Evli’s Interim Report January-March 2023: A favorable start to the year – outlook unchanged

Evli had a favorable start to the year 2023. The merger with EAB Group Plc was finalized according to a plan and the planned synergies were achieved. Alternative investment funds continued to grow, driven by strong client demand. Net fund subscriptions turned positive after a challenging year. In addition, incentive business continued to grow, and new clients were acquired from both Finland and Sweden.

Financial performance January-March 2023 (comparison period carve-out 1-3/2022)

  • Net revenue was EUR 25.7 million (EUR 23.3 million).
  • Operating profit was EUR 9.4 million (EUR 9.7 million).
  • Operating result of the Wealth Management and Investor Clients segment decreased to EUR 8.9 million (EUR 9.6 million).
  • Operating result of the Advisory and Corporate Clients segment decreased to EUR 0.2 million (EUR 0.8 million).
  • At the end of March, assets under management amounted to EUR 16.7 billion (EUR 15.8 billion) on a net basis.
  • Return on equity was 22.7 percent (33.8%).
  • Earnings per share, fully diluted, was EUR 0.26 (EUR 0.28).
  • The ratio of recurring revenues to operational costs was 128 percent (132%).

The general market uncertainty was reflected in the performance of Evli's business areas

The first quarter ended on an anxious note as investors worried about bank runs and the spread of a banking crisis. In addition to banking sector concerns, the operating environment was characterised by rising consumer prices, central bank interest rate hikes, a weak global economic growth outlook, the war in Ukraine and heightened geopolitical tensions, especially between the US and China. However, the values of key asset classes – equities, government bonds and corporate bonds – rose from their year-end levels.

“The general market uncertainty was also reflected in the development and performance of Evli's business areas. Group net revenue increased by ten percent to EUR 25.7 million (EUR 23.3 million), but operating profit decreased by three percent to EUR 9.4 million (EUR 9.7 million). Fee income from alternative investment products and the incentives business clearly increased, while fee income from traditional funds remained at the high level of the previous year. In contrast, fees and commission income for the Corporate Finance unit and Equity and ETF brokerage were lower than in the previous year, due to a slowdown in M&A activity and lower trading volumes”, CEO Maunu Lehtimäki says.

In January-March, Evli’s return on equity was 22.7 percent (33.8%), while the ratio of recurring revenue to operational costs was 128 percent (132%). The Group’s solvency and liquidity were at an excellent level.

“The key drivers of Evli's strategy, international sales and alternative investment products, developed positively overall during the quarter. Net subscriptions from international clients amounted to almost EUR 30 million, mainly in Evli's corporate bond funds. International clients accounted for 21 percent (23%) of Evli's total fund capital, including alternative investment products. Total sales of alternative investment products in the first quarter amounted to EUR 83 million (EUR 120 million). Sales were spread across a number of different funds, with Evli Private Equity I, Evli Private Equity III and Evli Infrastructure II attracting the largest subscriptions”, Lehtimäki says.

Responsibility is one of Evli's strategic focus areas, and Evli has continued to develop it according to plans. During the first quarter, Evli reported on the implementation of sustainability factors promoted by its equity and fixed income funds during 2022, as required by the SFDR disclosure regulation. In addition, Evli actively promoted its work on climate targets and biodiversity. As part of its human rights work, Evli continued its joint research project together with UNICEF Finland. The project aims to discover how investors can support and promote child rights.

Outlook unchanged 

The year 2023 started in an uncertain sentiment, 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 1–3/2023