Achmea Bank reported a profit before tax of EUR 39 million in 2018 (2017 EUR 24 million).
The operating profit, excluding exceptional items, increased from EUR 15 million in 2017 to EUR 39 million in 2018. The growth in the operating profit is mainly due to a higher interest margin of EUR 7 million and lower operating expenses of EUR 16 million. The structural lower operating expenses are mainly the result of the outsourcing of our mortgage servicing to Quion and the implementation of the new savings- and payment system. The 2017 result included the following exceptional items: release of the Acier loan loss provision of EUR 7 million and a positive fair value result of EUR 2 million.
In 2018 the implementation of a new system for the administration of payments and savings products and the implementation of the new reporting standard IFRS 9 were finalized. Furthermore the Bank integrated the client services desk of our two brands at Centraal Beheer. Centraal Beheer continues to focus on an excellent digital customer experience.
In line with Achmea Bank’s strategy, Woonfonds has introduced several new niche mortgage propositions, among others a buy-to-let mortgage (2018) and a mortgage product for self-employed persons (end of 2017). Due to Achmea Bank’s focus on niche propositions to achieve better interest margins over additional volume in the mainstream market, production of new mortgages decreased by EUR 0.1 billion to EUR 0.6 billion. In a strong competitive market the production for Achmea Pensioen- en Levensverzekeringen N.V. decreased to EUR 0.3 billion (2017 EUR 0.7 billion). The regular mortgage portfolio of Achmea Bank decreased by EUR 0.5 billion to EUR 9.8 billion with total prepayments stabilizing at EUR 1.1 billion.
The savings portfolio decreased, as expected, to EUR 5.7 billion (2017 EUR 6 billion), mainly driven by expiring term deposits. In 2018 Achmea Bank redeemed EUR 1.2 billion senior unsecured notes. The Bank retained its sound liquidity position with liquidity ratios well above internal and external limits.
The Total Capital ratio increased to 20.9% (2017: 20.5%). The Common Equity Tier 1 (CET1) Capital ratio increased to 20.8% as per December 2018 (20.4% at the end of 2017). The decline of the mortgage portfolio and 2017 result more than compensated the dividend pay-out of EUR 50 million in May 2018.
Achmea Bank currently applies the standardized approach to calculate the risk weighting of its assets. Achmea Bank is working towards the implementation of Advanced Internal Rating Based (AIRB) models which will have a positive effect on Achmea Bank’s credit risk and data management capabilities. The latter will ultimately impact capital ratios in the future, depending upon approval of the DNB.
As of 1 January 2018, Achmea Bank applies the IFRS 9 reporting standards for financial instruments. The initial 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 negative impact on equity of the implementation of IFRS 9 per 1 January 2018 on the loan loss provision of the regular portfolio amounted to EUR 3 million (3 basis points). Achmea B.V. issued a capped guarantee to cover credit risk and legal claims related to the Acier portfolio. The impact on the Acier portfolio was largely compensated by this guarantee.
Achmea Bank proposes to pay out a total dividend which equals the net result of EUR 29 million.