DVB achieved consolidated net income for 2015 which was still satisfactory overall

Banking, Company Profiles, Finance, Reports, Shipfinance — By on February 25, 2016 at 12:04 PM
Ralf Bedranowsky

Ralf Bedranowsky

Frankfurt/Main,  25 February 2016 – DVB Bank SE (ISIN DE0008045501) generated consolidated net income after taxes of EUR45.6 million (previous year: EUR79.1 million), providing financing solutions and advisory services to its clients in the international transport sector.

Ralf Bedranowsky, CEO and Chairman of DVB Bank SE’s Board of Managing Directors, commented on the Bank’s consolidated net income:

“DVB achieved results for the 2015 financial year which were still satisfactory overall. In a challenging environment – in geopolitical, macroeconomic and industry-specific terms – our business model once again proved resilient and sustainable. DVB’s clear focus on a diversified portfolio of transport asset financings has paid off, especially during these testing times.

The following positive factors were noteworthy:

DVB originated new international Transport Finance business at attractive terms, in spite of persistent and intense competition amongst banks on the financing markets. As at 31 December 2015, the Bank’s new business in Shipping Finance, Aviation Finance, Offshore Finance and Land Transport Finance comprised 190 transactions with an aggregate volume of EUR7.0 billion – compared to 187 transactions with an aggregate volume of EUR6.3 billion during the previous year.

Net result from financial instruments in accordance with IAS 39 swung to EUR70.8 million (previous year: EUR-21.4 million). Result from investment securities, which is included in this figure, showed a marked improvement to EUR35.3 million (previous year: EUR-4.0 million). This reflected substantial non-recurring income generated by the Bank’s Aviation Investment Management team from the partial disposal of its stake in Wizz Air Holdings Plc.

We managed to keep our general administrative expenses level at EUR180.9 million (previous year: EUR181.2 million), despite the continued high demands posed by regulatory-driven projects. 

The Bank’s results were burdened by various effects:

Allowance for credit losses rose to EUR141.5 million (previous year: EUR62.4 million), with the increase largely required for legacy exposure in the Shipping Finance portfolio, and for financings in the Offshore Finance portfolio.

Risk costs included in net interest income stood at EUR36.8 million (previous year: EUR27.6 million), largely incurred for vessels which are under the Bank’s control, as part of restructuring measures. 

Early loan repayments, which we were unable to re-lend at the respective funding rates, as well as the requirement to maintain additional liquidity with the European Central Bank (at negative interest rates), due to new EU liquidity requirements (LCR), led to additional charges on net interest income of EUR11.6 million, compared to the previous year.

We remain cautiously optimistic for the 2016 financial year:

We anticipate consolidated net income that is expected to be in line or slightly exceed the previous year’s figures. In the face of continued challenging shipping and offshore markets, we are of course aware that allowances for credit losses will remain on a high level, but should be lower than the figures seen in 2015.”

The detailed items of the consolidated financial statements are provided below. 

Net interest income decreased by 14.9%, from EUR215.9 million to EUR183.7 million. Net interest income was burdened by two of the factors outlined above: firstly, by risk costs incurred for vessels which are under the Bank’s control as part of restructuring measures; and secondly, costs for unexpected and early loan repayments.

Allowance for credit losses rose by EUR79.1 million, to EUR141.5 million (previous year: EUR62.4 million). This was largely required for legacy exposures in the Shipping Finance portfolio (2015: EUR88.4 million; 2014: EUR38.6 million), and for financings in the Offshore Finance portfolio (2015: EUR21.5 million; 2014: no allowance for credit losses required). Total allowance for credit losses (comprising specific allowance for credit losses, portfolio-based allowances for credit losses, and provisions) rose by 33.2%, from EUR219.0 million to EUR291.8 million.

As a consequence of higher allowance for credit losses,  net interest income after allowance for credit losses was down 72.5%, from EUR153.5 million to EUR42.2 million.

Net fee and commission income of EUR103.3 million, which primarily includes fees and commissions from lending business, asset management and Corporate Finance advisory services, almost matched the previous year’s figure of EUR108.5 million.

Results from investments accounted for using the equity method declined from EUR12.4 million to EUR3.9 million.

Net other operating income/expenses fell from EUR34.5 million to EUR14.7 million. The decline was largely due to a non-recurring effect related to the Bank’s Shipping Investment Management activities in 2014.

General administrative expenses declined by 0.2%, to EUR180.9 million. Staff expenses decreased by 4.3%, to EUR104.2 million (previous year: EUR108.9 million), whilst non-staff expenses (including depreciation, amortisation and write-downs) amounted to EUR71.8 million (previous year: EUR67.8 million).

Net result from financial instruments in accordance with IAS 39 (comprising the trading result, the hedge result, the result from the application of the fair value option, the result from derivatives entered into without intention to trade, and the result from investment securities) – which is generally volatile – amounted to EUR70.8 million (previous year: EUR-21.4 million). Result from investment securities, which is included in this figure, showed a marked improvement to EUR35.3 million (previous year: EUR-4.0 million). This reflected substantial non-recurring income generated by the Bank’s Aviation Investment Management from the partial disposal of its stake in Wizz Air Holdings Plc.

Consolidated net income before taxes was EUR46.1 million (previous year: EUR98.2 million), whilst consolidated net income after taxes amounted to EUR45.6 million (previous year: EUR79.1 million).

DVB’s total assets increased to EUR26.6 billion as at 31 December 2015, up 8.6% (31 December 2014: EUR24.5 billion), largely due to currency translation effects.

DVB’s nominal volume of customer lending (the aggregate of loans and advances to clients, guarantees and indemnities, irrevocable loan commitments, and derivatives) also rose by 8.6%, to EUR25.3 billion (previous year: EUR23.3 billion), also reflecting currency translation effects.

DVB’s key financial indicators developed as follows:

Return on equity before taxes stood at 4.1% (previous year: 8.5%), whilst the cost/income ratio was reduced by 3.7 percentage points, to 48.1% (previous year: 51.8%). Risk-adjusted Economic Value Added, which includes operating result from investment securities, amounted to EUR -86.8 million (previous year: EUR27.3 million).

DVB discloses capital ratios determined in accordance with the Basel III framework (Advanced Approach) and after appropriation of profits. On this basis, the common equity tier 1 ratio amounted to 16.3% (previous year: 18.7%) whilst the total capital ratio was 22.4% (previous year: 21.6%).

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.

Tags:

Leave a Reply

IMPORTANT! To be able to proceed, you need to solve the following simple math (so we know that you are a human) :-)

What is 4 + 12 ?
Please leave these two fields as-is:

Trackbacks

Leave a Trackback