apoBank: Euro 7.6 million accounting profit in the first half of 2009
- Operating core business provides a stable base
- Result affected by extraordinary effects
- Sales power strengthened and advisory capacity expanded
Deutsche Apotheker- und Ärztebank (apoBank) today published its Interim Report 6/2009. Overall, the Bank had a successful start to the 2009 financial year in its operating core business. Despite the impacts of the financial market crisis, the Bank achieved a positive result with an accounting profit of Euro 7.6 million (30 June 2008: Euro 56.8 million) in the first half 2009. The significant decline compared to the first half of the previous year must be seen in a differentiated way: On the one hand, the operating core business was successfully further expanded. On the other hand, there were basically three effects leading to the fall in result:
- Omission of additional income in strategic interest rate risk management generated in the previous year
- One-off expenses in connection with "apoFit" - a project for sustained optimisation of the cost structure
- Expenses in connection with our initiated consolidation and risk hedging strategy as well as value adjustments in the Financial Instruments portfolio
The Bank's fundamental earnings power continues to be solid and offsets these earnings impacts.
The figures in detail:
As expected, net interest income declined to Euro 300.0 million (30 June 2008: Euro 323.1 million). The omission of additional income generated from the strategic interest rate risk management in 2008 had a substantial negative impact. In particular the sales successes in the lending business had a compensating effect. The high level of the same period last year was exceeded here. Apart from growing volumes, this is also reflected in the increase in the number of customers by around 6,300 to around 325,400 (31 December 2008: 319,100).
Net commission income was characterised by the consequences of the financial market crisis and the continuing investor restraint and was significantly below the previous year's figure at Euro 35.3 million (30 June 2008: Euro 73.5 million). In return, fortunately for us, our customers increasingly put their money directly with apoBank.
Administrative expenses were slightly above the previous year's level at Euro 193.0 million (30 June 2008: Euro 187.5 million). One-off expenses in connection with "apoFit" were largely offset by stringent cost management. With "apoFit", apoBank creates additional scope for strategic investments to implement its growth strategy. For example, our advisory capacities were expanded by more than 80 employees in the sales field and new locations were opened.
The balance of risk provisioning in the first half 2009 totalled Euro 124.1 million and was thus at the same level as in the same period last year (30 June 2008: Euro 123.4 million):
- In the traditional customer loan business, the balance of risk provisioning was at the level of the planned standard risk costs, amounting to Euro 38.1 million (30.06.2008: Euro 15.7 million). The increase on the favourable prior-year level is attributable to the higher credit volume and also to individual value adjustments for larger innovative care structures. The overall quality of the loan portfolio continues to be good.
- The balance of risk provisioning in the Financial Instruments portfolio amounted to Euro 82.0 million (30 June 2008: Euro 92.2 million) and continues to be affected by the consequences of the financial market crisis. Apart from value adjustments for structured financial products, the risk provisioning is attributable to the consequently continued consolidation and risk hedging strategy. There were no non-performances or defaults in apoBank's tranches in the first half of the year. In return, there were also write-ups due to scheduled maturities of securities.
- The balance of other risk provisioning items amounted to Euro 4.0 million (30 June 2008: Euro 15.5 million).
The balance sheet total as at 30 June 2009 amounted to Euro 40.4 billion (31 December 2008: Euro 41.2 billion) and thus was slightly below the previous year's level. This development results from two opposite effects: On the one hand, the customer loan business significantly grew once again. On the other hand, the strategically intended, systematic reduction of the financial instruments portfolio had a relieving effect.
The Bank's liable equity capital increased to around Euro 2.6 billion (31 December 2008: Euro 2.5 billion). The Bank's equity ratio and core capital ratio as of 30 June 2009 decreased to 9.5 percent (31 December 2008: 12.8 %) and 6.4 percent (31 December 2008: 8.7 %), respectively. This is attributable to the disproportionate additional capital tied up as a result of rating downgrades of securities in the securitisation portfolio. The aim is to sustainably achieve a core capital ratio of over 7 percent and an equity ratio of over 10 percent. In the wake of this the Bank took appropriate measures to strengthen equity capital. In addition, the integration in the solidarity community of the cooperative banking alliance provides a high degree of security and stability.
The Bank's liquidity position is well secured and, based on various sources, comfortable at the moment. Refinancing is based both on growing customer deposits and on successful issues of bonds and mortgage Pfandbriefe in the capital market.
The new Spokesman of the Board of Directors, Herbert Pfennig: "Against the background of the challenging environment of the financial market crisis, apoBank's positive - although significantly lower - half-year result shows that our operating core business provides us with a stable base that withstands pressure. New advances in the loan sector of Euro 2.0 billion in the first half 2009 are an impressive proof that there is no credit crunch with us and that apoBank, with its expertise, has a central function in the provision of loans to the German health care sector and medical professions. We will continue to reduce our Financial Instruments portfolio over the next few years in order to significantly reduce the binding of resources and fully concentrate on the growth potentials in our core business in the future. For the second half of the year we expect a continuation of the positive development in the core business. However, the uncertainty about the further development of the financial market crisis does not allow any reliable earnings forecast for the full year 2009 from today's perspective."