Excellent year for Aktia despite an unstable operating environment
2023 did not bring the desired turn for the better; the same global political and economic uncertainties are still present, and the conflict in the Middle East has further weakened the predictability of the operating environment. For Finland, the outlook became darker towards the end of the year, and economic growth throughout the year is likely to be negative.
However, the central banks’ tight monetary policy has done what it was supposed to, and inflation in Finland was already below four per cent in December. At the same time, the labour market situation has remained good. The rise in interest rates seems to have ended, and rate cuts are already expected from central banks for 2024.
The rise in interest rates has restored the banking operations’ earnings logic and normalised the investment environment, but the coin has two sides. Construction and the housing market have been slow for a long time, and uncertainty about interest rate developments has been reflected in weak demand for housing loans. However, the number of new private customers through the Finnair cooperation and strong demand among corporate customers has kept the total credit stock stable. Thanks to active credit risk management, our credit losses have remained moderate and the credit quality good.
The wealth manager bank strategy proved its strength in a challenging market
Aktia has continued to drive forward its wealth manager bank strategy with determination. In a challenging market, a business strategy based on three pillars – Banking, Asset Management and Life Insurance - provides stability and predictability.
The rise in interest rates supported the increase in net interest income and contributed to Aktia's strong result, although the implementation of IFRS 17 makes comparisons between years considerably more difficult. The rise in interest rates also restored customers' interest in fixed income investments, which strengthened the position of Aktia's products among asset managers. The market uncertainty was reflected on the development of assets under management and commission income, but towards the end of the year the market picked up and the trend turned. The investment market has adapted to a new market environment where free money is no longer available and a new, more traditional market cycle has begun.
At the beginning of the year, Aktia launched the Article 9 fund Aurinkotuuli III in cooperation with Taaleri. The fund raised almost EUR 180 million in its first two rounds of funding. The Aurinkotuuli III fund strongly supports the green transition in the energy economy. During the year, we also developed our product portfolio with new structured products that were very well received by the customers. In addition, we launched the Premium Wealth Plan for investment customers.
The year was also strong for the life insurance business. The sales of risk life insurance developed well for the fifth consecutive year and the sale of investment-linked insurances remained stable. Net income from life insurance grew and the actuarially calculated result for the full year improved. In the summer, the life insurance company selected a supplier for its basic system, and the planning of the implementation project advanced towards the end of the year so that the implementation can begin in early 2024.
Strong increase in the number of customers was one of the biggest successes of the year
The interest towards the Finnair Visa Credit card, developed in cooperation between Aktia and Finnair, as well as sales remained strong also outside our standard customer base, which I am particularly pleased about. The cooperation brought us almost 30,000 new customers during the year. Our corporate customer business also developed very positively, and the acquisition of new customers resulted in more than 3,500 new corporate customers.
I am proud of the trust we gained from our new customers. As a next step, we will make the expertise of the wealth manager bank and our range of products and services fully available to this customer base.
Customer and employee experience will remain at the core of all activities
Each customer must have access to flexible banking services with us. Based on customer feedback, we have not always succeeded, but we have increased resources and continued the determined development of IT solutions. During 2023, we made our identification services smoother and supplemented customer service activities in digital channels by introducing new tools for encountering customers. In the coming year, IT will focus on the digital customer experience and ensuring the continuity of service production. Among other things, we will increase the use of the Aktia ID authentication app, improve customers' possibilities to manage their business as a self-service and renew our mobile bank to better meet our customers' expectations.
At the beginning of the year, we agreed together with the employees that if the bank's result exceeds EUR 100 million, we would divide EUR 1 million equally among all employees. We reached our goal, for which we have all Aktia employees to thank. We are proud of our competent staff and want to ensure that all employees are happy and feel that they are doing meaningful work that they themselves can affect.
I believe in Aktia's strategy. I am sure that we have good prerequisites to implement our plans and develop as a wealth manager bank, bearing in mind our customers, employees, and stakeholders. Together, we are building a prosperous society where everyone is comfortable.
Juha Hammarén
CEO