Evli Bank Plc's Financial Statements Bulletin January-December 2018

EVLI BANK PLC STOCK EXCHANGE RELEASE JANUARY 23, 2019, AT 11.00 AM

GOOD RESULT IN A CHALLENGING MARKET ENVIRONMENT

• In the Wealth Management and Investor Clients segment operating profit increased and was EUR 17.4 million (1-12/2017: EUR 16.2 million)
• The operating profit in the Advisory and Corporate Clients segment declined and was EUR 2.2 million (EUR 2.4 million)
• The revenues from the trading activities through the own balance sheet declined by EUR 4.2 million compared to the previous year, which led to a decrease of the operating profit in the Group Operations segment.

January-December 2018

• The net revenue was EUR 68.5 million (EUR 71.4 million)
• The operating profit was EUR 18.9 million (EUR 21.3 million). The result was weakened by non-recurring costs of EUR 0.6 million related to operational efficiency actions
• The profit for the financial year was EUR 17.3 million (EUR 17.5 million)
• Evli's diluted earnings per share were EUR 0.68 (EUR 0.72) and return on equity was 23.0 percent (25.5%)
• A dividend of EUR 0.61 per share is proposed (EUR 0.52 per share)
• Net assets under management grew year on year and totaled EUR 11.4 billion (EUR 11.2 billion) at the end of December
• The proportion of recurring revenue to operating costs was 113 percent (113%).

October-December 2018

• The net revenue was EUR 17.5 million (EUR 21.0 million). The revenue was affected by EUR 1.5 million lower performance-based fees than in the comparison period and the lower return from the own balance sheet investment activities
• The operating profit was EUR 3.6 million (EUR 6.5 million). The result was weakened by non-recurring costs of EUR 0.6 million related to operational efficiency actions
• Earnings per share amounted to EUR 0.07 (EUR 0.21).

Outlook for 2019

The risks associated with the general trend in the equity and fixed income markets are high due to the prevailing uncertainty on the markets. A possible continued decline in equity prices or a reduction in investors' risk appetite would have a negative impact on the company's profit performance. Evli Group's assets under management have grown substantially in recent years, which softens the result-impact of any reversal of the market. Sales of alternative investment products, in particular, have brought new, stable revenue. Evli has initiated a series of internal, strategy-based actions and cost savings, leading to improvements in the company's cost effectiveness.

There has been positive development in the demand for advisory services, and its outlook for 2019 is stable. Own balance sheet investments share of Evli's business decreased during 2018. Nevertheless, it may have a significant impact on the company's result performance. In the advisory business and in own investment activities, fluctuations in quarterly and annual returns are possible. Customer's demand for Evli's products and services has continued to be good, which has also led to a systematic increase in lending.

Because of profitable and stable development, we estimate that the result for the 2019 financial year, will be clearly positive.

Key Figures

*Dividend for 2018, proposal by the Board of Directors.

Maunu Lehtimäki, CEO

Despite the challenging market environment, we succeeded in increasing the sales of our strategic focus areas in 2018. Our international fund capital grew to EUR 1.9 billion and foreign customers' share of Evli's fund capital grew to 25 percent. Correspondingly over EUR 300 million in investments were raised for alternative investment products. In addition, we signed an agreement in December on buying Ab Kelonia Placering Oy. With this deal, the management of the private equity fund investments of nine important Finnish foundations, totaling some EUR 210 million, are transferred to the Evli Group.

In Finland, the sales of fund products and wealth management services also developed favorably. Although the total net subscriptions of Finnish fund management companies were clearly negative in 2018, the net subscriptions of Evli funds increased by about EUR 0.5 billion. At the end of the year, our fund capital stood at EUR 7.8 billion, which makes Evli Finland's fourth largest fund management company. The assets under management grew to EUR 11.4 billion.

In the Advisory and Corporate Clients-segment, Corporate Finance business improved sales after the weaker third quarter of the year. The company's mandate base has remained good, resulting in a favorable outlook for the future. The business of incentive system management continued its steady development, driven by new client relationships and broader incentive programs of existing clients. The sale of analysis services to listed companies launched a couple of years ago also developed favorably and increased their client base.

However, our operating profit was eleven percent lower than in 2017, largely because of two factors. Due to the decline in the stock market our performance-based fees declined substantially from last year's EUR 2.5 million. In addition, the returns from our treasury operations and market-making fell well short of 2017 due to a challenging market environment.

During the end of the year, we continued to develop our digital services and the unique client experience, and to enhance our cost structure. Our projects to improve client experience in 2018 were among others improving the features of the My Evli online service, transitioning to a fully paperless office and focusing on collecting client feedback in asset management. The several projects aiming at cost reductions included among others the decision to discontinue our market-making operations, and bond and stock brokerage in Sweden. In addition to their impact on costs, these measures will reduce our risks and reinforce our focus on asset management operations that accumulate recurring commission income. In 2019, we will continue our strategy-based actions and cost saving implementations.

Due to the weakening of market conditions, the outlook for 2019 has become challenging. However, we estimate that by continuing to invest in our strategic focus areas and concentrating on achieving stable and profitable growth, the result for 2019 will be clearly positive.

EVLI BANK PLC

For additional information, please contact:

Maunu Lehtimäki, CEO, Evli Bank Plc, tel. +358 (0)50 553 3000, [email protected]
Juho Mikola, CFO, Evli Bank Plc, tel. +358 (0)40 717 8888, [email protected]

Evli Bank Plc

Evli is a bank specialized in investments that helps institutions, corporations and private persons increase their wealth. The product and service offering includes mutual funds, asset management and capital markets services, alternative investment products, investment research, administration of incentive programs and Corporate Finance services. The company also offers banking services that support clients' investment operations. Evli is the highest ranked and most used institutional asset manager in Finland*.

Evli has a total of EUR 11.4 billion in client assets under management (net 12/2018). The Evli Group's equity capital totals EUR 77.4 million and its BIS capital adequacy ratio is 16.2 percent (December 31, 2018). The company has more than 250 employees. Evli Bank Plc's B shares are listed on Nasdaq Helsinki Ltd.

*KANTAR SIFO Prospera External Asset Management Finland 2015, 2016, 2017, 2018, SFR Scandinavian Financial Research Institutional Investment Services, Finland 2015, 2016 ,2017, 2018.

Distribution:
Nasdaq Helsinki Ltd, main media, www.evli.com