Aktia Q1'26: Share price drop made expected return attractive

Translation: Original published in Finnish on 5/4/2026 at 8:19 am EEST.

Aktia’s Q1 result fell well below our expectations. However, this was largely a result of market value changes in the investment portfolio of the life insurance business. Consequently, changes to the forecasts remained modest following earnings day. We revise our target price to EUR 12.0 (was EUR 12.5), mainly due to the dividend payout. We consider the share price decline on the earnings day to be excessive and thus raise recommendation to Accumulate (was Reduce) as the stock's valuation becomes moderate again.

Report's only disappointment was clear decline in net interest income

Aktia's net interest income decreased more than we expected in Q1, which was the most obvious disappointment in the report. The loan book slightly contracted due to subdued household demand, even though the corporate loan book grew commendably. In Asset Management, sales performed excellently, and net subscriptions were positive for the fourth consecutive quarter already. Net income from life insurance, on the other hand, was weighed down by the notional value development of the investment portfolio, which caused Aktia's earnings to fall significantly short of our estimate. However, due to the non-recurring nature of the item, its significance is minimal. Costs were in line with our expectations, but credit losses were more moderate than we anticipated. Aktia's comparable EPS (EUR 0.19) fell short of our estimate of EUR 0.27. Our morning comment on Aktia's Q1 report can be read here.

Overall, estimate changes remained moderate

Our forecasts for this year's net interest income and life insurance decreased due to the weaker Q1 development. However, changes in our credit loss forecasts offset this effect. We made several other adjustments, but our earnings forecasts remained virtually unchanged overall. Nevertheless, our dividend forecasts decreased slightly to better reflect the company's declining solvency in Q2.

Like the rest of the banking sector, Aktia's earnings and profitability have clearly improved due to rising interest rates. However, the trend has temporarily reversed with interest rates, and in 2026, we expect Aktia's comparable EBIT to still decline slightly. After this, we estimate that earnings will return to growth in line with business volumes and rising interest rates. We estimate that the recovering loan demand will turn Aktia's loan portfolio to clearer growth only from 2027 onwards. Our growth forecasts for asset management, on the other hand, are moderate, reflecting the challenges in institutional sales in recent years. Although recent times have shown signs of improvement, there is still insufficient evidence of a shift towards more sustainable growth. Achieving the ambitious growth targets (over 15% return on equity and 5% organic annual growth in net commission income), which rest heavily on asset management, would require a significantly more favorable development than what our forecasts show.

However, Aktia's reported earnings are expected to keep growing in our forecasts for 2026, as one-off expenses significantly burdened the 2025 result. We expect Aktia's payout ratio to remain around the 60% target level in the coming years as the update to the credit risk model decreased solvency in Q2. A strengthening balance sheet from 2028 onwards should enable more generous profit distribution.

Share price drop made expected return attractive

We have examined Aktia's valuation through balance sheet multiples, the dividend model, and Nordic banking peers. The methods indicate a per-share value of EUR 10.8-13.2. Due to slightly improved new sales in Asset Management, we believe the midpoint of the range is a suitable anchor point for Aktia's valuation. Although there is clear uncertainty regarding the sustainability of the turnaround in Asset Management sales, net sales have been positive for four consecutive quarters. Overall, we consider Aktia's valuation attractive following the recent decline in share price and believe the upside in the multiples and a strong dividend yield (6–7%) offer investors an appealing expected return (>10%).