Achmea Bank reported a profit before tax of EUR 18 million for the first half-year 2018 (first half-year 2017 EUR 13 million).
The operating result, excluding exceptional items, increased from EUR 6 million HY 2017 to EUR 18 million HY 2018. The growth in the operational result is mainly due to a higher interest margin of EUR 4 million and lower operational costs of EUR 8 million. The HY 2017 result included the following exceptional items: release of the Acier loan loss provision of EUR 7 million, addition to the provision compensation for income related to early redemptions of EUR 4 million and a positive fair value result of EUR 4 million.
In HY 2018 both the implementation of a new system for the administration of savings products and payments and the implementation of the new reporting standard IFRS 9 were finalized. In addition, the organization has been further optimized by the integration of the client services desks of our two brands at Centraal Beheer. In line with the Bank’s strategy, Woonfonds introduced several new niche propositions, among which a buy-to-let mortgage and a mortgage product for self-employed persons. Centraal Beheer has also introduced a self-employed proposition and continues to focuse on an excellent digital customer experience.
Production of new mortgages amounted to EUR 0.4 billion and was lower than HY 2017 (EUR 0.8 billion) as Achmea Bank concentrates on niche propositions with better interest margins alongside mainstream mortgages. In a strong competitive market the production for Achmea Pensioen & Leven N.V. decreased to EUR 0.1 billion (HY 2017 EUR 0.3 billion). The regular mortgage portfolio of Achmea Bank decreased EUR 0.2 billion to EUR 10.2 billion with total prepayments stabilizing at EUR 0.6 billion.
The savings portfolio remained stable at EUR 6 billion. In January the Bank redeemed EUR 500 million senior unsecured notes and made the preparations to futher optimize the liquidity position. Achmea Bank retained a sound liquidity position with liquidity ratios well above internal limits.
As of 1 January 2018, Achmea Bank applies the IFRS 9 reporting standards for financial instruments. The impact of IFRS 9 on equity amounts to EUR 13 million negative after tax, mainly related to a change in the classification and measurement of a small part of the mortgage portfolio. The initial impact of IFRS 9 on the loan loss provision was largely compensated by the capped guarantee Achmea B.V. issued to Achmea Bank to cover credit risk and legal claims related to the Acier portfolio.
In line with Achmea Group’s policy to manage excess capital at group level and our dividend policy Achmea Bank paid out dividend of EUR 50 million in May 2018. The Total Capital ratio (20.4%) and Common Equity Tier 1 (CET1) Capital ratio (20.3%) remained stable. The negative impact on capital ratios of the dividend paid and IFRS 9 was compensated by the positive result of 2017 and the decrease of risk weighted assets. The new Basel IV guidelines will come into force in 2022 and are expected to have no material impact on the capital ratios.
In line with the simplified and more efficient organization, the responsibilities of the Director of Operations decreased and have been transferred to the other Board members. The position of Director of Operations, which has been held by Mr. Vincent Teekens, is no longer filled in as of April 1, 2018. As of April 1, the Board of Directors consists of Mr. Pierre Huurman and Mr. Pieter Emmen.
Since year-end 2017 Achmea Bank has retained its Issuer Default Rating of A/stable (Fitch) and its A-/Negative Issuer Credit Rating from Standard and Poor’s.
The full report can be downloaded here.