bank of åland Plc annual report 2009 bank of åland Plc The year 2009 in brief • During 2009, the bank of åland Plc bought • In Euromoney magazine’s annual survey of portions of Swedish-based kaupthing bank wealth managers, the bank of åland ranked first Sverige AB, now ålandsbanken Sverige AB in terms of customer relationships in Finland. (encompassing kaupthing bank Sverige AB, In addition, the bank of åland was selected as kaupthing Fonder AB and alpha management the second best Finnish market player in private Company S.a.). banking. The bank also ranked high in the inher- ited wealth and business services category and • The year was characterised by the Group’s the discretion and safety category. investment in the Swedish market, increased focus on private banking services, instability in • In February, the bank of åland distributed EUr financial markets and low market interest rates. 76,000 in grants to long-term environmental The consolidated net operating profit of the promotion projects. This donation was gener- bank of åland Group increased by 52.1 per cent ated from the bank’s Environmental accounts. to EUr 30.5 m (20.0 in 2008). • The bank of åland’s customers are the most • During the year, the Group recognised EUr loyal in Finland, according to a survey commis- 23.1 m in negative goodwill as income due to sioned by the Finnish Direct marketing associa- its purchase of portions of kaupthing bank tion and avaus Consulting. The bank took first Sverige AB. place in customer loyalty, ahead of other players in the financial service sector, but also ahead of • In traditional banking operations, net interest many other well-known major companies. income was adversely affected by low market interest rates, while the Group’s strategic focus • During 2009, the bank of åland celebrated its on private banking meant increased income 90th anniversary. from mutual funds, stock brokerage and asset management. Information technology (IT) operations performed favourably during the year, which increased “Other operating income”. Net operating profit Deposits and lending risk-based capital ratio, % EUr m EUr m 35 2600 15 2546 30 2437 2450 2416 2428 25 10 2401 2411 20 2354 2375 2300 15 2193 10 5 2150 2126 5 0 2000 0 2006 2007 2008 2009 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 • Deposits • Lending Contents Financial calendar The year 2009 in brief The Bank of Åland will publish the following Interim About the Bank of Åland . 2 Reports during the 2010 financial year. • January−March Interim Report May 3, 2010 Group structure . .3 • January−June Interim Report August 2, 2010 Statement of the Managing Director . 4 • January-September Interim Report November 1, 2010 90 years of experience . 6 The Annual Report and all Interim Reports will be pub- A unique story of survival . 8 lished on the Internet: www.alandsbanken.fi The Bank of Åland’s role in society . 10 They can also be ordered from: [email protected] or Private Banking . 12 Secretariat, Bank of Åland Plc, Box 3, AX-22101 Marie- Premium Banking . 16 hamn, Åland, Finland. IT operations . 18 The Head Office of the Bank of Åland is in Mariehamn, capital of the autonomous Finnish province of Åland. Report of the Directors . 20 Located in the Baltic Sea midway between Sweden and Finland, the 6,400-island Åland archipelago has nearly Risk management in brief . 26 28,000 inhabitants. Its official language is Swedish. Facts on Bank of Åland shares . 27 This translation of the Swedish-language Annual Report uses the international currency codes for the European Consolidated statement of financial position . 30 Central Bank euro (EUR) and the Swedish krona (SEK). At year-end 2009, the middle rate for EUR 1 was USD 1.4406. Consolidated statement of comprehensive income . 32 Cash flow statement . 33 “The Bank” refers to the Bank of Åland Plc (Ålands- Statement of changes in equity capital . 34 banken Abp), Parent Company of the Bank of Åland Group. Amounts have generally been rounded off to mil- Risk management . 35 lions or thousands, but percentage figures, totals, ratios Table of contents, notes to the consolidated financial etc. are calculated on the exact amounts. The abbreviation statements . 54 M refers to million(s), and K means thousand(s). Finnish- language place and company names are sometimes Notes to the consolidated financial statements . 55 followed in parentheses by the corresponding Swedish- Parent Company balance sheet . 79 language name. Parent Company income statement . 81 Table of contents, notes to the Parent Company financial statements . 82 Notes to the Parent Company financial statements . 83 JÖMÄRK Proposed distribution of profit . 95 MIL T Auditors’ Report . 96 441 678 Board of Directors . 98 Trycksak Executive Team . 100 Printed on Cocoon – a new generation of fine paper made Legal structure of the Group . 102 of 100 percent recycled fibre. The paper has also been C02-offset. Organisational chart . 103 Stock exchange releases in 2009 . 104 Cover photo – Erkki Santamala, photographer Translation: Victor Kayfetz, SCAN EDIT, Oakland, CA Address list About the Bank of Åland • The Bank of Åland (Ålandsbanken) was • The focus of the Bank of Åland is on enhancing founded in 1919 as Ålands Aktiebank and has its role as a bank for investors, while offering been listed on the Helsinki Stock Exchange (now good financing know-how. Its most important Nasdaq OMX Helsinki Oy) since 1942. operational areas are Private Banking and Pre- mium Banking. • The Head Office is located in Mariehamn, Åland. The Bank of Åland has a total of 17 • By being a relationship bank, the Bank of offices in the Åland Islands and eight offices on Åland generates value for individual customers the Finnish mainland: in Helsinki (3), Espoo, and their companies by building, deepening Parainen, Tampere, Turku and Vaasa. The and maintaining long-term personal customer subsidiary Ålandsbanken Sverige AB has three relationships. The Bank of Åland wants to help offices in Sweden: Stockholm, Gothenburg and people and companies achieve a richer life. Malmö. • Over the years, the Bank of Åland has been • The Group has 772 employees, of whom 355 an innovative pioneer in the financial sector, for work for the Parent Company. example by offering Finland’s first equity index bonds (1996) and its first deposit accounts tied • The Bank of Åland Group includes six subsidi- to the prime rate (2000). It was the first to apply aries whose operations are connected in various modern portfolio theory in asset management ways with banking. They are Ålandsbanken for individual customers (2000). Sverige AB, Ålandsbanken Asset Management Ab, Ålandsbanken Equities Ab, Ålandsbanken • The Bank of Åland’s Premium Banking (2004) Fondbolag Ab, Crosskey Banking Solutions Ab is a unique concept that combines financial and Ltd and Ab Compass Card Oy Ltd. Some of these advisory services with security- and lifestyle- have their own subsidiaries. See the organisa- related services and benefits. tional chart on page 103. • The Bank of Åland is the only bank in Finland that has an Environmental Account. Bank of Åland Group 2009 2008 2007 2006 2005 EUR M Income Net interest income 39.1 42.1 39.3 32.7 31.4 Other income 48.3 32.4 36.3 29.3 20.9 Expenses -77.2 -52.1 -46.0 -40.9 -33.2 Loan losses -2.9 -2.3 -1.0 0.0 -0.3 Negative goodwill 23.1 0.0 0.0 0.0 0.0 Net operating profit 30.5 20.0 28.6 21.1 18.7 Selected items from the statement of financial position Lending 2,546 2,193 2,104 1,912 1,796 Deposits, including bonds issued 2,411 2,126 1,921 1,599 1,631 Equity capital 162 139 135 122 113 Total assets 3,379 2,770 2,592 2,189 2,170 Financial ratios Return on equity after taxes, % 17.8 10.7 16.4 13.3 12.5 Equity capital per share, EUR 13.97 11.87 11.54 10.68 10.32 Earnings per share after taxes, EUR 2.27 1.22 1.75 1.29 1.24 Risk-based capital ratio, % 1 12.3 12.6 12.8 13.8 11.3 Number of employees (recalculated as full-time 641 487 470 437 411 equivalents) 1 In 2005, in compliance with Basel 1. In 2006–2009 in compliance with Basel 2 regulations. 2 Bank of Åland Plc Bank of Åland Abp Group structure Operating area Company Sales Total assets Stake, % Offices Employees Founded Banking operations Bank of Åland Plc EUR 99.1 M EUR 2,849.9 M 100 25 355 1919 Ålandsbanken Acquired in EUR 21.0 M EUR 545.8 M 100 3 193 Sverige AB 2009 Ålandsbanken Asset Asset management EUR 7.3 M EUR 5.1 M 70 1 20 2000 Management Ab Fund management Ålandsbanken EUR 3.1 M EUR 1.7 M 100 1 7 1998 Fondbolag Ab Ålandsbanken Acquired in EUR 2.9 M EUR 1.5 M 100 1 4 Fonder AB 2009 Alpha Management Acquired in EUR 1.6 M EUR 1.2 M 100 1 0 Company S.A. 2009 Stock brokerage Ålandsbanken EUR 0.1 M EUR 0.2 M 74 1 3 2008 Equities Ab Equities research Ålandsbanken Equities EUR 0.1 M EUR 0.1 M 74 1 5 2009 Research Ab Crosskey Banking IT EUR 25.6 M EUR 10.6 M 100 4 178 2004 Solutions Ab Ltd S-Crosskey Ab EUR 2.9 M EUR 0.4 M 60 1 1 2005 Issuance of credit and debit Ab Compass Card EUR 0.0 M EUR 2.5 M 66 1 6 2006 cards Oy Ltd Annual Report 2009 3 Statement of the Managing Director A historic year In 2009 we faced both challenges and opportunities.