apoBank continues on growth path in 2014

apoBank continues on growth path in 2014

  • Operating result rises by 7.1 percent to €337.1 million
  • Profit before tax up on previous year, at €133.8 million
  • Significant increase in reserves
  • Dividend proposal of four percent
  • Spokesman of the Board of Directors Herbert Pfennig: "The investment business is our new growth driver."

In the 2014 financial year, Deutsche Apotheker- und Ärztebank (apoBank) generated a profit before tax of €133.8 million, thus exceeding the previous year’s figure (2013: €89.3 million). Net profit after tax also rose significantly to €54.5 million (2013: €47.4 million). The Bank will again propose a dividend of four percent at the Annual General Meeting. In addition, it has made further allocations to its reserves and added €75.0 million to the fund for general banking risks (2013: €116.0 million).

apoBank benefited from a positive trend in its customer business. The operating result, i.e. profit before risk provisioning, rose by 7.1 percent to €337.1 million (2013: €314.8 million), in spite of challenging framework conditions in the German banking industry. Herbert Pfennig, Spokesman of the Board of Directors: "We continued to grow our core business in 2014 and reinforced operational profitability - recently this has become the case for our investment business in addition to the lending business. In view of the very competitive market, we see this as a particular success."

With currently 382,000 customers, apoBank further consolidated its high level of market penetration (2013: 373,000 customers). The Bank has thus maintained its position as market leader among self-employed health care professionals. The number of members also continued to increase, to 105,864 at the end of the year (2013: 104,092). "Our success is also due to our new customer support concept 'apoPur', which we introduced last year as part of our realignment of the sales organisation. The concept is based on highly specialised customer support services that are precisely tailored to the needs of each individual customer. This approach has proven its worth and is already bearing fruit," continued Pfennig.

We concluded the "financial market crisis" chapter in May 2014 by completing the phase-out of the structured financial products sub-portfolio. At the same time, apoBank's equity ratios continued to increase in 2014. The equity ratio, which was calculated in accordance with the Capital Requirements Regulation (CRR), was at 25.0 percent on the reporting date (2013: 23.0 percent). The core capital ratio was at 20.2 percent.

Dr. Thomas Siekmann, CFO of apoBank: "We have developed a good risk profile in recent years, and this is reflected in the very good result of the ECB stress test. Based on this, we will continue to pursue our growth strategy."

In 2015, the Bank will build on the positive development of the previous year. Pfennig: "We have set the right course with our strategic realignment, and the next step is to leverage the existing potential in our core business areas." With an increasing number of advisors and stronger presence in the field, apoBank is optimising its customer support services, in particular to employed health care professionals and students of academic health care professions. In terms of digitalisation, the Bank is also continuing to adapt its range of services to changing customer requirements, by opening up additional channels of communication such as video and chat support.

In 2015, the Bank will place particular focus on promoting new business start-ups by health care professionals. Based on its in-house study "Chance Niederlassung" ("Practice Opportunity"), it aims to reduce existing reservations on the part of young health care professionals and to encourage a return to more health care professionals setting up their own practices. Pfennig: "With our support services and our special financing concepts, we aim to alleviate the inevitable concerns young health care professionals have in advance of setting up their own practice. In addition, we want to collaborate closely with the professional associations and better coordinate our advisory and support services in regional networks."

apoBank is responding to the increasing market potential of health care companies by expanding its corporate client business. With regional advisor teams that combine their local knowledge with specialised industry expertise, the Bank aims to position itself as a lending specialist for corporate clients and health care real estate.

With a view to the current year, the Bank is expecting the macro-economic and regulatory environment as well as the competitive situation to remain very challenging for financial institutions. The low interest rates in particular will have a dampening effect on the development of net interest income. By contrast, the Bank expects to see further growth in net commission income. Overall, it has forecast a slight increase in net profit for 2015. Pfennig: "Fundamentally, the Bank is in such good condition that it could overcome even a lengthier period of low interest rates without any damage and at the same time it can draw from its own resources to build up additional capital for future growth."

The results of financial 2014 in detail

In spite of the current phase of historically low interest rates, apoBank generated net interest income of €698.3 million, slightly up on the previous year’s level (2013: €679.2 million). The growth in new lending business was again impressive, at €5.2 billion (2013: €5.6 billion).

Net commission income showed a very positive trend, increasing by 19.1 percent to €123.5 million (2013: €103.7 million). The securities business both with retail and institutional customers as well as private asset management were the main drivers of this increase.

In spite of rising employee numbers, in particular due to newly recruited customer advisors, as well as higher expenses driven by regulation, general administrative expenses increased only moderately by 3.9 percent to €478.6 million (2013: €460.7 million). Here, the Bank continued to benefit from the optimisation of its cost structure in recent years.

The operating result, i.e. profit before risk provisioning, at €337.1 million, was again higher than the previous year’s figure (2013: €314.8 million).

Risk costs and provisioning measures for the customer lending business increased to €78.3 million (2013: €53.9 million). Overall, default rates in the lending portfolio remain at a low level. This is due to the above-average creditworthiness of our customers as well as the comprehensive financing expertise and successful risk management of apoBank.

Risk costs and precautionary measures for financial instruments and participations decreased year-on-year to €49.9 million net (2013: €55.4 million). This item primarily comprises precautionary measures for possible future burdens. It also includes extraordinary expenses in connection with the now completely phased out structured financial products sub-portfolio, which are, however, significantly lower than in the previous year and will no longer be incurred in the future.

Net profit increased significantly by 15.1 percent to €54.5 million (2013: €47.4 million). Subject to approval at the Annual General Meeting, €14.0 million of this will be allocated to the revenue reserves.

The balance sheet total, at €35.1 billion, was slightly higher than the previous year’s level (2013: €34.7 billion).

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