#1ÀLANDSBANKEN Bank of Åland Investor Presentation May 2023 Going our own way#2Table of Contents 1. Bank of Åland in Brief 2. Strategy and Market Position 3. Sustainability 4. Performance and Capital 5. Asset Quality 6. Liquidity and Funding 7. Appendix 3 7 13 20 27 29 32 2 ÀLANDSBANKEN Going our own way#31. Bank of Åland in Brief ALANDS KEN#44 Bank of Åland in Brief Bank of Åland Plc • • • Established in 1919 on the Åland Islands, listed since 1942 on NASDAQ OMX Helsinki A Finnish bank targeting high net worth and affluent individuals Operations on the Åland Islands, Finnish mainland and Sweden Top-ranked in customer loyalty A long-standing tradition of stability and very low credit losses BBB+ rating with a stable outlook from S&P The Vision Covered Bonds • . • • Create value for ambitious individuals and companies that appreciate relations: Private Banking since 1982 IT services by Crosskey Banking Solutions since 2004 Premium Banking since 2004 Partnership Banking since 2016 Delivering a large bank's range of services with a small bank's thoughtfulness and good sense Bank's customer surveys show that customers continue to appreciate Bank's expertise, personalized service, high ethical standards and sustainability work The Bank of Åland has been active in the covered bond market since 2012 Two Cover Pools: CBA Cover Asset Pool which was established in November 2022 and MCBA Cover Asset Pool established in September 2012. Covered Bonds issued prior to 8 July 2022 or associated Tap Issues after 8 July 2022 are secured by the MCBA Cover Asset Pool. Both pools consist of 100 % Finnish and the Åland Islands' residential mortgages Clear concentration to the growth centres and the wealthiest parts of Finland Published commitment to a strong over-collateralization and six months liquidity AAA (stable) rating from S&P on MCBA Cover Asset Pool and AAA (stable) rating from S&P on CBA Cover Asset Pool ÅLANDSBANKEN Going our own way#55 Financial Scorecard March 31, 2023 CET1 Capital Ratio 12.4 % Loan Loss Level • 0.03 % • • • • • • Capital Strong capital position IRB approach used in Finland, standardised approach used in Sweden On March 29, 2023, the Annual General Meeting (AGM) approved the distribution of a dividend of EUR 2.05 per share for the financial year 2022 (a regular dividend of EUR 1.60 plus an extra dividend of EUR 0.45) Capital requirements applicable are CET1 capital ratio 8.1%, Tier 1 capital ratio 9.8 % and Total capital ratio 12.0 % Bank of Åland has an ample capital surplus: CET1 capital ratio +4.3 pp, Tier 1 capital ratio +4.2 pp and Total capital ratio +4.5 pp Risk Management Long history of low loan loss levels. Loan loss level of 0.03 % in Q1 2023 (0.16 % in Q1 2022) 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 Loan/deposit ratio of 114 % Liquidity reserve at 19 % of total assets LCR at 156 % NSFR at 109 % BBB+ bank rating with stable outlook from S&P AAA rating with stable outlook on MCBA Covered Bonds from S&P AAA rating with stable outlook on CBA Covered Bonds from S&P Profitability Year started with strong earnings, and doubled net operating profit compared to first quarter of last year (if proceeds from divestment of mortgage loan portfolio is excluded) Net operating profit of EUR 8.2 M in Q1 2023 (EUR 13.9 M in Q1 2022) ROE 8.9 % in Q1 2023 (15.0 % in Q1 2022) Future Outlook: The Bank of Åland expects its net operating profit in 2023 to be significantly better than in 2022 AAA Rating with Stable Outlook on Covered Bonds from S&P Return on Equity 8.9% ÀLANDSBANKEN Going our own way#66 Stable Outlook on BBB+ Issuer Credit Rating by Standard & Poor's Issuer Credit Rating Stand-alone credit profile Anchor Business operations in economically robust regions in Finland and Sweden Business position Despite some geographic and business diversification, concentrated focus on retail and private banking increases vulnerability to cyclical swings Capital and earnings Strong risk-adjusted capitalization, earnings growth and low credit losses Geographic and business focus create some concentration risk Risk position • Funding Funding position supported by stable customer deposits Liquidity Comparable ratings analysis Support Additional loss-absorbing capacity support Government-related entity support Group support Sovereign support Additional factors Source: S&P Global Ratings Research Update Jan 13, 2023 ÅLANDSBANKEN BBB+/Stable/A-2 BBB+ On July 13, 2022, S&P Global Ratings raised its long-term issuer credit rating on Bank of Åland to BBB+ from BBB A- Constrained -2 Very Strong +2 Moderate -1 Adequate 0 Adequate 0 The rationale behind the upgrade was forecasted strengthened capitalization, expectations of a significant improvement of the RAC ratio to 16 % by 2024, improved return on average common equity just below 15 % over 2022-2024 and a steady earnings generation supporting capital build-up In S&P Global Ratings' latest research update on January 13, 2023, the outlook remained stable and reflects Standard & Poor's expectations that the Bank will maintain a sound financial profile and continue to make progress in building its capital base through earnings "Bank of Åland's retail private banking services will be the primary revenue driver, complemented by fees from asset management operations, and Crosskey" "We project Bank of Åland's risk-adjusted capital (RAC) to be 15-16 % over the next two to three years following the carve-out of the Swedish mortgage portfolio to Borgo" "We expect core customer deposits to be the primary funding source for the bank" Going our own way#77 2. Strategy and Market Position ALANDSBANKEN#88 Three Markets - Two Strategies Vaasa The Åland Islands Finland · 2 offices, market share > 50 % Full product range offered The Bank for everyone Sweden • 6 offices in affluent parts of Finland, market share > 1% Tampere Turku Parainen Stockholm • • Full product range offered but "bread and butter" services only as a complement to Private Banking and Premium Banking service offerings Targeted segment: High Net Worth/ Affluent Individuals and their companies Åland Islands • 3 offices in Sweden's largest cities, market share < 1% Full product range offered but "bread and butter" services only as a complement to Private Banking and Premium Banking service offerings Targeted segment: High Net Worth/ Affluent Individuals and their companies Gothenburg Malmö Oulu Helsinki#9Bank of Åland History of Strategic Decisions 6 From a local bank... Supporting the development of the Åland Islands - a poor fishing and agrarian community 1919 1942 2004 2019 2016 2009 Extended 1994 Fintech partnerships Expansion Dreams to Sweden IT company Expansion Crosskey Ab Ltd to Finnish mainland New Swedish mortgage bank Borgo with partners Listing Foundation ÅLANDSBANKEN ...to a Nordic banking group With a wide product range and personal service targeting High Net Worth Individuals Going our own way#1010 - Åland Index Global Market Leader in Spend Based Calculations Doconomy Geographic reach ensures a global standard Introduction to Doconomy Private & Confidential 12.01.2023 68 clients 22 markets Client reach: 850+ million consumers Selected Clients CRÉDIT AGRICOLE Findomestic Klarna. standard chartered exko COMMERCIAL BANK BANKWEST BNP PARIBAS YBOX GANKAG prožimus OLB Oldenburgische BANK Landesbank Banco Montepio 6 永豐銀行 HEAL WORLD Bank Sino Pac BKN301 (QUICKO treezor BANCA DI ASTI Nordea mediolanum CTBC BANK LichtBlick algbra * kapital BGZ BNP PARIBAS BANK 王道銀行 OCS CO ORESEEVIDORES COOPеUCH BCR CREDIT SAISON Fubon Bank GRANIT BANK nexI VISECA A DigitálisBank ALANDSBANKEN Railsbank DERFUL BANK OF AMERICA C PAYNETICS mdp bank Fidis | 新光銀行 新光金控 Shin Kong Bank Capital One REI Banca Popolare Verestro di Sondrio Coop credit europe TRANSACT PRO CASSA DI RISPARMIO ŠIAULIŲ BANKAS Banca San Marin Banco Desio Copyright 2022 Doconomy AB. All rights reserved. ÅLANDSBANKEN Going our own way#1111 Other Strategic Fintech Partners BORGO IN BRIEF STRONG DISTRIBUTION NETWORKS JOINING FORCES Fully operational company Scalable platform Ot Technology Dreams Products Solutions Expertise Distribution with track-record ICA Banken ΙΚΑΝΟ BANK SBAB historical mortgage provider and discontinued given capital constraints at the state-owned bank Söderberg & Partners Short term both Skandia and Bluestep Bank act as mortgage providers, but not perceived as sustainable long term ÅLANDSBANKEN Has been offering own mortgages in the Swedish market since 2009, expected to benefit from the ability scale up in the partnership, funding wise and operationally Sparbanken Syd Full-service bank, established in 1827, with existing distribution through SBAB and own balance sheet Seasoned management team and organisation With a vision to transform the mortgage market by creating a new financial institution, combining modern technology with responsible lending principles managing cost of funding, efficient capital structure, credit and liquidity risk Financially strong partners, investors and experienced board of directors Supporting the company financially and through industrial experience with a long-term perspective Modern platform with high degree of automation Allowing Borgo to build economies of scale and distributors to focus on sales, customer relationships and service Partnerships with distributors and service providers Proven IT-systems, payment services, credit administration processes and treasury support - at variable cost based on mortgage volume Engagement banking powered by behavioural science Make banking emotional to drive engagement and revenue in your digital applications Proven historical distribution capacity Pure-play mortgage company with distribution, access to capital market funding and organisation in place Legacy-free and scalable platform with benefits from outsourced back-and front-end Borgo ÅLANDSBANKEN Going our own way#1212 Bank of Åland Group Legal and Ownership Structures 10 Largest Shareholders as of March 31, 2023 Wiklöf Anders with companies Share of capital Share of votes 21.8% 29.8% 6.0 % 0.7% Ålandsbanken Abp (Bank of Åland Plc) The Family Kamprad Foundation Alandia Försäkring Abp 5.3 % 11.0% Fennogens Investment S.A. (Family Ehrnrooth) Crosskey Banking 5.1 % 9.0 % Solutions Ab Ltd 100 % Ålandsbanken Fondbolag Ab 100% Pensionsförsäkringsaktiebolaget Veritas 2.6% 2.0% Chilla Capital 1.8% 4.0% Lundqvist Ben Hugo S-Crosskey Ab 60% Ålandsbanken Fonder II Ab 1.7 % 3.7 % 100% Oy Etra Invest Oy 1.5 % 0.2% Svenska Litteratursällskapet i Finland r.f. 1.4 % 3.0 % Nordea Henkivakuutus Suomi Oy 1.2 % 0.1% Ålandsbanken Fonder Ab 100% Ålandsbanken Fonder III Ab 100 % Ålandsbanken Fonder IV Ab 100 % Ålandsbanken Fonder V Ab 100% Ålandsbanken Fonder VI Ab 100% Ålandsbanken Kiinteistökehitys I GP Oy 100% Ålandsbanken Kiinteistökehitys | Syöttörahasto GP Oy 100% Ålandsbanken Kiinteistökehitys I Syöttörahasto LP Oy 100% Ålandsbanken Havsvind I GP Ab 100 % Approximately 13,200 shareholders in total, half of them from the Åland Islands ÅLANDSBANKEN Going our own way#1313 3. Sustainability LANDSBANK#14Bank of Åland's Sustainability Journey 1919 ÀLANDSBANKEN The Bank established on strong values as a responsible actor 1997 The Bank unveils the world's first Environmental Account 2016 I SUPPORT A CLEAN BALTIC SEA ORROW TOM OSTERSJÖPROJEKTET ITAMERIPROJEKTI BALTICSEAPROJECT.ORG MEMBER 543211 The Baltic Sea Card, Baltic Sea Account and the Åland Index are launched. Every year, the Bank donates an amount equivalent to up to 0.2 per cent of deposits in Baltic Sea Accounts for environmental work 2019 UNEP PRINCIPLES FOR FINANCE RESPONSIBLE INITIATIVE BANKING PRI Principles for Responsible Investment The Bank of Åland signs the UN Principles for Responsible Banking and the Principles for Responsible Investment 2020 The Bank of Åland launches the Nordic Region's first investment fund specializing exclusively in wind power 2021 Industry-led, UN-convened Net-Zero Banking Alliance The Bank of Åland joins the UN Net-Zero Banking Alliance as a founding signatory The Bank of Åland launches the Baltic Sea Project The Bank of Åland conducts materiality analysis based on UN SDGs SUSTAINABLE DEVELOPMENT GOALS 1 ÖSTERSJÖPROJEKTET BALTICSEAPROJECT ITÄMERIPROJEKTI À 2015 13 14 2 3 4 5 Q 10 UN 11 12 Q SUSTAINABLE DEVELOPMENT GOALS 2017 Åland Index Solutions joint venture started with Doconomy Åland Index Solutions 2018 Ålandsbanken Green Bond ESG fund is the first Finnish bond fund to be granted the Nordic Swan Ecolabel SVANENMARKET Ålandsbanken Global Equity fund was granted the Nordic Swan Ecolabel for its sustainable investment strategy SVANENMARKET The Bank of Åland establishes its first climate targets according to the Paris Agreement and decides to become climate- neutral in keeping with Finland's climate policy decision 2019 2020 2021 The Bank of Åland has started the process of setting its own science-based target SCIENCE BASED TARGETS DRIVING AMBITIOUS CORPORATE CLIMATE ACTION 2022 14 15 16 PEACE 17 ANETRONS ÀLANDSBANKEN Going our own way#1515 Sustainability Strategy Our Four Areas of Sustainability Responsible Investments Our ambition is to obtain a basic knowledge of the operations of the companies we invest in and, above all, to thoroughly examine the sustainability of these business operations Responsible Lending Our main task shall be to finance housing for private individuals and to support our customers' savings and investment activities Social Responsibility We work actively with social sustainability, which is about inclusion, equal worth, sound values and a deep involvement in the community as a company Environmental Responsibility Our ambition is to raise awareness of our carbon dioxide emissions and to continuously reduce them ALANDSBANKEN Going our own way#16Climate Targets In 2021 we established the Group's climate targets, which support the Paris Agreement: 2035 KLIMATNEUTRALT Reducing CO₂e emissions Reducing CO₂e emissions by 50 per cent no later than 2030, compared to 2021 Climate-neutral by 2035 The Bank of Åland shall be a climate-neutral organisation no later than 2035 Net-Zero Emissions by 2050 The Bank of Åland shall achieve net-zero emissions by 2050 10 16 ÀLANDSBANKEN Going our own way#17Our Global Commitments UNPRI (The UN Principles for Responsible Investment) 2010 UNEP FI (The UN Principles for Responsible Banking) 2019 NZBA (Net Zero Banking Alliance) 2021 (Founding signatory, 1 out of 42 banks, UN initiative) Climate Action 100+ 2018 17 ÀLANDSBANKEN Signatory of: PRI Principles for Responsible Investment NZBA (Net Zero Banking Alliance) 2021. UNEP PRINCIPLES FOR FINANCE RESPONSIBLE INITIATIVE BANKING Climate Action 100+ Going our own way#18Our Focus on the 17 UN Global Sustainable Development Goals 6 CLEAN WATER AND SANITATION 7 AFFORDABLE AND CLEAN ENERGY In 2022 we focused on 7 of the UN's 17 Global Sustainable Development Goals: Goal 6: Clean water and sanitation Goal 7: Affordable and clean energy Goal 8: Decent work and economic growth Goal 12: Responsible consumption and production Goal 13: Climate action Goal 14: Life below water 12 RESPONSIBLE CONSUMPTION AND PRODUCTION GO Goal 15: Life on land 18 ÀLANDSBANKEN 15 LIFE 8 13 CLIMATE ACTION 14 DECENT WORK AND ECONOMIC GROWTH M LIFE BELOW WATER ON LAND SUSTAINABLE DEVELOPMENT GOALS Going our own way#1919 To date we have supported environmental work with 3 800 000 € Some of the funding recipients through the Baltic Sea Project: Luonto- Liitto WWF HALL PIDA SAARIS SUSTINA ARGARDEN CLEWAT SAVING THE SEAS REN unicef → JURMISEN SÄÄTIO AN NHOL P2X solutions SYKE Naturoch Miljö BSAG Baltic Sea Action Group ÖSTERSJOPROJEKTET BALTICSEAPROJECT ITAMERIPROJEKTI A SNYGG Beach SIISTI BITS#2020 4. Performance and Capital ÅLANDSBANKEN#2121 Long-Term Financial Targets Profitability Return on equity after taxes (ROE) shall exceed 15 per cent over time Capitalization The Common Equity Tier 1 capital ratio shall exceed the FIN-FSA's minimum requirement by 1.75-3.0 percentage points. Payout ratio The payout ratio shall be 60 per cent of shareholders' interest in profit or higher, provided that capital adequacy does not fall below the target ÅLANDSBANKEN Going our own way#22Q1 2023 in Summary • The first quarter was dominated by geopolitical and inflation-related concerns as well as banking sector turmoil, with significant volatility in global capital markets The Bank of Åland has no direct exposure to Ukraine, Belarus or Russia. The direct impact of the war on the Bank's credit risk is thus limited. However, the Bank of Åland is affected by the changing macroeconomic conditions. The Bank has substantial positive net interest income sensitivity to rising short-term market interest rates • The Bank of Åland still sees a continued inflow of new managed assets to financial investment services and have begun to prepare for an additional divestment of mortgage loans in Sweden to Borgo. According to plans, this divestment will occur after the summer and will involve a mortgage loan portfolio totalling SEK 5-6 billion In February, the Bank of Åland issued a new T2 (supplementary capital) instrument totalling SEK 200 M. In March, the Bank issued a new covered bond totalling EUR 250 M with a 3-year maturity The Bank of Åland issued 22,057 Series B shares to fulfil its commitments as part of the share savings programme for employees. In addition, 6,974 Series B shares were issued to fulfil the Bank's commitments as part of its employee incentive programme Volumes, EUR M +16% -2% 9 082 8 895 7 808 Actively managed assets Q1 2021 Q1 2022 3 529 Q1 2023 +20% 4 238 -10% 3 808 4 419 -11% 3 936 +10% 4 337 +47 % 1 639 1 114 0 Deposits Lending Managed mortgage loans Net operating profit, EUR M +10% -0% 41.4 41.3, 45.3 Q1 2021 Q1 2022 Q1 2023 +3% +16% 35.5 36.7 30.5 22 ÅLANDSBANKEN +100% -62% 10.9 8.2 9.8 4.1 1.7 0.1 0.3 Income Expenses Loan losses Net operating profit Divestment gain Going our own way#23Q1 Results ROE %, 2021-2023 Results Net operating profit EUR 8.2 M (EUR 13.9 M in Q1 2022), -41% Excluding a divestment gain the previous year, net operating profit increased to EUR 8.2 M (EUR 4.1 M in Q1 2022), +100 % • ROE Q1, 8.9 % (15.0 % in Q1 2022) Earnings per share Q1, 0.41 (0.71 in Q1 2022) Future Outlook • The Bank of Åland expects its net operating profit in 2023 to be significantly better than in 2022 • • Dependent on the performance of the fixed income and stock markets Some uncertainty about the Bank's current forecast due to concerns about economic development in a number of important markets 18 16 14 12 10 00 8 5 6 4 20 12.5 16.4 16.7 10.6 illi Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 ÅLANDSBANKEN 15.0 Q3 2022 Q4 2022 Q1 2023 ROE, Rolling 12 Months, % Target 16 14.8 15 14.7 14.0 12.5 14 13.7 11.9 13.6 11.9 13 12.6 8.9 12 11 10 9 8 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 12.8 12.5. Statutory fees: EUR 2.8 M (Q1 2021), EUR -0.1 M (Q2 2021), EUR 3.6 M (Q1 2022) and EUR -0.1 M (Q2 2022), EUR 3.2 M (Q1 2023) 23 Net Operating Profit, Rolling 12 Months, EUR M 40 11.3 35 SS 55 50 5.0 42 2.0 5.0 45 14.8 12.8 9.8 9.8 I Nonrecurring items 30 SNN 15 10 43.7 45.4 46.3 25 44.2 20 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Going our own way Q3 2022 Q4 2022 37.5 36.4 35.9 36.3 40.4 Q1 2023#24Income and Expenses Q1 2022-2023 Income Q1 2023, EUR M 24 51.1 5.5 1.9 0.6 0.2 9.8 45.3 Expenses Q1 2023, EUR M 35.5 0.7 0.4 -0.3 -0.2 36.7 2022 Net interest Net commission income IT income Other income Profit on sales 2023 2022 Staff Premises income Depreciation/ Stability fee amortization Consultants Others 2023 ÅLANDSBANKEN Going our own way#25Committed to Maintaining a Strong Capital Ratio The Bank of Åland is committed to a strong capital ratio The Bank will continue to build up its capital base, improve and diversify earnings, and uphold a sound approach to risk • Conservative pay-out policy is to safeguard the capital position As of 2022, the standardised 26.5 per cent upward adjustment in the risk exposure amount, calculated according to the current IRB approach while awaiting an updated approach, was raised to 45.5 per cent for the retail portfolio The countercyclical buffer requirement for Swedish exposures is currently 1.0 per cent but will be raised to 2.0 per cent starting in June 2023. For Finnish exposures, the requirement remains at 0.0 per cent. In Finland, a systemic risk buffer of 1.0 per cent will be re-imposed starting on April 1, 2024 On March 29, 2023, the Annual General Meeting (AGM) approved the distribution of a dividend of EUR 2.05 per share for the financial year 2022 (a regular dividend of EUR 1.60 plus an extra dividend of EUR 0.45), subtracted from the Bank's CET1 capital ratio on December 31, 2022 CET1 capital ratio for a small bank like the Bank of Åland is not comparable to larger banks with IRB methods 25 ÀLANDSBANKEN Capital position, % 16.5 16.5 15.8 15.4 15.2 2.2 2.5 2.4 1.8 1.5 85 1.6 1.6 99 1.6 T2 14.3 AT1 13.4 12.1 12.0 12.4 CET1 2019 2020 2021 2022 Q1 2023 Going our own way#26S&P Views Bank of Åland's Capital Position to be a Credit Strength S&P highlights that Bank of Åland's strong capital position is a credit strength Key strengths according to S&P Nordic Banks' RAC Ratios On Dec. 31, 2021, Compared With Dec. 31, 2020 25.0 • Strong risk-adjusted capitalization 20.0 • Low credit losses 3.0 15.0 The upgrade on the Bank's long-term issuer credit rating from BBB to BBB+ reflects S&P's forecast that Bank of Åland's capitalization will strengthen sustainably through 2024. S&P expects that the Bank's RAC ratio will improve to 15-16 % over the next two years from 14.5 % as of June 30, 2022 10.0 5.0 26 ÅLANDSBANKEN 0.0 <Norweg SBG Finland* Sparbanken Sjuharad Swedish Export Credit Islandsbanki Landsbankinn Sparbanken Skane Hypo§ POP Bank Group Lansforsakningar Bank Arion Bank OP Financial Group Landshypotek Bank S-Bank Swedbank DLR Kredit DNB Bank Jyske Bank SBAB Bank Bank of Aland Danske Bank Nordea Bank Handelsbanken Oma Savings Bank Nykredit Realkredit SEB Aktia Bank 7.0 Year-end 2021 (left scale) 5.0 Year-end 2020 1.0 -1.0 -3.0 -5.0 -7.0 Percentage ge points Change between 2020-2021 (right scale) Going our own way#2727 5. Asset Quality ALANDSBANKEN#2828 Lending Strategy Focused on Balanced Credit Growth Many small loans are preferred to a few large Loan loss level of 0.03 % in Q1 2023 (0.16 % in Q1 2022) Lending to the Public, EUR M 6000 5000 4000 3000 2000 1000 0 The Bank of Åland is a relationship bank with the primary focus on customers with investment needs in the Private Banking and Premium Banking segments Selective lending to high quality, affluent clients, where asset quality is prioritised over lending volume growth and higher returns The Bank of Åland is not granting credits as a standalone product to mass market clients or corporate clients Balanced growth in lending versus deposits in every business area • Residential mortgages or property as collateral in at least half of the lending Stage 3 Credits 2021-2023 70 1.55 1.40 1.62 1.61 1.8 1.6 1.37 1.19 1.23 1.4 60 1.01 1.2 50 0.92 1.0 0.8 0.6 0.4 10 0.2 0.0 83200 ≥ 40 EUR M 2013 2014 2015 2016 ÀLANDSBANKEN 2017 2018 2019 2020 2021 2022 Q1 2023 1400 1200 1000 800 Public and non-profit sector 600 ■Companies 400 Private individuals 200 0 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Lending to Companies, EUR M I Stage 3 credits, EUR M Share of Stage 3 credits of total lending, % 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Other service operations Other industry and crafts Construction I Agriculture, forestry and fishing Hotel and restaurant operations Financial and insurance operations Other real estate operations Housing operations Wholesale and retail trade ■Shipping Going our own way Q1 2023#296. Liquidity and Funding ALANDS KEN#30Group Funding and Liquidity Management Demand deposits and time deposits from core private customers and their companies are the main funding sources Covered Bonds, the main long-term funding source today, were introduced in early 2012 in order to diversify the funding mix and to form a reliable and cost-efficient funding channel Loans from central banks have grown from 2% →7% since the start of the pandemic A balanced funding mix is maintained with a diversity of funding sources Well-diversified maturity profile with limited exposure to short-term wholesale funding Group Funding Profile March 31, 2023 Subordinated; 1% Commercial paper; 4% Short term banks; 2% Central banks; 7% Senior unsecured; 0% Covered bonds; 14% Maturing Long-Term Funding* March 31, 2023, EUR M 400 300 200 100 Covered bonds 0 2023 2024 2025 2026 * Excluding retained covered bonds 30 ÀLANDSBANKEN Themes 2023 Equity capital (incl. AT1); 5% Deposits; 67% • After the transfer of SEK Covered Bonds to Borgo, the share of customer deposits is high, around two thirds of the funding profile In adverse market conditions it has been a reasonable strategy to issue retained Covered Bonds and use those as collateral for funding from the central banks Demand conditions and the market situation favour issuance in Covered Bonds The balanced funding mix is maintained Effective on January 1, 2022, the Finnish FSA has given the Bank of Åland a formal MREL requirement under European Union regulations. The requirement consists of a minimum of 9% total capital requirement and a minimum of 3% leverage ratio. The MREL requirements have no material effect on the funding of the Bank Going our own way#31Liquidity Reserve Key metrics Very high quality in liquidity reserves The most liquid and tradable assets • LCR and NSFR targets reached Coordinated cash pools between Finland and Sweden Conservative approach to market risk within liquidity reserves Composition of the Liquidity Reserve March 31, 2023 Liquidity reserve 19% of total assets ■Cash and central banks 0% 22% 30% ■Governments and official institutions ■Financial institutions Liquidity portfolio EUR 1,109 M 2% ■ Covered bonds • Assets with short duration • Well diversified counterparty risk profile LCR 156 % 31 ÅLANDSBANKEN NSFR 109% 46% ■Deposits Going our own way#3232 7. Appendix LANDSBANK#33Contact 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 33 ÅLANDSBANKEN Going our own way#34Key Figures Q1 2023 Q1 2022 2022 2021 2020 2019 2018 ROE, % 8.9 15.0 12.8 14.0 11.6 10.7 9.8 Expense/income ratio, % 81 69 72 69 70 73 77 0.03 0.16 0.14 0.12 0.11 0.08 0.02 Loan loss level, % CET1 capital ratio, % 12.4 13.9 12.0 12.1 14.3 13.4 13.0 16.5 Total capital ratio, % 17.5 15.2 15.4 16.5 15.8 15.4 Earnings per share, EUR 0.41 0.71 2.37 2.55 2.02 1.69 1.48 Equity capital per share, EUR 17.18 18.02 18.82 19.39 18.76 16.61 15.67 Lending to the public, EUR M 4,337 3,936 4,303 4,788 4,378 4,110 4,022 3,808 Deposits from public, EUR M 4,238 4,182 4,070 3,605 3,368 3,304 Equity capital, EUR M 292 310 316 332 292 258 242 Risk exposure amount, EUR M 1,901 1,805 1,938 1,976 1,671 1,583 1,578 FTE 34 ÅLANDSBANKEN 871 836 854 815 751 700 691 Going our own way#3535 Income Statement EUR M Net interest income Net commission income Other income Total income Staff costs Q1 2023 Q1 2022 2022 2021 2020 2019 2018 19.8 14.3 68.2 62.2 58.9 53.9 54.5 18.3 20.2 78.4 79.0 66.3 58.0 54.3 7.2 16.5 37.5 34.8 24.9 22.0 18.8 45.3 51.1 184.1 176.0 150.1 133.9 127.6 Other expenses Total expenses -20.5 -18.9 -75.5 -71.1 -62.9 -57.0 -57.1 -16.1 -16.7 -56.3 -50.8 -42.6 -40.5 -40.7 -36.7 -35.5 -131.8 -121.9 -105.6 -97.5 -97.8 Profit before impairment losses 8.5 15.6 52.3 54.1 44.6 36.4 29.8 Net impairment loss on financial assets -0.3 -1.7 -6.2 -4.9 -4.9 -3.2 -0.8 Net operating profit Income taxes 8.2 13.9 46.1 49.2 39.7 33.2 29.0 -2.0 -2.9 -9.3 -9.3 -8.2 -6.9 -6.1 Net profit for the period 6.2 11.0 36.8 39.9 31.5 26.3 22.9 Non-controlling interests 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Shareholders in Bank of Åland Plc 6.2 11.0 36.8 39.8 31.5 26.3 22.9 ÀLANDSBANKEN Going our own way#36Balance Sheet Bank of Åland Group Assets Cash and balances with central banks Debt securities March 31, 2023 243 1,009 Lending to credit institutions 52 Lending to the public 4,337 Shares and participations 48 March 31, 2022 900 Liabilities Liabilities to credit institutions and central banks 825 Deposits from the public 96 Debt securities issued 3,936 Derivative instruments 31 Current tax liabilities March 31, 2023 March 31, 2022 538 3,808 548 4,238 1,013 636 19 10 1 2 Participations in associated companies 6 6 Deferred tax liabilities 34 34 Derivative instruments 28 13 Other liabilities 112 97 Intangible assets 21 23 Provisions 1 1 Tangible assets 38 33 Accrued expenses and prepaid income 40 37 Investment properties Current tax assets 0 0 Subordinated liabilities 49 Deferred tax assets 3 6 1 Total liabilities 5,616 36 5,640 5 Other assets Accrued income and prepayments 80 38 52 Equity capital and non-controlling interests 29 Share capital 42 42 Total assets 5,908 5,950 Share premium account 33 33 Reserve fund Fair value reserve Unrestricted equity capital fund Retained earnings Shareholders' portion of equity capital Non-controlling interests' portion of equity capital 0 0 Additional Tier 1 capital holders 29 29 Total equity capital 292 310 Total liabilities and equity capital 5,908 5,950 Going our own way 36 ÅLANDSBANKEN 25 25 -12 1 29 28 145 152 263 281#3737 Outstanding Long-Term Funding* March 31, 2023 MCBA Cover Asset Pool ISIN XS1496878742 F14000375241 CBA Cover Asset Pool ISIN F14000549548 Nominal Amt 250 000 000 300 000 000 Settlement date 29-09-2016 19-03-2019 Maturity date 29-09-2023 19-03-2024 Coupon Currency 0 0.125 EUR EUR eq amt 250 000 000 Time to maturity 0.50 EUR 300 000 000 0.97 550 000 000 0.76 Nominal Amt 250 000 000 Settlement date 16.3.2023 Maturity date 16.3.2026 Coupon 3.875 Currency EUR eq amt Time to maturity EUR 250 000 000 250 000 000 2.96 2.96 *Excluding retained covered bonds ÅLANDSBANKEN Going our own way#38Sustainability Information Group, own emissions Greenhouse gases, tonnes of CO₂e Q1 2023 Q4 2022 % Q1 2022 % do Scope 1 Emissions from owned and controlled resources 0.6 0.5 18 1.2 -45 Scope 2 Energy-related emissions 0.2 0.2 4 14.2 -99 of which from electricity according to market-based method¹ 0.0 0.0 13.9 -100 Scope 3 upstream Purchased goods and services 18.6 25.3 -26 40.3 -54 Capital goods 1.8 1.6 13 1.3 36 Transport and distribution 29.7 35.4 -16 31.1 -4 Waste generated by own operations Business travel Leased assets Total scope 3 upstream Total greenhouse gases, own emissions Climate compensation Net greenhouse gases, own emissions 0.4 0.5 -24 0.5 -12 134.6 160.0 -16 31.1 2.4 2.6 -5 1.1 187.6 225.4 -17 105.5 78 188.4 226.1 -17 120.8 56 -188.4 -208.7 -10 -136.3 38 0.0 17.4 -15.5 38 'Emissions from electricity according to location-based method subtracted from Nordic Residual Mix, tonnes of CO₂e CO2e emissions per employee (tonnes/average full-time equivalent) 153.5 171.1 -10 204.6 -25 0.87 1.02 0.58 CO₂e emissions per EUR M earned (tonnes/EUR M) 4.16 4.81 2.36 ÅLANDSBANKEN Going our own way#39Sustainability Information Group, scope 3, downstream Current situation on annual basis (CO₂e), tonnes Q1 2023 Q4 2022 % Q1 2022* % Loan portfolio Scope 1 and 2 201,739 213,040 -5 of which scope 1-2 201,739 Investments Sope 1, 2 and 3 1,453,914 of which scope 1 of which scope 2 68,893 23,421 213,040 -5 1,587,742 -8 122,526 -44 24,155 -3 55 of which scope 3 1,361,599 1,441,061 -6 Treasury Scope 1, 2 and 3 12,358 13,756 -10 of which scope 1 1,124 1,334 -16 of which scope 2 256 278 -8 of which scope 3 10,979 12,144 -10 Total, Scope 3, downstream 1,668,011 1,814,538 Comparative data for the period is missing 39 ÀLANDSBANKEN Going our own way#40Disclaimer The presentation was prepared by Bank of Åland Plc 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 the 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 40 ÀLANDSBANKEN Going our own way