DVB continued to enjoy success in its core international transport finance business during the third quarter of 2011, leading to a solid 21.2% increase in net interest income after allowance for credit losses, to €162.1 million. At €106.4 million, consolidated net income before taxes decreased by 10.7% year-on-year, primarily due to volatile net income from financial instruments in accordance with IAS 39.
Wolfgang F. Driese, CEO and Chairman of the Board of Managing Directors, assessed DVB’s consolidated nine-month results:
“DVB continues to hold its successful course, in an environment that is characterised by political uncertainty. Compared to the turmoil caused by the sovereign debt crisis, with new unsettling facts surfacing almost every day, the impact of volatility on the transport markets and of the increasing divergence between transport asset supply and demand almost take a step back – even though these two factors are more important for our business. Additional uncertainty is triggered by the changes affecting the banking sector. In these extreme adversities, DVB’s business model proves its strength. We therefore continue to anticipate fully satisfactory results for the year 2011 as a whole.”
Total income (comprising net interest income after allowance for credit losses, net fee and commission income, net income from financial instruments in accordance with IAS 39, results from investments in companies accounted for using the equity method, and net other operating income/expenses) declined by 1.8%, from
€241.6 million to €237.3 million.
Net interest income rose by 23.7% year-on-year, to €181.3 million, and net interest income after allowance for credit losses was up 21.2%, from €133.8 million to €162.1 million. New Transport Finance business totalled 109 transactions as at 30 September 2011, with an aggregate volume of €3.3 billion (9m 2010: 93 transactions with a volume of €3.0 billion). The average interest margin on new Transport Finance business was down during the period under review, from 322 to 297 basis points. Factors contributing to this decline included the fact that higher funding costs, which have soared for all banks, can only be passed on to clients through new business with a certain time lag. In addition, the Bank consciously targeted new exposures that have the potential to weather even a more drawn-out period of market weakness. Net allowance for credit losses amounted to €19.2 million during the period under review (9m 2010: €12.8 million). New allowance recognised for credit losses totalled €47.7 million; a net €27.1 million was released.
DVB maintained net fee and commission income, which primarily includes fees and commissions from new Transport Finance business, and asset management and advisory fees, on high levels at €76.1 million, virtually unchanged year-on-year
Net income from financial instruments in accordance with IAS 39 (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 income from investment securities) changed from €2.8 million to €–10.1 million. The net figure reflects the level of volatility on foreign exchange and interest rate markets.
General administrative expenses were up 6.9%, to €130.9 million. Staff expenses increased slightly, by 2.6%, to €71.5 million. The 12.5% increase in non-staff expenses, from €52.8 million to €59.4 million, primarily reflected higher contributions and fees (such as the bank levy and the contributions to the deposit-protection scheme) plus higher expenses in banking operations (IT costs, rents, etc.).
DVB’s total assets rose by 7.3%, from €19.3 billion to €20.7 billion. DVB’s nominal volume of customer lending (the aggregate of loans and advances to customers, guarantees and indemnities, irrevocable loan commitments, and derivatives) rose by 2.1% in euro terms, to €19.6 billion; in US dollar terms, customer lending increased by 2.7%, to US$26.3 billion.
Return on equity before taxes was 13.8% – down 3.1 percentage points
(9m 2010: 16.9%). The cost/income ratio rose by 2.9 percentage points, to 51.1%.
Calculated in accordance with Basel II, DVB’s tier 1 ratio rose to 19.3%
(31 December 2010: 18.9%); reflecting maturing subordinated funds, the total capital ratio amounted to 21.8% (31 December 2010: 22.4%).
DVB Group – Condensed income statement (as at 30 September 2011)
DVB Group – Statement of financial position (as at 30 September 2011)