Interim Report 2023

Interim Report 2023

apoBank increases operating result

  • Interest rate turnaround shapes business performance
  • Number of customers: 500,000-mark surpassed .
  • Encouraging trend in private asset management
  • Fair dividend can be paid out

Deutsche Apotheker- und Ärztebank (apoBank) generated a net profit after tax of €33.0 million in the first half of 2023 (30 June 2022: €32.8 million). The operating result benefited from the interest rate turnaround in recent months, with the operating profit before risk provisioning almost doubling to €211.9 million (30 June 2022: €106.8 million). As a consequence, the Bank was able to build up a gratifying level of reserves.

In the reporting period, the economic environment continued to be characterised by rising interest rates, fears of recession, persistent inflation and high energy prices. Under these challenging conditions, the Bank grew its loan portfolio in the important segment of practice and pharmacy financing from €8.2 to €8.5 billion. In real estate loans, on the other hand, lending volume decreased to €17.7 billion (31 December 2022: €18.3 billion) due to a market-wide decline in demand. Investment and private financing amounted to €4.0 billion (31 December 2022: €4.2 billion). Overall, the customer loan portfolio decreased slightly to €36.2 billion (31 December 2022: €37.0 billion).

The strategic focus on private asset management is having an effect in the securities business. The deposit volume held by retail clients rose to €11.1 billion (31 December 2022: €10.3 billion), with private asset management posting an increase of 12.5% to €5.4 billion (31 December 2022: €4.8 billion).

apoBank continued to expand its customer base – at mid-year, it had more than 500,000 customers. In the first half of the year, the Bank also gained more new members.

Outlook for financial 2023

apoBank pushed ahead with its Agenda 2025 in the reporting period. This includes measures to strengthen sales, optimise products and processes and increase the Bank’s profitability. One example is the introduction of its new dual advisory model at all locations.

Matthias Schellenberg, Chair of the Board of Directors of apoBank: "The Bank performed well in the first half of 2023. We are using this favourable tailwind to invest in the optimisation of our processes and IT applications and thus to implement our Agenda 2025. The goal is to become faster and stronger while focusing exclusively on the needs of our customers – be it in the area of business start-ups or in asset and pension advisory services. We will continue to work hard on this in the coming months."

For the second half of 2023, apoBank expects a further positive earnings performance. While demand for real estate financing in particular is likely to remain subdued across the market, the deposit business should continue to benefit from the interest rate turnaround. In the customer business, apoBank intends to strengthen its core competence, which is to support and finance business start-ups, and to further expand its asset advisory services and the pension business.

Christian Wiermann, designated Chief Financial Officer of apoBank: "At the end of the year, we expect a net profit at the previous year’s level with a strong increase in the operating result. This would enable apoBank to pay its members a fair dividend and at the same time clearly strengthen its reserves and thus its capital base. We have already underpinned our solid capital base in this year’s EBA stress test."

The results for the first half of 2023 in detail

Net interest income increased by one third to €484.0 million (30 June 2022: €362.8 million). The Bank benefited significantly from higher interest rates in the deposit business. With a decline in new lending business – in particular due to the restrained demand for real estate financing across the market – apoBank was able to keep earnings in the lending business comparatively stable.

Net commission income, at €95.9 million, was below its previous year’s level (30 June 2022: €102.4 million), as expected. In volatile markets, the Bank posted a positive earnings performance overall in asset management for retail clients.

General administrative expenses amounted to €370.2 million (30 June 2022: €365.3 million). Personnel expenses rose to €135.5 million (30 June 2022: €127.1 million) due to increased wages and higher expenses for company pension plans, among other factors. Operating expenditure including depreciation was €234.7 million (30 June 2022: €238.2 million). Higher expenditure on projects and bank operations were compensated for by lower expenses for services as well as a lower bank levy. The cost-income ratio decreased to 64.5% (first half of 2022: 77.8%).

The bottom line is that the operating result, i.e. the profit before risk provisioning, almost doubled to €211.9 million (30 June 2022: €106.8 million) and thus exceeded the Bank’s expectations.

Risk provisioning for the operating business amounted to -€22.8 million (30 June 2022: -€3.0 million). Despite the increase compared to the previous year, apoBank made significantly lower risk provisions than planned. Risk provisioning with reserve character was expanded to -€82.9 million (30 June 2022: -€29.7 million).

On balance, the operating result was €106.2 million (30 June 2022: €74.1 million). After tax, net profit is €33.0 million (30 June 2022: €32.8 million).

The balance sheet total declined slightly as at mid-year, amounting to €51.7 billion (31 December 2022: €54.2 billion). The common equity tier 1 capital ratio climbed to 17.1% (31 December 2022: 15.8%), and the total capital ratio reached 18.3% (31 December 2022: 17.6%).

apoBank’s key data

€ millions 1.1. - 30.06.2023 1.1. - 30.06.2022 Change %1
Net interest income   484.0  362.8 33.4
Net commission income   95.9  102.4 - 6.4
General administrative expenses -370.2 -365.3   1.4
Balance of other operating income/expenses     2.3     6.9 -66.7
Operating profit before risk provisioning   211.9  106.8  98.4
Risk provisioning from the operating business   -22.8    -3.0 >100
Risk provisioning with reserve character   -82.9  -29.7 >100
Operating result  106.2   74.1  43.3
Net profit after tax    33.0   32.8    0.5
  30.06.2023 31.12.2022 Change1
Equity ratio, %  18.3  17.6   0.7%-pts.
Common equity tier 1 ratio, %  17.1  15.8   1.3%-pts.
Liquidity Coverage Ratio, % 221.2 206.3 14.9%-pts.
Balance sheet total, € billion  51.7  54.2  -4.5%

1) Rounding differences

The interim report is available here.