Van Lanschot: investment and cost reduction programme on track; profit recovery held back by higher loan loss provisions
(Thomson Reuters ONE) -
* Van Lanschot's solid profile remains strong:
* Core Tier I ratio at 11.0% (year-end 2011: 10.9%)
* Funding ratio at 85.3% (year-end 2011: 91.8%)
* Underlying net profit at ? 16.0 million
* Assets under management up 2% to ? 37.5 billion (year-end 2011: ? 36.7
billion)
* Operating expenses down 3%; expenses excluding non-strategic investments
? 204.3 million; investment and cost reduction programme on track:
* Net decrease of 101 FTEs in H1 2012
* Well on course to reducing the cost base to around ? 380 million
Constant Korthout, Chief Financial and Risk Officer of Van Lanschot: "We have
for a number of years now consciously focused on the new international capital
and liquidity requirements of Basel III and, as a result, Van Lanschot already
complies with the requirements that will come into effect in 2018. The current
Core Tier 1 ratio of 11.0% puts Van Lanschot at the top end of the market. A
high funding ratio of 85.3% means that our reliance on the capital market
remains limited; Van Lanschot is largely funded by customer savings and
deposits. However, this ample liquidity and funding position has a downside, in
that the bank is affected more severely by the ongoing competition on the
savings market, which has an adverse effect on the interest margin.
The deteriorating economic climate led to an increase in loan loss provisions
during the first six months of the year. Two large items had a significant
impact on the level of the provision. The increase in loan loss provisions was
largely the result of additions to existing provisions. In the absence of an
economic recovery, the loan loss provisions will remain at elevated levels.
The positive momentum on the stock markets in the first quarter of 2012 was
overshadowed by the escalation of the euro crisis in the second quarter. Thanks
to positive market performance, assets under management rose to ? 37.5 billion
in the first half of 2012. The investments made in Kempen's asset management
business bore fruit. New mandates worth ? 1.8 billion have been signed,
including one with the Pension Fund for the Dutch Butchers Industry, and these
mandates will take effect in the second half of this year.
Difficult financial markets and the resulting caution among clients to invest
impacted the bank's earnings. Although the underlying net profit of ? 16.0
million is substantially higher than the ? 0.3 million reported for the second
half of 2011, it has not yet returned to the level seen in the first half of
last year (? 42.8 million).
The initial impact of the cost reduction programme can be seen in a decline in
operating expenses. This programme is on schedule, thanks in part to staff cuts
by over 100 FTEs in the first half of the year, the mergers of a number of
branch offices and departments, and the start that was made on concentrating the
international private banking activities in Switzerland. The new securities
system has gone live and new elements of our online services will be made
available to clients in the near future. Furthermore, the roll-out of our wealth
planning approach, in which clear wealth objectives are linked to state-of-the-
art scenario analyses, has led to a notable increase in customer satisfaction.
All of the bank's investment propositions produced positive results in the past
half year, and are outperforming the benchmark over the long term."
SOLID BALANCE SHEET WITH A LOW RISK PROFILE
* Strong capital position: Core Tier I ratio up to 11.0% at 30 June 2012
(year-end 2011: 10.9%)
* Solid balance sheet: leverage ratio according to current definition[1] at
8.1% (year-end 2011: 8.2%)
* Loan losses on mortgages remain low
* Small property loan portfolio: property loans relate mostly to small-scale
buildings owned by director-owners and family businesses; very limited
exposure to property development
* No exposure to Europe's peripheral countries
* Single A- (stable outlook) credit rating from both Standard & Poor's and
Fitch Ratings, a rating that has been confirmed repeatedly since 2009
FUNDING AND LIQUIDITY POSITION REMAINS STRONG
* High funding ratio of 85.3% at 30 June 2012 (year-end 2011: 91.8%) shows
that lending is financed largely from customer savings and deposits
* Van Lanschot is a price follower on the savings market: savings accounts and
deposits down 9% to ? 11.9 billion; limited impact on funding ratio owing to
structural repayments by private clients: 2% reduction in loan portfolio
* Further diversification of funding profile: additional long-term market
funding raised in H1 2012 in the form of a seven-year retail note (? 125
million); in July 2012, RMBS notes worth ? 140 million were placed with
institutional investors by means of a private placement
* Van Lanschot already complies with published Basel III requirements: pro
forma Liquidity Coverage Ratio (LCR) at 162.2% (minimum requirement: 100%),
pro forma Net Stable Funding Ratio (NSFR) at 104.2% (minimum requirement:
100%), pro forma leverage ratio at 5.3% (minimum requirement: 3%)
GROWTH IN ASSETS UNDER MANAGEMENT
* Total assets under management up 2% to ? 37.5 billion (year-end 2011:
? 36.7 billion), comprising a net outflow of ? 0.6 billion and positive
market performance of ? 1.4 billion
* Further rise in discretionary mandates: at 30 June 2012, 35% of total assets
under management for Private & Business Banking clients comprised assets
under discretionary management (year-end 2011: 33%)
* Total client assets (assets under management plus funds entrusted by
clients) more or less unchanged at ? 49.4 billion (year-end 2011: ? 49.8
billion)
PROFIT RECOVERY HELD BACK BY HIGHER LOAN LOSS PROVISIONS[2]
* Income from operating activities at ? 272.7 million (H1 2011: ? 294.4
million; H2 2011: ? 258.0 million); income excluding the non-strategic
investments ? 264.4 million
* Volatility in bond portfolio (Dutch government bonds) had a marginal impact
on results in H1 2012
* Interest income down to ? 126.2 million; interest margin at 1.36% (H1
2011: 1.43%; H2 2011: 1.46%)
* The margin on the ring-fenced investment portfolio worth ? 750 million,
created following participation in the LTRO, amounts to 86 basis points on
an annual basis
* Commission income at ? 105.9 million; increase in transaction commission and
management fees compared with H2 2011; management fees[3] account for 76% of
total securities commission (2011: 72%)
* Expenses at ? 211.3 million, down 3% compared to H1 2011; expenses excluding
the non-strategic investments ? 204.3 million
* Non-recurring charges of ? 11.9 million relate to the investment and cost
reduction programme, and include gains on the sale of a number of office
buildings
* Addition to loan loss provision rises to ? 41.8 million; the addition
consists mainly of increases to existing provisions for corporate clients
* Underlying net profit at ? 16.0 million (H1 2011: ? 42.8 million; H2 2011:
? 0.3 million); net profit after non-recurring charges at ? 5.7 million
INVESTMENTS IN QUALITY AND SIGNIFICANT COST SAVINGS
The investment and cost reduction programme is on track, and the bank is well on
course to reduce its cost base to around ? 380 million by 2015.
The followings steps, among others, were taken in the first half of 2012:
* Regionalisation of Private & Business Banking: five branches were combined
with other branches in the same region, and the number of investment
advisory teams and business banking units was scaled back.
* Van Lanschot's investment department was integrated with Kempen Capital
Management in order to achieve synergy benefits and further improvements in
quality.
* Centralisation of the international private banking activities in
Switzerland: for this purpose, Van Lanschot Luxembourg will be integrated
into Van Lanschot Switzerland. In addition, the banking activities of
Van Lanschot Curacao and the trust business in the Netherlands, Curacao and
Jersey were sold to United Bank & Trust (this is still subject to the
approval of the supervisory authorities.
Of the envisaged staff cuts in the period up to and including 2014 (total of
300 FTEs), a reduction of 101 FTEs was achieved in the first half of 2012,
dropping the total number of FTEs down from 2,009 to 1,908 at 30 June 2012. The
impact on staff costs will start to become visible in the second half of the
year.
With regard to IT and automation, we are making further investments and
efficiency improvements, which include merging the securities platform at
Kempen, outsourcing payment services to Equens, and a new securities system
which is already live. In view of these changes, with effect from 1 January
2013 Van Lanschot will take on various previously outsourced IT tasks. This will
lead to an increase of 70 to 80 FTEs.
ASSETS UNDER MANAGEMENT
Total assets under management increased 2%, from ? 36.7 billion to ? 37.5
billion. This ? 0.8 billion rise was made up of a net outflow of ? 0.6 billion
and a positive market performance of ? 1.4 billion.
(x ? billion) 30-6-2012 31-12-2011 %
Assets under management 37.5 36.7 2
Assets under discretionary management 25.2 24.3 4
Assets under non-discretionary management 12.3 12.4 -1
Assets under management 37.5 36.7 2
Private & Business Banking 18.9 19.0 -1
- of which net inflow of new money -0.7
Asset Management 18.6 17.7 5
- of which net inflow of new money 0.1
Although the positive mood on the stock markets in the first quarter of 2012
boosted investment activities, the escalation of the euro crisis in the second
quarter led to a partial reversal of this initially positive momentum. In market
conditions such as these, some clients consciously choose to pull out of
investments. This, in combination with the debt repayment trend seen among many
private individuals, has led to a net outflow of assets.
The outflow at Private & Business Banking related mainly to assets under non-
discretionary management. Discretionary asset management now makes up 35% of
total assets under management for Private & Business Banking (2011: 33%). There
was a limited net inflow at Asset Management.
CORPORATE RESPONSIBILITY
The steps the bank has taken in the field of Corporate Responsibility (CR) have
produced clear results. The responsible lending policy that has been introduced
demonstrates that Van Lanschot has no involvement in human rights violations,
child labour, controversial weapons or the like. In the area of responsible
investing, the bank follows a strategy of engagement that leads to close
dialogues with funds and fund managers about potential issues. In June,
Van Lanschot was awarded a Forum Ethibel certificate, confirming that
Van Lanschot has a responsible banking policy in place and that it adheres to it
in practice. Van Lanschot is also working on setting up a Charity Desk to
provide a better service to clients in this area. In addition, Van Lanschot
recently made a detailed analysis of its own carbon footprint; the bank will
continue to manage its relatively limited level of carbon emissions.
OUTLOOK
The market outlook for the financial sector remains challenging. The earnings
model of financial institutions is under pressure due in part to the increase in
regulations. As previously announced, the bank expects the transition to F-IRB
to negatively hit the capital ratios in the second half of 2012. The capital
ratios will in addition be impacted in the future by the implementation of the
revised accounting standard on employee benefits (IAS 19R). Depending on the
relevant interest rate at the end of the year, this new regulation could have a
significant impact on the Core Tier I ratio.
As a private bank, Van Lanschot is keeping to its risk-averse profile and the
bank will continue to prioritise solidity and liquidity above profit
maximisation. The recovery in income depends partly upon the normalisation of
savings rates and the return of investor confidence. The investment and cost
reduction programme, which is on schedule, will allow the bank to reduce its
cost base to around ? 380 million[4] in 2015. Despite the high quality of the
loan book, the recession may cause the loan loss provision to remain at elevated
levels.
NEW CHAIRMAN OF THE BOARD OF MANAGING DIRECTORS
On 27 September 2012, notice will be given at an Extraordinary General Meeting
of Shareholders of the appointment of Karl Guha as the new Chairman of the Board
of Managing Directors of Van Lanschot with effect from 1 January 2013.
VAN LANSCHOT SHARE BUY-BACK PROGRAMME
Van Lanschot will launch a share buy-back programme for up to 50,000 treasury
shares (depositary receipts for ordinary A shares) on 15 August 2012. The
purpose of the share buy-back programme is to cover the award of depositary
receipts for shares to employees under the current pay and benefits policy and
the employee share plan.
This share buy-back programme will be carried out in accordance with the mandate
given by the Annual General Meeting of Shareholders on 10 May 2012. The share
buy-back programme will terminate on 31 December 2012, unless the maximum number
of 50,000 shares has been repurchased prior to that date. Van Lanschot has
mandated Rabobank International to execute the share buy-back programme.
Rabobank International will make its trading decisions with regard to the number
of shares and the timing of the purchases independently of Van Lanschot.
Updates on the progress of the share buy-back programme will be made available
on a weekly basis on the bank's website (www.vanlanschot.nl/sharebuyback).
KEY DATA
INCOME STATEMENT H1 2012 H2 2011 % H1 2011 %
(x ? million)
Income from operating activities 272.7 258.0 6 294.4 -7
Operating expenses 211.3 209.5 1 217.0 -3
Gross result before non-recurring 61.4 48.5 27 77.4 -21
charges
Non-recurring charges 11.9 - - - -
Impairments 45.3 48.5 -7 30.9 47
Operating profit before tax 4.2 - - 46.5 -91
Discontinued operations 0.2 - - 2.8 -93
Net profit 5.7 0.3 - 42.8 -87
Underlying net profit excluding non- 16.0 0.3 - 42.8 -63
recurring charges
Efficiency ratio (%) 81.4 81.2 - 73.7 -
BALANCE SHEET AND CAPITAL MANAGEMENT (x 30-6-2012 31-12-2011 % 30-6-2011 %
? million)
Equity attributable to shareholders 1,498 1,507 -1 1,466 2
Equity attributable to minority 51 59 -14 320 -84
interests
Savings and deposits 11,942 13,100 -9 13,225 -10
Loans and advances to customers 13,994 14,270 -2 15,059 -7
Total assets 18,462 18,454 - 19,286 -4
Risk-weighted assets 11,050 11,000 - 11,528 -4
Core Tier I ratio (%) 11.0 10.9 - 10.1 -
Tier I ratio (%) 11.0 10.9 - 12.6 -
BIS total capital ratio (%) 12.1 11.9 - 14.0 -
Leverage ratio (%) (current 8.1 8.2 - 7.6 -
definition)[5]
Basel III 30-6-2012 31-12-2011 % 30-6-2011 %
Liquidity Coverage Ratio (%) 162.2 149.4 - 191.0 -
Net Stable Funding Ratio (%) 104.2 103.6 - 106.2 -
Leverage ratio (%) 5.3 5.2 - 5.2 -
CLIENT ASSETS 30-6-2012 31-12-2011 % 30-6-2011 %
(x ? billion)
Client assets 49.4 49.8 -1 49.3 -
- Assets under management 37.5 36.7 2 36.1 4
- Savings and deposits 11.9 13.1 -9 13.2 -10
Assets under management 37.5 36.7 2 36.1 4
- Discretionary 25.2 24.3 4 22.2 14
- Non-discretionary 12.3 12.4 -1 13.9 -12
KEY FIGURES 30-6-2012 31-12-2011 30-6-2011
Weighted average number of outstanding 40,865 40,870 40,865
ordinary shares (x 1,000)
Earnings per share based on average 0.11 0.84 0.92
number of ordinary shares (?)
Return on average Core Tier I capital 0.7 3.0 6.5
(%)[6]
Funding ratio (%) 85.3 91.8 87.8
Number of staff (FTEs)[7] 1,907.6 2,008.8 2,009.7
RESULTS
H1 2012 H2 2011 % H1 2011 %
(x ? million)
Interest 126.2 138.7 -9 142.3 -11
Income from securities and associates 13.6 -2.2 - 13.6 -
Commission 105.9 107.3 -1 123.2 -14
Gains and losses on financial transactions 18.7 5.7 - 10.6 76
Income from non-strategic investments[8] 8.3 8.5 -2 4.7 77
Income from operating activities 272.7 258.0 6 294.4 -7
Staff costs 107.1 102.9 4 113.8 -6
Other administrative expenses 80.6 79.5 1 79.5 1
Depreciation and amortisation 16.6 18.3 -9 18.3 -9
Operating expenses of non-strategic 7.0 8.8 -20 5.4 30
investments[8]
Operating expenses 211.3 209.5 1 217.0 -3
Gross result before non-recurring charges
61.4 48.5 27 77.4 -21
Non-recurring charges 11.9 - - - -
Gross result after non-recurring charges 49.5 48.5 2 77.4 -36
Addition to loan loss provision 41.8 36.9 13 27.4 53
Other impairments 3.0 11.0 -73 3.0 -
Impairments of non-strategic investments[8] 0.5 0.6 -17 0.5 -
Impairments 45.3 48.5 -7 30.9 47
Operating profit before tax 4.2 - - 46.5 -91
Income tax -1.6 -0.2 - 6.9 -
Tax on non-strategic investments[8] 0.3 -0.1 - -0.4 -
Net profit from continuing operations 5.5 0.3 - 40.0 -86
Discontinued operations[9] 0.2 - - 2.8 -93
NET PROFIT 5.7 0.3 - 42.8 -87
Underlying net profit excluding non-recurring
charges 16.0 0.3 - 42.8 -63
ADDITIONAL INFORMATION
For additional information, please visit www.vanlanschot.nl/aboutvanlanschot.
FINANCIAL REPORT, PRESENTATION AND WEBCAST OF PRESS CONFERENCE
The financial report on the 2012 half-year results contains a detailed
explanation of the results and balance sheet of Van Lanschot NV.
The presentation for analysts will be held in Amsterdam on 14 August 2012 at
11.30 am (CET), and can be followed live online via a video webcast on the
website.
For the financial report on the 2012 half-year results, the presentation for
analysts and the webcast, please visit www.vanlanschot.nl/results2012.
2012 INTERIM FINANCIAL STATEMENTS OF F. VAN LANSCHOT BANKIERS NV
The 2012 interim financial statements of F. Van Lanschot Bankiers NV are
available as from Tuesday 14 August 2012 at:
www.vanlanschot.nl/reportsfvlbankiers.
KEY DATES 2012/2013
Publication of trading update Q3 2012 9 November 2012
Publication of 2012 annual results 8 March 2013
's-Hertogenbosch, the Netherlands, 14 August 2012
Media Relations: Etienne te Brake, Corporate Communications Manager
Telephone +31 73 548 30 26; mobile phone +31 6 12 50 51 10; e-mail
e.tebrake(at)vanlanschot.com
Investor Relations: Geraldine Bakker-Grier, Investor Relations Manager
Telephone +31 73 548 33 50; mobile phone +31 6 13 97 64 01; e-mail
g.a.m.bakker(at)vanlanschot.com
Van Lanschot NV is the holding company of F. Van Lanschot Bankiers NV, the
oldest independent bank in the Netherlands with a history dating back to 1737.
The bank offers high-quality financial services to high net-worth individuals,
director-owners and their businesses, and institutional investors. Van Lanschot
NV is listed on Euronext Amsterdam.
DISCLAIMER
Forward-looking statements
This press release contains forward-looking statements concerning future events.
Those forward-looking statements are based on the current information and
assumptions of the Van Lanschot management concerning known and unknown risks
and uncertainties. Forward-looking statements do not relate to definite facts
and are subject to risks and uncertainty. The actual results may differ
considerably as a result of risks and uncertainties relating to Van Lanschot's
expectations regarding such matters as the assessment of market risk or possible
acquisitions, or business expansion and premium growth and investment income or
cash flow predictions or, more generally, the economic climate and changes in
the law and taxation. Van Lanschot cautions that expectations are only valid on
the specific dates, and accepts no responsibility for the revision or updating
of any information following changes in policy, developments, expectations or
the like. The financial data regarding forward looking statements concerning
future events included in this press release have not been audited.
[1] Leverage ratio is the ratio of equity attributable to shareholders to total
assets
[2] The income and operating expenses of the operations in Curacao and the trust
business in the Netherlands, Curacao and Jersey, which have been sold, have been
classified as discontinued operations. The comparative figures for 2011 have not
been restated.
[3] Recurring commission comprises management fees, portfolio commission,
custody fees and performance fees
[4] Operating expenses excluding non-strategic investments
[5] Leverage ratio is the ratio of equity attributable to shareholders to total
assets
[6] Annualised on the basis of half-year data
[7] The number of FTEs disclosed in the table is exclusive of non-strategic
investments. Inclusive of non-strategic investments, the number of FTEs at 30
June 2012 was 2,052
[8] Since 2009, the figures have reflected the impact of a number of non-
strategic investments. The results of these investments have been disclosed
separately from the figures of Van Lanschot's core activities. Van Lanschot has
stated that it intends to sell these investments in due course as their
activities are not in line with the bank's private banking strategy.
[9] Van Lanschot Curacao and the trust business in the Netherlands, Curacao and
Jersey were sold at 31 March 2012, subject to regulatory approval. The results
of these activities for H1 2012 are classified as 'discontinued operations'.
The press release can be downloaded from the following link:
Press release (PDF):
http://hugin.info/133415/R/1633645/524320.pdf
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Van Lanschot via Thomson Reuters ONE
[HUG#1633645]
Unternehmensinformation / Kurzprofil:
Datum: 14.08.2012 - 07:30 Uhr
Sprache: Deutsch
News-ID 174159
Anzahl Zeichen: 27709
contact information:
Town:
's-Hertogenbosch
Kategorie:
Business News
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