Aktia Pankki Oyj (AKTIA) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to Aktia's Investor Event. I'm very delighted that so many of you are able to participate today. My name is Oscar Taimitarha, I'm Aktia Investor Relations Director, and I will be your moderator today. Yesterday, we published a release regarding our strategic acceleration program, our long term financial targets and our dividend policy. Today, we will go through these topics in more detail. Presentations will be given by our CEO, Aleksi Lehtonen and other members of the leadership team. And after the presentations, we are, of course, happy to answer your questions. If you're following us online, please feel free to write your questions in the comments field. And so let's move on to the presentations. Ladies and gentlemen, please welcome Aleksi Lehtonen.

Good afternoon. investors, analysts, ladies and gentlemen. My name is Aleksi Lehtonen. And on behalf of Aktia, I'd like to welcome all of you today to our Investor Event. We appreciate your interest and support in our journey. I'm excited to share with you today our updated strategic direction, our strengthened value creation plan and our financial targets for 2029. And at the same time, I'm also very happy to introduce our committed new leadership team that I warmly welcome on stage later in this presentation. In our journey towards 2029, we will launch an acceleration program to transform into a leading wealth manager empowered by a strong banking heritage. We Aktians, as we call ourselves, we are extremely proud of our long-term banking heritage. For 200 years, we've been building wealth and well-being throughout the society. And during these years, we've developed a stable and strong foundation on which we build the future of Aktia. As of now, we have 266,000 private customers and 24,000 corporate and institutional customers, which we serve through our three business areas: banking, asset management and life insurance. We have around 850 employees and 42,000 shareholders. Our foundation is solid. We have a profitable business with a return on equity currently at 15% and a portfolio of EUR 14 billion assets under management. And now we will accelerate our growth and value creation journey to become a leading wealth manager empowered by a strong banking heritage. If we take a step back and look at Aktia's journey in past years, we clearly see have developed the strong foundation. Our efforts have allowed us to significantly increase our profits, transform ourselves into a wealth manager and at the same time, increase our efficiency and return on equity. We see positive development in the environment we operate in. And we expect the pace of this development to increase going forward. We have witnessed a growth in investable wealth in Finland in the past years. First and foremost, this is something that I'm very pleased to see from the societal perspective, simply put, Finland needs more growth. And ultimately, this development will lead to an increasing amount of growth investments. And at the same time, Fins will benefit of this increasing financial wealth on their behalf. And on the other hand, the situation offers a great interesting opportunity for a wealth manager such as us. We have already seen an uptick in Wealth Management revenues, especially in active wealth management. And we expect this momentum to increase amid the increase in investable wealth. At Aktia, we find ourselves in a good position to face the increasing demand for wealth management services. In our focused private customer segments, i.e., premium banking and private banking, we already have a much bigger market share, actually more than a double seen on the right-hand side compared to our overall mortgage market [ share ]. This is a great example of our market position within wealthy individuals. And hence, we are positioned well in this growing yet competitive market. And then looking at the world around us, there are strong forces shaping the environment that we operate in, already in the short term, but especially in the long term. At the moment, as we know, we are right in the middle of one of the highest geopolitical tensions in decades. We face challenges of unparalleled complexity and magnitude all around the world. And this has already shaped and impacted global trade, capital flows, et cetera. War in Europe and in the Middle East, together with protectionist policies and trade wars have left us navigating in a much more turbulent environment than we were used to. And as a result of this, customers are increasingly looking for more stability and resilience from their financial partner. And for us, this is nothing new. We have been developing society and building well-being for 200 years. Customers need a stable partner that can support them in these turbulent times and we are happy to offer the stability to our existing and new customers. We also see a big shift in demographics as wealth is transitioning across the generations in accelerating pace in the forthcoming years. This happens not only in Finland, but also in the other countries. As wealth moves to the younger population through inheritance and the associated wealth planning, we will see an increasing flow of fresh demand to wealth management services. The generational shift will also result in wealth dispersing to a larger number of individuals. And hence, growing number of people, they need accessible and sustainable financial solutions. And we see this as a great opportunity for us and we will support our existing customers in planning the transfer of wealth. And at the same time, we do welcome warmly growing number of new customers to experience Aktia, to experience us. And we will call this democratizing private banking services. This means that our top class private banking level service is offered to broader customer base. In this way, we believe that we can leverage our already strong position further within our premium and private banking segments to capture the available growth. The world around us is changing more rapidly than we've seen in the past. The rapid technological development, especially in artificial intelligence and machine learning have fueled the pace of change to a level that we've not seen before. And at the same time, there is an interesting amount of regulation -- increasing amount of regulation for all companies and for banks and other actors, the magnitude is even greater. We know that. And this results in an increasing need for investments across the industry. For us, we will invest in technology, data and AI to drive resiliency, efficiency and scalable growth. Our CIO, Oskari Kurki will talk more about this later in the presentation. As I said earlier, we will accelerate the transformation into a leading wealth manager empowered by a strong banking heritage. We have a strong strategic foundation and a unique market position in place, which I'll go through shortly. And going forward, we will build on our strengths and have a sharp focus on execution. We have robust financials with a strong historical track record. We have maintained a growing trajectory in operating profit and dividend, but at the same time, ensured that growth is also profitable. Our return on equity at 15% in 2024 is a good testament of this. And now we have a new and committed leadership team to drive the cultural transformation needed to reach our fresh targets. This will mean changing the way we work and how we follow up our targets. In addition to the cultural changes, we are launching a strategy acceleration program to accelerate the needed change. we'll strengthen the execution of our value creation plan to ensure that we capture the growth in the profitable areas we have identified during the work. And to maximize the impact of the program, we have taken an external partner to kick start the program management and leverage further with us. I will describe the program in more detail shortly. Our unique position in the market is defined by, first, customer base, which is strong in our core segments. Our share of premium and private banking is more than double compared to our mortgage market share, as I said. This is a result of a proven customer-centric service model. Our high customer satisfaction within private investors demonstrates the value of Aktia's personalized advisory services and product quality. Today, we are the most active in town towards private investors. I'm very happy with it. Secondly, we are award-winning wealth manager with top-tier expertise in fixed income, manager selection, alternative investments and asset allocation. Thirdly, we were the first bank in Finland to successfully implement the renewal and modernization of core banking system. And that took place already in 2017. And this enables continued development of data-driven operations. We will continue to invest into technology, data and AI to drive resiliency, efficiency and scalable growth in the future. Our robust financials are supported by our strong historical track record. We have well-diversified earnings mix with high share of net commission income and life insurance income compared to the total income. This is broad-based among customer segments and driven especially by Wealth Management. In 2024, the share of our net commission income and life insurance income exceeded 50% of the total income. We've shown strong focus on capital efficiency, together with prudent risk management practices and resilient capital adequacy. This has resulted in one of the lowest regulatory capital requirement in the industry. Our full year core Tier 1 ratio for 2024 was 12%. And our track record in paying dividend is very solid. We have consistently distributed 60% or more. For the last year, Board of Directors now suggest that a record dividend of EUR 60 million or 60% of the comparable profit will be distributed. So I'm today very happy to present our committed new leadership team with a high ambition level. This team will accelerate our value creation plan. Together, we will set the high pace and ensure that the needed focus on execution -- executing our plans for the upcoming strategy period is intact. To make our strategic plans in reality, we need to get all Aktians, i.e., all of our 850 employees fully on board. And we will be clear in our communication to ensure that all targets and required ambition level is well understood and converted into action. We will also ensure that the needed accountability is there throughout the organization. Ultimately, this will require a cultural transformation, a change in the way we work. And we will build on our strengths and work together to achieve our goals. And this is supported by clear KPIs, which are connected to our updated variable remuneration plans that we announced to support the strategy execution. And at the end of the day, to succeed in our ambitious targets, we need to succeed together. Each and every Aktians will have an impact on our success. And therefore, we will ensure that our leaders are well equipped to lead performance in their respective units and teams. I look very much forward to inviting our leadership team shortly on stage to go through their respective areas. But first, I will spend a couple of minutes to introduce the acceleration program itself that we have just launched. As I said earlier, we will strengthen the execution of our value creation plan with a strategy acceleration program. This will ultimately result in an increase of our operating profit through a concept of operating profit run rate. This run rate increase should be considered as a high-quality recurring boost to our operating profit. And launching this program will not change the guidance we gave for this year in our Q4 results. And I will ask our CFO, Sakari Jarvela shortly to go through the financial impacts of the program in more detail. During the past autumn and this winter, we've delved into strategic questions. And as a result, we have now identified 10 focused streams with numerous initiatives actually more than 120 at the moment where we can see the biggest potential for growth and operating profit increase. And as I said earlier in this presentation, we have a strong strategic foundation in place with a unique market position. We'll build on our strengths and focus on identified profitable growth to drive the growth where it matters the most. We'll take an active role in capturing growth by driving momentum in premium banking, private banking, small- and medium-sized companies and institutional segments. The win in these segments, we will build on our existing capabilities of strengthen the value proposition build on our core offering, leverage outbound sales and enhance cross-sales opportunities. And in addition, a major enabler will be customer acquisition. And that will be in focus in all of our core customer segments. Further, we will streamline our retail service model to build an efficient and high-quality service model with a new and enhanced digital services and improved client prospecting. And as a part of this, we will explore if there are possibilities also to streamline the external reporting. We will strengthen our asset management operations by capitalizing on our high expertise and building on our service model. Kati will explain more in short time. And we will shift focus from active fund management into active wealth management. By combining our leading investment expertise in capabilities with high-quality external managers into a holistic, scalable and segment-specific wealth management offering. And there, we will utilize the full breadth of Aktia's offering to boost also life insurance services through improved cross-selling. And at the same time, we'll increase distribution efficiency to further develop our life insurance sales. And all of this will be supported our continuous efforts in data and technology, and that is to enable growth in a scalable and efficient way as well as the needed cultural shift I referred to in earlier stage. We are confident that through these 10 streams in the program, we will be able to achieve a recurring profit run rate increase of EUR 20 million by the end of 2026. And now I will ask Sakari Jarvela, our fresh CFO, to take the stage and walk you through the full financial impact of the plan and our long-term financial targets. Sakari?

Thank you, Aleksi. I'm recuperating from a seasonal flu. So my voice gives me a little bit of a hard time. My good friend, Aleksi will bail me out, but I'll give it a go. So thank you, Aleksi, very much for your presentation. And great to see you all here, both in the room and online. As Aleksi just showed on the previous slide, we have decided to focus on execution and delivery of our strategy in the form of an acceleration program. And the key characteristic of this program is to directly focus our efforts on creating measurable financial impact. I will here give you an overview of, first, how we have decided to record and follow this impact and also how eventually it feeds into our reported financials. The primary purpose of the program is to create sustainable increase in operating profit, and we will follow this through a concept of an operating profit run rate. As shown here on the slide, the targeted impact is EUR 20 million of operating profit run rate over the next 2 years out of which EUR 7 million in this year during 2025. Now what do we mean by that? The great majority of the detailed initiatives and work streams described by Aleksi have been designed to have a clear financial effect, increasing our operating profit. So as we progress in working through these initiatives, we will estimate and record the incremental operating profit the initiative is expected to generate. And by run rate, we mean projected, the forward-looking impact over the next 12 months from a given point in time when we do the measurement for the given initiative. As an example, by the end of 2026, the totality of all the actions and initiatives we have undertaken should result in approximately EUR 20 million of recurring operating profit that will be realized then in the following 12 months, i.e., in the financial year 2027. And as we go along from here towards the end of '26, we will be recording the run rate impact of all initiatives that we complete and cumulatively, they should result in the $20 million by the end of next year. Now this is not to be confused with the actual reported operating profit in the next 2 years as the actual realized impact generated in a year will, by nature, be lower than the run rate we talk about. Also, and very importantly, there are other external variables, such as interest rates, the forward curve, the market values of financial instruments in our AUM, general macroeconomic developments, geopolitical factors, a whole lot of impacts that will affect our financial performance and the actual reported profit that we generate. So the run rate is not realized profit but an indication of what our actions should be expected to produce based on what is known at the time. This may sound complicated. But why we do it, the most important thing that we want to achieve here is to make sure that we stay 100% focused on the incremental financial impact of all the actions that we undertake. It is also very, very important to stress that this program will focus on growth acceleration. So the great majority of actions and initiatives will focus on creating top line. Embarking on this kind of program will also give us a great opportunity to take a new look at how we actually work and how we are organized. And it should result in efficiencies also on the cost side. But the primary -- primarily we are seeking growth in business and in new top line. And the final remark about the financial impacts of this program is that we expect to record one-off costs of approximately EUR 6 million for the first year. These costs are primarily related to advisory fees that are of success fee-based and success fee nature as well as some minor restructuring costs. And this will be treated as items affecting comparability in our reporting so they come below EBIT or operating profit. So that's about the program. So let's move on into the new financial targets that we're setting for the next 5-year strategy period until -- or ending in 2029. First, we aim to reach return on equity above 15% by the end of '29. And underlying this target is the current interest rate curve. We reached 15% return on equity in 2024, but this was produced in an environment of higher interest rates that is much different compared to today. So what the target really means is that by the end of 2029, we will be able to generate return on equity above 15%, even in an interest rate environment that is lower, such as today. Secondly, we set ourselves a target, an ambitious target for gross assets under management exceeding EUR 25 billion by the end of 2029, reflecting our very high ambition of growing as a wealth manager. And an important note here is the word grows AUM. Previously, we have been reporting our AUM on a net basis, which excludes the instances where our funds are held in front of funds, and we receive fees at both levels. So from the first quarter 2025 onwards, we will be reporting AUM on both net and gross basis. At the end of '24, for example, we reported net AUM of EUR 14 billion where the corresponding gross AUM would be approximately EUR 16.2 billion. So for clarity, the target of EUR 25 billion should be looked at in the context of current gross AUM of approximately 16.2%. We'll show more details on this in our first quarter report. The third financial target is growing our net commission income organically by, on average, 5% per year throughout the strategy period, reflecting our ambition to grow our capital-light business lines. And combined with these targets, we also update our dividend and capital policy. Our dividend policy targets distributing 60% of annual profit as dividends to our shareholders. In addition, what we are adding we -- or we're being more specific in stating that the capital that can be considered excess may be distributed back to our shareholders in the form of, for example, extra dividends or share repurchases. When it comes to capitalization, we target a core equity Tier 1 ratio that is 2 to 4 points above our regulatory minimum requirement. This corresponds to the previous target of CET1 ratio 1.5 percentage points above the regulatory requirement. We firmly believe that the strong capitalization is an important competitive factor for Aktia, And with this range target, we can now provide more clarity on what we mean by CET1 ratio that corresponds to a prudent but not inefficient level of capitalization. We can also guide that typically we would expect to operate at the higher end of this range on a typical year. Then as the financial targets are, by nature, long term, and reflect ambition levels at the end of our strategy period 2029. We also want to be a bit more transparent on how we will follow our progress. To start with, as regards to the strategy execution program, which will be an important part in the next 2 years, we will be reporting on our progress every 6 months in our second quarter and fourth quarter reports. The other key indicators we will be following very closely and measuring are the following: First, as we're embarking on a growth program, we will be closely following the number of premium and prior banking customers, which we would expect to grow approximately 2% per year. Secondly, the assets under management is a key measure, we will pay very close attention to. And it is important to note, though, that the gross AUM is expected to grow with a number of customers with a certain multiplier. So there is an expectation that AUM growth should accelerate towards the end of the strategy period. Hence, we can guide as an interim target, that gross AUM should reach EUR 20 billion by the end of 2027, before then reaching EUR 25 billion by the end of 2029. Generally, there will always be some volatility in AUM from month-to-month and quarter-to-quarter, but we're primarily focused on executing the right actions for the long term and seeing AUM trend-wise on an increasing and accelerating path. And as stated, we expect net commission income to grow on average 5% per year over the period. So these are the three indicators that we and you can follow on a regular basis as we go along. Underlying all these financial indicators is the satisfaction of our employees and our customers, signaling that we're delivering on the Aktia experience that is at the core of our strategy, and of which Sini will be explaining more shortly. So employee engagement and customer satisfaction indicators will be closely followed as on an ongoing basis. With that, I will hand the word back to Aleksi. Take it away.

Thank you, Sakari. To reiterate, we have ambitious targets. And we have a thorough plan which we are committed to execute. I think this is best summarized by saying succeeding where it matters the most. And before welcoming the rest of the leadership team, let me introduce our key priorities, which are closely linked to our 10 work streams we just went through. I'd like to highlight the importance of succeeding where it matters the most. We will accelerate within the areas where we see the best opportunities for growth to build our business to be the better fit for the future. So first, active wealth management. We will support our customers to grow and transfer wealth with clear long-term plans and holistic approach. This will be very much supported by big generational shift in wealth, which is inevitable. We will leverage our strengths and further develop our capabilities to capture this opportunity. Number two, winning in strategic segments. We'll take an active role in driving success in premium, private banking, SMEs and institutional segments. This is nothing new to us. As stated, our market share in premium private banking is more than a double compared to the overall mortgage market share. And we'll build on our existing capabilities to strengthen to value proposition. Building our core offering, leverage outbound sales and cross-sales. Number three, the Aktia experience. So combining the employee and customer satisfaction into one. A needed cultural shift. It starts and ends with our customers. To be the best for our customers, we leverage our skilled and committed employees to deliver tailored solutions understanding and responding to customers' financial needs. The cultural shift is a necessity to further enhance our customer and employee experience. And all this, as said, will be enabled by our investments into data and technology, we'll uplift the digital customer experience, and strengthen our data and technology foundation to enable the growth in a scalable and an efficient way. So next, please let me welcome Kati Eriksson, Executive Vice President, Asset Management to the stage. Kati, take it away.

Thank you, Aleksi. Welcome also on my behalf. As Aleksi mentioned, we have played a fundamental role in building Finnish society and wealth for generations. Throughout our history, we have provided stability and growth for our customers during both the ups and downs of the market. Now as the wealth transitions across generations, a growing number of people need accessible and sustainable finance solutions. Wealth Management customers want simple modular solutions that fit their needs, are managed with sustainable and highly professional investment process. And increasingly with passive and alternatives components included. At the same time, the industry is facing margin pressure due to the rise of passive funds and increased competition. During our strategy period, we are taking several actions to respond to the changes in customer demand and to offset the pressure on profitability. Across our strategic segments, Aktia helps customers grow and transfer wealth with clear long-term plans and a holistic approach. We are shifting to active wealth management by combining our leading investment expertise and in-house capabilities with high-quality external managers into a holistic scalable segment-specific Wealth Management offering. This shift towards active wealth management, the whole concept of managing customers well in a holistic and systematic way will both grow value to our customers, but also fight against the margin compression that Aktia will continue to face in the next strategy period. We will reduce and refocus our product mix to deliver greater customer value in a scalable fashion with increased focus on discretionary portfolio management, in-house alternatives offering, and centralized wealth fund solutions. High-quality future-proof Wealth Management operations consists of professional asset allocation and portfolio construction. Strong in-house capabilities complemented with high-quality external managers, active and passive offering, liquid and illiquid products. Aktia has all the necessary components for a very attractive Wealth Management offering. Going forward, we will be better at bringing these different building blocks together, both within the investment product point of view. But also, we will be better at bringing our banking and insurance capabilities to benefit our Wealth Management customers. In Aktia Asset Management, we have clear focus on excellence. From now on, we will leverage these existing strengths better. At the same time, we will restore and develop the areas where we are not strong enough. Our manager selection capabilities are recognized all the way up to the biggest institutional investors. Going forward, we will leverage these capabilities to benefit all our strategic segments as a complement to our leading investment expertise and strong in-house capabilities. We will accelerate our alternative investment platform to provide wealth creation opportunities in private markets for all strategic segments. We will fully leverage our manager selection and private market transaction capabilities in alternative investments to enhance customer portfolio diversification and return potential, alternative investments play an important role. During the strategy period, we aim to double the fee income derived from alternative investments, increased alternatives AUM by 25% and increased Aktia alternative share of alternatives AUM from around 25% to 90%. We will execute this growth via Evergreen funds such as our diversified Multi-manager Evergreen Fund and a tailored closed-end solutions, which we built on our well-recognized manager selection capabilities. Our award-winning spearhead emerging market debt products are globally recognized. To sell to biggest Finish institutions and large international investors we have developed a very systematic and high-quality investment process. Going forward, the EMD processes will set the future standard for all Aktia investment products, helping us lift the bar across all products and asset classes. As said, we target ambitious AUM and Wealth Management net commission income growth. We are confident that we will deliver these ambitions with these concrete actions. We will deliver fit for need but scalable offering for all our strategic segments. Servicing their differentiated needs by using the same high-quality building blocks for investment offering, complemented with banking and insurance products and services. We have the foundation, a clear path forward and the right people to execute on this vision. Now it's about focusing on execution. Bringing our offering to life, ensuring our teams are equipped to succeed and ultimately delivering exceptional value to our customers and stakeholders. We are all set and already on our way. This is an exciting time for Aktia and I look forward to building this future together with our people. Next, please let me welcome Anssi Huhta, Executive Vice President, Banking, to the stage to go through the strategic segments. Anssi, the stage is yours.

Thank you, Kati and Aleksi. We all know that we live in a time where change is happening faster than ever. Over the past decades, especially in recent years. Technology has completely reshaped how people use financial services. This brings incredible opportunities both for our customers and us here at Aktia. But one thing hasn't changed, our customer fundamental needs remain the same. And neither has our mission to help our customers and society build wealth. And now we are taking this even further. We are making private banking more accessible than ever, as Aleksi said. We are setting a new standard for the affluent banking experience, and we are helping more Fins achieve their financial goals. We have a strong foundation for our success and the numbers prove it. Our customer service NPS is 60, customer meeting NPS has exceeded 70 reaching astonishing 73. And our newly launched Senior Service Live achieved perfect 100 NPS. These are fantastic results. But we are not stopping here, and we are aiming higher. We are now sharpening our focus, we are focusing our resources and capabilities on key segments. We are taking more proactive approach while ensuring that everything we do adds real value to our private banking and premium banking customers. And when we do this systematically, the results will show on our bottom line. We also firmly believe that our offering and service level truly set us apart. So how we are making this happen. First, we are making private banking stronger. We are moving more assets into centralized mandates, and this will give our bankers more time to focus on meaningful customer interactions. This will help us grow as our bankers can spend more time bringing in new customers. And the change is good also for our customers. And it leaves an even better customer experience. This is what set us apart in the market. Secondly, we are expanding our premium banking offering. We are setting a new industry standard by offering private banking level service to broader customer base. We all know that the demand for active wealth management is growing. This will help us attract new customers and increase the value we provide to our existing ones. Thirdly, we are enhancing the customer experience. Our customers value personal service, and we are committed to delivering it. At the same time, we recognize the need for flexibility and convenience. That's why we are improving our digital [ self-service ] channels to make sure our customers have the best options available. Whether they prefer face-to-face meetings, seamless digital interactions, we are making sure they get what they need. On the corporate side, we are unlocking the potential of SMEs. SMEs, especially own-led businesses have been underserved in personalized, high-quality financial services. And we see a huge opportunity to change that. We are taking more holistic approach. We are just not helping SMEs fund growth or manage cash flows. We are going beyond that by offering Wealth Management Solutions tailored for business owners. This is how we create real long-term impact. And the results are already there. Corporate NPS, 56, NPS for our relations managers is 73. We are capable to do this. These numbers confirm that we are on the right path. But once again, we are aiming higher. The key part of financial security is life insurance. Our life offering, especially unit-linked solutions plays a crucial role in ensuring our customers' long-term financial well-being. By strengthening our advisory capabilities, integrating life insurance more seamlessly into our broader Wealth Management Solutions, we are ensuring that. Our customers can build and protect their wealth more successfully. And they get comprehensive solutions tailored to their needs, whether they are accumulating assets securing the family future or planning for generational wealth transfer. This is an area where we have a tremendous potential, and we are committed raising the bar even further. Lastly, Kati, would you like to give an insight on our institutional segment.

Sure. Thank you, Anssi. Yes, in institutional segment, we are employing a new and more structured and systematic service model for institutions, which we build on stability, trust and long-term partnerships. We offer an active customer teaming approach with coordinated access to our portfolio managers and specialists for expert advice. This, together with our sharp investment expertise, high-quality investment processes and products and deep understanding of institutional operating environment, will deliver a strengthening of our market position in the institutional segment in Finland and beyond. We target highly ambitious sales and AUM uplift across 3 key metrics, Including improving our activity and RFP hit rate, growing share of wallet and improving profitability through alternative sales. We will also solidify our international growth platform by pooling AUM, selectively adding products to international distribution. And actively managing our sales channels in target markets and focusing on targeted in-house sales in the Nordics. With these actions, we will regain our position as one of the top providers for Finnish institutional segment.

So we are strengthening our position across all key segments. We are expanding our reach among affluent and high net worth individuals. We are growing our presence in the SME sector. And we are reclaiming our position as a top provider in the institutional segment. We are redefining affluent banking experience while staying true to our purpose. And helping our customers and society build wealth. And now it's time to focus on Aktia experience and our cultural transformation, please welcome Sini Kivekas, Executive Vice President, Group Functions. To stage, welcome, Sini.

Thank you, Kati and Anssi. on with time to deep dive into Aktia Experience, which we consider to be one of the game changers when accelerating our way forward. Aktia experience is a new approach to employee and customer satisfaction. It is known that high employee satisfaction and engagement reflects positively on customer experience. That is why many companies, including us, put a lot of focus to employee experience. We at Aktia are taking this even further, wanting to be a forerunner in combining employee and customer experience into one. We are aligning the internal culture, how we operate with the external experience, how the world sees us and will make it our superpower to achieve our strategic targets, and this is called Aktia experience. Now let me explain what are we aiming for? And what does this mean in practice? Whether you are a private customer pursuing long-term growth and SME seeking a growth partner or an institutional investor exploring innovative opportunities, we aim at delivering world-class solutions with a human touch. Unlike traditional banks, we continue specializing in personalized service. While technology boosts our capabilities, it is our skilled personnel who deliver true value and focused attention. We are known for our personal approach and accessibility and recognized for keeping up the most active dialogue with our customers. This is a strength we will continue to focus on. But we will boost the customer value creation even further by ensuring that our internal culture, organization and ways of working become even more customer-focused. We have already started this journey by shaping our joint culture at Aktia. We are taking our values courageously, skillfully and together into the way we act in our everyday encounters with our colleagues and customers. We are putting strong focus in the way how we work. One concrete example of this is that we have put collaboration as a goal for our employees in our annual target setting process. We are also putting strong focus on the performance of all Aktia employees. All our employees will have clear and concrete targets with link to our strategy and customer value creation. Our leaders have been trained to coach their teams, and they will get training on how to communicate the strategy towards their people, set clear targets and follow-up performance. All Aktia employees will understand how we want to serve our customers at Aktia and we all know what is expected from them to achieve the level we are reaching for throughout the new strategy period. We consider that succeeding in the cultural change requires also a change in the way we reward our personnel. Until now, only part of the personnel has participated in our variable remuneration schemes. From now on, all Aktia employees will be part of these schemes that will be strongly target and performance-based. Every employee can affect their own possibility to get rewarded and the best performance will be rewarded for each year. In addition, we are launching a new variable pay plan for our key employees, including leadership team and CEO. The plan will include both long and short-term incentive periods with ambitious target levels. The long-term LTI plan for the next 3 years will be heavily driven by total shareholder return metrics. The intention of this is to align the things we do strongly and clearly with our shareholders' interests. In the STI Plan 1 metric will be operating profit run rate with which we will follow up the progress of our goals under the acceleration program on an annual basis. Naturally, we will also focus on our organization in order to strengthen right service models, roles and competencies. Our HR strategy enables our employees to grow with Aktia and our customers. We have skilled and committed employees and we are looking into the ways of working and competence building to ensure their growth and ability to understand and respond to our customers' financial needs. Thanks to our size, our experts have the opportunity to collaborate to offer a unique and comprehensive approach to financial advice. Our close way of working together, both internally and with the customers ensures that our customers receive solutions that seamlessly combine the full expertise of banking and wealth management, tailored precisely to their needs. Together, we can provide the best solutions from one place, something customers rarely get in the financial industry. By the Aktia Experience concept and the cultural shaping underneath, we will now take the most out of our opportunities and commit to accessibility, collaboration and excellence to ensure every customer benefits from our comprehensive and forward-looking wealth management. This is the story behind Aktia Experience, and now we will move into the world of technology. Let's welcome our Chief Information Officer, Oskari Kurki to the stage. Welcome.

Thanks a lot, Sini. Very good afternoon also from my behalf. I'm also actually recovering from a seasonal flu, so please bear with me if my voice is a little bit pressed. Technology and utilization of technology is at the core of financial services. Good operational reliability and cybersecurity is the foundation of our business, which is based on trust. Reliability is also very important from an operational efficiency perspective. During the past years, we have increased our level in IT investments. Mainly, this is due to the development of our core platforms. Aktia is one of the few banks that has upgraded its core banking system, while there are many banks that still may still face major upgrades consuming significant amount of resources. In the beginning of the strategic period, we will continue to invest significantly to our core systems, for example, in life insurance and wealth management to secure our foundation for the coming years. Our intention is to keep our IT investments roughly on the current level during the strategic period in order to further develop our business and customer experience. Our solid technological platform will be supported by focus on operational excellence and processes in IT. Data is considered the oil of the future. Ability to derive value from data is crucial. But with data, you also need to get the basics right. You need to have a clear ownership of data as well as data governance and good data quality. On top of this foundation, we are building our cloud-based common data platform that we will utilize through our import -- improved analytics capabilities and AI. During the strategy period, we will also be increasing our cloud footprint. This will support efficiency, scalability and agility. We are also looking into ways of leveraging AI. We are enabling the use of generative AI tools, including productivity tools for our organization. And we will continue to explore possibilities and other use cases based on the input from our organization. From the AI use cases, we have built and continue building our AI road map that will change the way the bank operates. The leap to AI-based tools, we will have a large impact on how we work and it will require constant coaching and support. We will invest in these competencies to ensure that our organization is future fit. Improving our digital service capabilities is extremely important for us in order to achieve excellent customer experience and also in the future. And we will continue to develop our web and mobile services. This will further support the work around Aktia Experience. We will also continue to manage the cost of IT services going forward. We have identified and already implemented several initiatives that will improve the efficiency of our IT. We will continue to do so throughout the strategy period. In connection with the system development work, we constantly assess our current technology portfolio. As part of our Q4 '24 release, we announced an impairment following a reassessment we made on accounting values and depreciation times of some of our IT assets, a large part of which relates to our core banking platform. With these priorities, we are well equipped in Aktia IT to support the Aktia strategy. Next, I would like to welcome Aleksi back on stage. Thank you very much.

Thank you, Oskari. And finally, I'd like to talk about sustainability. Sustainability is not an overlay to our business. It is something that we believe is an integral part of the business. Our ambition is to build sustainable wealth for our customers investors, society and ultimately, a better world. And this is a key area for us where we are happy to say, we have already made concrete progress toward our targets. And hence, I'm proud to say that our full year 2024, we are well ahead of our '25 target to reduce our carbon footprint. And at the same time, a large maturity, actually 98% of the capital invested in our funds, is invested in responsible funds according to SFDR, Article 8 and 9. We will continue to be an active player in this, and we will present an updated sustainability program later this year with the updated targets. So putting all this together, to sum up, our direction is clear. We will build on our strengths and we will accelerate our value creation journey. We will succeed where it matters the most by focusing on our core strategic priorities: Active wealth management, winning strategic segments; and thirdly, the Aktia experience that Sini walked us through. This will ultimately result in us delivering on our long-term financial targets, i.e., above 15% return on equity, above EUR 25 billion in gross assets under management and above 5% organic growth in our net commission income annually. And this by the end of 2029. And I said, we will launch an acceleration program to transform into a leading wealth manager empowered by a strong banking heritage. Thank you all for the active listening. We are now ready to open the mics, the lines and circulate the microphone and answer any questions you may have. Thank you.

So thank you for the presentations. Nice to be back on stage with all of you. Are we ready for the questions-and-answers session. The voices are all right. Oskari, Sakari?

Always ready. Despite the Aktia flu.

Yes. So now we're happy to answer your questions. And we have some positive questions here that we got during the presentations. So let's start with the acceleration program. Aleksi and then, I suppose, Sakari can continue. Can you once again talk us the acceleration program and explain the logic with the run rate. Aleksi, please?

Yes. Thank you, Oscar. The program is truly designed to accelerate the transformation we are into to become a leading wealth manager and then at the same time, benefiting the banking heritage we have and combining these services to a unique way to our customers. Especially those customers where we really see where the growth is, and that is premium private banking, SME and institutions. Obviously, we do business with many other segments as well, but these are the segments we really see the growth. And the program launch is very important. And as that will enhance that will accelerate the chains. And hence, the key metric being the run rate that we are able to quantify the development in the right way. And yes, Sakari, you can reiterate the logic of the run rate, obviously.

Yes, sure. I think it's important to -- let's take a step back and think, why do we do it this way? Why do we focus on run rate. And in banking, like in many other industries, but especially banking, there's so many different variables that affect how we sort of -- how our reported financials pan out in a given year. If the rate curve changes, it has a massive impact on us. So when you do active initiatives and actions, the actual impact is easily lost if you just follow it afterwards. So what we want to do here, we want to be very, very clear that once we push these initiatives, through a very systematic process, we say, okay, now this initiative is up and running. We have a new product or new service. It is creating top line. At that point, we sit down and say, okay, with these volumes, these pricings, what is the financial impact we expect this to generate for the next 12 months. It is just to also to focus our mind on the financial impact and focus our mind even more when we have to come and explain to you every 6 months how this run rate is actually developing. But it is -- that is the core. We focus on actions and the financial impact of those actions.

Thank you very much, gentlemen. Then let's go to the questions here on site. I can see that Jacob Hesslevik from SEB has the microphone in his hand. Please go on.

Afternoon, everyone. So if we start on the profitability target of 15% Sakari, you mentioned earlier that we are living a different interest rate environment behind us, and that you will still reach above 15%, which is quite ambitious, I would say. Do you have a specific policy rate target in mind when you look at 2029 levels? Do you expect it to be 1%, 2% policy rate?

Not exactly. I think the only thing we can do is that we can focus on what the rate curve is telling us today. And it is still relatively flat for the next 5 years. It has been so for the last months. So underlying our long-term targets and reaching them is the right levels around as they are today.

And then you also have to take the capital into consideration as well when you look on the ROE component and your updated targets today is 200 to 400 basis points above the CET1 requirement, should we expect it to be on the midpoint level, 300 basis points when calculating 15%? Or is it at the upper end at 400?

I think we -- as I said, we would be expect on a normal situation and normal year to operate towards the upper end to more towards the 4%. I think today, we are not too far from it. I think the CET1 level today, we're quite happy with. It can still grow. And obviously, once we generate growth, we will generate more equity and hence, create capacity to do investments.

If I may, just to add. Thank you, Sakari. The 400 basis points above translates roughly to 12.5% in core Tier 1. And as we said, we are at 12% at the moment. So we are not far away of the higher end of the new band, so to speak.

Perfect. That's very clear. If we also look on the commission income line, you expect it to grow by 5% [indiscernible] and to reach EUR 20 billion already by 2027. Just to be very clear, I mean these CAGRs are 7% until 27, and it's a 9% -- sorry, 12% CAGR between 2027 and 2029 to reach the EUR 25 billion. Is this completely organically, you're going to reach it? Or does it include any inorganic acquisitions in order to boost the AUM base?

Yes, all of the numbers we presented here are organic. So just to put it in a simple as that. So we haven't included any forms of anything else than just our own doings and winning the market. And yes, they are ambitious.

Maybe just to add, I think it's important to note the distinction between the gross and net. Like I explained, I mean, we're reporting EUR 14 billion of net AUM. Now when we move into reporting both gross and net, the gross is already higher. It's about EUR 16.2 billion. And importantly, once we generate net inflows that affect both funds and funds of funds, of course, the AUM growth will be accelerated. So the gross number is actually -- and Kati is much better to explain, is a little bit more sensitive or you get the growth to accelerate more as you I wouldn't call it depo counting, but you get a double effect.

But will you also focus more on equities compared to historically fixed income as the equity market has historically always grown quite a bit faster, which would help you reach these CAGR numbers?

Thank you. As I said, we are aiming to lift the bar across all asset classes and products and definitely equities play an important role in our active wealth management offering. Going forward as well. And as you said, it's the important driver of the overall AUM and market growth as we believe the same way.

And on your final question before I let everyone else ask, on your offering within Wealth Management, you talked quite a bit about alternative investments today. Will you offer what type of asset classes will it be? Will it be EQT Nexus or through partners, i.e., investments? Or is it rather real estate rate funds? Or what type of alternative investments are you looking at?

Yes. Currently, our alternative investments offering consists of evergreen solutions, semiliquid structures, as I mentioned, the multi-manager Aktia alternatives fund, for example. And also we do have some semi-liquid real estate funds and also foreclosed in funds that we have set up mainly focusing in, I would say, both energy infra and also opportunistic credit. What we want to do going forward is to expand so that we have the offering across different asset classes within the alternative spectrum and also developing our evergreen product offering so that we can then provide the diversification and a potential uplift for all of our strategic segments.

And then let's continue with the question that was posted online by Jacob's colleague, Andreas Hakansson from SEB.

Kati, to grow the AUM to EUR 25 billion, how much performance do you expect per annum compared to flow? We have in the numbers we have for the first year, 5.3 point market growth and going forward, 4% market growth embedded in our estimation. But obviously, as Sakari said, as with the interest rate curve, same is with the market valuation. So 5 years, it can have a different type of investment environments. But on average, this is what we are expecting.

Thank you very much. And then I suppose -- yes, you have already passed the microphone, Jaakko Tyrvainen, SEB.

Yes. Finnish version from my colleague, Jacob. So Jaakko here from the same bank. Generally speaking, I didn't notice or here too much mentions regarding M&A in your presentation. What kind of role M&A will play during your strategy period? And are you looking any kind of opportunities out there? And with M&A I also mean possible divestments. Could you consider divesting any smaller units, for example, just to improve the capital efficiency.

Yes. Thank you. It's a good question. First and foremost, I start by saying that this is an acceleration growth program, organic one. And we put a lot of effort to really do things in a better way. Obviously, we can't rule out any inorganics. However, everything we do starts with the organic work. And then for the inorganics we have our eyes open, and we'll analyze different possibilities when they come, and it might obviously be both sides acquiring or divesting something. All in all, we pay a lot of attention how the capital is deployed for volume growth and lending for other capital-light businesses, et cetera, in order to really be efficient and profitable targeting to ROE above 15%.

Good. And then a bit more detailed one. on the IT systems that you have in place and you mentioned the future development over there, how happy you are with the current core systems that you have in different units? What is there kind of status in order to be prepared for the future developments. Do you have to still touch on the old systems or the existing systems? Or will the future development be kind of on top of the current platforms that you have?

Thank you. I think Oskari will be this question -- this question to Oskari.

Yes. Thank you. That's a good question. So like I said, that Aktia is among the few banks that has really upgraded our core banking system. So we have a pretty modern core banking system. But like I said, that we need investments in other areas like in life insurance and wealth management to really secure the foundation for the coming years and the operational reliability and efficiency. So I see that these kind of investments to the foundation, so they will be kind of -- so they will be emphasized on the first years of the strategy period. And then going forward to the latter years, we will invest more in innovation and kind of improving the business.

Thank you very much. And then let's take a couple of questions posted online. And Kati, [ Petri Bahamaki ] asks. How do you ensure that you take our alternative product sales to a new level. I understand recently sales have been lagging behind. Would you like to comment?

Of course. First of all, in every strategic segment, we have set ourselves a new renewed structured systematic service model. That is one thing. Secondly, we have set ourselves a very ambitious sales targets and also a way to monitor those targets actually within that acceleration program. And thirdly, our development of our offering, obviously, is accrued. So we need to future prove our offering also in the alternative space. We have come this far by now, and now we are taking another leap towards the future. And definitely, as I said before, building our both Evergreen product offering and closed-end product offering so that we have more broad-based offering overall in alternative space.

Thank you. And then the nickname [Foreign Language], which translates into a young investor ask your AUM growth CAGR between 2014 and 2024 has been plus 3%. How do you plan to make this new target, EUR 25 billion, meaning 12% CAGR happen.

Well, the answer is almost the same to the previous question. I look towards the future, and we have set ourselves a very good systematic way of service in different strategic segments, and that is a shift from what we had before. And secondly, we have very ambitious sales targets, and we have a good solid concrete plan to reach those targets. And then again, we need to future-proof our product offering overall. So we need to have this offering for different segments, the core segments that we are servicing so that it is tempting one. And together with the banking and insurance service and products that we're offering. We are very confident that we have the active wealth management in place and now it's just about the execution.

Thank you. And then I suppose we have more questions here from the audience, Sauli Vilen, Inderes.

Yes. Thank you. I guess this is meant for Aleksi and Kati. What do you see is -- has been a core issue for, let's say, during the -- in your previous strategy period or so that your net sales in asset management has been lagging so heavily behind your closest peers. Your product range should have been profit for the market environment during the past years or so. So what has been like the -- why you haven't been able to grow before?

Thank you, Sauli. I think for me, it's somewhat difficult to judge. I've been here for a few months now. And what has happened in the past is there. Probably Kati can -- you've been a bit longer, now almost a bit more than a year. Obviously, if we look at the flows in the latter part of last year, we saw quite big net redemptions from a few individual large institutional clients. And that dialogue was very collaborative dialogue and related to the allocation shifts they made in the Finnish market and so on. So there was nothing drama in a way, in those allocation shifts. So that was one thing. But Kati, could you elaborate further?

Well, my analysis is twofold. First of all, as we service the biggest institutions, and actually, half of our AUM approximately comes from the institutional segment. It comes with big tickets oftentimes. And then it comes with the allocation changes. And it's not about the -- how do I say, the quality of the product or performance per se. It is another reason oftentimes. And as we discussed in the Q4 presentation, we didn't lose any clients. We are just servicing our clients in their needs when they have to make those allocation changes. Another thing is that actually if you look back a couple of years, we have seen interest rate shift. And with that shift, actually, if you think about our spearhead products, emerging market debt, the value proposition compared to the very low yield interest rate environment, it's different when the interest rate rises. So it's natural that institutions then revise their fixed income strategies and make those allocation changes. So I think these are the three things. It's not about the quality of the product. It's not about how we service, even though, for example, in institutional segment, as I said, we have revised the model. And I'm very confident that now we have a good model. And now we have more systematic way also targeting the KPIs. As I said, the activity -- winning the RFPs and so forth. It is a little bit different setup that we are now utilizing. So I look forward to the future.

Okay. Then continuing about the alternatives. We all know how slow it is to ramp new business up in this field and especially in alternatives. So could you maybe shed some more light, what kind of plans you have for ramping up the alternatives for the next level? Obviously, your current range is kind of narrow, you could say, and specialty in-house products, it will take a ton of time before you get a decent size fund. So are you maybe trying increase it through like to partnering or maybe like some smaller bolt-on M&As? Or what is the plan there?

Yes. Well, first of all, maybe I'll start with that we acquired Taaleri. And as we did that, we actually gained good knowledge and people who are aware alternative investment. So we have the capabilities. So now we are building on top of that, as I said. We have the alternative AUM, and it is shifting towards Aktia alternatives AUM as we go to the future. But as you said, it is a journey that we will see throughout the strategy period. It's not the overnight experience. But on top of that, the -- I would highlight the evergreen product range. We actually have good product, Multi-Manager, Multi-strategy ever currently, and we will develop that going forward. And then obviously, look at other -- all the possible opportunities, how we can develop, how we can build those strategies going forward. But we have made ourselves a very how do I say, exact product road map for the forthcoming 2 years, and we will follow that and we will expand in this area.

Okay. And then final me. I didn't notice the employee NPS number. You just mentioned that you want to improve it. Can you give us the employee NPS.

Yes, sure. Yes, sure. It's was 19 during last autumn.

Thank you, Sauli. And before we have [indiscernible], that one question. Because it was quite close to one of the topics that you and Kati already were talking about. [indiscernible] is asking what's the status of the Taaleri collaboration?

It's a very good collaboration. We have a collaborative agreement with Taaleri and we are on our way of launching new products, and it's a very good dialogue. And obviously, we have the AUM that Taaleri is helping us to manage, and it's a good partnership.

Thank you. And I may remind you that you are still able -- you can still post questions online and then, of course, ask here on site. But then I suppose it's Antti Saari from OP, I guess. Yes, you have a mic.

We haven't talked much about lending today. But you mentioned that you want to improve your market position in private banking, premium clients SME. And at least the premium and SME are clients that usually have loans. So are you expecting that your market share in lending is growing similarly as we expect it to grow in asset management.

Thank you. So I think this one is for you, Anssi.

Yes. We are expecting growth in SMEs and especially in premium and Private Banking segment and also in lending. And actually, at the moment, we have grown heavily in higher purchase leasing and factoring products in SMEs, and we are going to continue in that path. So we are expecting growth that segment definitely. And yes, that's the case. We are going to grow.

But not similar with asset management market share?

The main thing is that we are growing in a number of customers. And as my colleagues have told that we are gaining -- we are heavily putting focus on asset management, AUM. And obviously, those clients has also that side of balance. So the main focus is in an asset management, but we are also growing in lending in those particular customers.

Partly related to this, now you are expecting your net commission income to grow above 5% annually. And asset management is, of course, the most important part of it, but only one part of commission income. So what kind of growth have you calculated in for other parts of commission income, for example, lending-related fees or payments or et cetera?

We have calculated in our business gets, so to speak, similar type of growth also in corporate banking and also in premium and private banking segments.

Sakari, would you like to elaborate on the income mix?

I don't think we are particularly ready to discuss in too much detail how the income mix is going to look, but it is -- the growth comes more from the wealth management side. But also from a typical banking commission income lines, it will grow, but perhaps a little bit more weighted towards the wealth management.

Okay. And final one from my side. Your acceleration program, did I understood it correctly that it's basically poorly top line growth. So you haven't calculated in much savings measures into that.

Thank you, Antti. I can take that. As we saw on this slide as well, it's primarily growth program. And the six main streams that was stated on green, they were growth parts. And obviously, we do look at various ways of enhance the way we work operational efficiency, IT and also cost side. But if we balance, this is a growth program, accelerated growth program.

So at this stage, best estimate for your cost development would probably be somewhere around inflation rate or...

We have not, in our outlook, gave any specific cost guidance. What we can say is that what we look in the past, we have actually been very cost-conscious. Our cost level has been below the inflation level many years in the past. And last year, the personnel costs actually declined 5% year-on-year. So in that sense, we are very cost conscious. That's our nature, how we develop the business.

And then -- let's continue with the question from a listener online. Will is asking how does this strategy differ from the previous strategy? Would you -- Aleksi, would you like to comment on that?

Yes. I think this such period gives us a lot of success. It will focus on these customer segments we stated, and we will do a very different pace when it comes to the execution. And this program itself, as we described, is a biggest lever for that execution. So it will be a different pace with our business.

Thank you. Do we have more questions here on site? [ Olav ] of course, please.

Thanks. We all know that market values are changing a lot when it comes to wealth management products. and that has a direct impact also, of course, how the net commission income develops. I was very happy to see that you have reached 8% market share on wealth management and private banking, even though, I guess, some part of that is also the acquisition of Taaleri. I would be very interested to hear what is your target for the market share in a few years to come on this. Are your intention to grow with the market or more than the market?

Obviously, we would like to beat the market. We would like to grow faster than the market. Obviously, that's our target. And that's what we have done in -- especially in the premium and private banking customers, as you mentioned. So we have grown faster than the market in that segment. And obviously, that's our target to do that.

Sorry, I thought I had closed that one, my telephone. As I recall, I stated here also earlier, the challenges for Aktia has not been lack of good wealth management products. There has been very good products for quite some time, quite some years. My feeling is that the challenge has more been for private banking, for instance, to successfully sell these products actually. I think you have touched this subject here already, but could you still a little bit elaborate on that one? And how you manage that to reach your goals?

So Anssi, would you like to continue on the topic of private banking sales?

Definitely. And as I mentioned, and Aleksi mentioned before, we are already the most active player in the town and that's regarding the latest EPSI rating. So Aktia is the most active one. And we are going to continue in that path to be the most active one. And we are going to give the most personalized service to our customers. And that's the medicine that we are going to take and going forward to that direction. The most active one and the most personalized service in town. That's the thing what we are going to do.

And finally, an IT question. Roughly speaking, how much of the coming years, IT investments are kind of regulatory related, and how much is business related? Are you able to comment on that?

I think that it's a bit hard to give an exact figure on the proportion of the regulatory-related investments. So there is new regulation that we need to take into account, and it will be kind of a significant or substantial portion of the investments, but I can't at this point, give an exact figure.

Thank you, Olav. And when we're talking about private banking, we have a question online from [indiscernible] JJ was asking, in the future, what is the minimum investment that is required to get the private banking level. So that -- well, would you like to tell something about democratizing of private banking.

So we are providing private banking level service customers with a few hundred thousand euros of assets under management, so that we are capable to do and we are going to continue to do that. So that's the level. There is no -- like a certain amount. What's the like exact amount, but roughly that. Thank you. And then I think that we have a question for Jaakko Tyrvainen.

Yes. Thank you. Just a follow-up. Could you describe the recent trends in the fee margins in asset management or wealth management that you have seen lately. And in your growth plan and the targets, are you kind of assuming unchanged margins going forward? And of course, by margins, I mean apples-to-apples products.

Happy to answer. Yes, as I mentioned, obviously, the margin pressure is here, and we are expecting it to continue. If I'm thinking about kind of as is scenario, if you wouldn't do anything, we are expecting in all of our strategic segments margin to decline. But that is why we are more actively now building our product offering. As I mentioned, bringing new initiatives in. And also, as we mentioned, actually in the Q4, as a good example, I would say. In Q4 reporting, we mentioned that we launched in the last quarter last year, the ETF discretionary portfolio management product family. And I think that is a good example how we can think about things in a new way. Previously, these clients invested in 100% ETF allocation. And now they are investing equity but through the ETF product offering and then the fixed income is the active fixed income funds that we offer. And with this, we can already increase the margin of these particular products by 30%. So these type of things. And this comes also about the -- how do I say, scalability of the products. It's not that every banker has different type of portfolios for each client, but we build these type of scalable solutions that fit our clients' needs, and then we can have time to service the clients and have that Aktia Experience in place. Thank you very much.

Jacob Hesslevik, please.

Just one more question. So during the past year, I mean, lending has not really accelerated, which has resulted in your RWAs being quite flat compared to a year earlier. Basically, I have a 2-part question. First of all, do you expect lending growth to accelerate during this year? If not, I mean, you will be quite overcapitalized already by Q4 2025. And given our new policy or updated distribution target, do you prefer to do extra dividend or to do a buyback? And how do you resonate regarding those 2 options?

So obviously, if you could answer the first part of the question and then Aleksi or Sakari, you may continue.

Yes. The lending market in Finland, especially in mortgages, has been extremely slow during this year and the past year and also SME lending. And Aktia has been always a conservative lender, especially in the corporate side. So that's one of the reason we are part of the society, as I mentioned before, and a part of the market. But this year, there is a bubbling under, so to speak. So if the market booms or starts to move, so we are ready there and then we are going to grow if the market is growing. But we are going to keep our risk levels at our pricing levels. So that's highly important to us. But let's see about the market. But in corporate side, it's looking relatively good.

And then concerning the excess capital, I saw two hands. Go ahead. Sakari please.

Yes. I mean, like Anssi said, I mean, we continue to be a bank. We have a growth program. So of course, as part of these initiatives, we also expect that we will increase lending. So we necessarily don't see a situation in the very near quarters where we would be excess capitalized. To the question of which one we prefer, that is something that we will keep our options open. And once the situation arises, we will make the decision whether it should be dividends or share repurchases.

Yes. And just to add, as we stated, 200 to 400 basis points buffer and that translates to 12.5% roughly where we see that, that is a more or less of a good balanced position to be considering of all this. And we are not much far away in there.

Thank you very much. Do we have any further questions here on site? No questions online. So then seems that was the last question for today. Many thanks for the active discussions and many thanks to all of you, both you have participated here on site. And those of you who have followed us online. We wish you all a very good end of the week. See you again. Thank you, and goodbye.