DVB Group posts a marked increase in consolidated net income before IAS 39 and taxes for the first half of 2012

Banking, Finance, Shipfinance — By on August 8, 2012 at 7:19 AM

Wolfgang Driese

DVB increased its consolidated net income before taxes (and excluding net result from financial instruments in accordance with IAS 39) by 36.6%, to €91.1 million (H1 2011: €66.7 million).

Wolfgang F. Driese, CEO and Chairman of the Board of Managing Directors, commented on DVB’s consolidated results for the first half of 2012:

“We have picked up speed nicely during the second quarter, bringing the various items of our income statement (excluding net income from financial instruments in accordance with IAS 39) into our target range for the first half of the year.

The general risk situation remains a challenge, as existing excess capacity and the high number of new deliveries coincide with falling demand in some transport sectors. The absence of any convincing and sustainable political measures to tackle the sovereign debt crisis is a major burden to the economic environment.

We are very satisfied with DVB’s achievements. The six-month financial statements show that we are straight on course for reaching our target of generating results that are comparable to the previous year.”

At €183.9 million, total income for the first six months of 2012 (comprising net interest income after allowance for credit losses, net fee and commission income, results from investments in companies accounted for using the equity method, and net other operating income/expenses), was up by 19.6% year-on-year (H1 2011: €153.8 million).

Interest income rose by a marked 16.3%, from €419.5 million to €487.8 million. DVB maintained its business policy – one that is both risk-aware and committed. DVB originated 63 new transactions, with an aggregate volume of €2.2 billion (H1 2011: 75 new transactions with a total volume of €2.4 billion). The average interest margin on new business originated by the three Transport Finance divisions rose to 356 basis points (H1 2011: 327 basis points). Interest expenses rose by 22.1%, mainly on account of higher funding costs. At €112.5 million, net interest income for the first half of 2012 increased slightly year-on-year (H1 2011: €112.2 million). Allowance for credit losses amounted to €27.3 million in the first half of 2012 (H1 2011: €18.4 million). Net interest income after allowance for credit losses declined by 9.2%, from €93.8 million to €85.2 million.

Net fee and commission income, which primarily includes fees and commissions from new Transport Finance business, and asset management as well as advisory fees, grew to €54.6 million, up 2.1% year-on-year (H1 2011: €53.5 million).

Net other operating income/expenses rose from €6.2 million to €43.9 million. Specifically, this figure also includes the proceeds from the sale of shareholdings. On 14 June 2012, the Bank sold a 60% stake in TES Holdings Ltd, the British aero engine specialist headquartered in Bridgend, Wales, to two Japanese investors. The two new partners – Mitsubishi Corporation, and Development Bank of Japan, Inc. – acquired 35% and 25%, respectively. DVB remains the largest shareholder, with 40%.

General administrative expenses rose by 6.5% to €92.8 million. Major expense items included a 10.1% increase in staff expenses, to € 52.3 million. Higher bank levy charges and contributions to the deposit insurance scheme, meant that non-staff expenses (including depreciation, amortisation and write-downs) increased slightly by €0.9 million, to €40.5 million.

Net result from financial instruments in accordance with IAS 39 (comprising net trading income, the hedge result, the result from the application of the fair value option, the result from derivatives entered into without intention to trade, and net result from investment securities) once again especially reflected the high volatility levels on foreign exchange and interest rate markets: during the first half of 2012, the net figure was negative, at €20.3 million, after a positive balance of €8.2 million during the same period of 2011.

Consolidated net income before taxes was down 5.5% year-on-year, to €70.8 million (H1 2011: €74.9 million), whilst consolidated net income after taxes was up 15.8%, to €65.3 million (H1 2011: €56.4 million).

DVB reported a 10.0% increase in total assets to €24.2 billion on the reporting date of 30 June 2012 (31 Dec 2011: €22.0 billion). The nominal volume of customer lending (the aggregate of loans and advances to customers, guarantees and indemnities, irrevocable loan commitments, and derivatives) increased by 4.6%, to €22.7 billion. In US dollar terms, customer lending was up by 1.4%, to US$28.5 billion. As at 30 June 2012, 96.0% of DVB’s assets were backed by long-term funding.

DVB’s key financial indicators developed as follows:

Return on equity before taxes was 12.8% – down 1.6 percentage points (H1 2011: 14.4%). Accordingly, the cost/income ratio rose by 0.3 percentage points, to 48.6% (H1 2011: 48.3%).

Calculated in accordance with Basel II, DVB’s tier 1 ratio declined slightly, to 18.8% (31 December 2011: 19.7%), due to the stronger US dollar exchange rate. Reflecting the issue of subordinated funds, the total capital ratio in accordance with Basel II increased to 22.3% (31 December 2011: 21.8%).

Viewers  can find a video commentary on the six-month results by Wolfgang F. Driese, CEO and Chairman of the Board of Managing Directors of DVB Bank SE,  at the bank’s website: www.dvbbank.com

About DVB Bank SE

Note to editors: DVB Bank SE, headquartered in Frankfurt/Main, Germany, is the leading specialist in the international Transport Finance business. The Bank offers integrated financing solutions and advisory services in respect of Shipping Finance, Aviation Finance, and Land Transport Finance. DVB is present at key international financial centres and transport hubs: at its Frankfurt/Main head office, as well as various European locations (Athens, Bergen, Hamburg, London, Oslo, Rotterdam and Zurich), plus offices in the Americas (New York City and Curaçao) and in Asia (Singapore and Tokyo). DVB Bank SE is listed at the Frankfurt Stock Exchange (ISIN: DE0008045501). www.dvbbank.com

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