Annual Report 2019 Bank of Åland Plc Going our own way 2018-12-11 12:08 Table of contents About the Bank of Åland............................... 2 The year 2019 in brief................................. 3 Legal structure of the Group and organisational chart ...... 4 Statement by the Managing Director .................... 6 Milestones during the Bank of Åland’s first century ........ 8 Eight questions about the Bank’s 100th anniversary ..... 10 Strategy............................................ 12 Sustainability ....................................... 14 Private Banking ..................................... 26 Premium Banking ................................... 28 Partnerships ........................................ 30 Corporate units . 33 Information Technology .............................. 35 report of the directors Report of the Directors ............................... 38 Facts on Bank of Åland shares ......................... 44 Financial calendar The Bank of Åland will publish the following Interim Reports financial statements during the 2020 financial year: Consolidated income statement ....................... 48 • January–March Interim Report April 24, 2020 • January–June Half-Year Financial Report July 17, 2020 Consolidated statement of comprehensive income ....... 49 • January–September Interim Report October 22, 2020 Consolidated balance sheet ........................... 50 Statement of changes in equity capital.................. 51 The Annual Report and all Interim Reports will be published on the Bank’s website: www.alandsbanken.fi Consolidated cash flow statement.......................52 Table of contents, notes to the consolidated They can be ordered from: [email protected] or from financial statements....................................55 Secretariat, Bank of Åland Plc, PB 3, AX-22101 Mariehamn, Notes to the consolidated financial statements........... 56 Åland, Finland. Parent Company income statement ...................104 The Head Office of the Bank of Åland is in Mariehamn, Parent Company balance sheet .......................105 capital of the autonomous Finnish province of Åland. Parent Company statement of changes in equity capital . 106 Located in the Baltic Sea midway between Sweden and Finland, the 6,700-island Åland archipelago has more than Parent Company cash flow statement.................. 107 29,000 inhabitants. Its official language is Swedish. Table of contents, notes to the Parent Company financial statements .................................109 This translation of the Swedish-language Annual Report uses the international currency codes for the European Notes to the Parent Company financial statements ...... 110 Central Bank euro (EUR) and the Swedish krona (SEK). Proposed allocation of profit ......................... 127 At year-end 2019, the middle rate for EUR 1 was USD 1.1234 Auditors’ Report.................................... 128 and SEK 10.4468. “The Bank” refers to the Bank of Åland Plc (Ålandsbanken Abp), corporate governance statement Parent Company of the Bank of Åland Group. Amounts have Corporate Governance Statement .................... 132 generally been rounded off to millions or thousands, but percentage figures, totals, ratios etc. are calculated on the exact amounts. The abbreviation M refers to million(s), and Board of Directors .................................. 138 K means thousand(s). Executive Team.....................................140 Definitions ........................................ 142 Translation: Victor Kayfetz, SCAN EDIT, Oakland, CA Cover: Painting by Jonas Wilén Stock exchange releases in 2019...................... 143 Address list . 144 Annual Report 2019 1 About the Bank of Åland • The Bank of Åland (Ålandsbanken) was founded in 1919 as • On the Finnish mainland and in Sweden, the Bank of Åland has Ålands Aktiebank and has been listed on the Helsinki Stock a niche strategy targeted to entrepreneurs, wealthy families and Exchange (now the Nasdaq Helsinki Oy) since 1942. individual customers with sound finances. We offer two concepts: ® • The Head Office is located in Mariehamn, Åland. The Bank of Private Banking and Premium Banking . Åland has a total of three offices in the Åland Islands and five • Over the years, the Bank of Åland has been an innovative offices on the Finnish mainland: in Helsinki, Tampere, Vaasa, pioneer in the financial services industry. The Bank of Åland’s Turku and Parainen. In Sweden, the Bank of Åland has three Premium Banking®, launched in 2004, has served as a model for offices: Stockholm, Gothenburg and Malmö. competitors in the Nordic countries. The Åland Index, launched • The Bank of Åland Group has two subsidiaries whose operations in 2016, has become established as an international standard for are connected in various ways with banking. They are Ålands- measuring the climate impact of consumption. banken Fondbolag Ab and Crosskey Banking Solutions Ab Ltd, • The Bank of Åland has proactively chosen to offer products the latter with its own subsidiary S-Crosskey Ab. that benefit the customer at various levels: first and foremost • In the Åland Islands, the Bank of Åland is a bank for all residents financially, but also by contributing to sustainable development. and is both in a position and with a desire to help develop the Including the 2019 amount, over the years the Bank’s Baltic Sea Åland of the future. Account (formerly the Environmental Account) has contributed almost EUR 2.3 M to projects that improve and protect the environment. Bank of Åland Group 2019 2018 2017 2016 2015 EUR M Income Net operating profit 33.2 29.0 26.0 25.1 30.3 Profit for the year attributable to shareholders 26.3 22.9 20.7 19.7 24.3 Volume Receivables from the public and public sector entities 4,110 4,022 3,979 3,808 3,617 Deposits from the public 3,368 3,304 3,148 3,028 2,517 Actively managed assets 1 6,343 5,177 5,737 3,900 3,927 Equity capital 258 242 234 222 213 Risk exposure amount 1,583 1,578 1,538 1,576 1,581 Financial ratios Return on equity after taxes (ROE), % 2 10.7 9.8 9.1 9.1 12.0 Expense/income ratio 3 0.73 0.77 0.78 0.76 0.73 Loan loss level, % 4 0.08 0.02 0.06 0.11 0.09 Core funding ratio, % 5 90 90 88 89 100 Equity/assets ratio, % 6 4.6 4.4 4.4 4.3 4.6 Common equity Tier 1 capital ratio, % 7 13.4 13.0 12.9 11.8 12.0 Working hours re-calculated to full-time equivalent positions 700 691 691 683 663 Earnings per share, EUR 1.69 1.48 1.35 1.29 1.60 Equity capital per share, EUR 16.61 15.67 15.14 14.50 14.00 Dividend per share, EUR 1.00 0.70 0.65 0.60 0.60 1 Actively managed assets include managed assets in the Bank’s own mutual funds plus securities custodial accounts with discretionary and advisory asset management agreements. 2 Profit for the report period attributable to shareholders/Average shareholders’ portion of equity capital. 3 Expenses/Income. 4 Impairment losses on loans and other commitments/Receivables from the public at the beginning of the period. 5 Receivables from the public/Deposits including certificates of deposit, index bonds and debentures issued to the public and covered bonds issued. 6 Equity capital/Balance sheet total. 7 (Common equity Tier 1 capital/Capital requirement)×8%. 2 Bank of Åland Plc The year 2019 in brief Financial summary of 2019 category and received the prestigious third quarter Lipper Fund Award Nordic. The fund won • The Bank of Åland – together with ICA • Profit for the year attributable to the award for all management periods shareholders increased by 15 per cent Bank, Ikano Bank, Söderberg & Partners that were analysed: 3, 5 and 10 years. to EUR 26.3 M (22.9). and Borgo – signed an agreement on • Together with its customers, the Bank of establishing a joint mortgage company • Earnings per share increased by Åland is continuing its commitment to a in the Swedish market. The Bank of Åland, 14 per cent to EUR 1.69 (1.48). cleaner Baltic Sea. The Baltic Sea Project along with its subsidiary Crosskey, will • Return on equity after taxes (ROE) contributed EUR 300,000 to various supply platform solutions for the new increased to 10.7 (9.8) per cent. projects that promote the health of the mortgage company, as well as contri- • Net interest income decreased by Baltic Sea. buting their existing knowledge about 1 per cent to EUR 53.9 M (54.5). mortgage management. • Net commission income increased by second quarter • Compass Card was merged with the Bank 7 per cent to EUR 58.0 (54.3). • The Annual General Meeting on April 3, of Åland, since an independent subsidiary • Total expenses were at an unchanged 2019 re-elected the Board of Directors is no longer needed in order to carry out level and amounted to EUR 97.5 M (97.8). consisting of Nils Lampi, Christoffer Taxell, the Bank’s card business. • Net impairment losses on financial Åsa Ceder, Anders Å. Karlsson, Göran assets (including recoveries) amounted Persson, Ulrika Valassi and Anders Wiklöf. fourth quarter to EUR 3.2 M (0.8), equivalent to a loan At the statutory meeting of the Board the • Crosskey acquired the Finnish software loss level of 0.08 (0.02) per cent. same day, Nils Lampi was elected as company Model IT Oy. • Actively managed assets increased by Chairman and Christoffer Taxell as Deputy • Åland Index Solutions, a joint venture 23 per cent to EUR 6,343 M (5,177). Chairman of the Board. Göran Persson between the Bank of Åland and the • Receivables from the public increased by resigned from the Board on April 29, how- Swedish fintech startup Doconomy, 2 per cent to EUR 4,110 M (4,022). ever, in light of his nomination as Chairman was established. of the Board of Swedbank AB (publ). • Deposits increased by 2 per cent to • Banks with over 40 million customers EUR 3,368 M (3,304). • The Bank of Åland launched a new worldwide announced that thanks to • The common equity Tier 1 capital ratio sustainable bond fund, Ålandsbanken Åland Index Solutions, they can now offer increased to 13.4 (13.0) per cent. Green Bond ESG.