ACHMEA BANK N.V. REPORTS AN OPERATING PROFIT BEFORE TAXES OF EUR 33 MILLION
The operating profit before taxes increased by
EUR 22 million to EUR 33 million in the first half-year of 2023 compared to the first half-year 2022. This increase is mainly due to the combination of higher interest margin of EUR 45 million, lower fair value result of
EUR 15 million and higher operating expenses of
EUR 7 million.
The positive development of interest margin strengthened in first half-year 2023, due to both an increase of our mortgage portfolio and higher margins on new originated and repriced mortgages. The rise in interest rates resulted in a shift of the mortgage market to shorter fixed-interest periods (<=10y) of which Achmea Bank clearly benefited. In addition to growth of our mortgage portfolio, interest margin improved due to lower funding costs including derivatives.
The mortgage production of Centraal Beheer for Achmea Bank increased due to the shift of the mortgage market to shorter fixed-interest periods. Together with a strong price position the origination of new mortgages increased with EUR 0.5 billion to EUR 1.1 billion in the first half of 2023 (EUR 0.6 billion H1 2022). Combined with prepayments of EUR 0.6 billion and the portfolio acquired from a.s.r. (EUR 0.5 billion), the Achmea Bank mortgage portfolio increased by EUR 1.0 billion to EUR 13.4 billion in line with the Bank's growth and diversification strategy. To further strengthen this strategy and remain robust in uncertain market circumstances, the Bank also joined the residential mortgages platform of asset manager DMFCO as per March 2023.
The Wealth accumulation for customers through savings and investments is also an important pillar of the Bank’s strategy. In 2023 Achmea Bank added retail investment to its portfolio. Due to rising interest rates, the retail savings market has become more active. The combination of our strong brand (Centraal Beheer) and attractive pricing strategy resulted in a growth of our retail savings portfolio of EUR 0.7 billion.
The fair value result of EUR 7 million loss (2022 EUR 8 million profit) is an accounting result related to the derivatives used for hedging the interest rate risk. This accounting result is mainly compensated in other reporting periods, generally reflecting a pull to par as the underlying derivatives approach maturity.
The rise in the operating expenses of EUR 7 million relates to the increase in servicing fees of our mortgage portfolio which servicing is outsourced. The efficiency ratio improved significantly from 88% (December 2022) to 57% for the first half-year 2023, reflecting a limited increase of operating expenses in relation to the higher interest margin. The number of defaults remained at a low level in line with the inherent low credit risk profile of our mortgage portfolio which resulted in a limited addition to the loan loss provision.
The Bank retained its sound liquidity position with liquidity ratios well above internal and external limits. In addition, the Bank has a diversified funding mix, comprising retail funding as well as unsecured and secured wholesale funding with different maturity profiles. In January 2023, the Bank issued a second EUR 0.5 billion tranche under its EUR 5 billion Soft Bullet Covered Bond (SB CB) program, which was established in 2021. In June 2023, Achmea Bank finalized the transfer of the three covered bonds under its EUR 5 billion Conditional Pass-Through Covered Bond (CPT CB) program to its EUR 5 billion SB CB program. The total outstanding amount of covered bonds on 30 June 2023 was EUR 3 billion.
The Common Equity Tier 1 Capital Ratio remains strong at 17.1% (31 December 2022: 18.2%). The decline is mainly due to the increase of the mortgage portfolio. In April 2023, Achmea Bank paid a dividend of EUR 15 million to its shareholder Achmea B.V., consisting of the 2022 net distributable profit plus a small amount (EUR 2 million) of released other reserves. Achmea Bank is working towards the implementation of Advanced Internal Rating-Based (AIRB) approach for its mortgage portfolio(s).
S&P confirmed the Issuer Credit Rating Outlook per 23 June 2023 of A-/stable, and Fitch confirmed the issuer Default Rating of A/Stable per 15 November 2022.
Achmea Bank is part of the Achmea’s Retirement Services strategy. As part of its purpose ‘Sustainable Living Together’, Achmea’s Retirement Services strategy allows customers to have and generate income for today and tomorrow. Achmea Bank offers mortgage, savings and investments solutions for customers in close cooperation with Centraal Beheer, Syntrus Achmea and Achmea Investment Management to achieve our shared ambition: making the whole of the Netherlands financially fit and self-reliant.