Aktia Q3'25: No support from loan market yet

Translation: Original published in Finnish on 11/7/2025 at 8:29 am EET.

Aktia's Q3 result did not offer any material surprises. However, we slightly raised our earnings estimates for the coming years, especially due to the well-developed life insurance net. We still consider Aktia’s valuation attractive and see the dividend yield, together with the upside potential in valuation multiples, offering investors an attractive expected return. We reiterate our Accumulate recommendation and raise our target price to EUR 11.0 (was EUR 10.5) in conjunction with the estimate upgrades.

Revenue decline still narrowed the result

Aktia's revenue declined in Q3 as expected, along with net interest income, which also kept comparable operating profit down. In asset management, customer assets grew strongly, but as net subscriptions remained only moderately positive, this was due to good market development. The loan book, on the other hand, remained at the previous quarter's level. Although corporate customer loans grew, the contraction in the mortgage portfolio offset this effect. Consumers' willingness to borrow still showed no signs of picking up. The growth in corporate lending was driven by leasing, hire purchase and invoice financing services. Their volume has already grown by 18% since the turn of the year, which explains Aktia's faster-than-market growth in corporate lending. However, the quality of the loan portfolio deteriorated, which also led to an increase in credit losses. Earnings per share were EUR 0.27, which was quite in line with our preliminary expectations. Both reported and comparable return on equity were still at a moderate level (reported 11.8% and comparable 12.8%).

Q3 report led to small forecast upgrades

We have made small upward revisions to our forecasts following the Q3 report. We raised our forecasts for Aktia's life insurance net due to the growth in insurance savings and good earnings performance and slightly revised down our cost forecasts for the coming years. We also made other minor forecast adjustments to our loan loss and revenue forecasts. However, the effects remained marginal and largely offset each other.  Overall, our EBIT forecasts for the next few years increased by 2-3%. However, our assessment of Aktia's earnings development remains largely unchanged after the Q3 report. Our dividend forecasts for 2026-2028 also increased as the solvency of our earnings estimates rose higher than our estimate in Q3.

In our forecasts, Aktia's net interest income is still pointing downwards next year, although a slight pick-up in credit demand and growth in the loan portfolio should mitigate the decline. We expect fee and commission income to grow steadily due to moderate growth in asset management and gradually normalizing loan demand. We expect loan losses to remain above average next year, after which they should return closer to the bank's historical levels. In our forecasts, the reported result is mainly supported by significant non-recurring costs that will be phased out next year, but the comparable result will still decrease next year. Due to the stabilized interest rate outlook, volume growth in both asset management and the loan portfolio should drive revenue development. We expect Aktia's return on equity to remain at a historically good level of around 11-12%.

Moderate valuation keeps the expected return sufficient

We have examined Aktia's valuation through balance sheet multiples, Nordic bank peers and the dividend model. The methods indicate a share value of just over EUR 11. Overall, we continue to believe that Aktia's valuation is still low and that the upside potential of the multiples and the strong dividend yield (8-9%) offer a good expected return. However, a much higher price level than today would require a significant step-up in asset management sales, as performance has been sluggish in recent years and client assets under management have declined. Until clear signs of this it is difficult to see significant upside potential in the share.