CEO's review

Record year

In the later part of 2024, economic growth continued as in the early part of the year. In the United States, growth remained strong, supported by private consumption and a high employment rate, while growth in Europe was subdued. At its December meeting, the Federal Reserve (Fed) cut its key interest rate by a quarter of a percent, bringing it into a new target range of 4.25–4.50 percent. This was the third consecutive rate cut, and now the policy rate has fallen by a full percentage point from its peak. In Europe, too, interest rate cuts continued; The European Central Bank’s interest rate on deposits stood at 3.0 percent at the end of the year. The US dollar strengthened markedly during the year and was close to parity against the euro by the end of the year.

”Possible US trade policy measures increased investors' concerns.”

In addition to the economic and interest rate outlook, the US presidential election in November and the subsequent change of direction in US domestic and foreign policy as well as the development of geopolitical risks were prominent towards the end of the year. Divisions within the US, growing nationalism, and possible trade policy measures increased investors' concerns. If enacted, possible import tariffs would raise prices in the United States, increase inflationary pressures, and weaken growth in other parts of the world. 

In the fourth quarter, capital market returns were mixed. The returns on fixed income investments were almost without exception positive in all fixed income asset classes, but in equities, strong returns focused particularly on the United States and, there, especially on shares of technology companies. In Europe, including Finland, stock price performance was weak in the fourth quarter, reflecting the continent's dependence on exports and traditional industries, which could be subject to possible U.S. import tariffs. There were no significant changes in valuations of other asset classes in the fourth quarter.

At the end of the year, open real estate funds became a topic of discussion in Finland. The property market, which has remained weak for two years, with falling prices and vacancy rates, and slowed transaction activity led to an increase in redemption requests and, consequently, to delays or temporary closures of redemption requests in several real estate funds. Of Evli's three open real estate funds, only Evli Rental Yield II had to delay redemptions. In the Evli Rental Yield and Evli Logistics Properties funds, redemptions have been carried out normally from the cash resources of the funds. Delaying redemptions or temporarily closing the fund is understandably unfortunate for the investor who requested redemption. However, doing so ensures equal treatment of all investors in the fund in a situation where the forced liquidation of the assets could lead to a particularly unfavorable outcome for the fund as a whole and all its unitholders.

”Evli’s comparable pro forma net revenue was 14 percent higher than in the previous year.”

In the fourth quarter, Evli Group's net revenue was almost at the same level as in the previous year, EUR 30.1 million (EUR 30.7 million). Net revenue for the full year increased by 17 percent from the previous year to EUR 126.8 million (EUR 108.7 million). Taking into account the incentive business transaction carried out in March 2024, comparable pro forma net revenue was 14 percent higher than in the previous year, rising to EUR 109.7 million (EUR 96.6 million). Commission income from traditional funds and advisory fees developed best, both of which grew clearly. Commission income from private equity funds and asset management was at the previous year's level. As a result of the slowdown in trading activity, brokerage returns fell. Income from the company's own balance sheet was lower than in the previous year. 

The Group's operating profit for the fourth quarter decreased by four percent to EUR 10.5 million (EUR 10.9 million). Operating profit for the full year increased by 45 percent from the previous year to EUR 58.2 million (EUR 40.2 million). Correspondingly, comparable pro forma operating profit increased by 19 percent to EUR 43.3 million (EUR 36.4 million).

Evli's return on equity in 2024 was 34.4 percent (22.8%). The ratio of recurring revenue to operating costs was 132 percent (130%). The Group's solvency and liquidity were at an excellent level. 

”Customer assets under management increased to EUR 18.9 billion.”

The Wealth Management and Investor Clients segment's net revenue increased by 24 percent in the fourth quarter to EUR 26.6 million (EUR 21.4 million). Due to positive market development and net subscriptions, customer assets under management increased to EUR 18.9 billion (EUR 18.0 billion). Evli Fund Management Company's mutual fund capital, including alternative investment products, totaled approximately EUR 13.4 billion (EUR 12.6 billion). Net subscriptions of traditional investment funds were in the fourth quarter approximately EUR -117 million and EUR 30 million for the full year. The largest net subscriptions during the quarter were directed at Evli's long-term fixed income funds, while subscriptions to equity funds and the Evli Euro Liquidity money market fund were negative. For the full year, the largest net subscriptions were raised by the funds Evli Europe Growth (EUR 170 million), Evli Nordic Corporate Bond (EUR 125 million) and Evli European High Yield (EUR 109 million). 
The Advisory and Corporate Clients segment's net revenue decreased by 59 percent in the fourth quarter to EUR 2.0 million (EUR 4.9 million). The decrease in net revenue is a consequence of the corporate arrangement in which the incentive business became an associated company of the Group and is therefore no longer part of segment reporting. Advisory fees received from M&A activities increased compared to the corresponding period of the previous year. The unit’s mandate base is good, and the M&A market is clearly livelier than in the previous year. 

The key areas of Evli's strategy, international sales and alternative investment products, developed positively during the quarter. The net subscriptions of international clients amounted to around EUR 240 million and international clients accounted for 21 percent (19%) of Evli's total fund capital, including alternative investment products. Sales of alternative investment products totaled approximately EUR 115 million (EUR 33 million) during the quarter and about EUR 265 million (EUR 225 million) for the full year. During the quarter, the first closing of the new Evli Private Equity IV fund was made with a record amount of investment commitments of EUR 77 million. 

In the area of responsibility, Evli prepared reporting according to the EU’s standardized sustainability reporting (CSRD), the nature reporting according to the Taskforce on Nature-related Financial Disclosures framework, and the emissions evaluation of its own operations. Evli also worked as an active investor participant in the Nature Action 100 initiative, which engages with 100 systemically important companies regarding nature and biodiversity loss and encourages companies to take more ambitious action to reduce nature loss. Furthermore, Evli talked about its research on promoting children’s rights and about utilizing AI in children’s rights assessments in the Building Bridges conference in Switzerland.
 

Maunu Lehtimäki, CEO, Evli Plc

Updated in connection with the publication of Evli Plc's Financial Statements Bulletin 2024 on January 29, 2025.