First half of 2010: apoBank earns profit totalling €25.0 million
- Operating profit before risk provisioning of €175.9 million
- Balance of risk provisioning totalling €145.7 million
- Lending and deposit business further expanded
The Deutsche Apotheker- und Ärztebank (apoBank) today published its report on the first half of 2010. Overall, the Bank generated a net profit after taxes totalling €25.0 million in the first six months (30 June 2009: €7.5 million). The continued success in the operating business played a decisive role in this, which is reflected in an operating profit before risk provisioning of €175.9 million, up 23.1 percent on the previous year (30 June 2009: €143.0 million). The main sources were the net interest income and net commission income.
apoBank's net interest income amounted to €315.4 million in the first half of 2010 (30 June 2009: €300.0 million), thereby exceeding the good level achieved in the previous year. This can mainly be attributed to the continuing success of the customer business as well as to contributions from the strategic interest rate risk management. The growth in the total volume of loans could largely be refinanced by an increase in customer deposits.
In the commission business, the positive trends from the second half of 2009 continued. The net commission income totalled €67.1 million and has therefore roughly doubled in comparison with the previous year (30 June 2009: €35.3 million). Alongside commission income from securities transactions and the lending business, the insurance business was also a key driver. Unlike in the previous year, commission income was not affected by measures to hedge individual items in the financial instruments portfolio.
General administrative expenses (including depreciation) increased slightly as planned by 30 June 2010 to €200.9 million (30 June 2009: €193.0 million). This increase can primarily be attributed to renewed investments in the expansion of sales capacities. The Bank continues to pursue its objective of consistently reducing its own complexity and streamlining internal processes. The continued strict cost management alleviated the general administrative expenses.
apoBank's risk result balance amounted to €145.7 million by 30 June 2010 (30 June 2009: €124.1 million). In addition to value adjustments in the lending business, this balance also includes depreciation and write-ups on financial instruments and participations as well as an allocation for provisioning reserves. Risk provisioning for the lending business remained unchanged at a low level of €28.6 million (30 June 2009: €38.1 million). Considering the growing total volume of loans, this underlines the overall good quality of the Bank's customer lending portfolio. The balance of risk provisioning for financial instruments and participations totalled €93.3 million (30 June 2009: €82.9 million).
The balance sheet total was slightly above the 2009 year-end total at €42.7 billion (31 December 2009: €41.2 billion), reflecting the growth in the deposits and lending business. In contrast, the reduction strategy in structured financial products in particular led to a decrease in the Bank's securities portfolio.
To strengthen and relieve the capital ratios, the equity required for structured financial products was reduced further in the first six months of 2010. Negative effects due to currency fluctuations could therefore be more than compensated for. Thus the Bank's equity and core capital ratio improved by 30 June 2010 to 10.9% (31 December 2009: 10.2%) and 6.6% (31 December 2009: 6.2%) respectively.
Herbert Pfennig, Spokesman of the apoBank Board of Directors: "Thanks to its strong core business, apoBank has all in all enjoyed a good start to the financial year 2010. Against this background, we have raised our year-end forecast for the net interest income and net commission income. The development shows that our focus on the core business pays off. We will continue the already implemented sales strategy also in cooperation with the Verbund."
Particularly due to the continued success in the lending and deposit business, net interest income is expected to attain the same level as in the previous year. apoBank is forecasting net commission income to exceed the previous year's total.
General administrative expenses will increase in the second half of the year due to the implementation of the IT migration to the cooperative data processing centre as well as to further new recruits within the scope of the sales offensive, and will exceed the previous year's total by the end of the year, as planned.
Operative risk provisioning in the lending business is stable and unlikely to exceed the previous year's level. The risk provisioning for financial instruments and participations remains difficult to predict due to the continued uncertainty on the financial markets. Overall, the Bank expects a significant decline compared to the previous year.
The Bank will continue to reduce the portfolio of structured financial products currently totalling €4 billion. In light of the expiring refinancing contracts for two special funds (so-called LAAM funds), the Bank will take over the underlying securities over the course of the remaining year. This will lead to a temporary increase in the total exposure to approx. €4.4 billion until the end of the year, but will remain below the 2009 year-end total (€4.5 billion).
The internal task force on risk immunisation of the financial instruments set up in 2009 is continuously working on optimisation options to further reduce the total exposure and strengthen equity. In keeping with the Bank's strategy, a concentration of the resources on the core business alone should be achieved through this.
Herbert Pfennig: "With the measures taken, we have already come a long way, although the reduction in total exposure will continue to be with us for some time yet. Following the results achieved in the first half of the year, we stand by our plan of being able to pay dividends again in the 2010 business year with growing confidence."
You will find the financial reports of apoBank here.