Aktia Pankki Oyj (AKTIA) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. A very warm welcome to Aktia's Virtual Capital Markets Day here in Helsinki. My name is Lotta Borgström. I head Aktia's Investor Relations and Communications, and I will be the moderator for this event. It has sure been eventful times since we held our previous CMD, actually almost to the day 2 years ago. Little did we know about the upcoming global COVID challenges that would affect almost every company in the world. The pandemic is, obviously, also the reason that we could not, unfortunately, ask you to join us physically at the venue today. But as it seems right now, we are seeing some light at the end of the COVID tunnel, at least I'll hold on to that, and I hope that we will be able to meet face-to-face soon again. However, the coronavirus did not keep Aktia from moving forward, and it didn't change our direction where asset management is the spearhead of the strategy. A historic milestone was reached last spring when Aktia acquired Taaleri's Wealth Management operations, an important step towards our clear strategy of becoming the best wealth manager bank in Finland. And this brings us to today's event and agenda. During the next hours, we will walk you through Aktia's updated strategy, the new financial targets and actually the brand-new climate strategy that were all 3 of them published yesterday. There will be 2 separate Q&As, first with Aktia's CEO, Mikko Ayub; and CFO, Outi Henriksson; and later on with all the presenters of the event. You are more than welcome to post your questions on the commentary field of the website from now on. With this note, I would like to give the floor to today's first speaker, Aktia's CEO, Mikko Ayub.

Thank you, Lotta, and a very warm welcome also on my behalf to this Aktia's Capital Markets Day on this sunny Wednesday morning that we have. My name is Mikko Ayub. I am the CEO of Aktia Bank Plc, and I'm going to walk you through our updated strategy. Before doing that, I'll take a short loop back to look at Aktia, where have we come from and what we stand in as figures for those of you who may not be so familiar with Aktia. We are a 200 years old bank, a 200 years old actor in the financial markets in Finland. Our roots date back to 1825. However, the modern Aktia was born in the 1990s financial crisis in Finland. And even more so, I would like to date 2017 as an important year for us, as then we had our new strategy that lifted banking and asset management in a very focal role. From that on, we have taken very decisive steps to build on asset management and banking. Some of these highlights you see on the picture and some of them are highlighted in green. With this, I want to point out that we have made our way forward in executing the strategy also in the field of inorganic transactions apart from organic growth and organizational and operational adjustments. We have sold our holding in Folksam non-life insurance company. We have reduced our holding in Aktia real estate company. We have sold our holding in Samlink, which no longer was strategically important for us as we took into use our new core bank system in 2018. On the other hand, we have acquired Alandia's life insurance portfolio and life insurance business. We have acquired the fund business of Askel Partners and now, most recently, last spring, we have acquired Taaleri Wealth Management as part of Aktia. Looking at us in numbers, I would like to take a few points from here and state that we have 39,000 shareholders. The number of shareholders has actually increased during the last year. We used to be at about 36,000 to 37,000 shareholders, and have gained now 3,000 to 4,000 new shareholders, which I'm very happy to observe, and I'm welcoming them very warmly on board on the journey that Aktia is having. We have about 300,000 customers, which I believe is a very good amount of customers on 1 hand to deliver exclusivity to customers and identified customer segments, while on the other hand, it gives us scale, and it gives us deepness into the operation to manage operational costs and also to create the variety of different offerings and services in the financial universe that are of most interest to these identified customer segments. Our assets under management reached now EUR 15.6 billion. This took a step upwards last May when Taaleri Wealth Management joined Aktia, and our balance sheet total is about EUR 11.2 billion. Moody's assigned a negative outlook to our rating earlier this week. This was not a surprise as such, as the acquisition of Taaleri Wealth Management, obviously, had an impact on our capital structure. But that is the newest change in this picture. Now we have 3 business areas that, hopefully, will become very familiar to you on the way forward during our Capital Markets Day and the presentations here. we have banking, we have asset management, and we have life insurance. Banking business was formed to become one business area last May when we merged household banking and corporate banking. The objective of this change was to have a business area that even more holistically can take care of the customers that we have and, on the other hand, can more efficiently execute on the strategies that we want to drive forward. In our reporting, we report banking as its own segment and asset management is emerged reporting category of asset management and life insurance as business areas. We have a well-balanced business portfolio. With this picture on the left-hand side, you can observe that our banking business stands for about 50% of our total operating income while Asset Management for about 1/3. Now it is good to keep in mind here that asset management as a reported entity carries also life insurance with it. On the other hand, on the right-hand side of the picture, we can see that banking stands for about 1/3 of our comparable operating profit while asset management stands for about 50% of comparable operating profit. Now one should not overanalyze these pictures. I trust we all know that, for example, principles of allocating costs, principles of allocating sales margins and the like can have an influence on these charts. More so I want to highlight to you that we have 2 business areas, banking and asset management and life, that very well support each other and create a very balanced platform for us to build further and execute on the strategy that we have and the strategy that now has become updated. But before going to our updated strategy, I would like to shortly loop back to 2019 and our previous Capital Markets Day. As Lotta said, almost to the day 2 years ago, we updated our strategy and even more clearly lifted asset management new customers and operational excellence into the forefront of our strategy. We stated one of our strategic priorities to be win in asset management. If I look back on what we have done during the last 2 years, it is clear that the acquisition of Taaleri's Wealth Management business and the strategic cooperation that we entered into with Taaleri Plc are a very important element in winning in asset management and positioning ourselves so that we win in asset management. But that is not the only thing that we have made in order to win in asset management. We have rolled out wealth plan concepts to our private customers and each and every customer interaction that we have includes now the approach of a comprehensive wealth dialogue with the customer, a comprehensive wealth plan dialogue under our concept of thinking further. We have also developed and delivered on product quality. And given all this together, I can say that we have well been able to execute on this strategic priority, giving us a very solid foundation to go forward. Now we, as a second strategic priority, stated that we will acquire new customers, both private and corporate customers, from Finland growth areas. Well, looking back, for example, at the SME segment, I am happy to state that we have delivered double-digit growth in gross income, 30% more precisely. On the other hand, regarding household customers, we have -- we can observe that in mortgage loans, we have been for the past 1.5 year or so grown faster than the market has grown in Finland. Now that is not a goal for us in itself to grow faster than the market has grown. I think this is more a result of better hit rates with customer interactions or in customer interactions with better and shorter handling processes and better identification of the potential customer segments to address. On the other hand, the service model renewal that we introduced in late 2019 and early 2020 has well supported our transition and transformation. Actually, I would go even further so and say that I believe we were a little lucky by implementing this service model change, service model renewal as in spring 2020, COVID-19 kicked in very forcefully, and had we not had this service model renewed, I actually do not believe that we would have been able to serve our customers such smoothly and such effortlessly from the customers' perspective as we were able to do. Also, the new service model helped and enabled us to go and work remotely in such a short period of time. Under the old service model or old operating model, I doubt this would have been possible. Our third strategic priority was operational efficiency, where we have our new ways of working, automization, robotization, helping in cutting service times and shortening processes. Our objective was, and I actually still believe that in order to deliver good customer experience, our machinery and our processes have to be in good shape. Now when we look at customer satisfaction, for example, among household customers, I can say that in all segments or, let's say, the most important segments to us, the high net worth customers and premium customers, customer satisfaction measured by NPS scores at 75 or above, 75 or above. Very proud and happy about that number. If we look at SME customers, customer satisfaction scores measured by NPS, 83, an amazing number of 83. Again, very proud and happy of that number. So I think that the improvements that we have in our service model, the investments that we have made in process development carry out both in customer satisfaction and, on the other hand, in our ability to process a large amount of volume, a large amount of tickets, a larger amount of customers through our machinery with a smaller capacity. This was our objective, and I'm now, when looking back, quite happy to say that this is also what we have managed to do. But looking forward, our updated strategy. We started by asking ourselves what has changed since 2019. A number of things have, obviously, changed, no surprise there, but what are the areas that have faced in relative terms, perhaps the biggest change and are factors that actually play into what we do and what our customers are doing when regarding banking and investing and insuring. Starting from top left, I think climate change and over exploitation of natural resources have become everyday topics, I think we can all observe that, but I think they have also become and sailed in into the awareness of an ever larger group of people. And it is becoming clearer and clearer to an ever larger group of people that this is actually an existential question for mankind that we are facing biologically, socially and financially. On the other hand, economic -- the economic outlook is uncertain, perhaps even more so than what it was in 2019. True, if we look at the economy today and what's happening and what are the headlines, everything seems to be fine. The sun is shining and outlooks -- or outlook and outlooks are good. On the other hand, every time when I meet customers and our discussion goes more into the topic of economy, Finland, Europe, U.S. The question that is put on the table is how will all this end? How will all this end? That is the question that repeatedly comes across. I think there is economic uncertainty much more than what the immediate touch and feel might be. On the other hand, new ways of interaction have emerged. Technology has advanced. I think we have a broader range of alternative ways of interaction at our hands. But on the other hand, the readiness to adopt different ways of interaction is broader, much broader than what it was 2 years ago. And finally, technological development to some extent, has revealed its dark side, I would say. Technological development was very much present 2 years ago and remains to be so also today. But I think questions like IT security, cybersecurity have emerged in a way that general awareness and expectations and requirements in this field are stronger than what they were 2 years ago and are becoming stronger going forward. So what do we make out of all this? How do we make business in this environment that we are facing? Now I'm looking at the green part of the chart and starting again from the top left corner. What we observe is that there is increasing wealth. Generations are becoming wealthier, and ever so younger generations are becoming wealthier. And a large amount of this wealth remains uninvested. This creates a need that can be addressed. This creates a need for what we have solutions and products to serve. On the other hand, financial uncertainty is very much present. COVID-19 brought into our awareness the fact that unexpected, unpleasant things can happen. It is a good idea to be prepared. It is a good idea to think further. It is a good idea to be insured to have some additional savings. This is another very concrete need that exists and waits to be served. We are equipped with both the products and the know-how to serve this need. Thirdly, customer expectations are higher. This is -- these are not expectations that are driven out of the financial industry, but these are expectations that our customers build on or take on from other industries and other branches and other areas of interaction. The demand for timeliness and the demand for correctness, the demand for a 24/7 type of environment is very much present. There is a demand, and we are to serve this demand. It needs to be served because there certainly is -- there certainly is a need among customers or there certainly is a desire among customers to receive also financial services in such a way. And last, but not least, the demand for sustainable investments and sustainable finance has grown significantly. Now these are complex issues. It is not easy to navigate in the forest of sustainability issues within finance and sustainability issues within investing. There is a demand, and we are equipped with the products, with the know-how to serve this demand. Now this is how we are going to make business out of the surrounding that we have. This is how we are going to address and serve customers, or these are the demands and needs that customers have that we are going to serve. So how are we going to do this? Well, like I started in the very beginning, we have 3 business areas. Those are asset management, banking and life insurance. Starting from the top, asset management is the anchor and the spearhead of our strategy. It offers us or it gives us the starting point, the know-how, the expertise for the comprehensive wealth management offering that we have to our customers. But asset management is not an isolated business area. It overlaps with banking, and it overlaps with life insurance. What asset management gets from banking is a distribution channel. On the other hand, asset management can gain from banking financing for its customers. This can be in the form of financing investments or financing other needs that customers of asset management have to finance. On the other hand, asset management overlaps with life insurance. Life insurance -- asset management gets products from life insurance to serve its customers and offer the comprehensive asset management offering. Life Insurance, on the other hand, is the fundamental pillar for being prepared for the unexpected. Life insurance loops and interacts very closely with banking and asset management. Banking is a distribution channel for life insurance as is asset management also a distribution channel for life insurance from their perspective. Thirdly, banking as a business area brings secure, stable revenue for our business. This offers the platform and infrastructure for us to take care of our customers. This is our way to in-source customers, to build customer relationships and to nurse customers. Banking is also very tightly related and interlinked with the 2 other business areas. Banking receives products from asset management to serve its customers. On the other hand, banking finances customers of asset management. Looking at life insurance, banking receives products from life insurance to sell to its customers. On the other hand, banking can access an enhanced, extended customer base to that of life insurance customers. The point here is that all 3 business areas are very tightly interlinked and interconnected with each other. And this is one of the differences that our updated strategy has compared to the previous strategies, and that is that no business area has an isolated, independent strategy; isolated, independent goals; or isolated, independent ambitions or objectives. All strategies are very tightly interlinked and brought together, and this is where we are able to become better than any of our competitors. We actually become the wealth manager bank, not a bank, not a wealth manager, not an insurance company, but a wealth manager bank, and we are the only one in our size to do that. Now turning towards the customer. How do we serve customers and how do we identify those customers that we can best serve? Goes without saying I believe that our strategic sweet spot is in the center of where all these 3 business areas overlap. This is where we offer our comprehensive wealth management to our target customers. We have asset management products or wealth management products in itself. We have financing. We have daily banking products. We have products of life insurance. And we may have many -- or we may have other products in the field of financing also. In this segment, our customer or our earnings per customer and our customer profitability are on a very different level than in any other segments. This, as I said, constitutes the core of our strategy and the segment where we go for growth. On the other hand, we have business areas where 2 -- or we have areas in this chart where 2 business areas are overlapping. That is also a very good and very interesting business. However, our focus there will be in cross-selling and upselling customers, developing customer relationships with the objective of guiding customers to observe our comprehensive wealth management in the strategic sweet spot for us. I believe there we can make a substantial difference to our competitors. But overlaps over 2 business areas can be interesting also from the point of view of taking, for example, corporate banking and asset management. I have met a number of customers during the last months. I end up very often in a dialogue with a customer who comes up to me and says that, listen, I have been a customer of Taaleri Wealth Management earlier. I have these type of investments and these type of interests. However, I am also engaged in this type of a corporate. Either I own the corporate or I'm in the Board or I have some other connection. Now as we are part of Aktia or as Taaleri Wealth Management is part of Aktia, is Aktia also interested in financing my corporate? At this point, I look at the customer and say, "Dear customer, this is exactly what we intend to do. You are at the very core of our strategy." And we can have these type of very interesting customer relationships in the dark gray areas that overlap. They might not ever land into the strategic sweet spot, but they are -- it is a very good business for us, and that is business we want to do. When we look at single product customers, the light gray areas in this chart, we have a twofold approach to these customer segments. In Asset Management at the top, this is a very interesting and a very important business for us. Domestic institutional customers and international institutional customers fall into this area. We have grown in that -- or we have grown, and we have growth ambitions in that area. And we have -- we are driving growth on its own in that area. For example, very recently, one of the Europe's -- one of Europe's biggest investors, a French institution, became our customer, I think that is a very positive sign also of the fact that COVID-19 brings -- or COVID-19 has entered a phase where international interaction can intensify in a different way than what it has been doing during the last 1.5 years. But this one of Europe's biggest institutional investors, a French investor, typically is a customer of single product or a customer in our light gray -- in the light gray area of this chart. Now in the area of banking and life insurance, our approach is somewhat different. Here, we have perhaps a more opportunistic approach and certainly a focus on production and service cost for single product customers. It may be interesting business as such. We have the infrastructure. We have the platform. We have the know-how. But here, we must observe that our cost-to-income ratio when serving these customers is on a good level. An example here is life insurance who may sell its products through third-party distributors. That is very interesting and very good business with a very interesting cost-to-income ratio, but it is certainly not in the core of the strategy but rather a more opportunistic approach. Now when looking at this updated strategic approach or rather crystallized strategic approach that we have, it is easy to understand that the acquisition of Taaleri Wealth Management falls very well into the picture. That is a major enabler for us to advance on this transformational journey and to reach the ambitions that we have here. And now as I mentioned the acquisition of Taaleri Wealth Management, let me stop there for a moment and give an update on the integration and on the situation where we are integrating Aktia on one hand and Taaleri Wealth Management on the other hand. Integration is proceeding as planned. That is what we stated after the second quarter result publication, and there is no reason to change this understanding of the integration advancement. Now when we are more familiar with Taaleri Wealth Management, I can say that it matches our pre-transaction understanding of the target of Taaleri Wealth Management that was based, for example, on DD processes that we ran. I can also state that a closer evaluation of Taaleri Wealth Management gives no reason for us to change our pre-transaction understanding of the synergy potential that this transaction provides. Operational takeover and business continuity were in a very focal point in May and in June. As you may recall, the transaction was closed in the month shift of May -- sorry, April and May. In the very first weeks and the very first couple of months, it was extremely important for us to secure a smooth transition for our customers as effortless as possible and, on the other hand, secure all critical operations that exist. We have succeeded in this and hence integration projects at that point and thereon are advancing as planned. Our prior understanding of some projects to advance slower compared to some other initiatives has turned out to be correct. For example, projects of technological infrastructure platform integrations require much more time than other operational alignments, if I'm to put it in those words. Cross-sales capabilities were very important for us from the very beginning. Now as we can enter the second phase of integration, we are to further ramp up and enhance these cross-sales functionalities, capabilities towards the end of the year. And last but certainly not least, the strategic importance with Taaleri Plc in their excellent alternative investment products, renewable energy, real estate, infrastructure has kicked off as planned, and we are looking at closing first transactions or actually perhaps even a couple of transactions still during the second half of the year. It is true that some individuals have left us. On the other hand, new people have joined us, the latter understandably receiving less attention than the aforementioned. We are not ready yet. We are working. We are building a wealth manager bank. It will take time. I think this should be no surprise, but it will be ready. And we are very determined on this building process that we have right now ongoing. So to summarize our updated strategy, our vision is to become the leading wealth manager bank. We are set on a mission to build wealth for our customers and society. We will be the only wealth manager bank in our size that is able to offer exclusivity, on the other hand, able to offer a range of products and an efficient production platform. We have sharpened our 3 strategic priorities. Win in wealth management is familiar. We will be the most preferred wealth manager among private and institutional customers. Also, obviously, success in integrating Aktia and Taaleri Wealth Management are very high on our agenda. We have sharpened our second strategic priority. Our growth comes from customers who are willing to create wealth, who are willing to increase their wealth. This is our strategic sweet spot. We want to acquire new customers to our strategic sweet spot, and we want to upsell and cross-sell existing customers towards our strategic sweet spot. And thirdly, we have sharpened our third strategic priority. We want to offer excellent customer experience. This comes from seamless collaboration across different business areas and holistic service models across different business areas. No business area has an isolated, independent strategy. They all build together, asset management, banking and life insurance, making us the wealth manager bank going forward. Ladies and gentlemen, thank you very much for following this presentation. Now it is my turn to hand over to Outi Henriksson, our CFO. Outi, welcome.

Thank you, Mikko. These themes will be a great talk on later during the Q&A. But first, let's move over to our next speaker that will elaborate on the financials behind the updated strategy. I'm very pleased to introduce to you Aktia's CFO, Outi Henriksson.

Thank you, Lotta, and good morning on my behalf as well. [Foreign Language] Let's then take a look at the updated long-term financial targets. But prior to getting there, we will warm up with the second quarter actual results, as they are the basis for the extended new strategy period now until 2025. We have a record quarter behind us. As many of you know, we had a very strong first half of the year. EUR 42.9 million of operating profit compared to EUR 19.3 million in the comparable period last year. Obviously, the first quarter last year was somewhat weaker than normal due to the COVID pandemic and related value changes, specifically in the life insurance company investment portfolio. But we saw a nice quick recovery on the second quarter of last year. So I would say, the comparison is pretty much apples-to-apples. I was very proud of the second quarter results. The growth come from all of the income sources. We were able to keep the cost base flat that led to the results that you saw when we published the results in the beginning of August. Where did the growth come from then? I have to point out that we had 68% underlying profit growth in the first half of this year compared to last year. That growth comes from the bars with a blue dot in the picture. So we have taken out the value changes in the life insurance company investment portfolio. Very strong net interest income driven by lending growth in the loan book, combined with a very modest financing costs. Net commission income, obviously, a major contributor here is the acquisition of Taaleri Wealth Management business. However, the pre-acquisition part of Aktia also grew. And same thing goes for the life insurance business, not only the investment part of the business but also actuarially calculated results. As you can see, our cost base, operating expenses were clearly higher in the first half of this year than last year, but there's an obvious explanation to it. We acquired Taaleri Wealth Management. We got approximately 100 new colleagues and the normal running costs that are attached to the business. So that is a major part of the operating expenses increase as well. We spent EUR 5.6 million of directly transaction-related costs such as advisory fees, taxes and so forth. So that explains the increase in the cost base. Other than that, development has been as expected and flat. Now maybe to the most exciting part of my presentation then, the updated financial targets 2025. Comparable operating profit above EUR 120 million in 2025, previously EUR 100 million 2023. Comparable return on equity now upgraded to over 12%. It was previously over 11%. Comparable cost-to-income ratio kept unchanged, under 0.6, but the ambition is obviously to be clearly under 0.6. Common Equity Tier 1 capital ratio previously above 1.5 to 3 percentage points over the regulatory requirement. We have taken out the cap or the hat of the corridor and left it open. The message that we want to give here is actually that we have to -- we want to have more freedom, more flexibility in determining where we want to be. When we set up the previous target from 1.5% to 3%, we haven't been even inside the corridor. So my message here is, we are not planning to force the CET1 ratio towards 1.5%, but it's an ongoing dialogue between the business and the capital adequacy, looking at what do we need, what do we need to kind of fulfill the growth ambitions that we have on the loan book and related risk-weighted assets and other ambitions. In all circumstances, we will make sure that the buffer that we have on the CET1 is sufficient. Where does the growth come from then? Let's first take a look at the income side. We have intentionally taken out the numbers here. This is not an estimate. This is a target setting. We have here net commission income, net income from life insurance business and then we have split the net interest income into a few categories. As you can see, the major part of the growth comes from the net commission income that is partially driven by the Taaleri Wealth Management acquisition but other sources of net commission income as well. Net income from life insurance business, the light blue line, solid growth there, a bit volatile in the past, and that has to do with the value changes, but very solid development there as well, and we do expect that to continue. Then the NII, the black line, net interest income from lending and borrowing. We do expect the healthy growth that we have seen in the loan book to continue going forward. We do also expect the modest financing cost to remain over the strategy period. Then the other components of the NII. I have taken separately here the TLTRO, ECB, central bank financing for the reason that has been in discussions quite a bit. It does have a positive impact this year as the interest rate is negative. However, based on the current information, that positive impact is going to decline towards the end of 2023 and beginning of 2024. The other side of the coin, if we think about the interest rate levels that we have now, is obviously the return that we get on our bank's liquidity portfolio. That is the kind of dark gray line. As we are renewing the investment, obviously, that is now done at a different level than before, given the risk profile that the bank has in terms of investments. And where does it come from? As said -- net commission income? It is coming mainly from the wealth management-related commissions. However, we need to bear in mind that the banking business has a sizable net commission income as well. However, as said, the growth is mainly from the wealth management side. NII growth comes from lending to targeted private and corporate customers. In the life insurance business, we will be focusing on broadened unit-linked offering and the cross sales of risk life insurances. Then a few words about the cost side as well. Here, I would like to point out the fact that rather than now staring at the single cost line item, certain type of costs, we will be focusing on efficiency, cost-to-income ratio. That is the focus now. That means we need to maintain the efficiency -- improve the efficiency of the running costs that the bank -- that the group has. At the same time, we will invest in development and better productivity. And right now, obviously, we need to ensure that we execute the synergies of the Taaleri Wealth Management acquisition, and that has progressed well. Aktia has been an attractive dividend payer in the past, and it aims to be also one in the future. We haven't changed our dividend policy. It is unchanged at 60% to 80% of annual net result. In the picture, you can see the history, very, very solid, very nice year 2020. Here, we have included the authorization that the AGM has given to the Board maximum of EUR 0.43 per share, and the Board can decide upon the dividend payment on the fourth quarter this year. And here's the picture of development of Aktia's comparable return on equity, very nice development here as well, a small dip in 2020, given the impact that the COVID pandemic had on our earnings in the first half of last year or specifically in the first quarter of last year. 10.2% comparable return on equity at the end of the second quarter and the target 12%. Bank's funding is dominating -- dominated by customer deposits and covered bonds, as you can see, 52.5% plus 21.8%. And maybe I should point out here as well that the growth in corporate lending has been funded by the Central Bank financing and senior debt. They are also presented in the pie. Our market share of the deposits was approximately 3% at the end of June. Then a few words about the redemption schedule. This year has been quite quiet, as you can see in the graph. However, we are picking up in speed next year as the EUR 0.5 billion covered bond is expiring in the end of March, followed by the expiry of the Central Bank financing TLTRO. We did it in 3 tranches expiring in 2023, end of 2023, and then beginning of 2024. We are planning -- our intention is to replace the funding with a similar type of instruments as they are expiring. However, we are also prepared to replace the Central Bank funding with market-based instruments, if need be. There's a note about the potential Tier 2 issue from a life insurance company. We have it on the drawing board. The idea is there to increase the solvency ratio of the life insurance company to the level that it could potentially pay dividends to the parent, which would in turn then strengthen the capital base of the parent company, which leads me to, the CET1 ratio at the end of the second quarter was 10.8%. Minimum requirement, 7.7%, the target range, the old one before the update, 9.2% to 10.7%. Now if you look at the picture, there is a drop in our CET ratio that was expected as we did the largest acquisition in the history of the company last May, when we acquired Taaleri's wealth management business. With it came goodwill, with it came intangible asset that we need to deduct from equity in the -- when calculating the capital adequacy ratio. The requirement is also lower than earlier, if you look at the end of first quarter, end of last year. We are now covering the AT1, additional Tier 1, portion with AT1 capital that we didn't do earlier, that kind of makes the requirement also lower. We issued EUR 60 million of AT1 capital in the second quarter of the year. Another minor change or smaller change is the fact that we are covering 25% of the Pillar 2 requirement with Tier 2 capital that was issued 2 years ago. So is this capital ratio good enough to support all of the growth ambitions that we have? We think so. We do have several tools in the tool box to improve the capital adequacy if we increase the capital base if we so want. Growing earnings compared to the flexibility that the dividend policy gives us. The Tier 2 emission issue that I just mentioned and several others. So I do feel comfortable with that. Just a few words about the impairments for future expected credit losses. They have been at a very modest level throughout the COVID pandemic itself last year, throughout the first half of this year. The new definition of default entered into force first of January this year, and that increased the model-based impairment to some extent, moving from -- certain loans from Stage 1 to Stage 2 and Stage 3. However, what I would like to point out here is that we are -- have been and we are at a very modest level in terms of impairment for credit losses. And we still have not observed any major new COVID-related risk concentrations in our loan book, in our credit portfolio. I'm going to conclude my part by stating the outlook that we came out with when we published the first quarter -- second quarter results in the beginning of August. The comparable profit -- operating profit for 2021 is expected to be considerably higher than during 2020, and then some more flavor in the bullet points. Now after the upcoming questions-and-answers session and a short break, my colleagues will go through how we deliver these numbers, tell what the business is doing to get us to over EUR 120 million of operating profit. So stay tuned. Thank you very much. Thank you for your attention.

Thank you, Outi. Now let's proceed to our first Q&A session of today. Don't forget to write in your questions to the commentary field on the website. Also, we will be dividing the questions between these 2 Q&A sessions according to who the speakers are.

Thank you, Outi and Mikko for the very comprehensive presentations.

Thank you.

I would like to direct the first question to you, Mikko. What would you say are the most material changes in the updated strategy compared to the old one?

Well, I would like to [ lift ] 3 points. The first is that our 3 business areas: Asset Management, Banking and Life Insurance will be very interconnected. No one of these areas will have a strategy of its own, targets of its own, but they will be very aligned. Secondly, when we look at our approach to single-product customers, we are very clear that our approach in asset management will be different to that of in Banking and Life Insurance. In Banking and Life Insurance, we will have a more opportunistic, a more cost income-focused approach to single-product customers. And thirdly, I would say that to deliver on this strategy, what we will do and what is new here is that all business areas will need to seamlessly interact with each other, and they will need to have comprehensive aligned offerings to customers. This has to go across business areas for us to be the wealth manager bank.

Also the word wealth manager bank is quite frequently mentioned in the strategy. How would you define it? How would you describe it?

Well, it has been sometimes difficult for different parties to place Aktia on the map compared to our competitors -- Sometimes we are compared to big Nordic banks, sometimes to an insurance company, sometimes to very small banks, sometimes to pure asset managers. I think we are something more unique. We are a wealth manager bank who is able to combine wealth management, comprehensive wealth management offering with needs -- with other needs in the financial universe in a way that we can deliver exclusivity to our customers. They all feel they are important, which is true because they are all important.

Okay. Good morning. I am looking at your split between business areas and I hear your comments about the new more interlinked strategy. However, as I see, the bank division consumes some 85% of group capital, but it only generates some 30% of profits, i.e., the profitability is in mid-single digits, while the profitability of the Asset Management/life division is closer to 20%. Would it not be interesting to look at -- or look for a new owner of the bank, and the proceeds from the divestment could either be used to acquire more asset management assets or buy backs, both creating significant values? A distribution agreement can be kept for the banks.

Should I take that one? It is true, obviously, that all business areas can be analyzed and evaluated isolated-ly. However, if we would go down that road, we would not be an asset manager bank or wealth manager bank. We would rather be doing very much the same than others are doing, both in the field of asset management or wealth management, and both in the field of banking. I believe that when we combine these to become the wealth manager bank, we actually do create something new and something where we can take -- make a difference to our competitors.

And let's go further. Operational efficiency is no more mentioned in the core of strategic initiatives. Does this mean that we should or expect any more significant cost savings? Are future earnings -- or is the future earnings growth based on top line growth only?

As I pointed out in my presentation, actually, we will be focusing on a cost efficiency even though we have taken out the word. The cost-income ratio, it is in very core focus going forward, combined with the top line growth. So a few components, as I said, we will be investing in development. But the running cost, the daily running cost that we need -- those, we need to streamline. And at the same time, as I said, we need to materialize the synergies that we are expecting from the Taaleri wealth management acquisition. We are well on our way. So we have starting to -- we are starting to see those effects already now. So absolutely, efficiency is still on the table.

May I pick on that?

Of course.

I think experience shows us now when we look at, say, 2 years back, that in order to deliver excellent customer experience, you need to have operational efficiency. And inefficient operation hardly delivers excellent customer experience over a longer period of time.

Then let's move on to next question. When you talk about the net interest income growth, you split out lending and deposits on one side, but then you have the TLTRO, hedges and the liquidity portfolio as negative drivers. If you combine them, do you expect to see overall NII growth?

Yes, we do, absolutely. I wanted to show the component separately to reflect the discussion, for example, around Central Bank finance, and it's one source of the funding that we have right now, having positive impact on the NII also next year. But the impact is expected to be declining, so I wanted to see that really the organic growth comes from lending combined with the modest financing costs throughout the period and, to some extent, declining liquidity portfolios return due to the interest rate levels that we have. But again, on the other side, we see kind of a modest financing cost, but the portfolio doesn't yield as much as before given the risk profile that we have.

And the next question is actually about the same theme. Expected CAGR for NII seems quite conservative considering figures seen previously. Do you have reason to expect lending growth to calm down significantly? Or is this just very conservative estimates? Anything you'd like to add on that, Outi?

Yes, absolutely. We do not see the growth in the loan book to decline but it is somewhat offset by the positive impact that we see right now from -- or we have seen from the liquidity portfolio impact, what we've seen from certain hedges that have expired will be expiring as well as if there is no new -- no new news regarding Center Bank finance and the positive impact will decline. So that is, to some extent, offsetting the growth in the loan book and the growth in lending-related NII.

May I just add one point to this? And that is that, we are not changing our risk profile in our loan book and in our lending book. That is unchanged also in this updated strategy, and I think that is important to mention here. Thank you for the question.

Then a bit more detailed question about the NII. If rates rise before 2025, what would be the NII impact be for each 25 basis points?

That, we have not commented on. Obviously, we do have some internal calculations, but not to be published.

But if I add on that, what I can say is -- and what we have earlier also stated publicly, is that the period or the journey from -- for interest rates from where we today are to 0 is going to be difficult for us or it's going to be sort of a tougher ride for us. Once interest rates go above 0, then we are on the positive side of what it creates. And that is just simply because of 0 floors in loans, which do not sort of become ineffective before rates go above 0. But our funding cost is going up all the way from where we are from here to 0, very roughly cutting the corners. This is the big picture.

Okay. Then let's move on to next theme. As we know, some portfolio managers from Taaleri have left Aktia recently. Has there been turnover among private bankers?

We have got some 50 private bankers now altogether, that's 5x more than what we had earlier. To my knowledge, there has not been turnover among private bankers. On the other hand, with 50 private bankers during a normal year, I would expect there to be turnover. But the answer is no to that question.

Could you comment on Moody's negative outlook announcement due to low and declining capital metrics? Would you be comfortable if they downgraded your rating to A2? And if not, what are your plans to boost the capital base?

As said, the outlook -- changing the outlook from stable to negative was expected as a result of the acquisition. Would like not -- would not like to comment on the rating agencies as models, whether it's Moody's or Standard & Poor's. As I said, we have tools to strengthen the capital base. If needed, we will be using them, and that is a combination of business growth ambitions and how much capital we need to have to fulfill those ambitions. So to answer the question, we consider us a very stable bank from a rating point of view and do necessary actions to keep the capital base at a sufficient level.

Thank you, Outi. Thank you, Mikko. We'll come back to some more interesting questions after the 3 following presentations. But first, let's go for a short break. Please join us again in approximately 10 minutes. That is 10:15 Finnish time. See you soon. [Break]

Welcome back from our short break. We have an extremely interesting agenda also for the second half of this event. So please stay tuned. It is my privilege to present you the next speaker, Aktia's Director for Asset Management, Perttu Purhonen.

Welcome back from my side as well. My name is Perttu Purhonen, I'm leading wealth asset management, and now we'll dig a bit deeper in the business areas. So first, let's take a closer look in the family of 3 circles. Our Asset Management is positioned in the entity. In order to fulfill the spearhead role, cooperation between business areas is crucial for asset management. Our target is to gain growth in our strategic sweet spot, together with Banking and Life Insurance. Asset Management also focuses on excellent customer experience and offering for stand-alone domestic and international institutional and private clients of wealth management. So what's next? We will gain net commission income growth primarily by utilizing the full potential of Aktia's current client base, meaning keeping care of our current clients' increasing share of wallet, cross sales and serve our clients so well that they are willing to recommend our services. Continued excellence in portfolio management is to be reached by maintaining top skill teams, ensuring best tools and selecting top of the class third-party partners. Our aim is to be the partner of choice, especially for institutions and high net worth clients. By successful integration, we are building a new wealth and asset management for Finnish market with an international reach. The foundation for our new operating model will be the combination of best of both worlds, legacy Aktia, Asset Management and legacy Taaleri wealth management. We aim to be best wealth manager in Finland. Here, we have 3 main elements described in nutshell. Wealth manager with discrete luxury, every little detail matters and services personalized and discrete. Excellence in asset management with proven track record, best-in-class competence and holistic offering, which match needs of our clients. A pioneer of modern and responsible wealth management, we are searching continuously new and unique investment ideas for our clients. As we see it, best wealth manager in Finland will be with best client satisfaction, best employee satisfaction, best products and solutions. On top of that we have reached our growth goals -- targets. Here we can see the impact of the acquisition of Taaleri wealth management to AUM. In these graphs, we have divided our AUM into 4 categories: local and the international institutional assets, private banking assets and retail assets. At the same time, these categories form our target groups. And in all 4 categories, we are aiming for growth in near future. This -- there is significant growth potential in all categories mentioned. Institutional market with international reach is almost unlimited and the size of private banking market in Finland is over EUR 1 billion. And the market is growing every year, especially in ultra-high net worth and high net worth client category. It's important to notice that in the end of March 2021, legacy private banking AUM was reported as part of household customers AUM. In new asset -- Aktia Asset Management, especially after Taaleri acquisition, we have all elements in place, and it's important that we will take full benefit out from our broad capabilities. We can say that, that is open for growth and success. We are in a unique spot because we have a big bank's wide offering and capabilities, especially in selected strategy areas. And we have boutique-style asset managers flexibility, excellent personalized customer service and possibility for tailormade solutions. It's extremely important that we will use best-in-class products from wide product selection which also includes third-party options. The cherry on top of the cake is that we have exclusivity to sell Taaleri Ltd's private equity funds in Finland. In spring 2021, Aktia won first place in Morningstar Finland awards in all 3 fund house categories, i.e., equities, fixed income and best overall. On top of that, legacy Taaleri wealth management has been the runner up. So Aktia's Taaleri wealth management acquisition created a new, very strong asset manager in the Finland. After acquisition, we have already merged part of our fixed income funds. And we have plans to merge part of our equity funds as well. On the other hand, excellent track record may open up new possibilities for portfolio managers, and that is what has happened during the past month. In spite of some portfolio managers leaving, we have very strong portfolio manager teams, which are able to continue with our selective portfolio management strategies. In addition, we have just recruited new portfolio managers with excellent track record. That demonstrates that Aktia continues to be highly attractive employer for talented professionals. We will do everything to keep our employees content and performing well. As I mentioned earlier, customer satisfaction is a key element to validate where we stand with regards to going towards our strategic goal to be the best wealth manager in Finland. We have chosen SFR and Prospera for our surveys to follow up closely the customer experience in the institutional side. Surveys will be made yearly. As you can notice, we have a long track record from both surveys with very good results. In near future, we will do our utmost to be ranked even better. Portfolio management capability, overall activity and ESG capability play an important role. In Private Banking side, new Aktia Asset Management also has also an excellent starting point. If you look at latest customer satisfaction numbers, it's important to remember, talking about customer satisfaction, either in institutional or private side. That is always a question about how good we are at that exact moment. History might help us a bit, but it's always more about the future. Customer experience should be the first priority for all of us every day. A couple of words about the integration. We have prioritized integration work, which is visible for our clients. Investment product offering is already wider for all customers than before. For example, first, margin lending deals have been made with the asset management customers. Fixed income funds have been merged and license processes ongoing in FSA for equity funds merged. In synergy side, we are on planned and communicated [ track ]. Despite challenges in people meeting face-to-face due to ongoing pandemic, we are right now building joint banker teams between legacy Aktia, Asset Management and legacy Taaleri wealth management. Like I mentioned earlier, we still have cherry on top of the cake in our offering as we have exclusivity to sell Taaleri Ltd's private equity funds in Finland. After acquisition, we have already succeeded to build feeder fund capability into Aktia Asset Management, meaning that we are ready to offer new alternative funds for our clients. First 2 funds will be real estate and infrastructure funds. Internal education related to new real estate fund has already been held. As a summary from my presentation, I would like to point out the following 3 things, how we will reach our growth targets. First, we have excellent cooperating between business areas. Second, elements and capabilities for growth are already in place. Third, our integration is proceeding according to plan. Thank you.

Thank you, Perttu. Then let's move on to our next speaker. Please welcome Aktia's Director for Banking business, Anssi Huhta.

Good morning to you all. My name is Anssi Huhta, and I'm heading Aktia's Banking, household banking and corporate banking. I'm here to tell you a little bit what we have delivered, what we are going to deliver, and a bit more about details about our target customers and what we are going to develop technical-wise in the future. As Outi and Mikko said, the Banking business balances our portfolio. And our Banking's goal is bring stable revenue to the Aktia. And how we are going to do that? We are going to do that by doing gross sales. On this slide, I have 3 key points. In Banking, we have a clear focus in increased net interest income. As Outi already said, we have grown in lending, and we are going to continue the growth, but we are going to continue the growth in targeted private and corporate customers, and even targeted large corporates. That's [ changed ]. Second point, we are putting a lot of effort in cross sales, as Perttu said. Cross sales in Banking perspective basically means that in every contact in banking, in every channel, we are going to offer services from Asset Management, Life Insurance and of course, from Banking. So extra effort in cross sales. To achieve these 2, we need to have excellent customer experience, as Perttu said. We are going to further develop our service models and our technical capabilities, our online services to enhance our customer experience. We are also going to put extra effort to [ MFA ]. We are going to build in corporate banking [ MFA ] function, together with Asset Management, to support our growth and path to be wealth management bank. We are also going to establish the teams to help Asset Management and Banking in investment financing. As Outi mentioned, there has been growth in loan book. And growth is going to continue, as I said, in targeted customers. The growth has been a good one, 10% since Q2 2020. And 19% of the growth has come from the corporate customers, 6% from private. And I'm really glad to say that we have been really successful in corporate customer acquisition and still maintaining solid margin development. And our loan book is in excellent condition risk-wise. So who are our target customers? We see growth among individuals, entrepreneurs, companies and institutions who want to increase their wealth. Those are our target customers. We are going to build, in corporate banking, MFA function, together with asset management to support our growth and path to be wealth management bank. We are also going to establish the teams to help asset management and banking in investment financing. As Outi mentioned, there has been growth in loan book. And growth is going to continue, as I said, in targeted customers. The growth has been a good one, 10% since Q2 2020. And 19% of the growth has come from the corporate customers, 6% from private. And I'm really glad to say that we have been really successful in corporate customer acquisition and still maintaining solid margin development, and our loan book is in excellent condition, risk-wise. So who are our target customers? We see growth among individuals, entrepreneurs, companies and institutions who want to increase their wealth. Those are our target customers. And we will provide, our customers can see that their whole picture of their full potential. That's our target. And that's a goal we are going to achieve and bring it to our customers. We strongly believe that the prosperous society is built on decision and one investment at a time. The first choice, we want to be the first choice. Target groups, entrepreneurs, individual companies who want to increase the wealth, especially for entrepreneurs and companies. We want to be the primary adviser. We have holistic offering of gas management and financing combined with excellent personal service. And especially for entrepreneurs and companies, we really want to keep our entrepreneurial and deal-making spirit. That's the target. We are going to be the wealth manager bank. We will leverage our excellent asset management expertise and broad offering for our banking customers, so the cross sales. We need to have excellent customer experience. We need to have efficient digital services. And we will further develop our digital capabilities. But our digital capabilities, combined with highly personal service, ensures our customer needs are met in the best possible way. Household banking. People thinking further. Aktia will provide personalized holistic wealth plans that cover all financial goals, helping our customers think further. We have a wide range of offering, best-in-class investment products, including future-oriented sustainable investment solutions. We have already delivered broadened offering in digital solutions and tools. We are going to further develop our credit processes. We aim for shortened lead times and increased automation. As a matter of fact, our goal is that 70% of household banking's credit decisions are made with automated processes, 70%, that's our goal. Our service model transformation continues. I will tell more about that later on in this presentation. Entrepreneurs, SMEs, that's core segment in Corporate Banking. What we will provide that we are committed to build long-term relationships, and we are really ready to walk the extra mile for our customers. I strongly believe that relationships are built on trust. We are capable to offer for SME's individual service with our highly talented key account managers. Our strength in corporate banking definitely is fast and hyper local decision-making, even in cases involving large finances. We have already launched new services for corporate banking to our customers. We have started vendor finance services in cooperation with Secto Automotive. Secto is the third largest leasing company in Finland. For SMEs especially, we are going to relaunch our improved factoring and leasing solutions and capabilities. We are going to be the wealth manager bank. So we have strengthened our collaboration with best asset management and increased focus on MFA financing and, I also already mentioned, in investment financing. We continue to reshape our service model. We want to have an excellent customer experience. A lot has happened since last Capital Market Day. We have built chat bots to our private customers and corporate customers, also to life insurance. We have digital archives, digital signings, digital letter of empowerments, digital meeting tools. As a matter of fact, our customers have given us great feedback from our digital meeting tools. Nowadays, 80% of our customer meetings are done by digital channels. It was 20% before corona times. We have strengthened our position in our key market areas, in capital region, Turku and Tampere, due to Taaleri acquisition. So to summarize. Banking brings solid foundation, stable profitable growth and we have already delivered. First phases of the service model are done. We have gone down from 33 branches to 18, and all of these 18 are Finance growth areas. That's a big change in the branch network. Mikko said something about our customer satisfaction, and I'm really glad about it. NPS level 73 in Household Banking, that's superb. NPS level 83 in corporate banking to our key account managers. That gives us solid foundation to offer our excellent products to our customers. We have delivered strong and steady net interest income, 15% from beginning of 2019. That's a good achievement. As we all know, we have focused on wealth management. And as a matter of fact, average monthly fund savings amount has increased by a stunning 22% since 2019. We are going to be the wealth manager bank. Thank you.

Thank you, Anssi. Finally, we have 1 more presenter on the stage. Aktia published its new climate strategy yesterday, that, among other things, will be presented by Aktia's Sustainability Director, Markus Lindqvist.

Good morning, everyone. My name is Markus Lindqvist. I am the newly appointed Director for Sustainability here at Aktia. Already, in my previous role, I worked with sustainability development within our Asset Management business. Now I'm glad to take on a broader group level role within this area. My responsibilities include both the corporate, social responsibility as well as the environmental, social and governance, so ESG development within our business areas. I will now give you a short overview of the ways that we incorporate ESG into the group activities and also share some of the most recent development within this field. I want to start off by looking at some of the key drivers for our sustainability development. But first, let's put this into a broader context. Banks like Aktia certainly have a central role in society. We are a financial intermediary, enabling transactions. We also offer financing and investment solutions, but we also make investment decisions on behalf of our clients. How well Aktia performs on ESG is not only dependent on the type of footprint of our own operations, but includes also the environmental and societal impact of our lending and investment activities. So now into the key drivers. Number one, growing client expectations. In order to be the preferred partner for our most demanding clients, we need to have the highest possible quality in our ESG policies, processes and the tools that we use. This has already been the case within the Asset Management business for some time, but it is becoming increasingly important in lending as well. Number two, stakeholder materiality analysis. This is something that we conduct regularly and it helps us prioritize our corporate social responsibility work. This means that we are engaging with our stakeholders, not only clients, but also, for example, owners and employees to understand which matters are the most important ones. Number three, ESG megatrends. It's really important for us to understand ESG megatrends to be able to develop our ESG integration and stewardship activities in the best possible way. With ESG integration, I mean, the way that we incorporate ESG into our investment decisions, our lending decisions. Stewardship activities, I mean, the type of active ownership methods and tools that we use. So those would be voting at Annual General Meetings, participating in nomination committees, engaging with, not only companies, but external managers, government institutions and even policymakers, and also joining forces with the broader investment community and participating in investor initiatives. As we heard our CEO, Mikko, mention, these huge, big themes such as climate change are really shaping the environment where both we, our clients and investee companies are operating in. We are sure that, for example, climate will have an impact on some companies' outlook, pricing power and profitability going forward. This can happen through changes in consumer behavior, changes in taxation or changes in regulation, which brings me to my final point here, regulation. Sustainability and ESG has, so far, not been subject to really too much regulation, but that is about to change. Actually, the change has already begun. I'd like to highlight here the European Union Sustainable Finance Regulation, which will be rolled out over the course of the coming few years. And we already have the first obligations of the sustainable finance disclosure regulation in place since early March this year. And additional requirements relating to this disclosure regulation as well as the EU taxonomy regulation just around the corner. At Aktia, we've worked with both consultants and service providers to find good and effective solutions for us to meet these requirements, and we are fully prepared. Before we move on to the most recent development within ESG, I'd like to spend a couple of more minutes on the theme of ESG megatrends. Although our operations are very much local and we follow a high level of corporate governance, as is the case in the Nordics in general, we have to look a bit further to understand all the really important ESG issues for Aktia. Through our global investment activities, we and our clients have exposure to an impact on some of the really big issues such as climate change, biodiversity, even human rights. I'll give you an example. One of the key areas within our asset management business is investing in emerging and frontier economies. Some of these regions are already very hot and dry and really exposed to some of the physical risks related to climate change. Therefore, it's very important for us to understand, for example, the sensitivity towards temperature rise in these regions to understand the possible impact it can have on the economies and to really understand the risk related to these investments. This was obviously a simplified example in reality. Aktia's ESG integrated country selection model is much more complex. Let's take a closer look. Over the course of the last 15 years, we've developed a country selection model that incorporates a wide range of different ESG criteria, including both environmental, social and political indicators, alongside with the more traditional economic ones. We apply both a quantitative approach, followed on by a layer of qualitative analysis, and the end result is a type of traffic lights map, if you will, that singles us which countries are investable and which are noninvestable. Sovereign ESG risk assessment is a field where there are not yet really widely accepted and used best practices, compared to, for example, when analyzing companies from an ESG perspective. However, given our long history within this field, we really believe that this is an area where we can show leadership going forward. And actually, we are already in discussion with some of the leading ESG organizations, finding ways to collaborate and to share our insights to help really shape and improve this part of the industry as a whole. Now finally, the promised latest development relating to sustainability and ESG, our new climate strategy. So we have developed a climate strategy where we set targets and take action on climate within our investment activities, lending portfolio as well as our own operations. If we start off looking at the investment side, really to protect the long-term interests of our clients and to support the goals of the Paris Agreement, we have set the target for all our investment portfolios to be carbon neutral by 2050. We will also set interim targets, shorter-term targets. And we will broaden the scope of portfolios included over time. The starting point for this work is a climate scenario analysis that we already conduct. Other methods for us are, for example, engaging with both companies, government institutions, external managers and policymakers and participating in investor initiatives to really drive for change. Divestment is the last resort. But alone, according to our understanding, not the most effective or best way to really gain real-world impact. Then if we move on to financing and lending. We are currently applying for membership in the principles for responsible banking initiative. We want to join the group of financial institutions who are adapting the already identified best practices out there. Within the strategy, our goal is to lower the carbon footprint and carbon exposure of our lending portfolio by developing a set of sustainable criteria for financing, which set targets for 2030 and 2050. Concerning our own operations, our target is to reach net carbon neutrality in energy consumption of our own premises by 2030 and in other remaining major carbon sources by 2050. Sitting the climate strategy is the easy part, the long-term goals. Actually starting to work today and working towards those goals is the important essence of this. We will now work on a more detailed action plan for implementing this strategy, and we will also start reporting on how this progress is going. If we think about why do we need a climate strategy, I think what I started off with, the key drivers for our development. So those would be the client expectations, stakeholder expectations, ESG megatrends and regulation. The topic of climate really fits well into, actually, all of these. With excellent ESG lending and investment solutions, together with the highest quality of our own operations, we truly believe that we can be the best partner for long-term relationships for our clients who think further. Thank you.

Thank you, Markus. Now let's proceed to our second Q&A session of today. Don't forget to write in your questions to the commentary field on the website.

Thank you all for the very interesting presentations. Let's kick off with a general question for Perttu and Anssi. From your perspective, what is the 1 single most important thing in this updated strategy? Anssi, perhaps you could start?

Good point. The most important thing from a banking perspective is the cross sales. So we need to be able to offer products and services in every contract from every business area. So that's definitely 1 of the key things that I see as the most important one.

Thanks, what about Perttu?

Thinking about this exact moment, I think that clients should be our first priority because we have been talking about quite a bit integration, but I really see that we have to focus into client side as well heavily during this -- in this exact moment. So bankers should do that -- bankers work, meet customers every day face-to-face or remotely and portfolio managers should manage the portfolios. That is, in a way, not the exact answer to your question. But talking about strategy, I think that is that growth possibility, what we are seeing at the moment. So basically, if you think this about -- from this, for example, client base, that is over 40x bigger than it used to be in legacy Taaleri side. And on the other hand, if you think the, let's say, bankers -- amount of the bankers, it's like Mikko said already, it's almost like 5x more bankers in this new Aktia Asset Management. So combined this extreme big client base and compared to legacy Taaleri's previous outlook and this quite big, let's say, a bunch of bankers, we have to succeed with operation on -- with business banking side and of course, household banking side as well. That is plenty of possibilities. I really see this huge opportunity.

Thank you, Perttu. Markus, Aktia published its climate strategy yesterday. What do you feel is at the core of that strategy? .

Well, I think it's really showing the commitment to this big theme of climate and taking the, really, first steps in the right direction.

Then we have 2 approximately similar questions about that strategy. In your climate strategy, you stated the goal of reaching carbon neutrality in the investment portfolios by 2050. This goal seems very unambitious. Should you not aim for at least 2030?

Well, as I said, it's the first step, what we believe is in the right direction. Obviously, the concept of carbon neutrality is a moving target. So I think it's important for us to revise the targets when needed, but also very important to understand that only divesting from carbon-intensive assets would not really gain any real-world impact. So I think as active owners, we can work together with these companies and really get the real change in the world. So this is the first step of something that is going to be an evolving and evolving process over time.

Okay. Thank you. Then let's move forward towards the questions directed more to the asset management side. In your strategic targets, you state that you aim for top know-how in portfolio management. However, practically all Taaleri-originated equity portfolio managers have left the company and also several Aktia originated equity portfolio managers, including 2 top-rated Nordic managers. How do you aim to fulfill this shortage of experts and hinder possible outflow of assets under management? .

Important question, of course. And I have to say that we have a strong asset manager teams still in Aktia side. So we have our 20 asset managers in place and we have had some plans to merge, of course, equity funds. And like I said, that might be affected a little bit that happening -- what has happened. But on the other side, I think we have a -- let's say, a strong team. We -- and I have been contacted quite many times during past 2 weeks, and we are recruiting, at the moment, new portfolio managers. So in that way, of course, I'm complete -- I'm not completely happy about the situation, but still I'm pretty much confident that -- I'm confident that we will manage this situation and go forward even stronger. And of course, for portfolio managers, how I see that is that -- so that quite often every time, actually, it's individual decision if someone is leaving company. So that way, in spite of that quite big amount of levers, I cannot see real connection between these happenings. So that is the situation at the moment.

If I -- just as sort of general comment or a general observation, we have a very large number of portfolio managers, a very strong portfolio management organization, for the lack of a better word, which means that, generally speaking, there will be more people leaving and more people joining us than from a competitor who has got a smaller operation. We have a very large operation.

Then sort of a follow-up question on that. Aktia as a whole in its small and micro-cap funds after the 2 managers left, now there is a new manager who has been working with the large cap companies. How will Aktia improve and guarantee equality in Nordic funds now?

Yes. We still have 1 portfolio management who has been working 7 years with these 2 asset managers, who left our company. So that is 1 thing. And on the other hand, we know exactly the process to invest, and we are continuing to do that. So that way, I see that we managed to do, of course, really good asset management job in the near future as well in that specific fund as well.

Why do you think we have seen the departure of these PMs lately?

Well, like Perttu say, I'm sure there are individual decisions, and we are in a transition phase. We are building the wealth manager bank, a new operator, a new way of working in the market. And we are not ready yet, and it takes time. But at one point, we will be ready. Like Perttu say, we have merged our fixed income funds ex legacy Taaleri fixed income funds, ex legacy Aktia fixed income funds, we are on the way of doing that regarding equity funds. A good number of people have contacted us and expressed their interest to join Aktia, which is, of course, very important for us that we are the employer that seeks a traction from talent.

Okay. Then let's move forward within the Asset Management. Have there been any customer losses in asset management after the Taaleri acquisition?

Yes, we have seen some outflows, but also inflows. I just actually a couple of days ago, checked the latest numbers from the legacy Taaleri wealth management side. And looking into net AUM, we are pretty much in an even state at the moment. So that way, okay, position. But of course, we have to utilize this moment that we will recruit new clients as well in the near future.

Then a question about Aktia's international strategy. Could you give some update considering your international sales in asset management and especially EMD products? Have your plans to expand your international distribution?

Yes, we do. Maybe Perttu can add into this. We actually report, in a very transparent fashion, development of our assets under management in different categories in connection to our quarterly reporting. And the next point will be our Q3 report that comes out. But we have no change in our international business strategy or international ambition, that is to extend and expand both in existing products, but we are also developing new products, for example, products with the EMG flavor -- sorry, ESG flavor to cater international demand in this specific field of expertise that we have.

So basically, we have some new ideas from the fixed income and equity side as well. So -- but of course, these are, at the moment, secret. So we will tell more about those near future.

Sure. Then you highlighted your broad product offering in asset management. Taaleri Asset Management had, historically, very wide product offering, plenty of small funds. And due to this, the product-based profitability was quite poor. How do you ensure that your offering is not too exclusive and tailored and that the growth is profitable?

Yes. If I take a look at into our, let's say, asset mix or asset under management, how that is mixed. So basically, on that side, of course, we have plenty of possibilities. If we think about that a little bit over 5 -- EUR 15 billion asset under management, it's a little bit under 10% alternatives, what we are having, what is the share of that asset from those assets. So basically, we have, that way, plenty of possibilities by asset allocation, increased profitability as well, if possible, for both for the clients and also for the company. So in a way, win-win situation that way. And as well, we are looking for those spearhead strategies in asset management in the near future as well so that we can find out which funds we will, let's say, produce by ourselves. And of course, we will use third-party partners as well. But I really see opportunities that side. That way as well, that fixed income share is quite big from our assets. So let's say, turning that asset mix more into equity and alternatives side, that is one possibility.

Just to put perspective, maybe not answering directly onto that question, but Taaleri Wealth Management had about 5,000 customers. Legacy Aktia or Aktia has about 300,000 customers. So there is a huge difference in scale that is now reachable to us.

Thank you. Then let's move forward towards the banking business. Aktia's market share in mortgage loans have remained flat around 4% for a long time. Do you have ambitions to increase your market share? Or will the growth be somewhat selective in the new strategic period?

As I already mentioned, we are growing in targeted customers, targeted households. And we don't want to be the price leader, and we want customers which are willing to accumulate wealth and customers who are willing to use our services in full scale. For example, [ Perttu Services ] and one for our lives insurance. So we are planning to grow, but in targeted customers.

How would you like the loan book to look like in the future, both within corporate and private customers?

Especially, it needs to be in excellent shape. It is in excellent shape and it's going to be in excellent shape. And we are going to provide stable growth to Aktia and profitable growth. So excellent shape, and we are going to keep our margins.

Given that OP is a mutual bank that is willing to accept a return on equity much below what listed banks are targeting, given the dominant position in the market of OP, how can you therefore make sure that you, within banking, can have prices and margins that are high enough to support your group return on equity? .

Basically, I already answered that question. But what we are aiming for, we are aiming for targeted customers. No, we are not aiming for customers which are solely looking for housing loans. We want to make cross sales. We are going to keep our margins and we want to grow, as I mentioned, in targeted private customers.

Thank you. Then a question for Outi. The market's been very strong recently. Have you included in your financial estimates the positive market value changes?

No, we haven't. Good point. We are looking at the organic growth with frozen interest rates and no market fluctuations, no positive, no negative. So we do not take any stand on where the market develops as we do our budget or long-term financial targets. So we'll see how the market will be, and that will, apparently, to some extent, affect the market values of our assets such as the assets under management and so forth. Life insurance portfolio can be positive, can be negative, but no, they are not included.

Aktia reported an operating profit of somewhat under EUR 70 million last year. Is it realistic to expect over 50% profit growth over the new strategy period?

We wouldn't be here if it wasn't. Absolutely, yes. I mean, the plan relies on top line growth boosted by Taaleri Wealth Management acquisition, obviously. And we do expect to see growth from all of the income sources combined with if we now take, as a starting point, the new Aktia with Taaleri's expenses. We do see that cost base going down as a result of the synergies, as a result of streamlining the ongoing operations. However, we need to be investing in the development, in the automatization and so forth, as I pointed out in my presentation. So yes, I do believe.

We have also a question about if Aktia has plans on reporting the return on equity for separate business areas in the future.

We are looking into that. Actually, internally, we have already done. We'll -- we have discussed whether we're going to be publishing those numbers. It's not -- it is super straight for how to do it. But yes, we are looking at it. And internally, we do follow.

If I may add, I'll pick on just on what Outi say that it is not at all a straightforward calculation and a large number of assumptions need to be made when calculating these figures. So if we, at some point, choose to publish such figures, we need to understand that those figures would be published. Or put it the other way around, we have to understand that a large number of assumptions would be behind those figures. And hence, it is much more complex than what the initial thought might feel.

We have been discussing the banking business and the asset management quite a lot. But Mikko, how do you see the role of life insurance in Aktia's business going forward?

Like I said, that's the fundamental pillar for providing the products and solutions or being a building block in the products and solutions for people to prepare for the unexpected. Life insurance has an excellent distribution channel, both in banking and in asset management, and it is an excellent ingredient into the offering for banking and asset management. Now take for an example, if we managed to sell risk life insurance policy for a person who is taking a mortgage loan, we are to more than double the income from that customer. And the time the customer interaction, the cost of acquiring that customer is not really any bigger, but it is just an additional income. And that is why cross sales is so important, and that is why it plays in so important that different business areas are very tightly synchronized with each other.

Sure. Thank you. As we have no more questions left, I think it's time to wrap up the Capital Markets Day. How would you, Mikko, conclude the day? And why should one invest in Aktia?

Let me summarize the core in our new strategy, updated strategy, and that is, as I say, that business areas are integrated. We do not have isolated targets, isolated strategies, isolated ambitions, but they all need to work together very closely for us to become the wealth manager bank. On the other hand, we have even further sharpened our strategy on single product customers, and there is a clear difference between those of asset management and those of banking and life wherein the 2 latter, the focus is on production cost and production efficiency. And thirdly, we need to have this seamless interaction and seamless customer experience, a comprehensive offering across all business areas. The customer really doesn't care where does 1 business area end the other business area begin. Our bankers have to become deal makers across business areas. We have a growth story. We have a very solid starting point, customer satisfaction. We have got a high number of professionals. We have got ambitions targets, and we are very much committed and set on -- to deliver on these targets. We are also in the very exciting phase of building something new. We are not in a maintenance phase. We are in the buildup phase of something new, and that at least, personally, excites me a lot.

Excellent. I think it's time to thank our presenters, but also the audience.

Thank you very much.

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