#1Bank of Åland ÅLANDSBANKEN 100 1919 YEARS 2019 GOING OUR OWN WAY Debt Investor Presentation November 2019 ALANDSBANKEN#2Table of Contents 1. Bank of Åland in Brief 2. Bank of Åland - Strategy and Market Position 3. Earnings and Capital 2 4. Asset Quality 5. Liquidity and Funding 6. Contact Details 7. Appendix 3 7 13 28 34 40 42 ALANDSBANKEN#31. Bank of Åland in Brief ÅLANDSBANKEN 100 1919 YEARS 2019 GOING OUR OWN WAY ÀLANDSBANKEN#44 Bank of Åland in brief . A Finnish bank targeting high net worth and affluent individuals • Top ranked in customer loyalty Bank of Åland Plc • Covered Bond Program • . • • • • Economy and Markets • . Tradition of stability and very low credit losses Net Operating Profit increased by 13 % to EUR 24.1 M in Q1-Q3 2019 from EUR 21.3 M in Q1-Q3 2018 BBB rating with a positive outlook from S&P EUR 2 bn combined Covered Bond/ Senior Medium Term Note Program 2018 (Finnish law) Two cover pools: Cover Pool FIN and Cover Pool SWE Legal LTV cap at 70 % and minimum 2 % over-collateralization Published commitment to a strong over-collateralization and six months liquidity AAA (stable) rating from S&P on both Cover Pool FIN and Cover Pool SWE The demand-led Finnish economy has been growing strongly during the last years Unemployment has dropped from 9.2 % in 2015 to 5.9% as of September 30, 2019 Finnish house prices have risen moderately compared to the Nordic neighbors, as the demand has been strong in the low rate environment Lending to private individuals comprise 73 per cent of the Bank of Åland loan portfolio. Home mortgage loans account for 78 per cent of lending to private individuals ALANDSBANKEN#5сл 5 Scorecard Capital • S&P rating uplift for strong capital position Common Equity Tier 1 capital ratio 13.3 % as of September 30, 2019 IRB method for credit risk capital requirement not yet approved for the Swedish credit portfolio Risk Management ● Long history of having the lowest loan loss • • level of all Finnish banks. Loan loss level was 0.05% in Q1-Q3 2019 No trading positions or complex financial instruments Strict limits on exposures to financial institutions. Bulk of the exposure is to highly rated Nordic entities • Liquidity and Funding Core funding ratio of 88% as of September 30, 2019 Liquidity reserve at 22% of total assets as of September 30, 2019 • LCR at 163 % as of September 30, 2019 · NSFR at 117% as of September 30, 2019 • AAA rating on Covered Bonds Profitability • • • Challenging interest rate environment Positive earnings trend Net operating profit of EUR 24.1 M Q1-Q3 2019 Return on equity 10.5 % Q1-Q3 2019 ALANDSBANKEN#66 Standard & Poor's rating on Bank of Åland Finnish banks A- Business position -2 - Niche bank with geographical concentration to Finland and Sweden Capital and earnings +1 - Strong capital position positive - Strong equity to assets ratio Risk position - Geographical concentration to Finland and Sweden - Small customer base with concentration risks Liquidity and funding -Above average with very strong deposit base Bank of Åland stand alone rating Cover Pool FIN, Cover Pool SWE - Very low credit losses and stable loan base - Commitment to strong over-collateralization - Commitment to six months liquidity buffer Bank of Åland Covered Bonds rating -1 0 BBB positive +9 AAA ALANDSBANKEN#72. Bank of Åland Strategy and Market Position ÅLANDSBANKEN 100 1919 YEARS 2019 GOING OUR OWN WAY ÀLANDSBANKEN#8Three Markets - Two Strategies The Åland Islands • 3 offices + 2 rep offices, market share > 50 % • Full product range offered • A bank for everyone Finland • • • 5 offices in affluent parts of Finland, market share > 1% Full product range offered but "bread and butter" services only as complement to Private Banking and Premium Banking services offering Targeted segment: High Net Worth / Affluent Individuals and their companies Sweden • 3 offices in Sweden's largest cities, market share <1% Full product range offered but "bread and butter" services only as complement to Private Banking and Premium Banking services offering • Targeted segment: High Net Worth / Affluent Individuals and their companies 8 Vaasa Tampere Turku Parainen Helsinki Åland Islands Stockholm Gothenburg Malmö ÀLANDSBANKEN#99 Bank of Åland – a relationship bank with focus on - Private Banking and Premium Banking customers An Overview The Vision • • Established in 1919 on Åland Islands Listed since 1942 on NASDAQ OMX Helsinki Total assets of EUR 5,555 M, as of September 30, 2019 Actively managed assets of EUR 5,788 M, as of September 30, 2019 Approximately 700 employees Operations in the Åland Islands, Finnish mainland and Sweden More than 200,000 customers and top-ranked in customer loyalty A long-standing tradition of stability and very low credit losses At the forefront for introducing new products in Finland Create value for ambitious individuals and companies that appreciate relations: • Private Banking since 1982 Premium Banking since 2004 Core values Service Finance ➤ Lifestyle ➤ Safety ALANDSBANKEN#1010 Bank of Åland History of Strategic Decisions. during the first 100 years From a local bank.. supporting development of Åland - a poor fishing and agrarian community 1919 1942 Foundation 2019 2016 2009 2004 1994 Fintech New mortgage Expansion to Sweden Dreams bank with partners Expansion to Finnish IT company Crosskey Ab Ltd Listing mainland ALANDSBANKEN 100 TÅR ..to a Nordic banking group with wide product range and personal service targeting high net worth individuals ALANDSBANKEN#11Dreams Digitalization in focus: strategic fintech partners The new way to save Reach your dream with money you didn't know you had GET IT ON Downicad on the Google Play App Store 11 MENU Buy an apartment 4 years and 250 000 kr left 55 089 kr SAVE Trustly CONSUMER MERCHANT PARTNERS ABOUT US PRESS BLOG CAREERS USER SUPPORT Shop and pay from your bank account Fast, simple and secure 0 WATCHES A banking service for everyday climate action Use a free revolutionary mobile banking service to reduce your carbon emissions day by day. Positive returns for both you and the planet. Early sign-up! DO About us Press FAQ English Nour total C Everyday Climate Action Nathalie Green Deconomy member 00000322 Compensate Invest OCTOBER ° Supermarket 4.00 123€ 6.90€ Florist 182 25 € D ALANDSBANKEN#1212 Bank of Åland group legal structure and Ownership structure Crosskey Banking Solutions Ab Ltd 100% S-Crosskey Ab 60% Ålandsbanken Abp (Bank of Åland Plc) Ab Compass Card Oy Ltd 100% Major owners Anders Wiklöf with companies Alandia Bolagen The Family Kamprad Foundation Alandsbanken Fondbolag Ab 100% Fennogen Investments A.S. (Family Ehrnrooth) Pensionsförsäkringsaktiebolaget Veritas Approximately 10,000 shareholders in total, mostly from the Åland Islands. Compass Card was merged with Ålandsbanken Abp 1st September 2019 Share of capital Share of votes 21,4% 29,7% 6,8% 11,1% 5,9% 0,7% 4,6% 8,3% 2,5% 2,0% 41,3% 51,8% ALANDSBANKEN#133. Earnings & Capital ÅLANDSBANKEN 100 1919 YEARS 2019 GOING OUR OWN WAY ÀLANDSBANKEN#1414 Long-term financial targets Return on equity after taxes (ROE) shall exceed 10 % • As a bank for investors, with financing know-how, the Bank of Åland has a business model that shall generate most earnings from operations with limited capital requirements. The Bank of Åland's earnings will benefit from higher interest rates The Bank's capital adequacy, primarily defined as the core tier 1 capital ratio under the Basel regulations, shall clearly exceed all regulatory requirements The payout ratio shall eventually amount to 50 % • This payout ratio target is subject to the condition that the capital adequacy target continues to be achieved. At present, the Bank of Åland is prioritising balanced growth ALANDSBANKEN#1515 Q1-Q3 2019 in summary - the best result during the 100 years history • • • Net operating profit EUR 24.1 M (21.3 M Q1-Q3 2018), +13 % Return on Equity after tax (ROE) 10.5 % (9.6 %), +9% Earnings per share EUR 1.23 (1.08), +14 % • The Bank of Åland has signed a cooperation agreement with ICA Bank, Söderberg & Partners and Ikano Bank to create a new joint mortgage company in Sweden • Compass Card merged with Ålandsbanken Abp (1st September 2019) • A new ESG fund: Ålandsbanken Green Bond, granted the Nordic Swan Ecolabel Euro Bond fund best in its' class by Lipper, six years in row Revised future outlook: The Bank of Åland expects its net operating profit in 2019 to be better than or at about the same level as in 2018 ALANDSBANKEN#1616 Bank of Åland "world champion" in sustainability Y eurobest the european awards for creative excellence CANNES LIONS INTERNATIONAL FESTIVAL OF CREATIVITY D&AD Impact GULDNYCKELN RETS INSATS 201 I SUPPORT A CLEAN BALTIC SEA ORROW TOM SUSTAINABLE BRAND INDEX ENGLISH ÖSTERSJÖPROJEKTET ITÄMERIPROJEKTI BALTICSEAPROJECT.ORG MEMBER 543211 GULDÄGGET SVERIGES KOMMUNIKATIONSBYRÅER 2017 FEMTIOSJÄTTE UPPLAGAN D&AD ALANDSBANKEN#1720th September 2019: "Bank of Åland, ICA Bank, Ikano Bank, Söderberg & Partners and Borgo starting mortgage company together in Sweden" Part 1/2 of the press release: The Bank of Åland (Ålandsbanken), ICA Bank (ICA Banken), Ikano Bank, Söderberg & Partners and Borgo have signed an agreement on establishing a joint mortgage platform on the Swedish market. "Launching a new mortgage company together with such strong and well-established business partners as ICA Bank, Söderberg & Partners and Ikano Bank ensures a long-term approach and stability, providing good potential to offer home mortgage loans on favourable terms. This will ultimately benefit us and our partners, but naturally also Swedish mortgage customers," says Peter Wiklöf, Managing Director of the Bank of Åland. The Bank of Åland and its information technology subsidiary Crosskey will supply platform solutions for the new mortgage company, as well as contributing their existing knowledge about mortgage management. "By establishing a new mortgage company, we can compete in the mortgage market in a completely different way and further enlarge our market presence. Doing this together with such stable and strong partners involves a number of advantages that will ultimately benefit our customers. ICA Bank's aim is to offer a smart, simple package solution for everyday finances, and obviously this includes a competitive home loan offering," says Marie Halling, CEO of ICA Bank. The new mortgage company will apply for permits according to the same regulations as other mortgage companies in the Swedish market. Part of its funding will come from covered bonds - which provide access to a proven and liquid funding source that will make the home loans in the platform competitive in the Swedish market. "At Ikano Bank, we see supplying mortgages on customer-friendly terms as a natural part of our offering. With this in place, we will have an opportunity to influence the shape of our mortgage offering, which will benefit our customers and further strengthen our product range. So we are pleased to join the Bank of Åland, ICA Bank, Söderberg & Partners and Borgo now in establishing a strong new mortgage institution in the Swedish market," says Patrik Hankers, Country Manager for Sweden at Ikano Bank. 17 ALANDSBANKEN#1820th September 2019: "Bank of Åland, ICA Bank, Ikano Bank, Söderberg & Partners and Borgo starting mortgage company together in Sweden" Part 2/2 of the press release: Looking ahead, the new mortgage company will offer a complete platform of mortgage products for Swedish consumers, with a focus on a long-term approach, security and quality, as well as a vision of being able to help change the market. "Altogether we are a group of five companies in this collaboration, with partly different backgrounds and business operations, but we all share the entrepreneurial ambition of wanting to make good things even better. Given all of our individual experience, combined with our shared vision, I am convinced that we will be able to establish an attractive alternative in the Swedish mortgage market," says Gustaf Rentzhog, CEO of Söderberg & Partners. The fifth partner in the collaboration is the digital mortgage company Borgo. In conjunction with the creation of the new mortgage platform, the Bank of Åland, ICA Bank, Ikano Bank and Söderberg & Partners are acquiring a majority of the shares in Borgo AB. Borgo's management will have operational responsibility for coordinating and establishing the new mortgage company. "It's a huge pleasure and an acknowledgement for us at Borgo to become part of this project through the transaction, but above all to be entrusted with helping build a new mortgage platform with this unique group of strong owners. With support and resources from them, complemented by our mortgage fund, there will be good potential to create a broad, modern and innovative mortgage platform in the market - something that has always been part of our vision and that will benefit both consumers and investors," says Gustav Berggren, CEO of Borgo. The creation of the new company and the transaction with Borgo are conditional upon completion of the permitting process with the Swedish Financial Supervisory Authority, after which further information about the new company can be communicated. 18 ALANDSBANKEN#1916 Q1-Q3 2019 in summary Operating profit, EUR M +2% 95,4 97,5 +13% 21,3 24,1 -2% +56 % Income Expenses Loan losses -0,9 -1,4 Operating profit -73,2-72,0 Volumes, EUR M -1 % 5 8495 788 +0% +7 % 3 9783 985 3 085 3 288 ■Q1-Q3 2018 Q1-Q3 2019 Actively managed assets Deposits Lending ■Q1-Q3 2018 ■Q1-Q3 2019 ALANDSBANKEN#20Q1-Q3 2019: Higher earnings EUR M 20 20 95,4 0,9 1,4 -1,3 1,5 -0,7 0,1 97,5 9M/18 FX EURSEK Net interest income Net commission income Net income from financial items at fair value IT income Other income 9M/19 ALANDSBANKEN#2121 9M/18 73,2 FX EURSEK EUR M Q1-Q3 2019: Lower expenses 3,0 -08- 2,5 -0,8 0,6 -0,7 -0,5 -0,8 Depreciation/ amortisation Premises and property expenses Stability fee Severance pay IT costs Capitalization of costs Other expenses 9M/19 ALANDSBANKEN 72,0#22Bank of Åland business segments 2017-2019, Operating profit, EUR M 22 22 16,3 14,5 14,6 6,8 5,9 4,2 1,5 2,1 0,5 Private Banking Premium Banking IT ■Q1-Q3 2017 Q1-Q3 2018 Q1-Q3 2019 Others -1,5 -1,5 1,5 ALANDSBANKEN#2323 Business volumes 2017-2019, EUR M 3 139 3 148. 2 953 2 835 2 598 2 638 2 539 3 304 3 288 3 979 4 022 3 985 Discretionary & Advisory Mutual funds Deposits Lending mandates dec. 17 dec. 18 sep.19 ALANDSBANKEN#24Bank of Åland 2017 - 2019 ROE, % 14,0 12,0 10,6 10,1 10,0 88 8,0 7,0 7,0 6,0 4,0 2,0 0,0 24 24 12,3 11,5 11,5 10,3 10,3 7,6 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 ALANDSBANKEN#25• • Commitment to a strong capital ratio Bank of Åland is committed to a strong capital ratio Positive outlook on the rating reflects S&P view that the bank will continue to build up its capital base, improve and diversify its earnings, and uphold a sound approach to risk over the next two years Conservative pay-out policy is to safeguard the capital position The core tier 1 capital ratio for a small bank like Bank of Åland is not comparable to larger banks with IRB methods. Standard & Poor's rating method considers Bank of Åland well capitalized, giving a rating uplift of one notch 18,0 16,0 15,2 15,4 15,6 14,2 14,0 12,9 13,0 2,4 2,3 12,1 1,3 4,4 0.9 1,2 12,0 1,2 10,0 8,0 6,0 12,0 10,8 10,9 11,8 12,9 13,0 13,3 4,0 2,0 0,0 2013 2014 2015 2016 2017 2018 Q3 2019 T2 ■ CET1 25 25 2014: revised Basel-regulation ALANDSBANKEN#2610 8 As of June 30, 2018 (left scale) 6 4 2 ▾ NO (2) 2° Q2 2018 vs Q4 2017, negative change (right (4) scale) (6) Q2 2018 vs Q4 (8) 2017, positive (10) 25 20 • S&P view of the total capital base According to S&P the capital position of Bank of Aland is strong Quality of capital is high • Structure of the balance sheet is of low risk Pay out policy is conservative Nordic Banks--RAC Ratios Before Diversification June 30, 2018 Versus Dec. 31, 2017 39 15 ° 10 เก 5 Islandsbanki Eiendomskreditt Storebrand Bank Arion Bank Sparbanken Sjuharad Landsbankinn Landshypotek Bank Sparbanken Skane tral Bank of Savings Banks Film weg Aktia Bank Danmarks Skibskredit The Mortgage Society of Finland Oma Savings Bank Swedish Export Credit OP Corporate Bank Lansforsakringar Bank Bank of Aland DNB Bank DR Kredit Nykredit Realkredit Nordea Bank SBAB Bank Swedbank Danske Bank Jyske Bank Skandinaviska Enskilda Banken Svenska Handelsbanken *RAC based on financials of a wider group. RAC--Risk-adjusted capital. Source: S&P Global Ratings. Copyright © 2019 by Standard & Poor's Financial Services LLC. All rights reserved. Source: Nordic Banks' Strong Capital Will Cushion Them From The Challenges Ahead, March 28, 2019 26 26 change (right scale) ÀLANDSBANKEN#2727 2 Capital structures in Nordic banks September 30, 2019 % 100 90 15 11 11 11 13 22 80 12 10 10 10 70 60 50 40 85 78 76 78 79 77 10 320. Aktia Ålandsbanken Swedbank SEB Handelsbanken ■T2 AT1 ■T1 Nordea ÀLANDSBANKEN#284. Asset Quality ÅLANDSBANKEN 100 1919 YEARS 2019 GOING OUR OWN WAY ÀLANDSBANKEN#29• • • Lending strategy • Bank of Åland is a relationship bank with primary focus on customers with investment needs in the Private Banking and Premium Banking segments. Serving the core customers' credit needs are part of our commitment Bank of Åland is not granting credits as a standalone product to mass market clients or corporate clients Every business area (Åland Islands, Finland and Sweden) should have a balanced growth in lending versus deposits At least half of the lending in every business area should be residential mortgages or have residential property as collateral Many small loans are preferred to few large loans 29 29 ALANDSBANKEN#30M EUR 4500 4000 3500 3000 2500 2000 1500 1000 500 • Balanced growth in the credit portfolio Total lending to the public was EUR 3,985 M September 30, 2019, unchanged from a year ago • • Selective lending to high quality borrowers Asset quality prioritised over lending volume growth and higher returns • Lending must always be made in consideration of safeguarding Bank of Åland's strong brand and market reputation Loan loss level 0.05 % in Q1-Q3 2019 Public and non-profit sector ■Companies Private individuals M EUR 1400 1200 1000 800 600 400 200 0 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9M G 2019 30 30 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9M 2019 Other industry and crafts Construction Agriculture, forestry and fishing Other service operations Hotel and restaurant operations Financial and insurance operations Other real estate operations ■Housing operations Wholesale and retail trade ■Shipping ALANDSBANKEN#3131 • Lending 2014 - 2019 Lending to private individuals has increased from 65% of the credit portfolio in 2014 to 73 % in Q3 2019 72 % 73 % 73 % 70 % 68 % 65 % 35 % 33 % 30% 28 % 27 % 27% 2014 2015 2016 2017 2018 Q3 2019 private individuals companies ALANDSBANKEN#32Geographical distribution of mortgage lending • Clear concentration to the wealthiest parts of Finland and Sweden As of September 30, 2019 approximately • 70% of the loan portfolio in Finland • 30% of the loan portfolio in Sweden • According to the business plan growth in the coming years will be mainly in Sweden 32 32 Gothenburg 12% Vaasa 3 % Stockholm 70% Tampere 12% Malmö 12 % Åland Islands 20 % Turku 15% Helsinki 46 % ALANDSBANKEN#3333 33 EUR M Stage 3 credits 2017-2019 40 30 0,70 0.60 20 0,57 20 0,42 0,46 10 0 1,0 0,93 0,8 0,69 0,57 0,6 º 0,49 0,5 0,52 0,4 0,2 0,0 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Stage 3 credits Share of Stage 3 credits of total lending Data for Q1 2017 - Q3 2017: loans in arrears > 90 days ALANDSBANKEN#345. Liquidity and Funding ÅLANDSBANKEN 100 1919 YEARS 2019 GOING OUR OWN WAY ÀLANDSBANKEN#3535 55 • Group funding profile September 30, 2019 Demand deposits, time deposits and certificates of deposits from core private customers and their companies are the main funding sources • Strong capitalization • Covered Bonds are the main long term funding instrument 2%9 1% 5 % 2% 7% 22% Deposits Covered Bonds Senior unsecured TLTRO II Short term banks Subordinated Own capital 61 % ÀLANDSBANKEN#3636 36 • • Funding strategy • Covered Bond programme was created in early 2012 in order to diversify funding sources and to form a reliable and cost efficient funding channel EUR- and SEK- denominated Covered Bonds total amount outstanding EUR 1 203 M as of September 30, 2019 Bank of Åland issues also senior unsecured to maintain a balanced funding mix • Themes 2019-2020 • • Demand conditions and the market situation favour issuance in Covered Bonds • The balanced funding mix is maintained Bank of Åland didn't get MREL requirements. There are no foreseen authority or regulatory requirements which would have effect on the funding of the bank ALANDSBANKEN#37Long term funding September 30, 2019 Cover Pool FIN ISIN Nominal Amt Settlement date Maturity date Coupon Currency EUR eq amt Time to maturity XS1238023813 250 000 000 26.5.2015 26.5.2020 0,375 EUR 250 000 000 0,65 XS0876678391 100 000 000 30.1.2013 30.1.2023 2,75 EUR 100 000 000 3,34 XS1496878742 250 000 000 29.9.2016 29.9.2023 0 EUR 250 000 000 4,00 F14000375241 300 000 000 19.3.2019 19.3.2024 0,125 EUR 300 000 000 4,47 Cover Pool SWE 900 000 000 3,15 ISIN Nominal Amt Settlement date Maturity date Coupon Currency EUR eq amt Time to maturity XS1155041004 SE0010598474 750 000 000 2 500 000 000 16.12.2014 22.11.2017 16.12.2019 22.11.2022 QUARTLY STIB + 50,0 QUARTLY STIB +53,0 SEK SEK 70 120 982 233 736 607 0,21 3,15 Senior unsecured ISIN XS1585198879 F14000348966 37 37 3 250 000 000 303 857 589 2,47 Nominal Amt 100 000 000 250 000 000 Settlement date Maturity date 24.3.2017 13.9.2018 24.3.2020 13.9.2021 Coupon QUARTLY EUR + 63,0 Currency EUR eq amt Time to maturity EUR 100 000 000 0,48 0,5 EUR 250 000 000 1,96 350 000 000 1,54 ALANDSBANKEN#3838 88 • . Liquidity management Well-diversified maturity profile Limited exposure to short term funding Bank of Åland is committed to continuously cover the next 180-day liquidity need in the cover pools for the Covered Bonds program M EUR 400 350 300 250 200 150 100 50 Maturing long funding Q4 2019 2020 2021 2022 2023 2024 Covered bonds Senior unsecured ALANDSBANKEN#3939 • Liquidity position Very high quality in liquidity reserves • The most liquid and tradable assets LCR target reached • Coordinated cash pools between Finland • and Sweden Conservative approach to market risk within liquidity reserves . Assets with short duration . Well diversified counterparty risk profile LCR 163 % as of 30 September, 2019 NSFR 117 % as of 30 September, 2019 Composition of the liquidity reserve Cash and central banks Bonds issued by governments and official institutions Bonds issued by financial institutions Covered bonds Deposits 30.9.2019 30.9.2019 31.12.2018 31.12.2018 EUR M of total EUR M of total 380 32 % 507 42% 135 11 % 158 13% 91 8% 24 2% 587 49 % 471 39 % 34 3 % 36 3% 1227 100 % 1195 100 % ÀLANDSBANKEN#406. Contact Details ÅLANDSBANKEN 100 1919 YEARS 2019 GOING OUR OWN WAY ÀLANDSBANKEN#4141 Contact Details Peter Wiklöf, CEO [email protected] +358 40 512 7505 Jan-Gunnar Eurell, CFO [email protected] +46 70 589 1209 Maria Rissanen, Head of Group Treasury [email protected] +358 50 538 8898 ALANDSBANKEN#427. Appendix ÅLANDSBANKEN 100 1919 YEARS 2019 GOING OUR OWN WAY ÀLANDSBANKEN#43Key figures - Bank of Åland Q1-Q3 2019 2018 2017 2016 2015 2014 Return on equity (ROE), % 10,5 9,8 9,1 9,1 12,0 8,7 Cost/income ratio, % 74 77 78 76 73 80 Loan loss level, % 0,05 0,02 0,06 0,11 0,09 0,06 Core funding ratio, % 88 90 88 89 100 105 Equity/assets ratio, % 4,4 4,4 4,4 4,3 4,6 4,6 Core Tier 1 capital ratio, % 13,3 13,0 12,9 11,8 12,0 10,9 Total capital ratio, % 15,6 15,4 14,2 13,0 12,9 12,1 Earnings per share, EUR 1,23 1,48 1,35 1,29 1,60 1,12 Equity per share, EUR 15,83 15,58 15,02 14,37 13,99 13,46 Lending to the public, EUR M Deposits from public, EUR M Shareholders'equity, EUR M Risk-weighted assets, EUR M FTE 43 3 985 4 022 3 979 3 808 3 617 3 343 3 288 3 304 3 148 3 100 2 675 2 391 247 242 234 222 213 196 1 571 1 578 1 538 1 576 1 581 1 554 713 691 691 685 663 644 ALANDSBANKEN#4444 Income statement Group EUR M Q3 Q2 2019 % Q3 2018 Note 2019 % Jan-Sep 2019 Jan-Sep 2018 % Net interest income 9 13.3 13.4 Net commission income 7 13.8 13.8 0 0 13-3 12.7 69 39.9 41.2 3 41.7 40.4 3 Net income from financial items at fair value 8 1.6 0.8 -0.1 2.8 1.3 IT income 4.0 4.1 -2 3.8 5 12.6 12.0 9 Other operating income 0.1 0.2 33 0.2 -41 0.5 0.6 -18 Total income 32.9 32.3 2 30.0 10 97-5 95-4 2 Staff costs Other expenses Depreciation/amortisation Total expenses Profit before impairment losses -13.4 -14-5 -8 9 -6.3 -6.0 85 -13.2 1 -42.4 -42.8 -1 -7.0 -10 -21.1 24.9 -15 -2.9 -2.8 1 -1.8 57 -8.5 -5.5 55 -22.5 -23.4 -4 -22.1 2 -72.0 -73.2 -2 10.4 8.9 16 7.9 31 25.5 22.2 15 Impairment losses on financial assets, net 10 -0.8 -0.2 -0.3 -1.4 -0.9 56 Net operating profit 9.5 8.7 9 7.7 24 24.1 21.3 13 Income taxes -1.9 -1.8 Profit for the period 7.6 6.9 99 -1.6 22 -5.0 -4.5 9 6.1 25 19.1 16.7 14 Attributable to: Non-controlling interests 0.0 0.0 0.0 13 O.O 0.0 -78 Shareholders in Bank of Åland Plc 7.6 6.9 9 6.1 25 19.1 16.7 14 Earnings per share, EUR 0.49 0.45 9 0.39 24 1.23 1.08 14 Earnings per share after dilution, EUR 0.49 0.45 10 0.39 25 1.23 1.08 14 Earnings per share, EUR, moving 12-month average to end of report period 1.63 1.54 6 1.42 15 ALANDSBANKEN#45Issuer Cover Pool FIN 1/2 Issuer: Owner: Controlling authority: Long Rating Covered bond Owner Issuer Ålandsbanken Abp Finnish Financial Supervisory Authority S&P Moody's AAA BBB BBB Cover pool FIN Included assets, MEUR Loans Substitute assets Other Total 1 200 126 0 1 326 Type of collateral Single-family housing & flats Multi-family housing Sum Loan volume, MEUR 1197 3 1200 Loan volume, Interest rate type MEUR Floating Fixed 1 161 39 Sum 1 200 Weighted average life, years LTV Level, Mortgage assets Loan volume, MEUR Loan volume, % 45 17,4 ALANDSBANKEN CRR-compliant Fitch Report date Yes 30-09-2019 Cover pool items Number of loans Number of clients Average loan size, TEUR 14 123 8 795 87 Loan MEUR Loan volume, % 550 46 % 141 12% 188 16 % 233 19 % 88 7% 1 200 100 % Loan volume, % 99,8 % 0,3 % 100 % Regional distribution Helsinki region, Southern Finland Tampere region, Pirkanmaa Turku region, Western Finland Aland Islands Other Sum volume, Loan volume, % 97 % 3% 100 % Repayments Amortizing Interest only Sum 0-10% 10-20% 20-30% 30-40% 40-50% 50-60% 13 1% 35 3% 72 6% 122 10 % 188 16% 256 21 % 60-70% 514 43% Loan volume, MEUR Loan volume, % 973 81% 227 19% 1 200 100 % 70+ % 0 0% Sum 1200 100 % ALANDSBANKEN#46Cover Pool FIN 2/2 Seasoning Loan volume, MEUR Loan volume, % 0-1 Y 143 1-2Y 147 2-3 Y 3-5 Y 151 12% 12 % 13% 300 25 % Credit quality Past due 31-60 D 61-90 D 90+ D Sum Loan volume, MEUR 0,8 Share of loan volume, % 0,0 0,0 0,0 0 0,0 1 0% Impaired loans, % 0,000% Key ratios OC, nominal WALTV FX-risk** 47,3 % 55,4 % **All issuance of covered bonds in foreign currency is swapped to entirely eliminate FX- risk. Bonds Outstanding issues in EUR 5+ Y 459 38 % Sum 1 200 100 % Remaining average maturity, years Assets 6,8 Liabilities 3,1 ISIN X51238023813 X50876678391 XS1496878742 F14000375241 Amount, MEUR Settlement date 250 26-05-2015 Maturity 26-05-2020 Coupon 100 30-01-2013 250 300 29-09-2016 19-03-2019 30-01-2023 29-09-2023 19-03-2024 0,375 2,75 Fixed Fixed 0,00 Fixed 0,125 Fixed Fixed/ Floating Outstanding issues in SEK ISIN Amount, MSEK Opening date Maturity Coupon Fixed/ Floating Other bonds Total of outstanding bonds of which repos Maturity, expressed in MEUR Total Total, % Interest rate type Fixed Floating Sum 46 46 Amount,MEUR 0 900 0 0-1 Y 250 28 % 1-2Y 2-3Y 0 0 3-4Y 350 0 % 0% 39 % 4-5Y 300 33 % 5-10 Y 0 0 % Amount, MEUR 900 0 900 Amount, % 100 % 0% 100% 10+ Y Sum 0 900 0% 100% ALANDSBANKEN#4747 Cover Pool SWE 1/2 Issuer Issuer: Owner: Controlling authority: Long Rating Covered bond Owner Issuer Cover pool SWE Included assets, MSEK Loans Substitute assets Other Total Type of collateral Single-family housing & flats Multi-family housing Sum Ålandsbanken Abp Finnish Financial Supervisory Authority S&P Moody's AAA BBB BBB 5 216 0 10 5 216 Loan volume, MSEK 5 216 0 5216 Loan volume, % 100,0 % 0,0 % 100% Loan volume, Interest rate type Floating MSEK 4688 Loan volume, % 88,9 % Fixed 528 Sum 5 216 11,1 % 100 % Weighted average life, years LTV Level, Mortgage assets Loan volume, MSEK Loan volume, % ÀLANDSBANKEN CRR-compliant Yes Fitch Report date 35,7 0-10% 10-20% 20-30% 16 99 206 0% 2 % 4% 30-09-2019 Cover pool items Number of loans Number of clients Average loan size, TSEK 2 100 1355 2 508 Loan volume, Regional distribution Stockholms län MSEK Loan volume, % 3 798 72,8 % Skåne län 533 10,2% Västra Götalands län 601 11,5 % Other 284 5,4% Sum 5216 100 % Repayments Amortizing Interest only Sum Loan volume, MSEK Loan volume, % 1807 26,1% 3 409 5 216 73,9 % 100 % 30-40% 440 8% 40-50% 50-60% 1011 1 034 19 % 20% 60-70% 2410 46 % 70+% Sum 0 5 216 0% 100% ÀLANDSBANKEN#4848 Cover Pool SWE 2/2 Seasoning Loan volume, MSEK 0-1 Y 264 1-2 Y 2-3 Y 3-5 Y 5+ Y Sum 931 1 312 1 882 827 5 216 15% 25 % 21 % 33% 6% 100 % Loan volume, % Credit quality Past due 31-60 D Loan volume, MSEK 2,5 61-90 D 0,0 90+ D Sum 0 3 Share of loan volume, % 0,00 % 0,00 % 0,00% 0% Impaired loans, % 0,000% Key ratios OC, nominal WALTV FX-risk** 60,5 % 56,7 % risk. 0 **All issuance of covered bonds in foreign currency is swapped to entirely eliminate FX- Bonds Outstanding issues in SEK ISIN XS1155041004 SE0010598474 Sum Fixed/ Amount, MSEK Settlement date 750 2 500 16-12-2014 22-11-2017 Maturity 16-12-2019 22-11-2022 Coupon Floating 0,472 0,733 Floating Floating 3 250 Remaining average maturity, years Assets 21,3 Liabilities 2,4 Maturity, expressed in MSEK Total Total,% 0-1 Y 750 23 % 1-2 Y 0 0% 2-3 Y 3-4 Y 0 2 500 0% 77% 4-5 Y 0 0% 5-10 Y 0 10+ Y Sum 0 3250 0% 0% 100 % Interest rate type Amount, MSEK Amount, % Fixed 0 0% Floating 3 250 100% Sum 3. 250 100% ALANDSBANKEN#49Thank you! ÅLANDSBANKEN 100 1919 YEARS 2019 GOING OUR OWN WAY ALANDSBANKEN#50Disclaimer • · • • The presentation was prepared by Bank of Åland Ltd for use in investor relations. This presentation is not intended for retail customers. This presentation has been prepared on the basis of publicly available information which Bank of Åland considers to be reliable. This presentation may contain forward-looking statements, which are subject to risks, uncertainties, and assumptions. This presentation is being presented solely for your information and is subject to change without notice. No representation or warranty, expressed or implied, is made and no reliance should be placed on the accuracy, actuality, fairness, or completeness of the information presented. ⚫ This presentation does not constitute an offer or invitation to purchase or subscribe for any shares or debt instruments of the Company, and no part of this presentation shall form the basis of or be relied upon in connection with any contract or commitment. • The contents of this presentation may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or in part, for any purpose. 50 50 ALANDSBANKEN