DVB Bank increases consolidated net income (before taxes and IAS 39)

Banking, Company Profiles, Finance, Reports, Shipfinance — By on March 2, 2015 at 10:16 AM
Wolfang F. Driese

Wolfang F. Driese

Frankfurt/Main,  2 March 2015 – DVB Bank SE (ISIN DE0008045501), the international transport finance specialist, postedconsolidated net income before taxes and IAS 39 of EUR116.8 million – up 10.2%. Results before IAS 39 were up 6.9%, to EUR304.5 million (2013: EUR284.8 million). These increases were driven by two factors in particular: a marked increase in net other operating income and expenses, to EUR30.1 million (largely comprising contributions from Investment Management), and much lower allowance for credit losses (EUR-25.5 million).

Wolfgang F. Driese, CEO and Chairman of DVB Bank SE’s Board of Managing Directors, commented on DVB’s consolidated results:

“We achieved good results overall for 2014. However, our performance was significantly compromised by expansive monetary policy from central banks, and by the ECB’s Asset Quality Review of our Shipping Finance division – which affected us over a period of nine months.

Central banks flood the international capital markets with liquidity, which leads to a marked increase in competition between banks and other providers of transport finance. This liquidity glut led to high early repayments of loans – as early as during the second half of 2013. It was not possible to fully replace these unexpected repayments by additional new business, or only with a time lag. Furthermore, the cash inflows from these repayments further increased the Bank’s already high liquidity reserves, thus burdening net interest income. Thanks to strong new business, we managed to restore a balance between our liquidity inventory and the volume of loans extended towards the end of the year.

We are cautiously optimistic for the 2015 business year. We anticipate solid results that are expected to exceed the previous year’s figures. We expect risk costs to remain on the levels seen during the past years, as the shipping segments that remain under stress might only recover from the trough in 2015.”

DVB closed 187 new transactions during 2014, representing a distinctly increased volume of EUR6.3 billion, in Shipping Finance, Aviation Finance, Offshore Finance and Land Transport Finance (2013: 173 new deals representing a volume of EUR4.7 billion). The Bank achieved a gross average margin of 260 basis points on new Transport Finance business (2013: 300 basis points). Net interest income decreased by 11.2%, to EUR215.9 million. Allowance for credit losses declined by EUR25.5 million, 29.0%, to EUR62.4 million (2013: EUR87.9 million).

Net interest income after allowance for credit losses declined by 1.0%, to EUR153.5 million (2013: EUR155.1 million), in spite of lower allowance for credit losses, for three reasons: Firstly, the high liquidity inventory, caused by unexpected and high early loan repayments, burdened net interest income. Secondly, additional risk costs were recognised; and thirdly, average lending volume also declined, placing an additional burden on net interest income.

Net fee and commission income, which primarily includes fees and commissions from the lending business, from asset management, and from Corporate Finance advisory services, declined to EUR108.5 million, down 15.7% year-on-year (2013: EUR128.7 million).

Net other operating income/expenses rose to EUR30.1 million (2013: EUR-4.1 million). The Bank very successfully sold an investment related to its Shipping Investment Management activities.

The (non-operating, always volatile) results from financial instruments in accordance with IAS 39 swung to EUR-12.8 million, down EUR31.0 million (2013: EUR18.2 million).

General administrative expenses rose by 5.0% to EUR187.7 million. Staff expenses of EUR108.9 million increased 3.0% year-on-year (2013: EUR 105.7 million), whilst at EUR74.3 million, non-staff expenses were up by 8.8% (2013: EUR68.3 million).

Reflecting the IAS 39 result,  consolidated net income before taxes showed a 16.3% decline, to EUR104.0 million (2013: EUR124.2 million).

Group strategic indicators reflected the business performance: return on equity before taxes stood at 8.1% (2013: 10.3%), whilst the cost/income ratio was 53.0% (2013: 45.7%) and risk-adjusted Economic Value Added totalled EUR28.5 million (2013: EUR22.8 million)

At EUR26.2 billion, the volume of business in 2014 was up 6.5% on the previous year (2013: EUR24.6 billion). Besides total assets of EUR24.5 billion (2013: EUR23.4 billion), the figure also includes irrevocable loan commitments of EUR1.7 billion (2013: EUR1.2 billion). DVB’s nominal customer lending (the aggregate of loans and advances to customers, guarantees and indemnities, irrevocable loan commitments, and derivatives) increased by 12.0%, to EUR23.3 billion (2013: EUR20.8 billion), reflecting the stronger US dollar.

DVB discloses capital ratios determined in accordance with the Basel III regime (Advanced Approach) and after appropriation of profits. On this basis, the common equity tier 1 ratio and the additional tier 1 ratio each amounted to 18.7%, whilst the total capital ratio was 21.6%.

The Board of Managing Directors and the Supervisory Board will propose to DVB Bank SE’s Annual General Meeting, which will be held on 25 June 2015, to pay an unchanged dividend of EUR0.60 per notional no-par value share. In this way, DVB will provide its shareholders with an adequate dividend yield of 2.43%, whilst further strengthening the Bank’s liable capital.

About DVB Bank SE
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, Offshore Finance and Land Transport Finance. DVB is present at all key international financial centres and transport hubs: at its Frankfurt/Main head office, as well as various European locations (Amsterdam, Athens, Hamburg, London, Oslo 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). Further information is available on www.dvbbank.com.

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