apoBank increases operating result
- Operating result increased by 8.1 percent year on year
- Growth in the number of clients and new business
- Rise in net commission income by 7.7 percent
- Reserves further strengthened, by €127 million
- Dividend proposal of 4%
Deutsche Apotheker- und Ärztebank (apoBank) completed the 2015 financial year with an operating result of €153.4 million, considerably exceeding the previous year’s figure by a total of 8.1 percent (2014: €141.8 million). Net profit after tax also increased by 8 percent, to €59.1 million (2014: 54.5 million). As a result of this positive trend, the Bank strengthened its after-tax reserves as well as reserves with equity character by a further €127 million (2014: €148 million) and will propose an attractive dividend of 4 percent at the Annual General Meeting.
Growth in the customer business continued in the year under review. The number of clients rose to 397,000 (2014: 382,000). New additions came from both the customer groups of self-employed health care professionals as well as salaried health care professionals and students of the academic health care professions. At year-end, the number of members reached 107,768 (2014: 105,864).
Herbert Pfennig, Chairman of the Board of Directors: "In a highly competitive market, we successfully continued on our growth path in 2015. The strategically motivated expansion of our sales organisation in recent years is paying off." Lending was characterised by very dynamic new customer business; new loans rose from €5.2 billion to €6.3 billion compared to the previous year - this is the highest level in over 10 years. Positive momentum was generated by the comparably new customer segment of salaried health care professionals as well as from the corporate clients segment.
The Bank posted growth of 7.7 percent to €133.0 million in the commission business. "Both our retail and institutional clients are increasingly coming to us for our investment expertise. This is proof that our integrated approach to customer support is the right one ," Pfennig added.
However, the significant increase in net commission income did not fully compensate for the drop in net interest income caused by low interest rates. Therefore, the operating result, i.e. profit before risk provisioning, at €304.8 million, was down on the previous year’s level, as expected (2014: €337.1 million).
In the year under review, apoBank’s equity situation remained comfortable. The regulatory capital ratios, already at a high level, rose again slightly. The common equity tier 1 ratio rose by 1.8 percentage points to 22.0 percent. The equity ratio grew to 26.1 percent.
Dr. Thomas Siekmann, CFO: "apoBank stands out for its forward-looking, conservative risk policy. Our good equity situation forms the foundation for our sustainable growth strategy. At the same time, we are using it to equip ourselves for stricter future regulatory conditions."
In 2016, the Bank plans to strengthen its customer business further. It also sees additional potential in the investment business with its retail and institutional clients. In the lending business, the Bank plans that area of corporate clients will make an increasing contribution in addition to the established business with retail clients. In collaboration with the regional professional associations, the Bank will continue to promote new practices.
Pfennig: "We will continue to be close to our customers and focus on personal advisory services. We will recruit additional customer advisors and invest in our locations, in spite of opposite trends in the sector. At the same time, we must consistently exploit the opportunities presented by enhanced efficiency in the administrative area – not least in view of the high level of expenses induced by regulation. In addition, we want to benefit from digitalisation - for our customers and for our processes." The new customer service centre, the online advisory services as well as the online consultation for start-ups represent further steps towards an integrated, all-channel concept in which the Bank will continue to invest in 2016. apoBank is also open to offers from fintech companies, if they can provide long-term added value for its customers and its value chain.
In terms of operational development, the economic and regulatory environment remains very challenging. For example, the low interest rates will continue to burden net interest income in 2016. The focus remains on the commission business, despite still difficult capital markets. Thus, the operating result will not reach the level of the previous year, especially since the costs induced by regulation will increase again. Overall, the Bank expects a stable net profit after tax. This includes additions to reserves as well as a stable dividend pay-out. Pfennig: "Due to our solid foundation. we can face the headwinds that we also feel."
The results of financial 2015 in detail
Due to the phase of historically low interest rates, net interest income, at €675.2 million, remained below the previous year’s level (2014: €698.3 million). Very positive growth in new business led to growth in the loans on the balance sheet of around €1 billion. In the area of customer deposits, the trend towards short-term deposits continued. By contrast, income from strategic interest risk management fell, as expected.
The positive trend in net commission income continued in 2015, increasing by 7.7 percent to €133.0 million (2014: €123.5 million). The growth drivers were once again the securities business with both retail and institutional clients and asset management, as well as the insurance and building society business.
In 2015, apoBank proved once more that it has a disciplined cost management. In spite of rising employee numbers, in particular due to the appointment of new customer advisors and higher expenses induced by regulation, general administrative expenses rose only moderately, by 3.6 percent to €496.0 million (2014: €478.6 million).
Therefore, the operating result, i.e. profit before risk provisioning, at €304.8 million, was down on the previous year’s level, as expected (2014: €337.1 million).
At €39.2 million, risk provisioning from the operating business was significantly below the previous year’s level (2014: €59.2 million). Thanks to the good creditworthiness of the loan portfolio and our successful risk management, net allocations to loan loss provisions in particular remained at a low level.
Risk provisioning with reserve character totalled €112.2 million (2014: €135.9 million). This item also includes precautionary measures for possible future burdens. It also includes the fund for general banking risks, to which we assigned €75.0 million (2014: €75.0 million).
Net profit after tax increased significantly by 8.3 percent, to €59.1 million (2014: €54.5 million). Subject to approval at the Annual General Meeting, €15.0 million of this will be allocated to the revenue reserves.