Ålandsbanken Abp

Quarterly Report • Jul 19, 2024

Half-Year Financial Report

For the period January–June 2024 • July 19, 2024

"We had a strong first half in terms of earnings, with a net operating profit of EUR 32.5 million (22.5) and with a return on equity after taxes of 18.2 per cent (12.8).

"The investment money we manage for our customers reached a new record level of more than EUR 10.3 billion.

"During the quarter, we completed the third and final migration (SEK 3 billion) of Swedish mortgages from our balance sheet to our partly owned mortgage company Borgo. We thus have a very strong capital and liquidity situation, which means that we are ready for future growth as the demand for loans now hopefully starts to pick up."

Peter Wiklöf, Managing Director and Chief Executive

January-June 2024

Compared to January-June 2023

• Net operating profit increased by 45 per cent to EUR 32.5 M (22.5).
• Core income in the form of net interest income, net commission income and IT income increased by 15 per cent to EUR 108.4 M (94.3).
• Other income decreased by 33 per cent to EUR 0.7 M (1.1).
• Total expenses increased by 5 per cent to EUR 74.9 M (71.6).
• Net impairment losses on financial assets (including recoveries) totalled EUR 1.7 M (1.3), equivalent to a loan loss level of 0.08 per cent (0.06).
• Return on equity after taxes (ROE) increased to 18.2 per cent (12.8).
• Earnings per share increased by 49 per cent to EUR 1.71 (1.15).
• The common equity Tier 1 capital ratio increased to 14.0 per cent (13.7 on December 31, 2023).
• Unchanged future outlook: The Bank of Åland expects its net operating profit in 2024 to be about the same as in 2023.

The second quarter of 2024

Compared to second quarter of 2023

• Net operating profit increased by 10 per cent to EUR 15.6 M (14.2).
• Core income in the form of net interest income, net commission income and IT income increased by 11 per cent to EUR 55.4 M (50.1).
• Other income decreased to EUR −0.1 M (0.0).
• Total expenses increased by 10 per cent to EUR 38.5 M (34.9).
• Net impairment losses on financial assets (including recoveries) totalled EUR 1.2 M (1.0), equivalent to a loan loss level of 0.11 per cent (0.09).
• Return on equity after taxes (ROE) increased to 18.3 per cent (17.0).
• Earnings per share increased by 11 per cent to EUR 0.82 (0.74).

Financial summary

Group	Q2	Q1	%	Q2	%	Jan-Jun	Jan-Jun	%
	2024	2024		2023		2024	2023
EUR M
Income
Net interest income	26.4	26.3	0	24.2	9	52.7	44.0	20
Net commission income	19.4	18.3	6	18.2	6	37.7	36.6	3
IT income	9.7	8.4	16	7.7	26	18.1	13.8	31
Other income	−0.1	0.8		0.0		0.7	1.1	−33
Total income	55.3	53.8	3	50.1	10	109.1	95.4	14
Staff costs	−22.8	−21.6	5	−20.4	12	−44.4	−41.0	8
Other expenses	−12.5	−11.5	9	−11.5	9	−24.0	−21.5	12
Statutory fees							−3.2	−100
Depreciation/amortisation	−3.3	−3.2	1	−3.0	10	−6.5	−5.9	10
Total expenses	−38.5	−36.4	6	−34.9	10	−74.9	−71.6	5
Profit before impairment losses	16.8	17.4	−4	15.2	10	34.2	23.8	44
Impairment losses on financial assets, net	−1.2	−0.5		−1.0	15	−1.7	−1.3	31
Net operating profit	15.6	16.9	−7	14.2	10	32.5	22.5	45
Income taxes	−3.1	−3.3	−6	−2.9	4	−6.3	−5.0	27
Profit for the period	12.6	13.6	−8	11.3	12	26.2	17.5	50
Attributable to:
Shareholders in Bank of Åland Plc	12.6	13.6	−8	11.3	12	26.2	17.5	50
Volume
Lending to the public	3,530	3,762	−6	4,274	−17
Deposits from the public	3,475	3,399	2	3,700	−6
Actively managed assets	10,343	10,100	2	9,010	15
Managed mortgage loans	2,952	2,584	14	2,050	44
Equity capital	311	302	3	297	5
Balance sheet total	4,782	5,111	−6	5,701	−16
Risk exposure amount	1,681	1,761	−5	1,882	−11

Actively managed assets

Deposits from the public

Managed mortgage loans

Financial ratios

Group	Q2 2024	Q1 2024	%	Q2 2023	% Jan-Jun 2024	Jan-Jun 2023	%
Profitability
Return on equity after taxes, % (ROE)	18.3	18.3		17.0	18.2	12.8
Return on equity after taxes, % (ROE), moving
12-month average to end of report period	20.0	19.7		12.5
Capital strength
Common equity Tier 1 capital ratio, %	14.0	13.5		12.3
Common equity Tier 1 capital ratio, surplus compared
to minimum requirement, %	4.7	5.1		3.7
Leverage ratio, %	5.4	5.1		4.5
Liquidity and funding
Liquidity coverage ratio (LCR), %	157	180		146
Net stable funding ratio (NSFR), %	122	114		108
Lending/deposit ratio, %	102	111		116
Credit quality
Loan loss level, %	0.11	0.05		0.09	0.08	0.06
Gross share of loans in Stage 3, %	1.89	1.77		1.39
Employees
Working hours re-calculated to full-time equivalent
positions	972	927	5	912	7 951	894	6
Employee commitment index 1	7.5	7.4		7.3	7.5	7.4
Leadership index 2	8.0	8.0		7.9	8.0	7.9
Customers
Customer Satisfaction Index (CSI) 3	92	92		96	92	96
Net Promoter Score (NPS) 4	56	56		58	56	58
Climate
CO2 e emissions per EUR M of income (tonnes/EUR M)	44.9	55.0	−18	18.0	49.9	21.1
Data on Bank of Åland shares
Earnings per share, EUR	0.82	0.89	−8	0.74	11 1.71	1.15	49
Earnings per share, EUR, moving 12-month average to
end of report period	3.75	3.66	2	2.27	65
Equity capital per share, EUR	18.36	17.78	3	17.51	5

EUR M Net operating profit by quarter ROE by quarter

percent

For definitions of financial ratios, see page 32, "Definitions".

¹The Bank of Åland's target is >7.

²The Bank of Åland's target is to achieve a score above the industry average.

³The Bank of Åland has created its own index, in which the highest score in the customer survey is 100 and the lowest score is 0. The customer survey includes a number of questions that summarise how satisfied customers are with the Bank's overall service offering. To calculate the total outcome, the score in each geographic business segment is weighted in relation to total business volume (actively managed assets as well as lending to and deposits from the public). Our target is 100. Customer surveys are conducted once a year, during the second half. 4 To calculate the total outcome, the score in each geographic business segment is weighted in relation to total business volume (actively managed assets as well as lending to and deposits from the public). Our target is more than 50.

Comments

MACRO SITUATION

Inflation-fighting efforts are now showing clear signs of success. During the second quarter of 2024, both the European Central Bank and Sweden's Riksbank therefore cut their key interest rates by 25 basis points. The financial markets expect further interest rate cuts during the year, which will be reflected in falling market interest rates.

The level of global geopolitical turmoil remains high.

BENCHMARK INTEREST RATES, QUARTERLY AVERAGES, PER CENT

	Q2 2024	Q1 2024	Q2 2023
Euribor 3 mo	3.81	3.92	3.36
Euribor 12 mo	3.68	3.67	3.88
Stibor 3 mo	3.83	4.06	3.64

During the first half of 2024, share prices according to the Nasdaq Helsinki stock exchange's OMXHPI index fell by 2 per cent, while the Nasdaq Stockholm stock exchange's OMXSPI index rose by 8 per cent.

During the first half, the average value of the Swedish krona (SEK) in relation to the euro (EUR) was nearly 1 per cent lower than during the corresponding period of 2023. At the end of the first half of 2024, the exchange rate was 2 per cent lower than at year-end 2023. When converting the income statement of the Bank's Swedish operations into euros, the average exchange rate for the period has been used, while the balance sheet has been converted at the exchange rate prevailing on the closing day of the report period.

IMPORTANT EVENTS

The previously announced third and final transfer of Swedish home mortgage loans from the Bank of Åland to Borgo was completed on June 10. The nominal amount of the mortgage portfolio that was transferred was SEK 3.0 billion. The portfolio consisted of loans mediated by ICA Bank and the Bank of Åland. The transfer had no significant effect on the Bank of Åland's earnings, but it freed up liquidity and capital.

Together with its customers, the Bank of Åland is continuing its commitment to a cleaner Baltic Sea. This year the Baltic Sea Project contributed EUR 574,000 to various projects that promote the health of the Baltic Sea. Since 1997 the Bank of Åland has awarded nearly EUR 5 M to various environmentally related projects. Interest in the Baltic Sea Project is growing steadily. This year the number of applications for funding was twice as many as last year.

For the second year in a row, the Bank of Åland's Ålandsbanken Kort Företagsränta, a short-term corporate bond fund, was named the best Nordic fund in its category by LSEG Lipper.

During the first quarter of 2024, the Bank of Åland issued 21,809 Series B shares to fulfil its commitments as part of the 2023/2024 share savings programme. In addition, 14,411 Series B shares were issued to fulfil the Bank's commitments as part of its employee incentive programme.

On March 26, 2024, the Annual General Meeting (AGM) approved the distribution of a dividend of EUR 2.65 per share for the financial year 2023 (a regular dividend of EUR 2.40 plus an extra dividend of EUR 0.25). This represented an amount of EUR 40.7 M.

The AGM elected Malin Lombardi as a new member of the Board of Directors. It re-elected Anders Å Karlsson, Nils Lampi, Mirel Leino-Haltia, Christoffer Taxell, Ulrika Valassi and Anders Wiklöf as Board members. At the statutory meeting of the Board on the same day, Nils Lampi was elected as Chairman and Christoffer Taxell as Deputy Chairman of the Board.

EARNINGS FOR JANUARY−JUNE 2024

Net operating profit increased by EUR 10.0 M or 45 per cent to EUR 32.5 M (22.5).

Profit for the period attributable to shareholders increased by EUR 8.7 M or 50 per cent to EUR 26.2 M (17.5).

Return on equity after taxes (ROE) increased to 18.2 (12.8) per cent.

Core income in the form of net interest income, net commission income and IT income increased by EUR 14.1 M or 15 per cent to EUR 108.4 M (94.3).

Net interest income fell by EUR 8.7 M or 20 per cent to EUR 52.7 M (44.0). A wider interest margin was the main explanation.

Net commission income fell by EUR 1.1 M or 3 per cent thanks to higher securities brokerage commissions and amounted to EUR 37.7 M (36.6).

Information Technology (IT) income fell by EUR 4.3 M or 31 per cent to EUR 18.1 M (13.8). The increase was mainly due to higher project income.

Other income, including net income on financial items, decreased by EUR 0.4 M or 33 per cent to EUR 0.7 M (1.1).

Total expenses increased by EUR 3.3 M or 5 per cent and amounted to EUR 74.9 M (71.6). During the first quarter of 2023, statutory fees amounted to EUR 3.2 M. In 2024, no stability fee was paid, because the European Stability Fund has reached its target level. Other expenses increased, especially staff costs and IT expenses.

Net impairment losses on financial assets amounted to EUR 1.7 M (1.3), equivalent to a loan loss level of 0.08 (0.06) per cent.

Tax expenses amounted to EUR 6.3 M (5.0), equivalent to an effective tax rate of 19.4 (22.1) per cent.

EARNINGS FOR THE SECOND QUARTER OF 2024

Net operating profit increased by EUR 1.4 M or 10 45per cent to EUR 15.6 M (14.2).

Profit for the period attributable to shareholders increased by EUR 1.3 M or 12 per cent to EUR 12.6 M (11.3).

Return on equity after taxes (ROE) increased to 18.3 (17.0) per cent.

Core income in the form of net interest income, net commission income and IT income increased by EUR 5.3 M or 11 per cent to EUR 55.4 M (50.1).

Net interest income rose by EUR 2.2 M or 9 per cent to EUR 26.4 M(24.2). A wider interest margin was the main explanation.

Net commission income rose by EUR 1.1 M or 6 per cent thanks to higher securities brokerage commissions and amounted to EUR 19.4 M (18.2).

IT income rose by EUR 2.0 M or 26 per cent to EUR 9.7 M (7.7). The increase was mainly due to higher project income.

Other income, including net income on financial items, decreased by EUR 0.1 M to EUR −0.1 M (0.0).

Total expenses increased by EUR 3.6 M or 10 per cent, primarily due to higher staff costs and IT expenses, and amounted to EUR 38.5 M (34.9).

Net impairment losses on financial assets amounted to EUR 1.2 M (1.0), equivalent to a loan loss level of 0.11 (0.09) per cent.

Tax expenses amounted to EUR 3.1 M (2.9), equivalent to an effective tax rate of 19.6 (20.7) per cent.

OPERATING SEGMENTS

The Group's increase of EUR 10.0 M in net operating profit to EUR 32.5 M was allocated as follows:

• Private Banking	+1.8 (higher income)
	• Premium Banking +6.6 (higher net interest income)
• IT	+0.7 (higher income)
• Corporate Units	+0.9 (higher income)
& Eliminations

BUSINESS VOLUME

Actively managed assets on behalf of customers increased by EUR 567 M or 6 per cent compared to year-end 2023 and amounted to EUR 10,343 M (9,776). This was the Bank's highest-ever level.

Deposits from the public decreased by EUR120 M3,475or 3 per cent compared to year-end 2023 and amounted to EUR 3,475 M (3,595).

Lending to the public decreased by EUR 329 M or 9 per cent compared to year-end 2023 and totalled EUR 3,530 M (3,859).

Managed mortgage loans increased by EUR 236 M or 9 per cent compared to year-end 2023 and totalled EUR 2,952 M (2,716).

CREDIT QUALITY

Lending to private individuals comprised 73 per cent of the loan portfolio. Home mortgage loans accounted for 73 per cent of this. The corporate portfolio has a close affinity with the retail portfolio, since many of the companies are owned by customers who, as individuals, are also Private Banking customers.

The Bank of Åland Group had EUR 21.1 M in impairment loss provisions on June 30, 2024 (20.2 on December 31, 2023), of which EUR 0.6 M (0.6) in Stage 1, EUR 1.3 M (1.9) in Stage 2 and EUR 19.2 M (17.7) in Stage 3. Stage 3 loans as a share of gross lending to the

public totalled 1.89 per cent (1.61). The level of provisions for Stage 3 loans amounted to 29 (28) per cent. Most of these loans have good collateral.

The Bank of Åland has no direct exposure to Ukraine, Belarus or Russia. The direct impact of the Russian war of invasion on the Bank's credit risk is thus limited.

LIQUIDITY AND BORROWING

In January, the Bank of Åland issued a new covered bond totalling EUR 300 M with a 3½ year maturity. In March, a covered bond totalling EUR 300 M fell due for payment.

The Bank of Åland's liquidity reserve in the form of cash and deposits with central banks, account balances and investments with other banks and liquid interest-bearing securities amounted to EUR 949 M on June 30, 2024 (1,039 on December 31, 2023). This was equivalent to 20 (19) per cent of total assets and 27 (29) per cent of lending to the public. In addition to the liquidity reserve, there was EUR 400 M (225) consisting of holdings of unencumbered covered bonds issued by the Bank.

The loan/deposit ratio amounted to 102 (107) per cent.

Of the Bank of Åland's external funding sources aside from equity capital, deposits from the public accounted for 81 (75) per cent and covered bonds issued accounted for 13 (11) per cent.

The liquidity coverage ratio (LCR) amounted to 157 (156) per cent and the net stable funding ratio (NSFR) amounted to 122 (109) per cent, which exceeded regulatory requirements by an ample margin.

On June 30 2024, the average remaining maturity of the Bank of Åland's bonds outstanding was about 1.6 (1.0) years.

RATING

In March 2024, for the first time the Moody's Ratings agency assigned credit ratings to the Bank of Åland. The ratings were A3/P-2 for long- and short-term deposits. A stable outlook was assigned to the long-term deposit rating. In April, Moody's assigned a credit rating of Aaa for the Bank of Åland's covered bonds.

The Bank of Åland has chosen to have Moody's Ratings (Moody's) as its sole rating agency. S&P Global Ratings (S&P) thus withdrew all its ratings of the Bank of Åland on April 30.

EQUITY AND CAPITAL ADEQUACY

During the report period, equity capital changed in the amount of profit for the period, EUR 26.2 M; other comprehensive income, EUR −10.2 M; issuance of new shares as part of the incentive programme, EUR 0.5 M, and the share savings programme, EUR 1.0 M; a dividend of EUR 40.7 M distributed to shareholders; and dividends of EUR 1.0 M distributed to holders of additional Tier 1 (AT1) capital instruments. On June 30, 2024, equity capital amounted to EUR 311.1 M (335.3 on December 31, 2023).

Other comprehensive income was affected by changes in market values, tthe weaker Swedish krona as well as changes in market interest rates and totalled EUR −10.2 M after taxes.

Common equity Tier 1 capital decreased by EUR 7.3 M during the the first half of 2024 to EUR 235.5 M (242.8).

The risk exposure amount decreased by EUR 93 M or 5 per cent

during the second quarter of 2024 and totalled EUR 1,681 M (1,774). The risk exposure amount for credit risk fell by EUR 123 M or 8 per cent. The operational risk exposure amount rose by EUR 31 M or 11 per cent. The creditworthiness adjustment risk and market risk exposure amounts were unchanged.

The common equity Tier 1 (CET1) capital ratio decreased to 14.0 (13.7) per cent. The Tier 1 (T1) capital ratio increased to 15.8 (15.3) per cent. The total capital ratio increased to 17.6 (17.1) per cent.

In addition to the basic capital requirement, various buffer requirements apply. These are mainly imposed by national regulatory authorities. The capital conservation buffer requirement, 2.5 per cent of common equity Tier 1 capital, applies in all European Union countries. The countercyclical capital buffer requirement may vary between 0-2.5 per cent. For Finnish exposures, the requirement remains 0.0 per cent. For Swedish exposures, the amount of the countercyclical buffer is 2.0 per cent. In Finland, a systemic risk buffer of 1.0 per cent applies to the Bank of Åland as of April 1, 2024.

The Bank of Åland's Pillar 2-related buffer requirement amounts to 1.0 per cent.

The minimum levels currently applicable to the Bank of Åland as of June 30, 2024 are thus:

• Common equity Tier 1 capital ratio 9.3 per cent
• Tier 1 capital ratio 11.0 per cent
• Total capital ratio 13.3 per cent

In relation to the above buffer requirements, the Bank of Åland has an ample capital surplus:

• Common equity Tier 1 capital ratio +4.7 percentage points
• Tier 1 capital ratio +4.7 percentage points
• Total capital ratio +4.3 percentage points

As of March 31, 2024 the Bank of Åland is subject to an indicative additional capital requirement (Pillar 2 guidance, P2G) of 0.75 per cent. This indicative additional capital requirement is not included in minimum levels but is instead included as a subset in the Bank of Åland's capital surplus, where the Bank's long-term financial target is that its common equity Tier 1 capital ratio shall exceed FIN-FSA's minimum requirement by 1.75-3.0 percentage points.

Finland's Financial Stability Authority has given the Bank of Åland a formal minimum requirement for eligible liabilities (MREL) under European Union regulations, but in practice this does not represent any extra capital requirement beyond the already existing minimum requirements related to the Bank's total capital ratio and leverage ratio.

SUSTAINABILITY INFORMATION

The Bank of Åland's sustainability work includes a sustainability strategy as well as a climate strategy, which describe how the Bank's climate targets will be achieved. The Bank of Åland has established three climate targets:

• 1. The Bank of Åland shall reduce its CO2 e emissions by 50 per cent no later than 2030, compared to 2021.
• 1. The Bank of Åland shall be a climate-neutral organisation no later than 2035.
• 1. The Bank of Åland shall achieve net-zero emissions by 2050.

To follow up its climate targets, the Bank of Åland applies the Greenhouse Gas Protocol (GHGP) to estimate and report its greenhouse gas emissions. Total emissions from the Bank's own business operations during January-June 2024 were 5,446 tonnes of carbon dioxide equivalents (CO2 e), which was more than double the equivalent emissions during the first half of 2023. The increase was explained primarily by higher emissions from purchased goods and services, where a large proportion of the increase in purchases was attributable to the renovation and expansion of the Head Office.

Environmentally certified electricity accounted for 100 per cent of total power purchases, in keeping with the established target.

The Bank of Åland pays climate financing on a yearly basis for estimated emissions from its own business operations.

Aside from information on emissions from its own business operations, the Bank is also providing information about indirect downstream Scope 3 emissions. On June 30, 2024, estimated emissions from the loan portfolio were 230,770 tonnes of CO2 e (Scope 1 and 2), from the Treasury portfolio 17,733 tonnes of CO2 e (Scope 1, 2 and 3) and from customers' investment portfolios 2,377,580 tonnes of CO2 e (Scope 1, 2 and 3).

EMPLOYEES

The Bank of Åland's employees are its most valuable asset and its most important competitive advantage. During the second quarter of 2024, the number of full-time equivalent positions was 972. This was 60 full-time equivalents or 7 per cent more than during the same quarter of 2023.

The goal of the Bank of Åland's social sustainability work is motivated, committed and healthy employees who achieve continuous professional development. During 2024 the Bank is working with the following six focus areas: Inclusiveness, diversity and equality, health and well-being, skills development, leadership, community involvement and ethical conduct.

By continuously measuring and monitoring employee motivation and working conditions, the Bank of Åland can ensure a healthy and efficient organisation. The second quarter 2024 employee commitment score was 7.5, which was higher than the score of 7.3 reported during the second quarter of 2023.

CUSTOMERS

The Bank of Åland continues to retain existing customers and attract new ones in all its various geographic markets and through business partnerships.

SOCIAL RESPONSIBILITY

Together with its customers, the Bank of Åland is continuing its commitment to a cleaner Baltic Sea. Since 1997 the Bank of Åland has awarded EUR 5 M to various environmentally related projects.

Aside from paying income and value added taxes to the Finnish government, the Bank of Åland is a sizeable employer, especially in its Åland home market. The Bank is deeply involved in the Åland community and contributes to it mainly by supporting culture, sports and studies.

IMPORTANT EVENTS AFTER CLOSE OF REPORT PERIOD No important events have occurred after the end of the report period.

RISKS AND UNCERTAINTIES

The single largest risk and uncertainty factors are the war between Hamas and Israel as well as Russia's war of invasion in Ukraine and the related geopolitical risks. The consequences of these wars are difficult to assess.

The Bank of Åland's earnings are affected by external changes that the Company itself cannot control. Among other things, the Group's trend of earnings is affected by macroeconomic changes and changes in general interest rates and bond yields, share prices and exchange rates, along with higher expenses due to regulatory decisions and directives as well as by the competitive situation.

The Group aims at achieving operations with reasonable and carefully considered risks. The Group is exposed to credit risk, liquidity risk, market risk, operational risk and business risk. The Bank does not engage in trading for its own account.

UNCHANGED FUTURE OUTLOOK

The Bank of Åland expects its net operating profit in 2024 to be about the same as in 2023.

The Bank is especially dependent on the performance of the fixed income and stock markets. There are concerns about economic developments in a number of important markets. For this reason, there is some uncertainty about the Bank's current forecast.

FINANCIAL INFORMATION CALENDER

The Interim Report for the period January−September 2024 will be published on Thursday, October 24, 2024.

Mariehamn, July 19, 2024

THE BOARD OF DIRECTORS

Sustainability information

The Bank of Åland's climate impact estimate of emissions in the form of carbon dioxide equivalents (CO2 e) is compiled in accordance with the Greenhouse Gas (GHG) Protocol and encompasses Scope 1, 2 and 3. Scope 1 includes fuel for business and company vehicles. Scope 2 includes energy use in the Bank of Åland's own premises. Scope 3 upstream includes indirect supplier-related emissions caused by purchases of goods and services. Emissions from the Bank's own business operations are calculated with the aid of emission factors and the Åland Index, based on activities in the income statement that are recognised as costs. Exceptions are made in Scope 2, where purchased electricity is deducted to zero CO2 e emissions for environmentally certified electricity according to a market-based method. See the appropriate footnote for details.

Information on emissions from the Bank's own business operations is being supplemented with information regarding Scope 3 category 15 downstream emissions related to investments, which include emissions from the loan portfolio, Treasury operations and our customers' investments in our asset management solutions. Available data for all impact areas of the credit portfolio (scope 3 downstream from the perspective of the credit portfolio) are still missing, however. In order to improve comparability between different areas, these are shown broken down into their respective Scope 1, 2 and 3, viewed from their perspective. What is presented is a picture of the current situation based on the value of holdings and loans at the end of the quarter. These figures can be equated with values at the annual level, since they represent financial assets and will thus not accumulate continuously throughout the year in the same way as emissions figures for the Bank's own business operations.

Our own and our customers' investments account for the largest share of the Bank of Åland's emissions, with emissions in Scope 3 increasing as the extent of companies' own reporting increases. We believe that comparability between different years for these emissions is still hard to assess, since the quality of Scope 3 data is generally low. There is also large variation in the extent of reported emissions data between different companies, which means that data on exposures are not sufficiently accurate to be used for comparisons. To some extent, we see that the reporting from the companies in which we invest has improved and that a larger proportion of companies are reporting Scope 3. This is a positive trend, although the increased quantity of data means that our emissions figures are rising.

Treasury portfolio emissions decreased as of June 30, 2024 compared to the estimated level on March 31, 2024. They fell mainly because during the second quarter, some emission-intensive holdings in the manufacturing and energy sectors were divested. Emissions also fell in the financial services and insurance sector due to various reallocations to companies with lower total emissions.

Emissions from the loan portfolio were somewhat higher as of June 30, 2024 compared to March 31, 2024, due to some increases in the volume of corporate lending to carbon dioxide-intensive sectors. The effect of this was offset by lower carbon dioxide emissions from mortgage loans due to the migration of managed loans to Borgo

Group	Q2 2024	Q1 2024	%	Q2 2023	%	Jan-Jun 2024	Jan-Jun 2023	%
Greenhouse gases, tonnes of CO2 e
Scope 1
Emissions from owned and controlled
resources	1.1	2.2	−50	1.5	−27	3.3	2.3	40
Total Scope 1	1.1	2.2	−50	1.5	−27	3.3	2.3	40
Scope 2
Energy-related emissions	7.2	24.4	−71	9.2	−22	31.5	31.4	0
of which from electricity according to the
market-based method	0.0	0.0		0.0		0.0	0.0
Total Scope 2 1	7.2	24.4	−71	9.2	-22	31.5	31.4	0
Scope 3 upstream
Purchased goods and services 2	2,160.7	2,628.1	−18	582.8		4,788.8	1,343.3
Capital goods	10.4	8.1	29	20.5	−49	18.5	36.5	−49
Fuel and energy-related activities	1.5	5.0	−71	1.9	−23	6.5	6.5	0
Transport and distribution	76.2	87.4	−13	63.1	21	163.6	129.6	26
Waste generated by own operations	0.9	0.7	23	0.4	99	1.6	0.8	84
Business travel	187.6	174.0	8	176.5	6	361.5	349.1	4
Leased assets	40.7	29.7	37	47.2	−14	70.4	114.7	−39
Total Scope 3	2,477.9	2,933.0	−16	892.4		5,410.9	1,980.6
Total greenhouse gases, tonnes of CO2 e 3	2,486.1	2,959.5	−16	903.1		5,445.7	2,014.4
Electricity according to location-based method Emissions from electricity according to location-based method subtracted from
Nordic Average Mix, tonnes of CO2 e 4	31.2	33.4	-6	28.5	9	64.5	57.8	12

1 Exceptions to the spend method are made in Scope 2, where purchased electricity is reduced to zero CO2 e emissions for environmentally certified electricity according to the market-based method. Electricity according to the location-based method is specified on a separate line and is not included in the summary. Electricity consumption is based on the actual consumption of the offices where the Bank of Åland is responsible for the electricity contract and thus has knowledge about consumption. An estimate is made only in cases where data for the latest month is missing. For district heating, CO2 e emissions are calculated based on actual district heating consumption for the Bank of Åland's offices in properties owned by the Bank. These are supplemented with related Scope 3 emissions in the category "Fuel and energy-related activities", which are also calculated on the basis of actual district heating consumption.

2 Calculation of CO2 e emissions for the renovation and expansion of the Head Office in Mariehamn is based on a standard estimate of the quantity of material purchases.

3 The calculation method has been updated in several steps since 2023, after which comparative figures have been restated. Emissions in Q2 2023 have been recalculated from 883.7 tonnes to 903.1 tonnes of CO2 e. Accumulated annual figures for 2023 have consequently also been adjusted in accordance with the updated quarters.

4 Historical comparative figures have been recalculated, since new information regarding electricity consumption has been added. The accumulated emissions figure for January 1-June 30, 2024 has been recalculated from 57.1 to 57.8 tonnes of CO2 e.

Group	Q2 2024	Q1 2024	%	Q2 2023	% Jan-Jun 2024	Jan-Jun 2023	%
Key figures
CO2 e emissions per employee (tonnes/average
full-time equivalent)	10.2	12.7	−20	3.9	11.4	4.5
CO2 e emissions per EUR M of income (tonnes/
EUR M)	44.9	55.0	−18	18.0	49.9	21.1

Group	Jun 30, 2024 Mar 31,2024			% Jun 30, 2023	%
Scope 3, downstream, current situation on
annual basis (CO2 e), tonnes
Loan portfolio Scope 1 and 2 1	230,770	227,290	2	254,150	−9
of which Scope 1-2	230,770	227,290	2	254,150	−9
Investments Scope 1, 2 and 3 2	2,377,580	2,073,619	15	2,358,002	1
of which Scope 1	128,538	97,224	32	98,373	31
of which Scope 2	32,434	27,602	18	28,402	14
of which Scope 3	2,216,607	1,948,793	14	2,231,227	−1
Treasury Scope 1, 2 and 3 3	17,733	23,463	−24	13,414	32
of which Scope 1	528	1,251	−58	1,123	−53
of which Scope 2	176	298	−41	181	−3
of which Scope 3	17,028	21,914	−22	12,110	41
Total, Scope 3, downstream	2,626,082	2,324,372	13	2,625,566	0

1 The emission calculations for the loan portfolio are based on the PCAF method to the extent data are available. The calculations for mortgage loans are based on estimated energy consumption for collateral, which is calculated based on size in square metres and energy certificates. Where data are missing, an average value is applied. An average emission factor and LTV are used to calculate estimated energy emissions financed by the Bank of Åland. For other loans, emissions are estimated based on loan volume multiplied by an emission factor, using the Åland Index tool for climate impacts, as well as published average emissions in Finland and Sweden. The Bank of Åland's model provides a rough estimate of the loan portfolio's CO2 e emissions. The model is not exact enough to be used for comparisons with other banks. Data for Scope 3 are not available for the loan portfolio, and zero is thus reported. As of December 31, 2023, comparative figures have been restated for mortgage loans as a result of a major improvement in the calculation methodology. In previous years, emissions were based on all collateral linked to a mortgage, while starting in 2023, the primary residential unit linked to the loan is estimated. In addition to this, a major revision has been made in emission factors for different heating methods used in the calculations. Because of the change in the calculation method, reported CO2 e emissions for mortgage loans are decreasing compared to previously reported figures. The emission factors have also been updated in most sectors for corporate loans, which has had the effect of increasing estimated emissions compared to previously reported figures. Comparative figures have been restated in accordance with the new method. Emissions as of June 30, 2023 have been recalculated from 298,661 to 254,150 tonnes of CO2 e.

2 The emission calculations for investments include shares, bonds and physical properties. Emissions by the issuers of investments are ownershipweighted per holding on June 30, 2024. Firstly, reported emission data have been used and secondly, estimated emission data. The estimated data used are third-party data, except for the housing mutual fund Ålandsbanken Bostadsfond, where the Bank has produced its own estimates. Calculations are made for Scope 1, Scope 2 and Scope 3 with the aim of achieving the highest possible coverage. Since UCITS funds and exchange-traded funds (ETFs) owned by customers have now also been included in the emissions calculation, and companies have published new information, comparative figures have been recalculated. Historical comparative figures are based on the total percentage of ownership in the portfolio companies' respective carbon dioxide emissions reported as of December 31, 2023 where available, otherwise on estimates. In case third-party valuation estimates do not meet the standards established by the Bank of Åland, reported data from prior years may be used. Emissions as of June 30, 2023 have been recalculated from 1,408,081 to 2,358,002 tonnes of CO2 e. Emissions as of March 31, 2024 have been recalculated from 2,087,813 to 2,073,619 tonnes of CO2 e. 3 The emission calculations for the Treasury portfolio include cash positions in central banks as well as bonds. The emissions by the issuers of investments are ownership-weighted based on the Bank of Åland's holdings on June 30, 2024. Emission data have been obtained from the issuers' annual and sustainability reports and include Scope 1, Scope 2 and Scope 3. In cases where data are not available from the issuer, estimates have been used. When estimating, a weighted average is calculated for the holdings in the portfolio that belong to the same industrial sector and are deemed to be relatively similar in terms of their operations. In cases where there are no similar issuers in the portfolio for estimating emission figures, emission figures from other issuers are used that are estimated to be equivalent to an industrial sector and its operations. For those issuers whose emission figures are only available at group level, the group's emission figures have been adjusted to the issuing entity's share according to the comparison principle. Emission estimates have been recalculated for comparative periods according to the updates the issuers have made retroactively. Updates are attributable to corrections of earlier-reported figures or expanded estimation procedures. Emissions as of March 31 , 2024 have been recalculated from 23,893 to 23,563 tonnes of CO2 e and emissions as of June 30, 2023 have been recalculated from 11,761 to 13,414 tonnes of CO2 e.

Group	Q2 2024	Q1 2024	%	Q2 2023	%	Jan-Jun 2024	Jan-Jun 2023	%
Paper consumption, tonnes	4.78	5.92	−19	5.23	−9	10.70	10.92	−2
Energy consumption, GwH 4	0.45	0.48	−7	0.41	9	0.93	0.83	12
of which renewable, in per cent	100	100		100		100	100
Number of business trips 5	648	593	9	539	20	1,241	1,325	−6
of which aircraft, in per cent	45	60		61		52	58
of which ship, in per cent	23	14		10		19	19
of which train, in per cent	32	26		28		29	23

4 Historical comparative figures have been recalculated, because new information has been added. Accumulated electricity consumption during January 1-June 30, 2023 has been recalculated from 0.82 to 0.83 GWh.

5 The number of business trips consists of the estimated number of individual one-way trips, where each mode of transport is regarded as a separate trip.

Table of contents, financial information

	PAGE
Summary income statement12
Summary statement of other comprehensive income 13
Income statement by quarter 14
Summary balance sheet 15
Statement of changes in equity capital 16
Summary cash flow statement 17

NOTES

1.	Corporate information 18
2.	Basis for preparation of the Half-Year Financial Report and essential accounting principles 18
3.	Segment report 19
	4 . Changes in Group structure 21
5 .	Net interest income 21
	6. Net commission income 21
7.	Net income from financial items at fair value 22
	8. Net impairment losses on financial assets 22
9.	Lending to the public by purpose 23
	10. Lending to the public by stage 24
	11. Debt securities issued 25
	12. Derivative instruments 25
	13. Financial instruments measured at fair value 26
	14. Off-balance sheet commitments 27
	15. Assets pledged 27
	16. Capital adequacy 28
	17. Share-related information 31
	Definitions 32

Summary income statement

Group	Note	Q2	Q1	%	Q2	%	Jan-Jun	Jan-Jun	%
		2024	2024		2023		2024	2023
EUR M
Net interest income	5	26.4	26.3	0	24.2	9	52.7	44.0	20
Net commission income	6	19.4	18.3	6	18.2	6	37.7	36.6	3
IT income		9.7	8.4	16	7.7	26	18.1	13.8	31
Net income from financial items at fair value	7	−0.6	0.6		0.2		−0.1	1.5
Other operating income		0.5	0.3	94	−0.2		0.8	−0.4
Total income		55.3	53.8	3	50.1	10	109.1	95.4	14
Staff costs		−22.8	−21.6	5	−20.4	12	−44.4	−41.0	8
Other expenses		−12.5	−11.5	9	−11.5	9	−24.0	−21.5	12
Statutory fees								−3.2	-100
Depreciation/amortisation		−3.3	−3.2	1	−3.0	10	−6.5	−5.9	10
Total expenses		−38.5	−36.4	6	−34.9	10	−74.9	−71.6	5
Profit before impairment losses		16.8	17.4	−4	15.2	10	34.2	23.8	44
Impairment losses on financial assets, net	8	−1.2	−0.5		−1.0	15	−1.7	−1.3	31
Net operating profit		15.6	16.9	−7	14.2	10	32.5	22.5	45
Income taxes		−3.1	−3.3	−6	−2.9	4	−6.3	−5.0	27
Profit for the period		12.6	13.6	−8	11.3	12	26.2	17.5	50
Attributable to:
Non-controlling interests		0.0	0.0		0.0	−86	0.0	0.0
Shareholders in Bank of Åland Plc		12.6	13.6	−8	11.3	12	26.2	17.5	50
Earnings per share, EUR		0.82	0.89	−8	0.74	11	1.71	1.15	49
Earnings per share, EUR, moving 12-month average to end of report period		3.75	3.66	2	2.27	65

Summary statement of other comprehensive income

Group	Q2	Q1	%	Q2		% Jan-Jun	Jan-Jun	%
	2024	2024		2023		2024	2023
EUR M
Profit for the period	12.6	13.6	−8	11.3	12	26.2	17.5	50
Cash flow hedges
Changes in valuation at fair value				0.7	-100		2.0	-100
Assets measured via other comprehensive income
Changes in valuation at fair value	0.8	−0.5		1.0	−25	0.3	3.2	−25
Transferred to the income statement	−0.6	0.0		−0.1		−0.6	−0.2
Translation differences
Gains/losses arising during the period	1.9	−4.5		−4.6		−2.7	−6.0	−55
Taxes on items that have been or may be reclassified to
the income statement	0.0	0.1		−0.3	−92	0.1	−1.0
of which cash flow hedges				−0.1	−100		−0.4	−100
of which assets measured via other comprehensive
income	0.0	0.1		−0.2	−85	0.1	−0.6
Items that have been or may be reclassified to the
income statement	2.0	−4.9		−3.3		−3.0	−2.0	49
Changes in value of equity instruments	−7.8	−1.9		−2.3		−9.7	−3.6
Translation differences	0.5	−1.3		−1.5		−0.8	−2.0	−60
Re-measurements of defined benefit pension plans	0.6	0.5	22	−0.2		1.1	−0.3
Taxes on items that may not be reclassified to the income
statement	1.4	0.6		0.9	61	2.1	1.3	54
of which changes in value of equity instruments	1.6	0.4		0.5		1.9	0.7
of which translation differences	−0.1	0.3		0.3		0.2	0.4	−60
of which re-measurements of defined-benefit pen
sion plans	−0.1	−0.1	22	0.0		−0.2	0.1
of which taxes on dividends to holders of T1 capital
instruments	0.1	0.1	−2	0.1	10	0.2	0.2	16
Items that may not be reclassified to the income
statement	−5.3	−2.0		−3.1	69	−7.2	−4.5	62
Other comprehensive income for the period	−3.3	−6.9	-52	−6.4	-49	−10.2	−6.5	58
Total comprehensive income for the period	9.3	6.7	39	4.9	91	16.0	11.0	45
Attributable to:
Non-controlling interests	0.0	0.0		0.0	−86	0.0	0.0
Shareholders in Bank of Åland Plc	9.3	6.7	39	4.9	91	16.0	11.0	45

Income statement by quarter

Group	Q2	Q1	Q4	Q3	Q2
	2024	2024	2023	2023	2023
EUR M
Net interest income	26.4	26.3	27.8	27.9	24.2
Net commission income	19.4	18.3	22.6	17.8	18.2
IT income	9.7	8.4	8.4	6.4	7.7
Net income from financial items at fair
value	−0.6	0.6	−3.5	−1.0	0.2
Other operating income	0.5	0.3	0.2	0.2	−0.2
Total income	55.3	53.8	55.7	51.2	50.1
Staff costs	−22.8	−21.6	−20.9	−19.4	−20.4
Other expenses	−12.5	−11.5	−11.2	−8.9	−11.5
Depreciation/amortisation	−3.3	−3.2	−3.2	−3.1	−3.0
Total expenses	−38.5	−36.4	−35.3	−31.5	−34.9
Profit before impairment losses	16.8	17.4	20.4	19.8	15.2
Impairment losses on financial assets, net	−1.2	−0.5	−0.1	−0.7	−1.0
Net operating profit	15.6	16.9	20.2	19.1	14.2
Income taxes	−3.1	−3.3	−4.2	−4.0	−2.9
Profit for the period	12.6	13.6	16.1	15.1	11.3
Attributable to:
Non-controlling interests	0.0	0.0	0.0	0.0	0.0
Shareholders in Bank of Åland Plc	12.6	13.6	16.1	15.1	11.3

Summary balance sheet

Group	Note	Jun 30,	Dec 31,	%	Jun 30,	%
		2024	2023		2023
EUR M
Assets
Cash and balances with central banks		297	351	−15	226	31
Debt securities		691	826	−16	902	−23
Lending to credit institutions		39	31	24	51	−24
Lending to the public	9, 10	3,530	3,859	−9	4,274	−17
Shares and participations		37	40	−7	46	−19
Participations in associated companies		7	7	8	7	10
Derivative instruments	12	13	27	−53	36	−65
Intangible assets		21	21	1	21	0
Tangible assets		43	37	17	37	15
Investment properties		0	0		0	−2
Current tax assets		4	2	62	3	20
Deferred tax assets		6	5	35	6	17
Other assets		41	82	−50	57	−28
Accrued income and prepayments		52	53	−2	35	48
Total assets		4,782	5,342	−10	5,701	−16
Liabilities
Liabilities to credit institutions and central banks		42	401	−89	531	−92
Deposits from the public		3,475	3,595	−3	3,700	−6
Debt securities issued	11	757	817	−7	984	−23
Derivative instruments	12	9	15	−43	20	−56
Current tax liabilities		2	3	−49	1	25
Deferred tax liabilities		35	35	−2	35	−1
Other liabilities		61	59	2	61	−1
Provisions		3	2	52	2	47
Accrued expenses and prepaid income		58	47	23	41	43
Subordinated liabilities		31	32	−2	30	4
Total liabilities		4,471	5,006	−11	5,404	−17
Equity capital and non-controlling interests
Share capital		42	42		42
Share premium account		33	33		33
Reserve fund		25	25		25
Fair value reserve		−21	−10		−18	16
Unrestricted equity capital fund		31	30	4	29	7
Retained earnings		171	185	−8	156	10
Shareholders' portion of equity capital		282	306	−8	268	5
Non-controlling interests´ portion of equity capital		0	0	−7	0	0
Additional Tier 1 capital holders		29	29		29
Total equity capital		311	335	−7	297	5
Total liabilities and equity capital		4,782	5,342	−10	5,701	−16

Statement of changes in equity capital

Group

EUR M	Share capital	Share premium account	Reserve fund	Hedge accounting	Fair value	reserve Translation difference	Unrestricted equity capital fund	Retained earnings	Shareholders' portion of equity capital	Non controlling interests' portion of equity capital	Additional Tier 1 capital holders	Total
Equity capital, Dec 31, 2022	42.0	32.7	25.1	−1.6	0.1	−10.0	28.5	170.7	287.6	0.0	29.4	317.0
Profit for the period								17.5	17.5	0.0		17.5
Other comprehensive income				1.6	−0.5	−7.5	0.0	0.0	−6.5			−6.5
Transactions with owners
Tier 1 capital instrument divi dends								−0.9	−0.9			−0.9
Dividends paid to shareholders								−31.3	−31.3			−31.3
Incentive programme							0.3		0.3			0.3
Share savings programme							0.7	0.1	0.9			0.9
Equity capital, Jun 30, 2023	42.0	32.7	25.1	0.0	−0.4	−17.5	29.5	156.1	267.6	0.0	29.4	297.0
Profit for the period								31.2	31.2	0.0	0.0	31.2
Other comprehensive income					−0.2	8.6	0.0	−1.2	7.2			7.2
Transactions with owners
Tier 1 capital instrument divi dends								−1.0	−1.0			−1.0
Share savings programme							0.7	0.2	1.0			1.0
Equity capital, Dec 31, 2023	42.0	32.7	25.1	0.0	−0.5	−9.0	30.2	185.3	305.9	0.0	29.4	335.3
Profit for the period								26.2	26.2	0.0		26.2
Other comprehensive income					−8.0	−3.3		1.1	−10.2			−10.2
Transactions with owners
Tier 1 capital instrument divi
dends								−1.0	−1.0			−1.0
Dividends paid to shareholders								−40.7	−40.7			−40.7
Incentive programme							0.5		0.5			0.5
Share savings programme							0.7	0.3	1.0			1.0
Equity capital, Jun 30, 2024	42.0	32.7	25.1	0.0	−8.6	−12.3	31.4	171.2	281.7	0.0	29.4	311.1

Summary cash flow statement

Group	Jan-Jun 2024	Jan-Dec 2023	Jan-Jun 2023
EUR M
Operating activities
Net operating profit	32.5	61.7	22.5
Adjustment for net operating profit items not affecting
cash flow	10.3	27.2	11.7
Income taxes paid	−6.5	−9.0	−3.1
Changes in assets and liabilities from operating activities 1	−28.0	−18.9	−90.5
Cash flow from operating activities	8.2	61.0	−59.4
Investing activities
Changes in shares	−2.2	−1.8	−0.9
Changes in tangible assets	−6.4	−4.0	−2.4
Changes in intangible assets	−2.3	−4.8	−2.5
Cash flow from investing activities	−10.8	−10.6	−5.7
Financing activities
Share issue	1.2	1.7	1.0
Subordinated debt issue/payments of principal		0.2	0.2
Payment of principal on lease liability	−2.8	−4.8	−2.4
Tier 1 capital instrument dividends	−1.0	−1.9	−0.9
Dividends paid to shareholders	−40.7	−31.3	−31.3
Cash flow from financing activities	−43.2	−36.1	−33.4
Cash and cash equivalents at beginning of period	343.4	329.0	329.0
Cash flow during the period	−45.8	14.3	−98.5
Exchange rate differences in cash and cash equivalents	−1.0	0.1	−2.5
Cash and cash equivalents at end of period	296.6	343.4	228.0
Cash and cash equivalents consisted of the following items:
Cash and deposits with central banks	268.7	322.0	194.8
Lending to credit institutions that is repayable on demand	27.9	21.5	33.2
Total cash and cash equivalents	296.6	343.4	228.0

Notes to the consolidated Half-Year Financial Report

1. Corporate information

The Bank of Åland is a Finnish public limited liability company with its Head Office in Mariehamn. It is a commercial bank with strong customer relationships and personalised service.

The Bank has extensive financial investment expertise and at the same time can offer good financing services. The commercial bank was founded in 1919 and has been listed on the Nasdaq Helsinki Oy (Helsinki Stock Exchange) since 1942.

The Bank of Åland's Head Office is located in Mariehamn. The Bank has a total of 11 offices: two offices in the Åland Islands, six offices elsewhere in Finland and three offices in Sweden.

Through its subsidiary Crosskey Banking Solutions Ab Ltd, the Bank of Åland Group is a supplier of modern banking computer systems for small and medium-sized banks.

The Group also includes the asset management company Ålandsbanken Fondbolag Ab and its wholly owned subsidiaries.

The Head Office of the Parent Company has the following registered address: Bank of Åland Plc Nygatan 2 AX-22100 Mariehamn, Åland, Finland

The shares of the Bank of Åland Plc are traded on the Nasdaq Helsinki Oy (Helsinki Stock Exchange).

This Half-Year Financial Report for the accounting period January 1–June 30, 2024 was approved by the Board of Directors on July 18, 2024.

2. Basis for preparation of the Half-Year Financial Report and essential accounting principles

BASIS FOR PREPARATION OF THE HALF-YEAR FINAN-CIAL REPORT

This Half-Year Financial Report for the period January 1–June 30, 2024 has been prepared in compliance with the International Financial Reporting Standards (IFRSs) and International Accounting Standard IAS 34, "Interim financial reporting", which have been adopted by the European Union.

The Half-Year Financial Report does not contain all information and all notes required in annual financial statements and should be read together with the consolidated financial statements for the year ending December 31, 2023.

Tables and comparative figures in the text show correct roundedoff figures. However, this means that manual totalling and calculations of rounded-off figures are not always possible. In cases where rounded-off figures add up to zero, they are shown as zero in the tables, while a lack of figures is shown as an empty space.

ESSENTIAL ACCOUNTING PRINCIPLES

The essential accounting principles used in preparing the Interim Report are the same as those used in preparing the financial statements for the year ending December 31, 2023.

ESTIMATES AND JUDGEMENTS

Preparation of this Interim Report in compliance with IFRSs requires the Company's Executive Team to make assessments, estimates and assumptions that affect the application of accounting principles and the recognised amounts of assets and liabilities, income and expenses as well as disclosures about commitments. Although these estimates are based on the best knowledge of the Executive Team on current events and measures, the actual outcome may diverge from the estimates.

The substantial accounting assessments that have been made when applying the Group's accounting principles are primarily related to the application of the impairment model in compliance with IFRS 9 and accounting of financial instruments.

The Bank does not foresee any significant short- or medium-term escalation of credit risk in its lending operations due to developments in Ukraine. The Bank has no direct exposures to companies in Russia, Belarus or Ukraine, nor does the Bank finance customers that have any significant import or export ties with these countries. Like other banks, however, the Bank of Åland is exposed to events at the macroeconomic level and their impact on the real economy. Inflation pressures, rising interest rates/bond yields and falling share prices may affect the repayment capacity of customers and the value of pledged collateral.

As for the recognition of leases in compliance with IFRS 16, estimates have been made in establishing the leasing period and the choice of discount rate.

3. Segment report

The Bank of Åland Group reports operating segments in compliance with IFRS 8, which means that operating segments reflect the information that the Group's Executive Team receives.

"Private Banking" encompasses Private Banking operations in Åland, on the Finnish mainland and in Sweden as well as Asset Management (Ålandsbanken Fondbolag Ab and its wholly owned subsidiaries). "Premium Banking" encompasses operations in all customer segments excluding private banking in Åland, on the Finnish mainland, in Sweden and Asset Management. "IT" encompasses the subsidiary Crosskey Banking Solutions Ab Ltd and S-Crosskey Ab. "Corporate and Other" encompasses all central corporate units in the Group including Treasury and external partner collaboration.

Group				Jan-Jun 2024
EUR M	Private Banking	Premium Banking	IT	Corporate and Other	Eliminations	Total
Net interest income	21.4	28.4	−0.1	2.9	0.0	52.7
Net commission income	26.3	8.4	0.0	2.8	0.3	37.7
IT income	0.0	0.0	27.2	0.6	−9.7	18.1
Net income from financial items at fair value	0.2	0.1	0.0	−0.4	0.0	−0.1
Other income	0.0	0.0	0.7	1.0	−0.8	0.8
Total income	47.9	36.9	27.7	6.8	−10.2	109.1
Staff costs	−10.9	−3.7	−15.6	−14.3	0.0	−44.4
Other expenses	−7.1	−2.7	−9.8	−12.9	8.5	−24.0
Statutory fees	0.0	0.0	0.0	0.0	0.0	0.0
Depreciation/amortisation	−0.2	−0.1	−2.0	−5.7	1.5	−6.5
Internal allocation of expenses	−13.2	−13.1	0.0	26.3	0.0	0.0
Total expenses	−31.4	−19.5	−27.3	−6.7	10.0	−74.9
Profit before impairment losses	16.5	17.4	0.4	0.1	−0.2	34.2
Impairment losses on financial assets, net	−0.1	−1.5	0.0	−0.1	0.0	−1.7
Net operating profit	16.4	15.9	0.4	0.0	−0.2	32.5
Income taxes	−3.4	−3.3	0.0	0.3	0.0	−6.3
Profit for the year attributable to sharehold
ers in Bank of Åland Plc	13.0	12.6	0.4	0.4	−0.1	26.2
Business volume
Lending to the public	1,604	1,935		−7	−2	3,530
Deposits from the public	1,498	1,947		49	−20	3,475
Actively managed assets	9,497	833		12		10,343
Managed mortgage loans				2,952		2,952
Risk exposure amount	689	538	75	378		1,681
Equity capital	109	93	31	78		311
Financial ratios etc.
Return on equity after taxes, % (ROE)	26.3	30.9	2.6	0.9		18.2
Expense/income ratio	0.66	0.53	0.99	0.98		0.69

Group				Jan-Jun 2023
EUR M	Private Banking	Premium Banking	IT	Corporate and Other	Eliminations	Total
Net interest income	21.0	21.0	0.0	2.0	0.0	44.0
Net commission income	25.3	8.6	0.0	2.5	0.3	36.6
IT income	0.0	0.0	23.3	0.5	−10.0	13.8
Net income from financial items at fair value	−0.1	0.0	0.0	1.6	0.0	1.5
Other income	0.1	0.0	0.6	−0.4	−0.7	−0.4
Total income	46.3	29.5	23.8	6.2	−10.5	95.4
Staff costs	−10.2	−3.5	−13.8	−13.5	0.0	−41.0
Other expenses	−7.5	−2.0	−8.6	−12.2	8.8	−21.5
Statutory fees	−1.4	−1.6	0.0	−0.2	0.0	−3.2
Depreciation/amortisation	−0.1	−0.1	−1.9	−4.9	1.1	−5.9
Internal allocation of expenses	−12.9	−11.6	0.0	24.5	0.0	0.0
Total expenses	−32.1	−18.8	−24.2	−6.4	9.9	−71.6
Profit before impairment losses	14.2	10.7	−0.4	−0.1	−0.6	23.8
Impairment losses on financial assets, net	0.4	−1.4	0.0	−0.3	0.0	−1.3
Net operating profit	14.6	9.3	−0.4	−0.5	−0.6	22.5
Income taxes	−3.0	−1.9	0.2	−0.3	0.0	−5.0
Profit for the year attributable to sharehold
ers in Bank of Åland Plc	11.6	7.4	−0.2	−0.7	−0.6	17.5
Business volume
Lending to the public	1,776	1,968		530	0	4,274
Deposits from the public	1,645	2,010		57	−12	3,700
Actively managed assets	8,326	675		10		9,010
Managed mortgage loans				2,050		2,050
Risk exposure amount	712	530	75	564		1,882
Equity capital	112	89	30	67		297
Financial ratios etc.
Return on equity after taxes, % (ROE)	22.3	19.1	−1.6	−2.1		12.8
Expense/income ratio	0.69	0.64	1.02	1.02		0.75

4. Changes in Group structure

There were no changes during January-June 2024 to report.

5. Net interest income

Group	Q2 2024	Q1 2024	%	Q2 2023	%	Jan-Jun 2024	Jan-Jun 2023	%
EUR M
Total interest income	52.7	55.9	−6	48.2	9	108.6	86.2	26
of which interest income according to the effective
interest method	52.5	55.8	−6	48.1	9	108.3	85.9	26
Total interest expenses	26.4	29.5	−11	24.0	10	55.9	42.2	32
of which interest expenses according to the effec
tive interest method	26.3	29.5	−11	23.9	10	55.8	42.0	33
Net interest income	26.4	26.3	0	24.2	9	52.7	44.0	20
Interest margin, per cent	2.08	1.94		1.70		2.00	1.59
Investment margin, per cent	2.11	1.99		1.66		2.05	1.52

Interest margin is interest on interest-bearing assets divided by the average balance of assets minus interest on interest-bearing liabilities divided by the average balance of liabilities. Average balance is calculated as the average of end-of-month figures for the period in question plus the opening balance for the period.

Investment margin is net interest income divided by the average balance sheet total.

6. Net commission income

Group	Q2 2024	Q1 2024	%	Q2 2023	%	Jan-Jun 2024	Jan-Jun 2023	%
EUR M
Banking commissions	2.9	2.8	4	2.9	−1	5.7	5.9	−5
Asset management commissions	15.3	14.4	6	14.3	7	29.8	28.6	4
Other commissions	1.1	1.1	2	1.0	8	2.2	2.0	14
Net commission income	19.4	18.3	6	18.2	6	37.7	36.6	3

7. Net income from financial items at fair value

Group	Q2	Q1	%	Q2		% Jan-Jun	Jan-Jun	%
	2024	2024		2023		2024	2023
EUR M Valuation category fair value via the income statement
("profit and loss")
Shares	0.0	0.0		0.0	15	0.0	0.0	−32
Derivatives	0.0	0.0		−0.2	−100	0.0	−0.2
Other financial items	−0.3	0.1				−0.2	0.2
Total, valuation category fair value via the income
statement ("profit and loss")	−0.3	0.1		−0.2	60	−0.2	0.0
Valuation category fair value via other comprehensive income
Realised changes in value	0.6			0.1		0.6	0.2
Expected loan losses	0.0	0.0	47	0.0	−44	0.0	0.0	42
Total, valuation category fair value via other com
prehensive income	0.6	0.0		0.2		0.7	0.2
Hedge accounting
of which hedging instruments	−2.0	−1.4	48	0.7		−3.4	5.5
of which hedged item	2.0	1.7	13	0.3		3.7	−3.3
Hedge accounting	−0.1	0.4		1.0		0.3	2.3	−86
Valuation category accrued cost
Loans	−0.7	0.0		0.0		−0.7	0.0
Debt securities	0.0	0.0		0.0		0.0	0.0
Total, valuation category accrued cost	−0.7	0.0		0.0		−0.7	0.0
Foreign currency revaluation	−0.2	0.0		−0.7	−70	−0.2	−0.9	−79
Total	−0.6	0.6		0.2		−0.1	1.5

8. Net impairment losses on financial assets

Group	Q2 2024	Q1 2024	%	Q2 2023		% Jan-Jun 2024	Jan-Jun 2023	%
EUR M
Impairment losses, Stage 1	−0.1	0.0		0.2		−0.1	0.2
Impairment losses, Stage 2	−0.2	−0.3	−30	0.1		−0.6	0.3
Net impairment losses, Stages 1-2	−0.3	−0.3	−8	0.3		−0.6	0.5
Impairment losses, Stage 3
New and increased individual provisions	2.7	1.5	79	1.6	70	4.2	3.0	40
Recovered from previous provisions	−1.2	−0.7	66	−1.2	4	−1.9	−2.1	−9
Utilised for actual loan losses	−0.1	−0.2	−58	0.2		−0.3	−0.5	−24
Actual loan losses	0.2	0.4	−54	0.1	19	0.5	0.5	0
Recoveries of actual loan losses	−0.1	0.0		−0.1	65	−0.1	−0.1	1
Net impairment losses, Stage 3	1.5	0.9	69	0.7	96	2.3	0.9
Total impairment losses	1.2	0.5		1.0	15	1.7	1.3	31
of which lending to the public	1.0	0.5	98	1.0	−1	1.5	1.3	14
of which off-balance sheet commitments	0.2	0.0		0.0		0.2	0.0
of which debt securities at amortised cost	0.0	0.0		0.0		0.0	0.0	−42
Loan loss level, lending to the public, %	0.11	0.05		0.09		0.08	0.06

9. Lending to the public by purpose

Group	Jun 30, 2024			Dec 31, 2023		% Jun 30, 2023
EUR M	Lending before provisions		Provisions Lending after provisions	Lending after provisions		Lending after provisions
Private individuals
Home loans	1,866	−2	1,864	2,102	−11	2,471	−25
Securities and other investments	319	0	319	340	−6	372	−14
Business operations	74	−2	72	76	−5	80	−10
Other household purposes	316	−8	308	345	−11	342	−10
Total, private individuals	2,575	−13	2,563	2,863	−10	3,265	−22
Companies
Shipping	19	0	19	20	−7	24	−22
Wholesale and retail trade	36	0	36	36	0	37	−3
Housing operations	207	−5	202	210	−4	212	−4
Other real estate operations	217	−1	216	203	6	209	3
Financial and insurance operations	221	0	221	228	−3	222	0
Hotel and restaurant operations	30	0	30	31	−2	32	−5
Agriculture, forestry and fishing	15	0	15	15	−1	15	4
Construction	39	0	39	56	−31	52	−26
Other industri and crafts	43	0	43	38	12	39	10
Other service operations	116	−1	115	129	−11	136	−15
Total, companies	943	−8	935	967	−3	976	−4
Public sector and non-profit organisations	32	0	32	29	10	33	−2
Total, public sector and non-profit organisations	32	0	32	29	10	33	−2
Total	3,551	−21	3,530	3,859	−9	4,274	−17

10. Lending to the public by stage

		Jan 1, 2024 - Jun 30, 2024
Group	Stage 1	Stage 2	Stage 3	Total	Total
EUR M
Carrying amount, gross
Opening balance, January 1	3,583.0	233.7	62.6	3,879.2	4,323.0
Closing balance, June 30	3,268.7	215.3	67.0	3,551.0	4,294.1
Provisions for expected losses
Opening balance, January 1	0.6	1.9	17.7	20.2	20.0
Increases due to issuances and acquisitions	0.2	0.0	0.0	0.2	0.2
Decrease due to removal from balance sheet	−0.1	−0.3	−0.5	−0.8	−0.9
Decrease due to write-offs	0.0	0.0	−0.2	−0.2	0.0
Transfer to Stage 1	0.4	−0.4	0.0	0.0	0.0
Transfer to Stage 2	−0.5	0.8	−0.3	0.0	0.0
Transfer to Stage 3	−0.1	−0.3	0.4	0.0	0.0
Net changes due to changed credit risk	0.0	−0.4	2.3	1.9	1.5
Net changes due to changed estimation method	0.0	0.0	0.0	0.0	0.0
Exchange rate differences and other adjustments	0.0	0.0	−0.1	−0.1	−0.4
Closing balance, June 30	0.6	1.3	19.2	21.1	20.5
Carrying amount, net
Opening balance, January 1	3,582.4	231.8	44.9	3,859.1	4,303.0
Closing balance, June, 30	3,268.2	213.9	47.8	3,529.9	4,273.6
			Jun 30,	Dec 31,	Jun 30,
Impairment losses, IFRS 9 - Financial ratios			2024	2023	2023
Total provision ratio, lending to the public, %			0.59	0.52	0.48
Provision ratio, Stage 1, lending to the public, %			0.02	0.02	0.02
Provision ratio, Stage 2, lending to the public, %			0.62	0.80	0.53
Provision ratio, Stage 3, lending to the public, %			28.68	28.22	30.80
Share of lending to the public in Stage 3, %			1.89	1.61	1.39

11. Debt securities issued

Group		Jun 30, 2024 Dec 31, 2023	% Jun 30, 2023	%
EUR M
Certificates of deposit	210	265	−21	196	7
Covered bonds	547	552	−1	788	−31
Total	757	817	−7	984	−23

12. Derivative instruments

Group		Jun 30, 2024				Dec 31, 2023
EUR M		Nominal amount/maturity
	Under 1 yr		1–5 yrs over 5 yrs	Nominal amount	Positive market values	Negative market values	Nominal amount	Positive market values	Negative market values
Derivatives for trading
Interest-related contracts
Interest rate swaps	0	0	6	6	0	0	6	0	0
Currency-related contracts
Currency forward contracts	554	0	0	554	2	3	488	8	8
Total	554	0	6	560	2	3	494	9	9
Derivatives for market value hedge
Interest-related contracts
Interest rate swaps	20	655	34	709	10	6	712	19	7
Total	20	655	34	709	10	6	712	19	7
Total derivative instruments	574	655	40	1,269	13	9	1,207	27	15
of which cleared	20	655	37	712	10	6	715	19	7

13. Financial instruments measured at fair value

Group		Jun 30, 2024
EUR M	Instruments with quoted prices (Level 1)	Measurement techniques based on observable market data (Level 2)	Measurement techniques based on non-observable market data (Level 3)	Total
Debt securities	398			398
Lending to the public		166		166
Shares and participations	1		36	37
Derivative instruments		13		13
Other assets			5	5
Total financial assets	400	179	41	619
Debt securities issued		547		547
Derivative instruments		9		9
Total financial liabilities	0	556	0	556

Group		Dec 31, 2023
EUR M	Instruments with quoted prices (Level 1)	Measurement techniques based on observable market data (Level 2)	Measurement techniques based on non-observable market data (Level 3)	Total
Debt securities	498			498
Lending to the public		184		184
Shares and participations	1		39	40
Derivative instruments		27		27
Other assets			9	9
Total financial assets	500	212	48	759
Debt securities issued		552		552
Derivative instruments		15		15
Total financial liabilities	0	567	0	567

Changes in Level 3 holdings	Jan-Jun 2024	Jan-Dec 2023
EUR M	Shares and participations	Shares and participations
Carrying amount on January 1	38.9	47.6
New purchases/reclassifications	6.8	1.8
Change in value recognised in
"Other comprehensive income"	−9.7	−10.6
Carrying amount at end of period	35.9	38.9

Financial instruments for which there is price information that is easily available and that represent actual and frequently occurring transactions are measured at current market price. For financial assets, the current purchase price is used. For financial liabilities, the current sale price is used. The current market price of groups of financial instruments that are managed on the basis of the Bank's net exposure to market risk equals the current market price that would be received or paid if the net position were divested.

In the case of financial assets for which reliable market price information is not available, fair value is determined with the help of measurement models. Such models may, for example, be based on price comparisons, present value estimates or option valuation theory, depending on the nature of the instrument. The models use incoming data in the form of market prices and other variables that are deemed to influence pricing. The models and incoming data on which the measurements are based are validated regularly to ensure that they are consistent with market practices and generally accepted financial theory.

The measurement hierarchy

Financial instruments that are measured according to quoted prices in an active market for identical assets/liabilities are categorised as Level 1. Financial instruments that are measured using measurement models that are, in all essential respects, based on market data are categorised as Level 2. Financial instruments that are measured with the help of models based on incoming data that cannot be verified with external market information are categorised in Level 3. These holdings essentially consist of unlisted shares related to strategic shareholdings. In order to estimate the non-observable price, different methods are used depending on the type of data available. The primary method is based on the Bank's portion of the net asset value of the company, or based on completed transactions, for example in the form of new share issues, or prices of similar listed shares. If liquid price quotations are not available for shares at this level, the valuation is determined using significant input from the Bank of Åland's own internal assumptions. Unlisted shares are valued at fair value in "Other comprehensive income".

In the tables on the previous page, financial instruments measured at fair value have been classified with regard to how they have been measured and the degree of market data used in this measurement on closing day. If the classification on closing day has changed, compared to the classification at the end of the previous year, the instrument has been moved between the levels in the table. During the period, no instruments were moved between Levels 1 and 2. Changes in Level 3 are presented in a separate table above.

14. Off-balance sheet commitments

Group		Jun 30, 2024 Dec 31, 2023 % Jun 30, 2023
EUR M
Guarantees	19	21	−10	23	−15
Unutilised overdraft limits	351	359	−2	354	−1
Unutilised credit card limits	82	93	−11	92	−10
Lines of credit	94	350	−73	531	−82
Other commitments	11	16	−30	15	−26
Total	557	838	−34	1,014	−45
Provision for off-balance sheet commitments	0	0		0

15. Assets pledged

Group		Jun 30, 2024 Dec 31, 2023	% Jun 30, 2023	%
EUR M
Lending to credit institutions	2	10	−75	18	−87
Debt securities	49	106	−54	112	−56
Loan receivables constituting collateral (cover pool)
for covered bonds	1,190	1,180	1	1,450	−18
Other assets pledged	4	4	−2	4	7
Total	1,246	1,300	−4	1,584	−21

During the report period, no major changes took place regarding the quantity of financial assets and liabilities that were subject to offsetting, netting agreements or the like. Information about this type of agreements is included in the Annual Report of the Bank of Åland, Note G47.

16. Capital adequacy

Group	Jun 30,	Dec 31,	%	Jun 30,	%
	2024	2023		2023
EUR M
Equity capital	281.6	305.9	−8	266.9	6
Foreseeble dividend	−21.9	−40.6	−46	−11.6	89
Common equity Tier 1 capital before deductions	259.8	265.3	−2	255.3	2
Intangible assets	−14.4	−14.0	3	−14.6	−2
Deduction for excess value of pension assets				−0.2	−100
Non-controlling interests	0.0	0.0	−7	0.0	0
Net other items	0.0	−0.1	−47	−0.2	−78
Further adjustments in value	−0.5	−0.6	−21	−0.7	−32
Expected losses according to IRB approach beyond recognised
losses (deficit)	−9.4	−7.8	20	−7.6	24
Adjustments due to transitional rules related to IFRS 9				0.3	−100
Common equity Tier 1 capital	235.5	242.8	−3	232.4	1
Tier 1 capital instruments	29.4	29.4	0	29.4	0
Additional Tier 1 capital	29.4	29.4	0	29.4	0
Tier 1 capital	264.9	272.2	−3	261.8	1
Supplementary capital instruments	30.8	31.5	−2	29.6	4
Supplementary capital	30.8	31.5	−2	29.6	4
Total capital base (own funds)	295.8	303.7	−3	291.4	1
Capital requirement for credit risk according to the IRB
approach	38.4	38.0	1	38.3	0
Additional capital requirement, IRB approach	14.0	13.8	1	13.9	1
Capital requirement for credit risk according to standardised
approach	54.7	65.1	−16	75.4	−27
Capital requirement for market risk	3.6	3.6	0	1.6
Capital requirement for credit-worthiness adjustment risk Capital requirement for operational risk	0.1 23.7	0.1 21.3	−27 11	0.1 21.3	−46 11
Capital requirement	134.5	141.9	−5	150.6	−11
Capital ratios
Common equity Tier 1 capital ratio, %	14.0	13.7		12.3
Tier 1 capital ratio, %	15.8	15.3		13.9
Total capital ratio, %	17.6	17.1		15.5
Risk exposure amount	1,681	1,774	−5	1,882	−11
of which % comprising credit risk	80	82		85
of which % comprising market risk	3	3		1
of which % comprising credit-worthiness adjustment risk	0	0		0
of which % comprising operational risk	18	15		14

Requirements related to capital buffers, %	Jun 30, 2024	Dec 31, 2023	Jun 30, 2023
Total common equity Tier 1 capital requirements including
buffer requirements	9.3	8.5	8.6
of which common equity Pillar 1 capital requirement	4.5	4.5	4.5
of which common equity Pillar 2 capital requirement	0.6	0.6	0.6
of which capital conservation buffer requirement	2.5	2.5	2.5
of which countercyclical capital buffer requirement	0.8	0.9	1.0
of which systemic risk buffer requirement	1.0	0.0	0.0
Common equity Tier 1 capital available to be used as a buffer	14.0	13.7	12.3

Exposure class	Jun 30, 2024
EUR M	Gross exposure	Exposure at default	Risk weight %	Risk exposure amount	Capital requirement
Credit risk according to the IRB approach
Without own LGD estimates
Corporate, other large companies	201.8	169.8	60	101.5	8.1
Corporate, small and medium sized companies	285.7	254.1	50	126.3	10.1
Corporate, special lending	4.7	4.7	71	3.4	0.3
Using own LGD estimates
Retail with property as collateral (private individuals)	1,802.4	1,790.5	9	165.4	13.2
Retail with property as collateral (small and medium-sized
companies)	116.2	113.4	23	26.4	2.1
Retail, other (small and medium-sized companies)	32.2	31.3	20	6.1	0.5
Retail, other	342.8	284.8	18	51.2	4.1
Total exposures according to IRB approach	2,785.8	2,648.6	18	480.4	38.4
Credit risk according to standardised approach
Central government or central banks	347.4	416.1	0	0.0	0.0
Regional governments or local authorities	79.3	117.5	0	0.0	0.0
Public sector entities	29.4	29.4	0	0.0	0.0
Multilateral development banks	51.6	58.2	2	1.0	0.1
International organisations	4.0	4.0	0	0.0	0.0
Institutions	212.1	160.0	25	39.5	3.2
Corporates	582.4	239.7	94	224.9	18.0
Retail	259.8	78.3	74	57.7	4.6
Secured by mortgages on immovable property	488.3	488.0	32	155.0	12.4
Exposures in default	9.6	4.4	117	5.2	0.4
Covered bonds	419.4	419.3	11	44.8	3.6
Collective investment undertakings	1.3	1.3	136	1.7	0.1
Equity exposures	42.6	42.6	174	74.1	5.9
Other exposures	103.1	103.1	78	79.9	6.4
Total exposures according to standardised approach	2,630.3	2,162.1	32	683.9	54.7
Total risk exposure amount, credit risk	5,416.0	4,810.7	24	1,164.3	93.1

Exposure class		Dec 31, 2023
EUR M	Gross exposure	Exposure at default	Risk weight %	Risk exposure amount	Capital requirement
Credit risk according to the IRB approach
Without own LGD estimates
Corporate, other large companies	188.4	171.4	54	92.9	7.4
Corporate, small and medium sized companies	294.0	259.6	50	129.0	10.3
Corporate, special lending	4.8	4.8	71	3.4	0.3
Using own LGD estimates
Retail with property as collateral (private individuals)	1,804.5	1,793.9	9	164.3	13.1
Retail with property as collateral (small and medium-sized
companies)	122.6	120.0	21	25.0	2.0
Retail, other (small and medium-sized companies)	32.9	31.7	20	6.2	0.5
Retail, other	355.4	297.4	18	53.8	4.3
Total exposures according to IRB approach	2,802.7	2,678.8	18	474.5	38.0
Credit risk according to standardised approach
Central government or central banks	440.9	525.0	0	0.0	0.0
Regional governments or local authorities	79.1	115.8	0	0.0	0.0
Public sector entities	37.3	37.3	0	0.0	0.0
Multilateral development banks	52.5	59.8	2	1.0	0.1
International organisations	4.0	4.0	0	0.0	0.0
Institutions	222.1	170.9	25	42.6	3.4
Corporates	672.2	270.2	95	257.0	20.6
Retail	527.4	87.1	73	64.0	5.1
Secured by mortgages on immovable property	713.2	712.6	33	234.4	18.8
Exposures in default	12.1	5.0	141	7.0	0.6
Covered bonds	486.5	486.5	11	52.4	4.2
Collective investment undertakings	1.3	1.3	138	1.8	0.1
Equity exposures	45.0	45.0	167	75.0	6.0
Other exposures	141.9	141.9	56	79.0	6.3
Total exposures according to standardised approach	3,435.6	2,662.2	31	814.2	65.1
Total risk exposure amount, credit risk	6,238.3	5,341.0	24	1,288.7	103.1
Leverage ratio	Jun 30,	Dec 31,	%	Jun 30,	%
	2024	2023		2023
EUR M
Tier 1 capital	264.9	272.2	−3	261.8	1
Total exposure measure	4,867.5	5,431.8	−10	5,876.1	−17
of which balance sheet items	4,775.8	5,310.0	−10	5,734.3	−17
of which off-balance sheet items	91.7	121.8	−25	141.8	−35
Leverage ratio, %	5.4	5.0		4.5

The leverage ratio was calculated according to the situation at the end of the period. Tier 1 capital included profit for the period.

17. Share-related information

Group	Jun 30, 2024	Dec 31, 2023	%	Jun 30, 2023	%
thousands
Number of Series A shares outstanding at beginning of period	6,476	6,476		6,476
Number of Series B shares outstanding at beginning of period	8,832	8,778	1	8,778	1
Total shares outstanding at beginning of period	15,308	15,254	0	15,254	0
Number of Series B shares issued	36	54	−33	29	25
Number of Series B shares bought back and nullified		0	−100
Total change in Series B shares	36	54	−33	29	25
Number of Series A shares outstanding at end of period	6,476	6,476		6,476
Number of Series B shares outstanding at end of period	8,868	8,832	0	8,807	1
Total shares outstanding at end of period	15,344	15,308	0	15,283	0
Total shares outstanding at end of period after dilution	15,454	15,415	0	15,350	1
Equity capital per share, EUR	18.36	17.78	3	17.51	5
Closing price per Series A share, EUR	33.60	31.20	8	34.10	−1
Closing price per Series B share, EUR	33.10	31.00	7	34.10	−3
Market capitalisation, EUR M	511	476	7	521	−2
Market capitalisation/shareholders' portion of equity capital, %	181	156		195
Group	Q2 2024	Q1 2024	%	Q2 2023	%	Jan-Jun 2024	Jan-Jun 2023	%
thousands
Average number of shares outstanding	15,329	15,315	0	15,277	0	15,329	15,277	0
Average number of shares outstanding after dilution	15,398	15,382	0	15,314	1	15,398	15,314	1
Earnings per share, EUR	0.82	0.89	−8	0.74	11	1.71	1.15	49
Earnings per share after dilution, EUR	0.82	0.89	−8	0.74	11	1.70	1.14	49
Earnings per share, rolling 12 months, EUR	3.75	3.66	2	2.27	65

Definitions

ACTIVELY MANAGED ASSETS

Managed assets in the Bank's own mutual funds plus securities custodial accounts with discretionary and advisory asset management agreements and external funds with contractual earnings.

ALTERNATIVE PERFORMANCE MEASURES

Alternative performance measures are financial metrics for the historical or future trend of earnings, financial position or cash flow that are not defined in the applicable International Financial Reporting Standards (IFRSs) or in the European Union's Capital Requirements Directive and Regulation (CRD/CRR).

The Bank of Åland uses alternative performance measures when they are relevant for monitoring and describing the Bank's financial situation, to facilitate comparability between periods and to provide further usable information to the users of its financial reports.

These metrics do not need to be comparable to similar performance measures that are presented by other companies

CAPITAL COVER RATIO

Own funds divided by risk exposure amount.

CO2

Chemical designation for carbon dioxide.

CO2e

Carbon dioxide equivalents, collective term for the environmental impact of the most common greenhouse gases recalculated into carbon dioxide.

COMMON EQUITY TIER 1 (CET1) CAPITAL

Equity capital excluding proposed dividend, deferred tax and intangible assets and certain other adjustments according to the European Union's Capital Requirements Regulation No. 575/2013 (CRR).

COMMON EQUITY TIER 1 CAPITAL RATIO, %

Common Equity Tier 1 (CET1) capital divided by risk exposure amount.

CUSTOMER SATISFACTION INDEX (CSI)

The Bank of Åland has created its own index where first and last place in the customer survey correspond to index values of 100 and 0, respectively. The customer survey includes various questions that summarise how satisfied customers are with the Bank of Åland's overall service offering. To calculate the total result, the outcome for each geographic business segment is weighted according to its total business volume (actively managed capital as well as lending and deposits from the public).

EARNINGS PER SHARE, EUR

Shareholders' portion of earnings for the period divided by the average number of shares.

EMPLOYEE COMMITMENT INDEX

A measure of employee motivation and loyalty at the Bank of Åland. Calculated on the basis of nine standard categories from our measurement tool that describe what employees need in order to remain committed and motivated.

EMPLOYEE NET PROMOTER SCORE (ENPS)

Employees' propensity to recommend the Bank of Åland. Calculated on a scale of 0–10, where the percentage of negative responses (0–6) is subtracted from the percentage of positive responses (9–10).

EQUITY CAPITAL PER SHARE, EUR

Shareholders' portion of equity capital divided by the number of shares on closing day.

EXPENSE/INCOME RATIO

Total expenses divided by total income.

GROSS SHARE OF LOANS IN STAGE 3

Gross loans in Stage 3 as a percentage of the carrying amount of lending to the public before provisions for impairment losses.

LEADERSHIP INDEX

A measure of employees' perception of leadership at the Bank of Åland. Calculated on the basis of questions about trust, cooperation, communication, feedback and support.

LEVEL OF PROVISIONS FOR LENDING TO THE PUBLIC IN STAGE 3

Provisions for impairment losses in Stage 3 as a percentage of gross lending to the public in Stage 3.

LEVERAGE RATIO

The ratio of Tier 1 capital to the balance sheet total plus certain offbalance sheet items recalculated using conversion factors defined in the standardised approach.

LIQUIDITY COVERAGE RATIO (LCR), %

High-quality liquid assets as a percentage of estimated net liquidity outflow during a 30-day period.

LOAN/DEPOSIT RATIO

Lending to the public divided by deposits from the public.

LOAN LOSS LEVEL

Net impairment losses on net financial assets in lending to the public divided by lending to the public at the beginning of the period.

MANAGED MORTGAGE LOANS

Total mortgage loan volume in Borgo AB (publ) that the Bank of Åland manages through various services.

MARKET CAPITALISATION/SHAREHOLDERS' PORTION OF EQUITY, %

Share price at the end of the reporting period as a percentage of shareholders' portion of equity capital on closing day.

NET PROMOTER SCORE (NPS)

The propensity to recommend the Bank of Åland. Calculated on a scale from 0-10 where the proportion of negative responses (0-6) is subtracted from the proportion of positive responses (9-10).

NET STABLE FUNDING RATIO (NSFR)

Available stable funding as a percentage of necessary stable funding.

OWN FUNDS (REPLACES CAPITAL BASE CONCEPT)

Total of Tier 1 capital and Tier 2 (supplementary) capital.

RETURN ON EQUITY AFTER TAXES (ROE), %

Profit for the report period attributable to shareholders divided by average shareholder's portion of equity capital.

RISK EXPOSURE AMOUNT

Assets and off-balance sheet commitments, risk-weighted according to capital adequacy regulations for credit risk and market risk. Operational risks are calculated and expressed as risk exposure.

TIER 1 CAPITAL

Common equity Tier 1 (CET1) capital including certain loss-absorbing subordinated debentures ("additional Tier 1 capital").

TIER 2 (SUPPLEMENTARY) CAPITAL

Mainly subordinated debentures that do not meet requirements to be included as additional Tier 1 capital.

Translation

Report on review of the Half-Year Financial Report of Bank of Åland Plc for the accounting period January 1 – June 30, 2024

To the Board of Directors of Bank of Åland Plc

INTRODUCTION

We have reviewed the summary balance sheet as of June 30, 2024 and the related summary income statement, summary statement of other comprehensive income, statement of changes in equity capital and summary cash flow statement of Bank of Åland Plc group for the six-month period then ended, as well as other explanatory notes to the consolidated financial statements. The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of this Half-Year Financial Report in in accordance with IAS 34 Interim Financial Reporting and other Finnish rules and regulations governing the preparation of interim reports. We will express our conclusion on the Half-Year Financial Report based on our review.

SCOPE OF REVIEW

We conducted our review in accordance with the Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the standards on auditing and other generally accepted auditing practices and consequently does not enable us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

CONCLUSION

Based on our review, nothing has come to our attention that causes us to believe that the Half-Year Financial Report, in all material respects, is not prepared in accordance with IAS 34 Interim Financial Reporting and other applicable rules and regulations governing Half-Year Financial Report reporting preparation in Finland.Helsinki, July 19, 2024

KPMG OY AB

Henry Maarala Authorised Public Accountant, KHT