apoBank 2011: net profit once again strong at €43.1 million


  • Dividend proposal of 4% for members
  • Operating result at €280.4 million declines as expected due to special effects
  • Reduction in structured financial products of over €1 billion faster than expected
  • VorWERTs future programme launched to increase performance and expand market position

For Deutsche Apotheker- und Ärztebank (apoBank), the 2011 financial year was marked by two opposing developments: A stable expansion of the customer business was accompanied by special burdens that had a negative impact on the operating result. Overall, apoBank achieved a net profit of €43.1 million (2010: €53.4 million). Subject to approval of its Annual General Meeting, it will again pay out a dividend of 4% to its some 100,000 members. At the same time, the result allows for an allocation to be made to reserves, thus strengthening the capital base.

Herbert Pfennig, Spokesman of the Board of Directors of apoBank: "In a market environment that continues to be difficult for the entire banking sector, we achieved our primary economic goal of being able to pay out a dividend and can again enable our members to participate in the positive result of our Bank."

The Bank’s success was based on the positive development of the business with health care professionals. With more than €4 billion in new loans, apoBank supported investments in business start-ups, practices and pharmacies as well as private projects in the last financial year. In addition, it was able to expand its customer funds and thus further reduce the share of refinancing via the capital market.

"This development proves that health care professionals place their trust in us as financing and investment advisor. This means we are not only fulfilling an essential function in supplying the German health care market with financial services, but we are also conforming to our statutory purpose of economic promotion of health care professionals," said Pfennig.

The results of the 2011 financial year in detail

The Bank generated a net interest income of €646.7 million, down on the previous year’s level (2010: €679.2 million). The reason for this was that income from the sale of global interest derivatives in 2010 was not generated and that the interest payments on the silent partnership issued in October 2010 were recognised in P&L in full for the first time. New lending business, at €4.2 billion, was above the result of the previous year (2010: €4.0 billion). With respect to customer deposits, the Bank posted a considerable increase of over 6%, to €19.3 billion (2010: €18.2 billion). Without the special effects described the Bank would have posted an increase in net interest income.

Net commission income, at €119.1 million, was slightly below the level of the previous year (2010: €127.1 million). This reflects the difficult market environment and continuing investor reticence. Accordingly, turnover and deposit volumes declined. This development stood in contrast to the very successful expansion of private asset management. New insurance business did not quite achieve the record level of 2010. As planned, there was almost no further income from the business with real estate capital assets.

As expected, administrative expenses were affected by the investments in IT migration to the GAD cooperative data processing centre, which was brought to successful completion at the end of March 2012. It was due to this special burden that administrative expenses including depreciation amounted to €485.4 million, above the previous year’s level (2010: €452.4 million).

Against this background, the operating result, i.e. profit before risk provisioning, at €280.4 million, was down on the previous year’s level, as expected (2010: €341.0 million).

Risk costs and precautionary measures for the customer lending business, at €65.1 million, were below the previous year’s level in spite of continuing growth (2010: €69.9 million). This is proof of the good credit risk management of the Bank and the low default rate in its core business.

The risk costs and precautionary measures for financial instruments and participations, at €118.7 million, were also below the previous year’s level (2010: €201.6 million). The focus of risk costs in the area of financial instruments was on provisions for contingent losses for credit default swaps (CDS), which were based on direct country risks with Greece and Hungary. In the annual financial statements 2011, the Bank already took account of burdens resulting from the credit event for its Greece CDS positions determined at the beginning of March 2012.

In 2011, the Bank reduced its financial instruments from a total of €11.9 billion to €10.5 billion. The Bank consistently reduced its structured financial products. For 2011, the volume here is €3.0 billion (2010: €4.2 billion). A decline of over €1 billion meant that the reduction progressed faster than planned.

The balance sheet total remained stable at €38.8 billion. The development of the individual balance sheet items reflects the continued growth in business volume in the customer business on the one hand; on the other hand, the planned reduction of its structured financial products and the capital-market-based refinancing funds affected the balance sheet development.

In 2011, apoBank was able to increase its equity ratio to 13.0 % (2010: 11.3 %) and its core capital ratio to 8.5 % (2010: 7.2 %). In addition to the reduction in structured financial products, the guarantee agreement with the Federal Association of German Cooperative Banks (BVR) continued to provide relief. In the 2011 financial year, apoBank further increased the number of its customers. More than 12,000 new customers and almost 2,500 new members are proof of the strong position of the Bank in the health care sector.

Outlook: apoBank plans further growth and invests in the future

apoBank is working on the assumption that the general conditions for the entire German banking sector will continue to become increasingly difficult also and in particular due to the further rise in equity capital and refinancing costs as a result of Basel III. Nevertheless, due to its good market position and its focused business policy, the Bank plans to grow in its core business. At the same time, expenses will be affected by the final costs for the IT migration as well as investments in the VorWERTs future programme. Overall, apoBank currently plans to generate a net profit in 2012 again, which will enable it to pay out an appropriate dividend as well as make a statutory allocation to reserves.

"Last year showed that focusing on our core business was the right step to take. We will continue to follow this path with determination. We have a stable economic base and the course has been set for further long-term development as a reliable financial services provider. After all, we will only remain successful if we continue to focus on adapting ourselves and our business to the changes in the health care market in the future," commented Pfennig.

"VorWERTs" future programme

To further expand its future market position in the face of growing competition and continue to increase its performance, apoBank is investing in its future programme "VorWERTs". The core element of strategic further development will be target-group-oriented advisory services to health care professionals in each phase of life. The strong transformation in the health care sector and in the role of heath care professionals is accompanied by new financial requirements that may differ considerably according to life phases.

To meet these requirements, apoBank will be realigning its sales activities. In the future, part of this process will entail the Bank investing even more effort in the needs of employed health care professionals and students of academic health care professions, in addition to its services to self-employed health care professionals. The future programme also comprises the establishment of a private banking division, which will offer competent advisory services and comprehensive support to fulfill the specific needs of particularly wealthy customers.

At the same time, to enhance apoBank’s performance, it is optimising internal processes within the framework of VorWERTs. Procedures will be simplified, processing times will be shortened to the customers’ benefit, the quality of results will be improved and efficiency increased.

Pfennig: "Health care professionals shall receive the best possible banking support from us, both in their private and professional environment, from financing to investment. We want to expand our market position, further develop our unique strengths and stand out clearly from the competition as a reliable partner. With VorWERTs, we will achieve this."

You will find the financial figures for 2011 here.