#1Bank of Åland Debt Investor Presentation July 2020 ALANDSBANKEN#22 Table of Contents 1. Bank of Åland in Brief 2. Bank of Åland - Strategy and Market Position 3. Bank of Åland and Sustainability 4. Performance and Capital 5. Asset Quality 6. Liquidity and Funding 7. Contact Details 8. Appendix 3 7 15 18 31 36 41 43 ALANDSBANKEN#31. Bank of Åland in Brief ALANDSBANKEN#44 Bank of Åland in Brief Bank of Åland Plc Covered Bond Program • A Finnish bank targeting high net worth and affluent individuals • Top ranked in customer loyalty • Tradition of stability and very low credit losses • • • • • Net operating profit increased by 15 % to EUR 16.7 M in H1 2020 from EUR 14.5 M in H1 2019 BBB rating with a negative outlook from S&P EUR 3 bn combined Medium Term Note, Covered Bond and Tier 2 Note Programme 2020 (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 Corona has already had and will continue to have its effects on the global economy Economy and Markets • • • Before Corona the demand-led Finnish economy was growing strongly Finnish house prices have risen moderately compared to the Nordic neighbors. A trend explained by the fast amortizing plans of Finnish mortgages Sound Bank of Åland portfolio as at least half of the lending in every business area has residential mortgages or property as collateral and many small loans are preferred to few large loans ÀLANDSBANKEN#55 Scorecard June 30, 2020 Capital • . • Strong capital position Common Equity Tier 1 capital ratio 14.5% IRB method for credit risk capital requirement not yet approved for the Swedish credit portfolio Liquidity and Funding . • Core funding ratio of 95 % Liquidity reserve at 18 % of total assets • LCR at 142 % • NSFR at 114 % • AAA rating with a stable outlook on Covered Bonds Risk Management Long history of having the lowest loan loss level of all Finnish banks. Loan loss level was 0.08% in Q2 2020 and 0.22 % in H1 2020 • No trading positions or complex financial instruments Strict limits on exposures to financial institutions. Bulk of the exposure is to highly rated Nordic entities Profitability • Challenging interest rate environment Positive earnings trend . • Net operating profit of EUR 9.8 M in Q2 2020 and EUR 16.7 M in H1 2020 Return on equity 11.8 % in Q2 2020 and 10.1 % in H1 2020 ALANDSBANKEN#6CO 6 Standard & Poor's Rating on Bank of Åland Finnish banks Business position - Despite some geographic diversification, concentrated business focus on retail and private banking makes it vulnerable to cyclical swings in the segments Capital and earnings - Strong capital position - Strong earnings Risk position - Small customer base with concentration risks - Moderate geographic diversity Liquidity and funding - Stable core 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 A- -2 +1 -1 0 BBB negative +9 AAA stable ÀLANDSBANKEN#72. Bank of Åland Strategy and Market Position ALANDSBANKEN#88 Three 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% • • Sweden 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 Vaasa Tampere Turku Parainen Helsinki Åland Islands Stockholm · 3 offices in Sweden's largest cities, market share < 1% Gothenburg • • 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 Malmö ALANDSBANKEN#99 Bank of Åland – a Relationship Bank with Focus on - Private Banking and Premium Banking Customers • Established in 1919 on Åland Islands Listed since 1942 on NASDAQ OMX Helsinki An Overview • • Total assets of EUR 5,708 M, as of June 30, 2020 • Actively managed assets of EUR 6,107 M, as of June 30, 2020 Approximately 744 full time employees The Vision • • 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 How we do it Delivering a large bank's range of services with a small bank's thoughtfulness and good sense ALANDSBANKEN#1010 Bank of Åland History of Strategic Decisions From a local bank... Supporting development of Åland - a poor fishing and agrarian community 1919 2019 2016 2009 2004 1994 Fintech 1942 Expansion Dreams New Swedish mortgage to IT bank with Expansion company Sweden partners to Finnish Crosskey Listing Ab Ltd mainland Foundation ...to a Nordic banking group With wide product range and personal service targeting high net worth individuals ALANDSBANKEN#1111 Digitalization in Focus: Strategic Fintech Partners Dreams The new way to save Reach your dream with money you didn't know you had GET IT ON Downinad on the Google Play App Store Trustly CONSUMER MERCHANT PARTNERS ABOUT US PRESS BLOG CAREERS MENU = Buy an apartment 4 years and 250 000 kr left. 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. 55 089 kr SAVE USER SUPPORT Shop and pay from your bank account Fast, simple and secure WATCHES Early sign-up! DO About us Press FAQ English Compensate Invest OCTOBER Supermarket 123 € Marmoty 25 € Florist O ACARES Everyday Climate Action DCO Nathalie Green Deconomy member 00000322 Åland Index Solutions Share ALANDSBANKEN#1212 The Åland Index reaches 40 million customers globally • • Banks with over 40 million clients team up with Doconomy, a Swedish based start-up company, to enable customers to track their CO2- footprint through Åland Index Solution The Åland Index Solution, originally developed and implemented by The Bank of Åland, offer a proven, independent climate calculation and is based upon leading financial data To fuel this offering and fast track a global roll out, Mastercard makes an equity investment in Doconomy • Co-operation with Standard & Poor's guarantees the best data quality • Bank of the West, a subsidiary of BNP Paribas, is the first American Bank to become a partner with Doconomy • Nordea is the first bank in the Nordics to make a similar agreement ALANDSBANKEN#13SANKERS FOR LIMATE Bankers for Climate @bankers4....5hv Well done @doconomy @alandsbanken for your strong product, enabling large banks such as @Nordea and @BankoftheWest @BNPParibas to offer CO2-tracking for their customers @bencaldecott @shenningsson @EricPUsher @KajEmbren @GeorgeSerafeim @CFigueres Åland Index Solutions Banker med över 40 miljoner kunder ingår partnerskap med Doconomy f.... mynewsdesk.com 273 6 T TelavoX 23:10 Q Sök Frank Vang-Jensen 2:a President & Group CEO at Nordea 1 mån Redigerad 00 ax 62% Nordea's modern mobile platform with more than 1 billion touchpoints per year gives an excellent opportunity to visualise the environmental impact of everyday spending to our customers. This is an example how we in Nordea strive to make sustainability concrete and real to our customers. We are continuously developing a growing number of sustainable products and services like green mortgages, green car loans and sustainable savings. #nordea #co2tracker #ålandindex Se översättning Koranvindning 39 kg C United Nations Climate Change United Nations Climate Change Partners Doconomy facebook GARD ART INTERNATIONAL IKEA IBERDROLA Let Q VISA WHAT DESIGN RealBetis Balompié CAN DO BNP Paribas Group @BNPPa... - 6m [#BNPPCSR] << Consumers understand their purchasing actions have the power to impact positive change >> @Nandita Bakhshi @Bankofthewest now teams up w/ @doconomy to enable customers to track the CO2 impact of their purchases. bnpp.io/1tnF50xxwHu @herveduteil @LaurencePessez Bank of the West @Ba... 22h This just in: we're thrilled to be the first major U.S. bank teaming up with @doconomy to enable our customers to track and measure the CO2 impact of their purchases Learn more: bankofthewest.com/about-us/press... #PositiveBanking #EverydayClimateAction 13 Per Bolund @bolund Språkrör för Miljöpartiet, finansmarknadsminister och bostadsminister. AIK:are och basketälskare. Följ ALAND INDEX Individual carbon footprints now available to 3 million customers using Nordea's digital bankin... nordea.com Qlik Q LEAD WITH DATA Startsida Ditt nätverk Lägg upp Aviseringar Jobb Trucost @Trucost Just released: Trucost partners with Stockholm-based fintech, @doconomy to give banks new visibility of the carbon impact of consumer financial transactions to inform conscious decision making. Read more: ow.ly/MOUT50xwKMC #climateaction #cop25 #alandindex Erik Gutwasser • 2:a Head of Nordics and Baltics at Mastercard 4d. Feels great that we have invested in Doconomy, let's join efforts and leverage the global Mastercard network to work together to drive a tri change for the climate. #mastercard #parisagreement #doconomy #cop25 Se översättning 66 Bank of the West is one of the only major U.S. banks that has chosen to restrict the financing of activities harmful to the planet, making them the ideal partner for our entrance into North America. NATHALIE GREEN, CEO Doconomy 17 3 Trucost ESG Analysis S&P Global TM Mastercard and Doconomy Extend Collaboration to Deliver a More Sustainable Future newsroom.mastercard.com 3 minuters läsning ALANDSBANKEN#1414 Bank of Åland Group Legal Structure and Ownership Structure Ålandsbanken Abp (Bank of Åland Plc) Major owners Crosskey Banking Solutions Ab Ltd 100 % S-Crosskey Ab 60 % Model IT Oy 100 % Ålandsbanken Fondbolag Ab 100 % Ålandsbanken Fonder Ab, 100% Ålandsbanken Fonder II Ab, 100% Share of capital Share of votes Wiklöf Anders with companies 21.4% 29.7% Alandia Försäkring 6.8 % 11.1% The Family Kamprad Foundation 6.0 % 0.7% Fennogens Investments S.A. (Family Ehrnrooth 4.6 % 8.3 % Pensionsförsäkringsaktiebolaget Veritas 2.5 % 2.0 % 41.3% 51.8% Approximately 10,000 shareholders in total, half of them from the Åland Islands ALANDSBANKEN#153. Bank of Åland and Sustainability ALANDSBANKEN#1616 Bank of Åland "World Champion" in Sustainability ) eurobest the european awards for creative excellence CANNES LIONS INTERNATIONAL FESTIVAL OF CREATIVITY D&AD Impact D&ADI GULDNYCKELN ÖSTERSJÖPROJEKTET ITÄMERIPROJEKTI BALTICSEAPROJECT.ORG ARETS ETS INSATS 201 I SUPPORT A CLEAN BALTIC SEA ORROW TOM SUSTAINABLE BRAND INDEX MEMBER 543211 GULDÄGGET SVERIGES KOMMUNIKATIONSBYRÅER 2017 FEMTIOSJÅTTE UPPLAGAN SVANENMARKE Fond 3101 0027 ALANDSBANKEN#1717 THE UN SDGS AND OUR SUSTAINABILITY WORK 1 POVERTY 2 3 GOOD HEALTH QUALITY EDUCATION 5 GENDER EQUALITY ++ 7 RENEWABLE ENERGY 8C GROWTH GOOD JOBS AND 9 INNOVATION AND INFRASTRUCTURE REDUCED 10 INEQUALITIES * SUSTAINABLE 6 WATER AND SANITATION 11 HORACES 12 RESPONSIBLE CLIMATE 14 LIFE BELOW WATER 15 ON LAND 16 PEACE AND JUSTICE 17 PARTNERSHIPS FOR THE GOALS CONSUMPTION 13 ACTION THE GLOBAL GOALS Our sustainability work is based upon the UN's 17 sustainability development goals, including its 169 sub-targets. THE BALTIC SEA PROJECT 2,300,000 € for good environmental ideas since 1997. ÖSTERSJÖPROJEKTET ITÄMERIPROJEKTI BALTICSEAPROJECT.ORG CREDIT/DEBIT UNEP PRINCIPLES FOR FINANCE RESPONSIBLE INITIATIVE BANKING PRI Principles for Responsible Investment We have signed the UN Principles for Responsible Banking and the Principles for Responsible Investment. I SUPPORT A CLEAN BALTIC SEA ORROW TOM 40,000,000 customers globally are able to track the CO2 footprint of their purchases through Åland Index Solutions. ALAND INDEX ALANDSBANKEN#184. Performance and Capital ALANDSBANKEN#1919 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 ALANDSBANKEN#20Q2 2020 Net operating profit – The best quarter ever • Net operating profit, EUR 9.8 M (8.7 M), +12% • Return on equity after tax (ROE) 11.8 % (11.5%) - • Earnings per share, EUR 0.50 (0.45), +11 % The common equity Tier 1 ratio increased to 14.5 per cent (13.3) Unchanged future outlook: Due to low visibility and high volatility in the market, until further notice the Bank of Åland has decided to refrain from issuing any outlook for 2020 20 20 ALANDSBANKEN#2121 H1 2020 in Summary Operating profit, EUR M +15% 64.6 74.2 +15% 16.7 14.5 +7% -0.6 -4.6 Income Expenses Loan losses Operating profit -49.4 -53.0 H1 2019 TH1 2020 Volumes, EUR M +8% 5,651 6,107 +5% 4,188 +7% 4,001 3,459 3,225 Actively managed Deposits Lending assets H1 2019 TH1 2020 ALANDSBANKEN#22H1 2020: Higher Income EUR M 22 22 64.6 H1 2019 FX EURSEK 2.8 4.7 Net interest Net commission income income 2.4 0.2 74.2 Net income from financial items at fair value IT income Other income H1 2020 ALANDSBANKEN#23H1 2020: Higher Expenses EUR M 23 23 49.4 1.8 0.2 1.0 0.9 0.4 53.0 H1 2019 FX EURSEK Crosskey Stability fee Travel and representation Depreciation/ amortisation Others H1 2020 ALANDSBANKEN#24Bank of Åland Business Segments, Operating Profit EUR M, 2018-2020 24 24 9.9 9.5 13.0 4.0 3.6 1.7 1.6 1.0 0.5 0.0 Private Banking Premium Banking IT -0.4 Others H1 2018 TH1 2019 TH1 2020 0.4 ALANDSBANKEN#2525 Business Volumes EUR M, 2018-2020 2,638 3,286 3,199 4,022 4,110 4,188 3,304 3,368 3,459 3,057 2,908 2,539 Discretionary & Advisory mandates Mutual funds Deposits Lending Dec. 18 ■ Dec. 19 ■ Jun. 20 ALANDSBANKEN#26Bank of Åland ROE %, 2018 – 2020 - 7.0 11.5 10.3 10.3 7.6 12.3 11.5 11.4 8.4 11.8 niiniin ill Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 26 26 Stability fee: EUR 2.6 M Q1 2018, EUR 2.3 M Q1 2019, EUR 2.0 M Q1 2020 and EUR 0.6 M Q2 2020 ALANDSBANKEN#2727 Operating Profit, Rolling 12 Months, EUR M 26.0 23.8 35.4 34.3 33.2 31.8 29.6 29.0 27.3 27.8 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 ALANDSBANKEN#28ROE, Rolling 12 Months, % 28 80 10.9 11.0 10.7 10.5 9.9 100.... 9.8 9.4 9.4 9.1 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 8.2 Stability fee: EUR 2.6 M Q1 2018, EUR 2.3 M Q1 2019, EUR 2.0 M Q1 2020 and EUR 0.6 M Q2 2020 ALANDSBANKEN#29Commitment to a strong capital ratio • 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 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 to have strong risk-adjusted capitalization 29 29 16.7 15.4 15.8 14.2 2.2 12.9 0.9 13.0 1.3 2.4 2.4 1.2 12.0 11.8 12.9 13.0 13.4 14.5 2015 2016 2017 2018 2019 Q2 2020 ■T2 ■CET1 ALANDSBANKEN#30• S&P View of the Total Capital Base According to S&P the capital position of Bank of Aland is strong · Strong risk-adjusted capitalization • Low credit losses • RAC ratio remains a rating strength to Bank of Åland 30 25 20 % 15 Nordic Banks' RAC Ratios On Dec. 31, 2018 Versus June 30, 2018 O 10 5 0 Arion Bank Islandsbanki hf Landsbankinn hf. Eiendomskreditt AS Storebrand Bank ASA Bank Norwegian AS Sparbanken Skane Landshypotek Bank AB Oma Savings Bank PLC Danmarks Skibskredit A/S Sparbanken Sjuharad AB Central Bank of Savings Banks... Bonum Bank Swedish Export Credit Corp. The Mortgage Society of Finland 7 Aktia Bank PLC OP Financial Group Lansforsakringar Bank 7 DNB Bank ASA DLR Kredit A/S Bank of Aland PLC Swedbank AB SBAB Bank AB (publ) T Nordea Bank Abp Nykredit Realkredit A/S Skandinaviska Enskilda Banken AB... 7 Jyske Bank A/S Danske Bank A/S Svenska Handelsbanken AB Source: Nordic Banks' Capital And Earnings Can Weather The Weakening Credit Cycle, November 14, 2019 гото 51321012345 % ■As of Q4 2018 (left scale) Q4 2018 versus Q2 2018 (right scale) 30 ALANDSBANKEN#315. Asset Quality ALANDSBANKEN#32. 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 • To have balanced growth in lending versus deposits in every business area (Åland Islands, Finland and Sweden) . To have residential mortgages or residential property as collateral in at least half of the lending in every business area • Many small loans are preferred to few large loans 32 32 ALANDSBANKEN#3333 33 M EUR 4500 4000 3500 3000 2500 2000 1500 1000 500 0 2009 Balanced Growth in the Credit Portfolio . • Total lending was EUR 4,188 M June 30, 2020 • 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 0.08 % in Q2 2020 and 0.22 % in H1 2020 2010 2011 2012 2013 2014 2015 2016 2017 Total Receivables 2018 2019 Q2 2020 ■Public and non-profit sector ■Companies ■Private individuals M EUR Receivables from the Companies 1400 1200 1000 800 600 400 200 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q2 2020 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 ÀLANDSBANKEN#3434 • • Geographical Distribution of Mortgage Lending • Clear concentration to the wealthiest parts of Finland and Sweden As of June 30, 2020 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 Gothenburg 12% Malmö 10 % Vaasa 3 % Stockholm 73% Tampere 12% Åland Islands 20% Turku 15% Helsinki 46 % ALANDSBANKEN#3535 55 EUR M 255 Stage 3 Credits 2018-2020 40 30 20 0.46 10 0 0.69 0.57 0.49 9.51 0.52 IT 1.0 0.93 0.85 0.81 0.81 0.8 0.6° 0.4 0.2 0.0 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Stage 3 credits, EUR M Share of Stage 3 credits of total lending, % Exposures in Stage 3 fulfil the Group's default definition, in which an exposure is regarded as in default when a payment related to a significant amount is more than 90 days late. ALANDSBANKEN#367. Liquidity and Funding ALANDSBANKEN#3737 Group Funding Profile June 30, 2020 • Demand deposits and time deposits from core private customers and their companies are the main funding sources • Strong capitalization . Covered Bonds are the main long-term funding instrument 16% 1% 5% 4% 7% 5% Deposits Short term banks Subordinated Covered Bonds Senior unsecured TLTRO II Own capital 62 % ALANDSBANKEN#3838 • • • 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 1 079 M as of June 30, 2020 Bank of Åland issues also preferred senior unsecured bonds to maintain a balanced funding mix • Themes 2020-2021 . Demand conditions and the market situation favour issuance in Covered Bonds • The balanced funding mix is maintained . Bank of Åland has not received any MREL requirements. There are no foreseen authority or regulatory requirements which would have effect on the funding of the bank ALANDSBANKEN#3939 Liquidity Management • Well-diversified maturity profile • Limited exposure to short term whole sale funding Bank of Åland is committed to continuously cover the next 180-day liquidity need in the cover pools for the Covered Bonds program 400 350 300 250 200 150 100 50 M EUR Maturing long funding 2020 2021 2022 2023 2024 2025 ■Covered bonds ■Senior unsecured ALANDSBANKEN#40Liquidity Position Very high quality in liquidity reserves The most liquid and tradable assets LCR target reached 40 40 Coordinated cash pools between Finland and Sweden Cash and central banks Conservative approach to market risk within liquidity reserves • Assets with short duration Well diversified counterparty risk profile • LCR 142 % as of June 30, 2020 NSFR 114 % as of June 30, 2020 Composition of the liquidity reserve Bonds issued by governments and official instituti Bonds issued by financial institutions Covered bonds Deposits 30.6.2020 30.6.2020 31.12.2019 31.12.2019 EUR M of total EUR M of total 667 65 % 490 43 % 71 7% 83 7% 0 0% 42 4% 270 26 % 495 44% 20 2% 20 2% 1028 100 % 1129 100 % ALANDSBANKEN#418. Contact Details ALANDSBANKEN#4242 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#439. Appendix ALANDSBANKEN#4444 Key Figures - Bank of Åland Hi 2020 2019 2018 2017 2016 Return on equity (ROE), % 10.1 10.7 9.8 9.1 9.1 Cost/ income ratio, % 71 73 77 78 76 Loan loss level, % 0.22 0.08 0.02 0.06 0.11 Core funding ratio, % 95 90 90 88 89 Equity/assets ratio, % 4.8 4.6 4.4 4.4 4.3 Core Tier 1 capital ratio, % 14.5 13.4 13.0 12.9 11.8 Total capital ratio, % 16.7 15.8 15.4 14.2 13.0 Earnings per share, EUR 0.50 1.69 1.48 1.35 1.29 Equity per share after dilution, EUF 17.41 16.59 15.58 15.02 14.37 Lending to the public, EUR M 4,188 4,110 4,022 3,979 3,808 Deposits from public, EUR M 3,459 3,368 3,304 3,148 3,100 Shareholders equity, EUR M Risk-weighted assets, EUR M 271 258 242 1,661 1,583 1,578 234 1,538 222 1,576 FTE 744 700 692 691 685 ÀLANDSBANKEN#4545 Income Statement EUR M Net interest income Net comission income Other income Hi 2020 2019 2018 2017 2016 29.3 53.9 54.5 55.9 55.1 32.6 58.0 54.3 49.7 44.9 12.3 22.0 18.9 22.4 20.4 74.2 133.9 127.6 128.0 120.4 Total income Staff costs Other expenses Total expenses -30.7 -57.0 -57.1 -59.8 -57.0 -22.3 -40.5 -40.7 -40.0 -34.2 -53.0 -97.5 -97.8 -99.8 -91.3 Profit before impairment losses 21.3 36.4 29.8 28.2 29.2 Impairment losses on financial assets, net -4.6 -3.2 -0.8 -2.1 -4.1 Net operating profit 16.7 33.2 29.0 26.0 25.1 Income taxes -3.5 -6.9 -6.1 -5.3 -5.4 Profit for the period 13.2 26.3 22.9 20.7 19.7 Non-controlling interests 0.0 0.0 0.0 0.0 0.0 Attributable to the shareholders 13.2 26.3 22.9 20.7 19.7 ÀLANDSBANKEN#46Long-Term Funding June 30, 2020 Cover Pool FIN ISIN X50876678391 XS1496878742 F|4000375241 Cover Pool SWE ISIN SE0010598474 SE0013359627 Nominal Amt Settlement date Maturity date 100,000,000 30-01-2013 30-01-2023 250,000,000 29-09-2016 29-09-2023 300,000,000 19-03-2019 19-03-2024 Coupon Currency 2.75 0 0.125 EUR eq amt Time to maturity EUR 100,000,000 2.59 EUR 250,000,000 3.25 EUR 300,000,000 3.72 650,000,000 3.36 Nominal Amt Settlement date Maturity date 2,500,000,000 2,000,000,000 22-11-2017 12-05-2020 22-11-2022 12-05-2025 Coupon Currency QUARTLY STIB +53,0 QUARTLY STIB + 50,0 EUR eq amt Time to maturity SEK 238,213,210 2.40 SEK 190,570,568 4.87 4,500,000,000 428,783,779 3.50 Senior unsecured ISIN Nominal Amt Settlement date Maturity date F|4000348966 250,000,000 13-09-2018 13-09-2021 Coupon Currency 0.5 EUR 46 EUR eq amt Time to maturity 250,000,000 250,000,000 1.21 1.21 ALANDSBANKEN#47Issuer Cover Pool FIN 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 850 125 0 975 Loan volume, Type of collateral MEUR Single-family housing & flats 850 Loan volume, % 100.0 % Multi-family housing 0 850 Sum Maturity buckets Loan volume, MEUR Loan volume, % 2020 2021 2022 519 310 و 61% 36% 1% Maturity is the time remaining to the next change of interest rate in the contractual terms 2023 2024 2025 2026 2027- Sum 3 2 3 0% 0% 0% 1 0% 3 850 0% 100% Seasoning Loan volume, MEUR Loan volume, % 0-1 Y 64 7% 1-2 Y 74 2-3 Y 74 3-5Y 210 9% 9% 25% 5+ Y 428 50% Sum 850 100 % CRR-compliant Yes Credit quality Past due Loan volume, MEUR Fitch Report date 30.6.2020 Share of loan volume, % 31-60 D 61-90 D 90+ D Sum 0.1 0.1 0 0 0.0 0.0 0.0 0% Impaired loans, % 0.000% Key ratios Cover pool items Number of loans Number of clients OC, nominal WALTV FX-risk** 50.0% All issuance of covered bonds in foreign currency is swopped to entirely eliminate FX- 54.2% 0 risk. Remaining average maturity, years Assets Liabilities 6.7 3.3 10,834 6,574 Number of properties 7,921 Average loan size, TEUR 80 0.0 % 100% Regional distribution Helsinki region, Southern Finland Tampere region, Pirkanmaa Turku region, Western Finland Åland Islands Other Sum Bonds Loan volume, Outstanding issues in EUR MEUR Loan volume, % ISIN 386 45% Amount, MEUR Settlement date 103 12% XS0876678391 100 30-01-2013 114 13% XS1496878742 250 29-09-2016 183. 22 % F14000375241 300 19-03-2019 Maturity 30-01-2023 29-09-2023 19-03-2024 Coupon Fixed/ Floating 2.75 Fixed 0.00 0.125 Fixed Fixed 64 8% 850 100% Outstanding issues in SEK ISIN Amount, MSEK Opening date Maturity Coupon Fixed/ Floating Loan Loan volume, Interest rate type MEUR Loan volume, % Floating Fixed 816 34 96% 4% Sum 850 100% volume, Repayments MEUR Loan volume, % Amortizing Interest only Sum 695 82 % Amount, MEUR 155 18 % Other bonds 0 850 100 % Total of outstanding bonds of which repos 650 0 Weighted average life, years 18.0 LTV Level, Mortgage assets 0-10% 10-20% 20-30% 30-40% 40-50% 50-60% 60-70% 70+ % Sum Maturity, expressed in MEUR Total 0-1 Y 1-2 Y 0 0 2-3 Y 100 3-4Y 4-5 Y 5-10 Y 10+ Y Sum Loan volume, MEUR Loan volume, % 9 27 53 92 150 175 344 10 850 Total, % 0% 0% 15% 550 85% 0 0 0 650 0% 0% 0% 100% 1% 3 % 6% 11 % 18 % 21% 40% 0% 100% Interest rate type Fixed Amount, MEUR Amount, % 650 100 % Floating Sum 0 650 0% 100% 47 ALANDSBANKEN#48Issuer Cover Pool SWE Issuer: Owner: Controlling authority: Ålandsbanken Abp Finnish Financial Supervisory Authority Long Rating Covered bond Owner Issuer S&P Moody's AAA BBB BBB Maturity buckets 2020 2021 2022 2023 2024 2025 2026 2027- Sum Loan volume, MSEK 6,549 247 135 74 15 9 CRR-compliant Yes Loan volume, % 93 % 4% 2 % 1% 0% 0% 0 0% 0 0% 7,029 100 % Maturity is the time remaining to the next chabge of interest rate in the contractual terms Fitch Report date 30.6.2020 Seasoning Loan volume, MSEK Loan volume, % 0-1 Y 1,499 1-2 Y 2-3 Y 3-5 Y 5+ Y Sum 925 1,219 2,055 1,331 7,029 21% 13% 18% 29 % 19 % 100 % Cover pool SWE Included assets, MSEK Loans Substitute assets 7,029 0 Other Total 0 7,029 Credit quality Past due 31-60 D Cover pool items Number of loans Loan volume, MSEK 0.5 61-90 D 0.0 90+ D 0 2,814 Share of loan volume, % 0.00 % 0.00 % 0.00 % Sum 1 0% Number of clients 1,830 Number of properties 2,195 Average loan size, TSEK 2,522 Impaired loans, % Key ratios Loan OC, nominal Loan volume, volume, WALTV Type of collateral MSEK Loan volume, % Regional distribution MSEK Loan volume, % FX-risk** 0.000% 56.2 % 55.2 % **All issuance of covered bonds in foreign currency is swapped to entirely eliminate FX- risk. Remaining average maturity, years Assets Liabilities 24.1 3.5 0 Single-family housing & flats 7,029 100.0 % Stockholm 4,858 69.1 % Multi-family housing Sum 0 0.0 % Östra Mellansverige 140 2.0% 7,029 100% Småland med öarna 20 0.3 % Sydsverige 869 12.4 % Västsverige 926 13.2 % Bonds Norra Mellansverige 15 0.2 % Mellersta Norrland 4 0.1 % Outstanding issues in SEK Övre Norrland 7 0.1% Fixed/ Other 190 2.7 % ISIN Amount, MSEK Settlement date Maturity Coupon Floating Sum 7,029 100 % SE0010598474 2,500 SE0013359627 2,000 22-11-2017 12-05-2020 22-11-2022 12-05-2025 0.937 0.690 Floating Loan Floating Loan volume, volume, Sum 4,500 Interest rate type MSEK Loan volume, % Repayments MSEK Loan volume, % Floating 6,406 91.1% Amortizing 3,079 43.8 % Maturity, expressed in MSEK 0-1 Y 1-2 Y 2-3 Y 3-4 Y Fixed 623 8.9 % Interest only 3,950 56.2% Total Sum 7,029 100 % Sum 7,029 100 % Total, % 0 0% 0 2,500 0 4-5 Y 2,000 5-10 Y 0 10+ Y Sum 0 4,500 0% 56 % 0% 44 % 0% 0% 100% Weighted average life, years 34.3 Interest rate type Fixed Amount, MSEK Amount, % 0 0% LTV Level, Mortgage assets 0-10% 10-20% 20-30% 30-40% 40-50% 50-60% 60-70% 70+ % Sum Loan volume, MSEK 21 125 296 572 1,635 1,567 2,813 0 7,029 Floating 4,500 100 % Loan volume, % 0% 2% 4% 8% 23 % 23% 40% 0% 100 % Sum 4,500 100 % 48 ALANDSBANKEN#4949 Disclaimer • • • • • The presentation was prepared by Bank of Åland Ltd for use in investor relations. 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