three-month results 2015 - interim statement during the first half of 2015

2015Interim Statements – Three-Month Results

DVB Bank Group | Interim Management Statement – Three-Month Results 2015

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difficult environment in some segments of the shipping market. Conversely, allowance for credit losses of €15.5 million was reversed (Shipping Finance: €10.8 million). Net interest income after allowance for credit losses of €51.4 million was lower than the previous year’s figure (3m 2014: €59.1 million).

Total allowance for credit losses (comprising specific allowance for credit losses, portfolio-based allowances for credit losses, and provisions) rose to €234.8 million, up 7.3% from year-end 2014 (€219.0 million).

Net fee and commission income, which primarily includes fees and commissions from new Transport Finance business, and asset management and advisory fees, amounted to €26.2 million – a further 13.4% improvement over the very good figure posted the year before (3m 2014: €23.1 million). Fee and commission income was up 17.4%, to €28.3 million (3m 2014: €24.1 million); fee and commission expenses rose to €2.1 million (3m 2014: €1.0 million).

Results from investments in companies accounting for using the equity method increased from €0.4 million to €3.1 million. Net other operating income/expenses amounted to €–0.9 million (3m 2014: €–0.1 million).

General administrative expenses were up 7.7%, to €46.0 million (3m 2014: €42.7 million). Staff expenses rose by 1.2%, to €25.8 million (3m 2014: €25.5 million), whilst non-staff expenses (including depreciation, amortisation, impairment and write-ups) amounted to €20.2 million (3m 2014: €17.2 million).

Accordingly, consolidated net income before IAS 39, bank levy and taxes rose to €33.8 million (3m 2014: €39.8 million).

Net result from financial instruments in accordance with IAS 39 (comprising the trading result, the hedge result, the result from the application of the fair value option, the result from derivatives entered into without intention to trade, and the result from

DVB Bank posts strong results for the first quarter of 2015

DVB more than doubled consolidated net income, from €33.9 million to €74.9 million. This excellent result was largely due to three factors: besides higher net interest income – driven by attractive new business volumes – and a similarly positive development of net fee and commission income, the Investment Management division generated a significant non-recurring income from investment securities due to the partial sale of a shareholding in Wizz Air Holdings Plc, an Eastern Europe-based airline.

The individual items developed as follows:

At €140.6 million, total income for the first three months of 2015 (comprising net interest income after allowance for credit losses, net fee and commission income, results from investments in companies accounted for using the equity method, net other operating income/expenses, and the net result from financial instruments in accordance with IAS 39), was up 68.0% year-on-year (3m 2014: €83.7 million).

Net interest income rose by 13.9%, from €56.9 million to €64.8 million. Interest income was up 21.1%, to €259.6 million (3m 2014: €214.3 million); interest expenses amounted to €194.8 million (3m 2014: €157.4 million).

DVB’s new business in Shipping Finance, Aviation Finance, Offshore Finance and Land Transport Finance comprised 51 transactions with an aggregate volume of €1.7 billion (3m 2014: 40 transactions with an aggregate volume of €1.1 billion).

Net allowance for credit losses amounted to €13.4 million (3m 2014: €–2.2 million). Specifically, new allowance recognised for credit losses totalled €26.1 million, of which €19.6 million was accounted for by Shipping Finance, due to the persistently

Substantial events and deals

90

75

60

45

30

15

0

43.6

2011

17.5

2012

39.4

2013

33.9

2014

74.9

2015

Consolidated net income, as at 31 March

€ mn


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12.0%, to €26.1 billion. In US dollar terms, it was down slightly, by 0.4%, to US$28.2 billion.

The following chart illustrates the distribution of customer lending (in euro terms) amongst the Bank’s business divisions.

Key financial indicators developed as follows:

Driven by a strong consolidated net income, the return on equity (before taxes) stood at 25.2% – up by 12.7 percentage points (3m 2014: 12.5%). Whereas, the cost/income ratio declined by 16.9 percentage points, to 36.6% (3m 2014: 53.5%). The risk- adjusted Economic Value Added – which now also includes operating net income from investment securities – amounted to €45.4 million (3m 2014: €15.8 million).

Since the year 2014, DVB has disclosed capital ratios deter-mined in accordance with Basel III framework (Advanced Approach) and after appropriation of profits. On this basis, the common equity tier 1 ratio as at 31 March 2015 was 15.9% (31 December 2014: 18.7%), whilst the total capital ratio amounted to 22.5% (31 December 2014: 21.6%).

Frankfurt/Main, May 2015 THE BOARD OF MANAGING DIRECTORS

investment securities) – which is generally volatile – swung to €60.8 million (3m 2014: €1.2 million). The net figure included a significant non-recurring income from the sale of financial assets, generated within DVB’s ordinary activities, including the partial sale of a shareholding in Wizz Air Holdings Plc. Accordingly, the result from investment securities rose by €44.1 million, to €46.7 million (3m 2014: €2.6 million).

Consolidated net income before bank levy and taxes also showed a marked improvement, to €94.6 million (3m 2014: €41.0 million).

Consolidated net income before taxes amounted to €84.3 million (3m 2014: €40.1 million). The expected bank levy for the fiscal year 2015, in the amount of €10.3 million, already needed to be deducted from this figure at the beginning of this year. During 2014, the Bank paid an aggregate bank levy of €3.6 million. Consolidated net income after taxes rose to €74.9 million (3m 2014: €33.9 million).

DVB’s total assets increased to €27.1 billion as at 31 March 2015, up 10.6% from the 2014 year-end (31 December 2014: €24.5 billion) mainly due to currency effects. DVB’s nominal volume of customer lending (the aggregate of loans and advances to customers, guarantees and indemnities, irrevocable loan commitments, and derivatives) also rose significantly, by

Substantial events and deals

Development of the customer lending volume

€ bn US$ bn31 Mar 2015 31 Dec 2014 % 31 Mar 2015 31 Dec 2014 %

Shipping Finance 11.3 10.1 11.9 12.1 12.3 –1.6

Aviation Finance 8.4 7.1 18.3 9.1 8.6 5.8

Offshore Finance 2.6 2.3 13.0 2.8 2.8 –

Land Transport Finance 1.8 2.0 –10.0 2.0 2.4 –16.7

ITF Suisse 1.1 1.0 10.0 1.2 1.2 –

Investment Management 0.7 0.6 16.7 0.8 0.7 14.3

Business no longer in line with DVB’s strategy 0.2 0.2 – 0.2 0.3 –33.3

Total 26.1 23.3 12.0 28.2 28.3 –0.4

Shipping Finance 43.3% (0.0 pp)

Aviation Finance 32.2% (+1.7 pp)

Offshore Finance 9.9% (0.0 pp)

Land Transport Finance 6.9% (–1.7 pp)

ITF Suisse 4.2% (–0.1 pp)

Investment Management 2.7% (+0.1 pp)

Business no longer in line with the Bank’s strategy 0.8% (0.0 pp)

Distribution of customer lending by business division, as at 31 March 2015


4Condensed income statement (IFRS)

€ mn

1 Jan 2015 – 31 Mar 2015

1 Jan 2014 – 31 Mar 2014

%

Net interest income 64.8 56.9 13.9

Allowance for credit losses –13.4 2.2 –

Net interest income after allowance for credit losses 51.4 59.1 –13.0

Net fee and commission income 26.2 23.1 13.4

Results from investments in companies accounted for using the equity method 3.1 0.4 –

General administrative expenses –46.0 –42.7 7.7

Net other operating income/expenses –0.9 –0.1 –

Consolidated net income before IAS 39, bank levy and taxes 33.8 39.8 –15.1

Net result from financial instruments in accordance with IAS 39 60.8 1.2 –

Consolidated net income before bank levy and taxes 94.6 41.0 –

Bank levy –10.3 –0.9 –

Consolidated net income before taxes 84.3 40.1 –

Income taxes –9.4 –6.2 51.6

Consolidated net income 74.9 33.9 –

thereof: consolidated net income attributable to non-controlling interests 0.0 0.0 –

thereof: consolidated net income attributable to shareholders of DVB Bank SE 74.9 33.9 –

Earnings per share (€)

1 Jan 2015 – 31 Mar 2015

1 Jan 2014 – 31 Mar 2014

%

Basic earnings per share 1.64 0.74 –

Diluted earnings per share 1.64 0.74 –

Key financial indicators (%)

1 Jan 2015 – 31 Mar 2015

1 Jan 2014 – 31 Mar 2014

pp

Cost/income ratio 36.6 53.5 –16.9

Return on equity before taxes 25.2 12.5 +12.7

Return on equity after taxes 22.4 10.6 +11.8

Economic Value Added (€ mn) 45.4 15.8 –


5Statement of financial position (IFRS)

Assets (€ mn) 31 Mar 2015 31 Dec 2014 %

Cash and balances with the central bank 275.7 175.5 57.1

Loans and advances to banks 1,296.2 1,491.6 –13.1

Loans and advances to customers 23,173.9 20,633.0 12.3

Allowance for credit losses –234.8 –218.9 7.3

Positive fair values of derivative hedging instruments 445.0 416.7 6.8

Trading assets 97.0 88.2 10.0

Investment securities 332.0 328.6 1.0

Investments in companies accounted for using the equity method 238.0 193.4 23.1

Intangible assets 102.2 100.5 1.7

Property and equipment 1,193.0 1,087.7 9.7

Income tax assets 109.2 99.8 9.4

Other assets 119.0 114.7 3.7

Total 27,146.4 24,510.8 10.8

Liabilities and equity (€ mn) 31 Mar 2015 31 Dec 2014 %

Deposits from other banks 3,292.6 3,058.5 7.7

Deposits from customers 7,266.7 7,097.0 2.4

Securitised liabilities 12,404.4 11,305.8 9.7

Negative fair values of derivative hedging instruments 220.6 192.6 14.5

Trading liabilities 1,281.4 604.5 –

Provisions 83.5 65.1 28.3

Income tax liabilities 81.1 75.6 7.3

Other liabilities 174.3 187.1 –6.8

Subordinated liabilities 818.2 487.2 67.9

Equity 1,523.6 1,437.4 6.0

Issued share capital 116.9 116.6 0.3

Capital reserve 323.8 320.6 1.0

Retained earnings 1,001.1 974.6 2.7

thereof: fund for general banking risks 82.4 82.4 –

Revaluation reserve 25.6 7.2 –

Reserve from cash flow hedges –29.4 –15.9 84.9

Reserve from net investment hedges –23.5 –8.2 –

Currency translation reserve 34.1 14.4 –

Distributable profit 74.9 27.9 –

Non-controlling interests 0.2 0.2 –

Total 27,146.4 24,510.8 10.8

Customer lending volume (€ bn) 31 Mar 2015 31 Dec 2014 %

Nominal customer lending volume 26.1 23.3 12.0

Capital ratios – Basel III (%) 31 Mar 2015 31 Dec 2014 pp

Common equity tier 1 ratio 15.9 18.7 –2.8

Additional tier 1 ratio 15.9 18.7 –2.8

Total capital ratio 22.5 21.6 0.9

Imprint

DVB Bank SEPlatz der Republik 660325 Frankfurt/Main, Germanywww.dvbbank.com, [email protected]

Elisabeth WinterHead of Group Corporate CommunicationsManaging DirectorPhone: +49 69 9750 4329E-mail: [email protected]

Lisa Boose-KirwelGroup Corporate CommunicationsManager Investor RelationsPhone: +49 69 9750 4435E-mail: [email protected]

Design and realisationStudio Oberländer GmbH, Frankfurt/Main, Germany

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Cover page photosShipping FinanceOdfjell SE, Bergen, Norway

Aviation FinanceBert van Leeuwen, DVB Bank SE, Amsterdam, The Netherlands Offshore FinanceHarald M. Valderhaug, Skjongholmen, Norway Land Transport FinanceWouter Radstake, DVB Bank SE, Frankfurt/Main, Germany

The Interim Management Statement during the first half of 2015 is published in English and German. It is available as PDF file, on our webpage: www.dvbbank.com > Investors > Publications > Financial reports