Aktia Q3'25 flash comment: The decline in earnings continued as expected

Source: Inderes

Translation: Original published in Finnish on 11/6//2025 at 9:25 am EET.

Aktia's Q3 result did not offer any material surprises. As expected, top-line declined along with net interest income, which also kept comparable EBIT down. Both asset management sales and demand for new loans remained at a rather subdued level. On a negative note, the quality of the loan portfolio deteriorated, which also led to an increase in credit losses.

Income decreased as expected along with net interest income

Aktia’s comparable operating expenses in Q3 were slightly below our expectations. Net interest income declined slightly more than estimated (-6% vs. -4% forecast), but net commission income and life insurance net income developed better than anticipated. In asset management, both assets under management and the fee level developed well. However, net subscriptions in asset management were only moderately positive, so the stronger-than-forecast growth in client assets under management was due to favorable market development. Net subscriptions, on the other hand, came mainly from bank customers, so no significant pick-up was seen in institutional sales. Aktia's gross assets under management grew by 2.5% in Q3 to 16.3 BNEUR.

The loan book, on the other hand, remained at the previous quarter's level. Although corporate customer loans grew moderately, the contraction in the mortgage portfolio offset this effect. Thus, the development of Aktia's credit demand was not in clear contradiction with previously published market data, which showed that the pick-up in lending had at least somewhat paused since the beginning of the year. On the other hand, Aktia's loan demand was at a higher level than in the previous two years in Q3, which is seasonally typically quieter due to, among other things, the summer holiday season. Thus, the direction is still right.

Overall, Aktia's operating income decreased by 3% from the comparison period to 73.5 MEUR.

The decline in revenue also weighed on profitability

Aktia’s comparable operating expenses in Q3 were in line with our expectations. Comparable costs were thus, as expected, slightly below the comparison period. This was explained by a decrease in depreciation, and adjusted for this, operating expenses increased by approximately 8% due to IT investments in particular. Aktia recorded 2.1 MEUR in one-off costs in Q3 from its ongoing change program.

The loan portfolio showed deterioration in Q3, with the share of non-performing loans rising to 1.2% of the loan portfolio (Q2'25: 1.0%). This was also reflected in credit losses, which increased more than we expected in the first half of the year to 3.8 MEUR (0.19%). According to the company, the increase in credit losses came from individual loans, which were affected by the challenges in the real estate sector. The realized credit loss level is already clearly higher than Aktia's historical levels, so the weakening economic situation has been reflected in the payment capacity of the bank's customers. The levels are not alarming, but in our view, the deterioration in the quality of the loan portfolio will keep loan losses higher than average in the near future.

Earnings per share was EUR 0.27, which was quite in line with our preliminary expectations. Both reported and comparable return on equity were still at a moderate level (reported 11.8% and comparable 12.8%). There was a clear year-on-year decline, so, like the rest of the banking sector, Aktia's result has also been hit by the decline in interest rates, as expected.

No changes to guidance or underlying assumptions

Aktia made no changes to its guidance or the underlying assumptions. Contrary to what we erroneously wrote in our flash comment, Aktia already lowered its growth expectation for commission income in its previous quarterly report. According to its current guidance, Aktia expects its comparable operating profit to decrease compared to the previous year (124.5 MEUR in 2024).

Solvency, on the other hand, surprisingly improved compared to the previous quarter. This was explained by technical adjustment items, which offset the increase in risk weights resulting from the change in the credit risk calculation model. Aktia's CET1 solvency ratio was 13.0% at the end of Q3, which is slightly above the company's target level (~12.6%).