.4 0.3 0.0 0.0 0.4
Commission income 2 .6 2.3 2.4 2.3 3.1
Net income from securities trans-
actions and foreign exchange dealing 0.4 0.5 0.6 0.1 -0.8
Other operating income 1.8 0.7 2.0 1.3 0.3
TOTAL INCOME 12.6 11.2 12.6 11.8 11.1
Commission expenses -0.4 -0.4 -0.3 -0.3 -0.3
Staff costs -4.5 -4.2 -4.1 -4.1 -4.1
Other administrative expenses -2.1 -1.8 -2.5 -1.9 -2.5
Depreciation -0.6 -0.7 -0.7 -0.7 -0.7
Other operating expenses -0.9 -1.0 -1.0 -0.9 -1.0
TOTAL EXPENSES -8.4 -7.9 -8.6 -7.9 -8.7
Loan and guarantee losses 0.0 0.1 -0.6 0.0 -0.1
Write-downs in securities held as
financial fixed assets 0.0 0.0 0.0 0.0 0.0
Share in operating results of
company consolidated according
to equity method 0.1 0.2 0.1 0.1 0.1
NET OPERATING PROFIT 4.2 3.5 3.6 4.0 2.4
0