LoginEvli’s net revenue and operating profit increased in January–September due to good fund performance and the acquisition of EAB Group Plc in the autumn of 2022. Demand for traditional investment funds increased, and Evli attracted the second most fund subscriptions in Finland. Also, the recurring revenue’s share of turnover increased further, improving the quality of the result.
Financial performance January–September 2023 (comparison period 1–9/2022*)
- Net revenue was EUR 78.0 million (EUR 66.7 million).
- Operating profit was EUR 29.3 million (EUR 25.8 million).
- Operating result of the Wealth Management and Investor Clients segment increased to EUR 26.3 million (EUR 22.3 million).
- Operating result of the Advisory and Corporate Clients segment decreased to EUR 1.5 million (EUR 2.8 million).
- At the end of September, assets under management amounted to EUR 17.1 billion (EUR 14.4 billion) on a net basis.
- Return on equity was 22.8 percent (27.3%).
- Earnings per share, fully diluted, was EUR 0.80 (EUR 0.71).
- The ratio of recurring revenues to operational costs was 133 percent (127%).
Financial performance July–September 2023 (comparison period 7–9/2022)
- The Group's net revenue was EUR 25.9 million (EUR 20.5 million).
- The Group's operating profit was EUR 10.2 million (EUR 7.8 million).
- Diluted earnings per share amounted to EUR 0.28 (EUR 0.21).
Uncertainty of the operating environment and increased costs reflected in the result of Evli's business areas
In the third quarter of this year, the US economy continued to grow briskly, and Europe, too, avoided a recession, as a result of which prevailing market expectations of the end of the interest rate hike cycle vanished. Even though consumer prices have come down from last year's peaks, price increases were still above the central banks' long-term target of approximately two percent, thus restricting the central banks' freedom of maneuver.
Stock prices dropped in the third quarter in many places. The sluggish performance of equities and government bonds was due to investors' U-turn on interest rate expectations in late summer, in particular on hopes for a quick end to monetary policy tightening. High raw material prices, especially the price of crude oil, as well as declining corporate earnings also added to investors' caution. Higher-rated Investment Grade bonds as well as lower-rated High Yield bonds, however, performed strongly, which indicates that recession risks will remain at a low level.
“The uncertainty of the operating environment and the uneven development of international markets, together with increased costs, were reflected in the development and result of Evli's business areas. Net revenue increased due to the merger with EAB Group Plc completed last year and the continued strong growth in commission income from alternative investment products and incentive business”, Evli’s CEO Maunu Lehtimäki says.
In the third quarter, the Group's net revenue increased by 26 percent from the comparison period and was EUR 25.9 million (EUR 20.5 million). Operating profit, in turn, increased by 31 percent to EUR 10.2 million (EUR 7.8 million). Commission income from traditional funds increased, being 12 percent higher throughout the early part of the year than in the previous year. By contrast, commission income from the Corporate Finance unit and brokerage activities remained lower during the quarter than in the previous year because of the slowdown in M&A activity and lower trading volumes.
In January–September, Evli's return on equity was 22.8 percent (27.3%). The ratio of recurring revenue to operational costs was 133 percent (127%). The Group's solvency and liquidity were at an excellent level.
“As in the early part of the year, the key drivers of Evli's strategy, international sales, and alternative investment products, developed twofold during the quarter. Net redemptions by international clients amounted to EUR 15 million. International clients accounted for 19 percent of Evli's total fund capital, including alternative investment products. Sales of alternative investment products totaled EUR 19 million in the third quarter”, Lehtimäki says.
In the third quarter, Evli signed the investor statement on the European Sustainability Reporting Standards (ESRS). Evli continued its joint research project together with UNICEF Finland to explore how investors can promote child rights. In addition, Evli submitted its interim targets to Net Zero Asset Managers initiative and joined the global Nature Action 100 investor engagement initiative.
Outlook unchanged
Uncertain sentiment in investment markets has persisted due to heightened interest rate and inflation fears, increased geopolitical risks and market volatility.
As a result of the acquisitions made during 2022, Evli has managed to strengthen its position in the market. With synergies from the acquisitions and non-recurring costs allocated to 2022, we estimate that the operating result will be well above the comparison period's level (EUR 30.9 million in 2022).
Read more: Evli Plc’s Interim Report 1–9/2023
* Includes carve-out figures for 1-3/2022
