apoBank continues on growth path

apoBank continues on growth path

  • Net profit after tax above previous year, at €27.4 million
  • Operating result increased by 10.4 percent, despite challenging environment
  • Growth in commission business continues, with an increase of 8.8 percent
  • Outlook for year as a whole: increase in net profit and stable dividend planned

In the first six months of 2015, after further allocations to reserves, Deutsche Apotheker- und Ärztebank (apoBank) achieved a net profit after tax of €27.4 million, an increase on the previous year’s figure (30 June 2014: €24.9 million). The operating result amounted to €88.2 million, 10.4 percent up year on year (30 June 2014: €79.9 million).

"We have continued on our growth path both in terms of the result and customer accounts, and we have achieved this despite the fact that interest rates are at a historically low level and the environment for banks continues to be challenging", said Herbert Pfennig, Spokesman of the Bank’s Board of Directors. "So our investments in our sales organisation are paying off. This success is primarily due to the fact that we have tailored our services and bank products even more precisely to the needs of health care professionals. Our customers appreciate this." For example, apoBank expanded its lending business from €2.5 to €3.0 billion compared to the first half of 2014 and deposits by a total of 5.7 percent to €23 billion. Success was also achieved in new customer acquisitions – with an increase to 390,000 customer accounts, apoBank further expanded its already high level of market penetration (31 December 2014: 382,000). New customers included both self-employed and salaried health care professionals as well as students of academic health care professions.

"We also made good progress towards our aim of expanding the investment business", continued Pfennig. More customer advisors and an extended product portfolio both for retail and large customers led to higher commission income overall. Securities volume increased accordingly by 5 percent to €39.7 billion. "We are thus increasingly expanding the significance of the investment business in our income mix."

The results of the first six months of 2015 in detail

Due to persistently low interest rates, net interest income, at €359.8 million, was below the previous year’s level, as expected (30 June 2014: €379.5 million). The loan portfolio increased slightly due to the very high level of new business. In the area of customer deposits, the trend towards short-term deposits continued. In addition, contributions from strategic interest rate risk management decreased as planned.

Net commission income continued its upward trend. Driven by the increase in the securities business with private and institutional customers and in private asset management, it grew by 8.8 percent to €67.8 million (30 June 2014: €62.3 million).

General administrative expenses amounted to €240.5 million (30 June 2014: €227.1 million), 5.9 percent above the previous year’s figure. Operating expenditure rose, primarily due to higher regulatory expenditures. In addition, investment in the expansion of advisor capacity led to increasing personnel expenses.

The operating profit before risk provisioning amounted to €187.4 million – this was below the previous year’s figure, as expected (30 June 2014: 203.5 million).

Risk provisioning from the operating business, at €19.0 million, was significantly below the previous year’s level (30 June 2014: €52.1 million). Due to high credit ratings in the credit portfolio, net allocations to individual loan loss provisions in particular were considerably lower than in the first half of 2014. Financial instruments and participations saw a slight recovery in value. In addition, in the first half of 2015, the Bank was also able to make precautionary reserves for potential future burdens. Risk provisioning with reserve character amounted to €80.1 million (30 June 2014: €71.5 million).

apoBank’s capital ratios continued to improve: The equity ratio rose to 26.1 percent. The common equity tier 1 ratio was 21.8 percent. In addition to allocations to reserves and to the fund for general banking risks from the annual result of 2014, the expansion of capital contributions had a particularly positive effect, with both existing and new members subscribing shares. At the mid-year point, apoBank had 106,065 members (31 December 2014: 105,864 members).

The mid-year balance sheet total remained stable, at €35.1 billion (31 December 2014: €35.1 billion).

Outlook for 2015 as a whole

apoBank expects its business to continue to develop positively in the second half of 2015. Overall, it plans to achieve a net profit above that of the previous year and to be able to pay out a stable dividend while at the same time making allocations to its reserves. Pfennig: “Our direction is very clear. Together with our partners in the health care sector, we will continue in the second half of the year to provide comprehensive support for start-ups and the set-up of health care practices, which are at core of the German health care sector. In order to intensify its customer relationships, apoBank is also investing in the expansion of its communications channels with its customers. This includes the launch of its new customer service centre, video and chat advisory services, as well as the recruitment of new advisors and the opening of additional locations. Pfennig: “We are adapting our service offering to the digital media world. In addition to state-of-the-art technology, however, proximity to our customers remains the focus. This is essential, especially in areas such as the start-up sector, where professional advice is very important."