After the steep decline in share prices at the end of last year the market environment calmed down and equity and corporate bond prices recovered.
Cautious market sentiment reflected in the first quarter result
- The Wealth Management and Investor Clients segment's operating profit declined and was EUR 2.8 million (1-3/2018: EUR 4.3 million)
- The Advisory and Corporate Clients segment's operating profit of EUR 0.5 million remained at same level as in the comparison period (EUR 0.5 million)
- The return from own balance sheet items developed favourably and totaled EUR 1.1 million (EUR -0.1 million), which improved the operating profit in the Group Operations segment
- According to our strategy, Evli's assets under management in alternative investment products increased during the review period and exceeded EUR 400 million (about EUR 100 million).
January-March 2019
- Net revenue was EUR 16.8 million (EUR 17.0 million)
- Operating profit was EUR 4.3 million (EUR 5.2 million)
- Profit for the financial year was EUR 3.5 million (EUR 5.9 million)
- Evli's diluted earnings per share were EUR 0.13 (EUR 0.24) and return on equity was 19.2 percent (34.1%)
- Net assets under management grew and totaled EUR 11.9 billion (EUR 11.4 billion) at the end of March
- Proportion of recurring revenue to operating costs was 110 percent (120%).
Outlook for 2019
The risks associated with the general trend in the equity and fixed income markets are high due to the prevailing uncertainty on the markets. A possible continued decline in equity prices or a reduction in investors’ risk appetite would have a negative impact on the company’s profit performance. Evli Group’s assets under management have grown substantially in recent years, which softens the result-impact of any reversal of the market. Sales of alternative investment products, in particular, have brought new, stable revenue. Evli has initiated a series of internal, strategy-based actions and cost savings, leading to improvements in the company’s cost effectiveness.
There has been positive development in the demand for advisory services, and its outlook for 2019 is stable. Own balance sheet investments share of Evli’s business decreased during 2018. Nevertheless, it may have a significant impact on the company’s result performance. In the advisory business and in own investment activities, fluctuations in quarterly and annual returns are possible. Customer's demand for Evli's products and services has continued to be good, which has also led to a systematic increase in lending.
Because of profitable and stable development, we estimate that the result for the 2019 financial year, will be clearly positive.
