apoBank: Strong base on which to expand business model
- Lending business with retail and corporate clients remains on growth path
- Stronger demand for asset advisory services
- Proposed dividend of four percent
- Outlook 2019: New products and offerings for health care professionals and set-up of digital platform for health care market
Deutsche Apotheker- und Ärztebank (apoBank) achieved a stable net profit after tax of €62.9 million (2017: €61.9 million) in fiscal 2018. On this basis, the Board of Directors will again propose an attractive dividend of four percent to the Annual General Meeting in June. Thanks to a respectable operating result, the Bank was again in a position to make allocations to reserves and strengthen equity capital in 2018 with a view to business growth. After allocations to reserves, the operating result amounted to €113.4 million, in line with expectations (2017: €132.8 million).
In 2018, apoBank continued on its growth path in the health care market. The number of customers increased to 458,770 (2017: 436,260), of which 113,455 are also members and therefore owners of the Bank (2017: 111,494). Ulrich Sommer, Chairman of the Board of Directors: “In 2018, we further expanded our market position in supporting the establishment of medical practices and pharmacies in the health care sector as well as in the Corporate Client segment. In addition, we have driven forward our investment business with retail clients and institutional investors in a difficult market environment.”
The dynamic development in the lending business remained unchanged in the year under review. New lending business, at €7.1 billion, exceeded the already high level from the previous year (2017: €6.8 billion). Driving forces were start-up and real estate financing, as well as loans for companies in the health care market. The new apoPrivat brand, bundling all asset advisory services, met with a good response from health care professionals. This allowed the Bank to gain new customers and new mandates in asset management, especially with its new product apoVV SMART.
apoBank’s capital position remained comfortable during the year under review. The common equity tier 1 capital ratio decreased to 16.7%, in line with business growth as well as following a method adjustment in the internal rating procedure (2017: 19.5%). The total capital ratio amounted to 18.3% (2017: 21.8%).
Dr. Thomas Siekmann, Director of Finance and Controlling at apoBank: “The results for fiscal 2018 prove that it is possible to combine growth and prudent risk policies and generate long-term profit. This was confirmed not least by the ECB in last year’s stress test, which we passed with a good result.”
In 2019, apoBank will strengthen its leading position as the bank in the health care sector. It will continue to pursue its three strategic focus areas: increasing its market share in business start-up financing, stepping up its business with corporate clients and expanding its asset and investment advisory services. The growing customer business is being accompanied by process optimisations and investment in modern IT systems. In addition, the Bank continues to refine its business model.
Sommer: “We have a strong foundation for engaging even more as co-creators in the health care market. We are now taking a further step towards fulfilling our claim, “We enable health”, making use of our expertise and our network in the health care sector. One focus is on developing a platform via which third-party services in the health care market can be found and participants can be linked to everyone’s benefit.”
Working with the Zahnärztliche Abrechnungsgenossenschaft under the name Dental Practice of the Future (Zahnpraxis der Zukunft, ZPdZ), the Bank has developed a model for an innovative dental practice that allows young dentists to test out self-employment without high investment. The concept provides for turnkey premises with innovative and digital facilities and processes and an option of purchasing administrative services. The Dental Practice of the Future will launch in Dusseldorf in mid-2019.
For its 2019 business performance, apoBank expects a stable net profit overall. It plans to further strengthen its capital position and to distribute a stable dividend to its members.
Results for fiscal 2018 in detail
Thanks to lively new lending business, the bank has succeeded in compensating for the effects of low interest levels. Net interest income increased by 4.3% to €632.4 million (2017: €606.2 million).
Net commission income rose by 5.5% to €164.9 million (2017: €156.3 million). This is attributable in particular to asset management for its customers, where apoBank gained new funds as well as new customers. Despite the negative performance on the stock markets in the second half of 2018, apoBank succeeded in holding deposit volume at just under €8 billion. apoBank also successfully expanded its business with institutional customers.
With an increase of 12.7% to €597.6 million, general administrative expenses rose significantly (2017: €530.1 million). This was primarily due to expenditure for the upcoming migration of the core banking system, as well as project costs for optimising the bank’s loan processes.
The operating result, i.e. profit before risk provisioning, increased slightly by 4.4% to €233.6 million (2017: €223.7 million).
Risk provisioning for the operating business was at -€31.9 million (2017: €12.1 million). This means that risk provisioning for the operating business remains at a low level, as this amount is still well below standard risk costs.
Risk provisioning with reserve character was at €88.3 million (2017: €103.0 million). This includes the fund for general banking risks, which was endowed at €64.2 million.
Tax expenses came to €50.4 million (2017: €70.9 million). The decrease is related to a tax refund.
Net profit after tax reached €62.9 million (2017: €61.9 million). Subject to approval by the Annual General Meeting, €16.0 million of this figure will be allocated to revenue reserves.
The balance sheet total, at €45.4 billion, an increase of 9.7%, was significantly above the previous year’s value (2017: €41.4 billion). The key driver was the growing customer business.