ACHMEA BANK N.V. REPORTS AN OPERATING PROFIT BEFORE INCOME TAXES OF EUR 18 MILLION
Achmea Bank reported an operating profit before income taxes of EUR 18 million in 2022 (2021 EUR 52 million). The operating profit declined mainly due to a lower interest margin of EUR 20 million and higher impairment charges of EUR 13 million. The latter due to an incidental release relating to the implementation of a second generation IFRS 9 model in 2021. The interest margin decreased from EUR 138 million to EUR 118 million as a result of lower compensation for early redemptions and lower interest income for the mortgage portfolio. During 2022, more specifically the second half, the development of the interest margin is positive due to an increase of the mortgage production and higher margins on new and repricing mortgages compared to last year. The rise in interest rates resulted in a shift of the mortgage market to shorter fixed-interest periods (<=10y) which is positive for Achmea Bank, given our chosen strategy. In the 2nd half of 2022 the interest margin (EUR 63 million) increased compared to the 1st half of 2022 (EUR 55 million), which reflects this positive development.
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 production increased by EUR 1.2 billion (+ 250%) to EUR 2.0 billion in 2022 (2021: EUR 0.8 billion). Combined with prepayments of EUR 1.6 billion and the acquired portfolios from a.s.r. (EUR 0.9 billion), the Achmea Bank mortgage portfolio increased by EUR 1.3 billion (+11.7%) to EUR 12.4 billion. This increase reflects the effectiveness of the Bank's growth and diversification strategy.
The number of defaults remained at a low level, which reflects the inherent low credit risk profile of the mortgage portfolio of Achmea Bank, which results in a limited addition to the loan loss provision.
The fair value result of EUR 7 million (2021 EUR 5 million) is an accounting result that is mainly compensated in other reporting periods, generally reflecting a pull to par as the underlying derivatives (used for hedging interest rate risk) approach maturity.
The Bank retained its sound liquidity position with liquidity ratios well above internal and external limits. In addition the Bank maintained different maturity profiles in its funding mix. In May 2022, the Bank issued a second EUR 0.5 billion tranche under its EUR 5 billion Soft Bullet Covered Bond Programme, which was established in 2021. The Bank has a diversified funding mix, comprising retail funding as well as unsecured and secured wholesale funding.
The Common Equity Tier 1 Capital Ratio remains strong at 18.2% (2021: 20.9%). The decrease is mainly due to higher mortgage origination. In April 2022, Achmea Bank paid a dividend of EUR 42 million to its shareholder Achmea B.V., the 2021 net distributable profit plus a small amount (EUR 3 million) of released other reserves.
Achmea Bank is working towards the implementation of Advanced Internal Rating-Based (AIRB) approach for its regular mortgage portfolio(s). This strengthens the bank’s credit risk management and data driven strategy further and is expected to result in lower capital requirements.
S&P confirmed the Issuer Credit Rating Outlook per 16 November 2022 of A-/stable and Fitch confirmed the issuer Default Rating of A/Stable per 15 November 2022.