apoBank: Leading market position strengthened
- Rise in number of customers and members
- Lending business remains on growth path
- Stronger demand for asset advisory services
- Reserves strengthened once again
- Proposed dividend of 4%
Deutsche Apotheker- und Ärztebank (apoBank) achieved a stable net profit after tax of €61.9 million (2016: €61.0 million) in the 2017 financial year. On this basis, the Board of Directors will propose to the Annual General Meeting an attractive dividend of 4.0% for the year under review once again. The operating result of €132.8 million was below the previous year’s figure, but significantly higher than anticipated (2016: €159.6 million). This includes allocations to reserves, which exceeded the previous year’s already high level.
apoBank continued on its growth path in the health care market in 2017. The number of customers rose to 436,260 (2016: 415,700), of which 111,494 are also members and thus owners of the Bank (2016: 109,680). Presenting the first annual financial statement under his responsibility, Ulrich Sommer, Chairman of the Board of Directors, commented: "In 2017, our plan was to drive forward our start-up financing business and strengthen the investment business with both retail customers and institutional investors. We were successful in both cases."
New lending business reached a record level of €6.8 billion (2016: €6.4 billion). In business start-up financing alone, it grew by almost 20%. The deposit volume of our retail customers rose by over 10% to €8.0 billion. The Bank also intensified its business with corporate clients. With rising customer numbers, loans to corporate clients increased by just under 20% to €3.1 billion.
Thanks to the lively securities business with its customers, the Bank’s net commission income grew by 12.5% to €156.3 million (2016: €139.0 million). apoBank thus largely compensated for the declining net interest income caused by low interest rates.
apoBank’s capital position remained comfortable during the reporting year. The common equity tier 1 capital ratio decreased at a high level to 19.5% (2016: 22.6%). The total capital ratio amounted to 21.8% (2016: 26.1%). This was due to the growing lending business as well as a methodological adjustment in the internal rating procedure in particular.
Dr. Thomas Siekmann, Director of Finance and Controlling at apoBank: "In 2017, apoBank succeeded in combining strong growth with a prudent risk policy. This is due to our sound business model and our many years of experience in the health care sector. It benefits not only us as a bank, in the form of lower risk costs, but also our customers, who gain considerable planning security with our financing solutions."
apoBank wants to continue to expand its customer business in 2018, supported by modern technology and digital processes. In addition, it is developing new digital services that are tailored to customers' specific needs.
Support for health care professionals in the area of business start-ups will be expanded through complementary services such as a digital application that supports the customers during the entire process of opening their own practice. Another focus area are our investment advisory services. In future, all products related to assets will be combined in a new independent business line, 'apoPrivat'. This includes investment advice, our multiple award-winning private asset management and Private Banking.
With regard to business with corporate clients in the health care market, the Bank plans to further increase the number of customers and expand its range of products and services. With its specialised knowledge, the Bank wants to become a strategic partner for its corporate clients.
Sommer: "Through our strategy, we are gradually expanding our position in the health care market. In the future, we want to go even one step further. We want to develop products beyond financing and asset advisory services in such a way that our clients and owners will benefit from our unique knowledge of the health care and banking markets. In the long term, we want to give ourselves a broader base at the interface between health care and financial markets."
Among other things, apoBank establishes under its umbrella a new digital health centre of competence. The 'apoHe@lth' initiative aims to help health care professionals to navigate more easily through the digital applications in the health care sector. apoBank will be expanding its competence in this field in order to provide customers with advice that sets them up for a secure future in this area.
Based on this strategic direction, net profit in 2018 should remain at the 2017 level overall. At the same time, it would be possible to accumulate further capital and pay out a stable dividend to the shareholders.
The results of financial 2017 in detail
Low interest rates had a negative impact on the development of net interest income again in 2017, although the decline was less than in 2016. In 2017, net interest income fell only slightly, by 3.1% to €606.2 million (2016: €625.6 million). In the lending business, the Bank achieved a record level of growth with new loans amounting to a volume of €6.8 billion. The trend towards short-term demand deposits continued on the refinancing side.
In the commission-based business, the Bank succeeded in making significant progress. Net commission income rose by 12.5% to €156.3 million (2016: €139.0 million). The expansion of investment advisory services has therefore paid off. In the securities business with retail clients, namely in private asset management, both the number of customers and the volume increased. Deposit volume reached €8.0 billion. Of this amount, €3.2 billion were in private asset management. Business with institutional investors was also positive.
General administration expenses rose only slightly, by 2.6% to €530.1 million (2016: €516.4 million). This increase was largely due to the costs of the IT migration.
Overall, the operating result, i.e. profit before risk provisioning, amounted to €223.7 million, which was below the previous year’s level, as expected (2016: €249.2 million).
Risk provisioning from the operating business, which was at €12.1 million, rose once again (2016: €5.7 million). On the one hand, the Bank registered high net dissolutions of loan loss provisions due to its successful risk management. On the other hand, write-ups in respect of receivables that had been written off rose again in the year under review.
Due to the favourable trend, the Bank again succeeded in increasing risk provisioning with reserve character compared to 2016. This amounted to €103.0 million (2016: €95.3 million). This item includes precautionary measures for potential future burdens. It also includes the fund for general banking risks, to which the Bank assigned €60.0 million.
Net profit after tax amounted to €61.9 million (2016: €61.0 million). Subject to approval by the Annual General Meeting, €16 million of this will be allocated to the revenue reserves.
The balance sheet total, at €41.4 billion, was 7.2% higher than in the previous year (2016: €38.6 billion). This was driven by the growing customer business.