Ralf Bedranowsky
Frankfurt/Main, 13 August 2015 – DVB Bank SE (ISIN DE0008045501), the international transport finance specialist, increased consolidated net income before taxes for the first half of 2015 by 4.6% year-on-year, to EUR43.3 million (previous year: EUR41.4 million).
Ralf Bedranowsky, CEO and Chairman of DVB Bank SE’s Board of Managing Directors, commented on DVB’s consolidated net income:
“Overall, DVB considers Group developments during the first half of 2015 to be stable and satisfactory. The consolidated net income achieved is characterised by five factors:
- Interest income, and fee and commission income from our operating Transport Finance business developed favourably, thanks to attractive new business.
- Allowance for credit losses amounted to EUR39.7 million during the period under review (previous year: EUR27.9 million); as expected, this was due to legacy burdens in some segments of the shipping market.
- Our Investment Management division generated significant non-recurring income through the partial sale of a shareholding, which increased net result from investment securities from EUR44.3 million to EUR47.0 million. The IAS 39 result rose to EUR75.0 million.
- Other operating expenses was burdened by a non-recurring effect: an unscheduled write-down of a claim for damages in the amount of EUR36.4 million.
- Expected bank levy charges of EUR10.3 million as well as EUR4.6 million in expenses for the Deposit Guarantee Scheme of the National Association of German Co-operative Banks needed to be deducted already at the beginning of the year, for the first time.
We remain cautiously optimistic for the development of DVB’s operating business in Transport Finance during the second half of the year. After all, experience shows that we are usually able to increase profit contributions from our financing and advisory business with the international transport sector during the second half of the year. Risk costs will remain at the levels seen in previous years for the time being, due to the prevailing difficult situation in some shipping segments.
In contrast to our previous guidance for consolidated net income to exceed the previous year’s level, taking the burden by the non-recurring effect due to the write-down mentioned into account, the Bank’s consolidated net income for 2015 might be lower year-on-year.”
The individual items of the half-yearly financial statements developed as follows:
Interest income rose by 18.9%, from EUR434.7 million to EUR516.8 million. DVB’s new business in Shipping Finance, Aviation Finance, Offshore Finance and Land Transport Finance during the first half of 2015 comprised 100 transactions with an aggregate volume of EUR3.6 billion (previous year: 78 transactions with an aggregate volume of EUR2.2 billion). Based on a generally cycle-neutral lending policy, DVB continued to successfully implement its tried-and-tested strategy of pricing exposures in line with the risks involved. It achieved an average gross interest margin of 235 basis points on new Transport Finance business (previous year: 279 basis points).Interest expenses rose by 28.7%, from EUR329.7 million to EUR424.3 million. The latter item includes expenses from funds managed by the Investment Management division which must be consolidated, as well as risk costs for ships held by the Bank within the scope of restructuring measures. Higher interest income was not sufficient to compensate these effects. As a result, net interest income declined by 11.9%, from EUR105.0 million to EUR92.5 million.
Allowance for credit losses amounted to EUR39.7 million (previous year: EUR27.9 million). Specifically, new allowance recognised for credit losses totalled EUR69.2 million (previous year: EUR49.1 million), of which EUR45.0 million (previous year: EUR32.8 million) was accounted for by Shipping Finance, due to the persistently difficult environment in some segments of international shipping. Conversely, allowance for credit losses of EUR34.8 million (previous year: EUR25.2 million) was reversed (of which EUR19.5 million in Shipping Finance – previous year: EUR16.7 million). Net interest income after allowance for credit losses of EUR52.8 million was lower than the previous year’s figure of EUR77.1 million.
Net fee and commission income, which primarily includes fees and commissions from new Transport Finance business, and asset management and advisory fees, was up 2.5%, to EUR52.3 million (previous year: EUR51.0 million). Fee and commission income was up 10.1%, to EUR58.8 million (previous year: EUR53.4 million); fee and commission expenses amounted to EUR6.5 million (previous year: EUR2.4 million).
Results from investments in companies accounting for using the equity method increased from EUR0.3 million to EUR3.1 million.
Net other operating income/expenses amounted to -EUR36.8 million (previous year: EUR2.3 million). Other operating expenses was burdened by a non-recurring effect: an unscheduled write-down of a claim for damages in the amount of EUR36.4 million which had to be recognised as a result of a final arbitration ruling issued by the London Court of International Arbitration with regard to DVB’s consolidated subsidiary Dalian Deepwater Developer Ltd, St Helier, Jersey, British Channel Islands.
General administrative expenses rose by 0.6%, to EUR88.2 million (previous year: EUR87.7 million). Staff expenses declined by 6.0%, to EUR51.5 million (previous year: EUR54.8 million), largely due to lower provisions for variable remuneration components and lower pension expenses. Non-staff expenses (including amortisation, depreciation and impairment) rose by 11.6%, from EUR32.9 million to EUR36.7 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 net result from investment securities) – which is generally volatile – amounted to EUR75.0 million (previous year: EUR2.4 million). Notably, net result from investment securities was up by EUR44.3 million, to EUR47.0 million (previous year: EUR2.7 million). The net figure largely comprised a substantial non-recurring operating income from the sale of investment secruities.
Consolidated net income before bank levy, BVR, and taxes improved by 28.2%, to EUR58.2 million (previous year: EUR45.4 million). Expected bank levy charges of EUR10.3 million (2014: actual bank levy of EUR3.6 million) as well as EUR4.6 million in expenses for the Deposit Guarantee Scheme of the National Association of German Co-operative Banks (2014: EUR4.4 million in expenses for the BVR Deposit Guarantee Scheme) already needed to be deducted at the beginning of the year.
Consolidated net income before taxes was up 4.6% year-on-year, to EUR43.3 million (previous year: EUR41.4 million), whilst consolidated net income after taxes amounted to EUR30.1 million and thus almost reached previous year’s figure of EUR31.7 million.
DVB’s consolidated total assets increased to EUR25.4 billion as at 30 June 2015, up 3.7% from the 2014 year-end (31 December 2014: EUR24.5 billion) mainly due to currency translation effects. DVB’s nominal volume of customer lending (the aggregate of loans and advances to customers, guarantees and indemnities, irrevocable loan commitments, and derivatives) increased by 8.6%, also reflecting currency translation effects, to EUR25.3 billion. In US dollar terms, it was unchanged, at US$28.3 billion.
The return on equity before taxes stood at 8.7% – up by 2.2 percentage points (previous year: 6.5%), and thecost/income ratio declined by 7.0 percentage points, to 47.4% (previous year: 54.4%). Risk-adjusted Economic Value Added – which has included operating net result from investment securities since the beginning of this year – amounted to -EUR34.6 million (previous year: -EUR2.6 million).
DVB discloses capital ratios determined in accordance with the Basel III framework (Advanced Approach). On this basis, DVB’s common equity tier 1 ratio as at 30 June 2015 was 16.6% (31 December 2014: 18.7%), whilst thetotal capital ratio amounted to 23.3% (31 December 2014: 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.
