Evli's business developed steadily until late February and early March, when the coronavirus epidemic that emerged in China turned into a global pandemic that derailed the capital markets and rapidly weakened our earning power.
VALUATION CHANGES IN EVLI'S BALANCE SHEET WEAKENED FIRST QUARTER RESULT SIGNIFICANTLY
Financial performance January-March 2020
- Net revenue was EUR 14.2 million (1-3/2019: EUR 16.8 million)
- Operating profit was EUR 2.1 million (EUR 4.3 million)
- The Wealth Management and Investor Clients segment’s operating profit increased and was EUR 6.2 million (EUR 2.8 million)
- The Advisory and Corporate Clients segment’s operating profit declined and was EUR 0.4 million (EUR 0.5 million)
- The return from own balance sheet items declined substantially as a consequence of the market collapse and were EUR -3.7 million (EUR 1,1 million), which resulted in a clear decline in the operating profit in the Group Operations segment
- Net assets under management amounted to EUR 12.2 billion (EUR 11.9 billion) at the end of March
- Evli’s diluted earnings per share were EUR 0.07 (EUR 0.13) and return on equity was 10.1 percent (19.2%)
- Proportion of recurring revenue to operating costs was 118 percent (110%).
Outlook for 2020
In the current market environment, we estimate that the operating profit for 2020 will be clearly positive. In a situation where market conditions would deteriorate further, we estimate the operating profit to be positive.
Despite the challenging market environment, the view is supported by a high ratio of recurring revenue to operating costs, as well as sales of alternative investment products, which have brought new, stable revenue. In addition, the company took a number of adjustment measures during March to ease the cost structure. As part of the measures, the Board of Directors and the Executive Group as well as some employees have, among other things, voluntarily reduced salaries and fees on a temporary basis.
