Aktia Q1'25 earnings preview: Steady development anticipated

Translation: Original published in Finnish on 5/5/2025 at 7:59 am EEST.

We expect Aktia's result to be slightly lower than in the comparison period due to a lower interest margin and increased operating expenses. In the earnings report, we will focus not only on the numbers, but also on the development of the quality of the loan book and management's comments on the outlook for credit demand, as the quarter's numbers have not yet been affected by fears of an escalation of the trade war. The potential negative impact will therefore be felt with a time lag in the form of caution on the part of asset management clients, weaker credit demand and lower interest rates.

We expect a slight decline in income

Aktia will announce its Q1 results on Wednesday morning around 8.00 am EEST. We expect net interest income to have declined both year-on-year and also moderately quarter-on-quarter. We expect credit demand to remain moderately subdued, although a slight pick-up in lending should bring the loan book back to moderate growth.

In turn, we expect net commission income to grow from the comparison period. This will be driven by moderate growth in both lending fees and assets under management. Regarding AUM, it should be noted that in the future Aktia will report gross assets under management, to which the growth target for the strategic period is also linked. The change in reporting method will therefore increase the reported client assets by an estimated 2 BNEUR (14.0 -> 16.0 BNEUR).

We estimate that the other items will develop quite steadily, so that overall we expect Aktia's operating income to be slightly below the comparison period at 76.5 MEUR.

Profitability remains good

We expect Aktia's comparable expenses to increase by approximately 6% year-on-year. In our forecasts, the overall increase will be mainly driven by general cost inflation and IT cost increases. We expect credit losses to be slightly below the comparison period at around 2.3 MEUR (0.11% of the loan book).

As a result of these factors, we expect Aktia's comparable operating profit for Q1 to have been 30.9 MEUR. We forecast earnings per share of EUR 0.34 for the quarter, which would still represent a strong return on equity of over 15%.

Threat of tariff war looms over banking sector as well

Aktia's current earnings guidance includes an expected decline in comparable operating income (124.5 MEUR in 2024). The company expects its net interest income to decline in line with interest rates, while net commission income is expected to increase slightly. In addition, costs are rising due to IT investments and inflation. The company is likely to reiterate these estimates in the Q1 report, as there are no immediate signs of a return to growth.

Of particular interest will be the possible views on the impact of the threat of a trade war and increased uncertainty. The investment appetite of asset management clients and the credit demand of private and corporate clients are under particular pressure. A deterioration in the economic outlook could also have a negative impact on interest rates. For banks, the risks of an escalation of the trade war have come at a very bad time, just as there were first indications of a pick-up in demand. Of course, there is no certainty of a negative trend, as falling interest rates and rising real wages could support private consumption already this year. In addition, tax cuts and stimulus measures in other EU countries may provide some relief for Finland's economic development.