DVB Posts Record Group Results for 2010

Published Mar 14, 2011 3:20 PM by The Maritime Executive

DVB Bank SE's clearly-defined business model, with a unique focus on global transport finance, once again proved its mettle throughout 2010 - in a business environment that continued to be challenging. Based on preliminary, still unaudited figures, the Bank posted record consolidated net income before taxes of EUR131.1 million, a 51.4% increase over the previous year's figure of EUR86.6 million.

Wolfgang F. Driese, CEO and Chairman of the Board of Managing Directors, assessed DVB’s consolidated results as follows:

"We are proud to present these results, which returned DVB to its strong performance seen before the crisis. Driven by attractive new Transport Finance business, we succeeded in boosting our sources of income: net interest income after allowance for credit losses was up 15.5%, to EUR141.0 million, and net fee and commission income even rose by 27.2%, to EUR124.4 million. What is remarkable about these very good results is that we generated them during a phase when, from our point of view, the period of global economic crisis was only around two-thirds over. Even though global trade picked up strongly during the year under review, the recovery in the transport markets was slow to materialise, and with marked regional differences. The values of transport assets - vessels, aircraft, rail vehicles - also stabilised to some extent, accompanied by higher charter and leasing rates. Despite the fact that in 2010 some transport market segments continued to be burdened by excess newbuild supply, additional orders were placed.

Volatility is set to prevail during 2011: in the general economic development, on financial markets, in terms of transport demand, and particularly in the supply of additional transport capacity. A high number of newbuilds keeps pushing onto the markets during 2011 and 2012. As in the previous year, there is no reason to give the "all clear” so far. Our goals, however, remain unchanged: we want to provide our clients with optimal solutions, and an appropriate return on equity to our shareholders. Whether 2011 will be another record year for DVB remains to be seen. Our focus is on the sustainability of our performance."

Specifically, 2010 results comprised the following components:

Net interest income amounted to EUR193.0 million. DVB originated 140 new transactions in the international transport market. New Transport Finance business totalled EUR4.5 billion (previous year: EUR2.8 billion). With an average interest margin of 327 basis points (previous year: 354 basis points), the Bank ensured that the risk/return ratio of its new business was adequate.

Whilst continuing tensions on international transport markets - particularly in maritime shipping - burdened DVB's portfolios, the Bank's risk management functioned very well, thanks to numerous pro-active and targeted measures. Allowance for credit losses amounted to EUR52.0 million during the period under review (2009: EUR72.2 million). Specific allowances for credit losses remained at the previous year's levels (2010: EUR86.0 million; 2009: EUR86.8 million), whilst there was no recurrence of portfolio impairment allowance, to the extent seen in 2009 (2010: EUR1.3 million; 2009: EUR23.4 million).

Consolidated net fee and commission income, which primarily includes fees and commissions from lending business, and - to an increasing extent - asset management and advisory fees, rose to EUR124.4 million, up 27.2% year-on-year (2009: EUR97.8 million). Attractive new Transport Finance business was also the main contributor here.

Net income from financial instruments in accordance with IAS 39 showed a significant 68.7% increase, from EUR17.9 million to EUR30.2 million, reflecting market volatility in interest rates and currencies during the course of 2010. The comparable figures for 2008 and 2009 had burdened the IAS 39 result by the impairment of a bank bond; no further write-downs were required in 2010.

General administrative expenses rose by 12.6%, to EUR176.2 million (previous year: EUR156.5 million). Staff expenses of EUR101.5 million were up 13.5% year-on-year (previous year: EUR89.4 million). Due to the Bank's very good business performance, provisions for payments to employees under DVB's Long-Term Incentive Plan were recognised for the first time since 2008. At EUR69.0 million, non-staff expenses were up 10.0% (previous year: EUR62.7 million).

At EUR21.2 billion, the volume of business in 2010 was up 11.0% on the previous year (2009: EUR19.1 billion). DVB's total assets also increased, to EUR19.3 billion on the reporting date (2009: EUR17.3 billion). The Bank's nominal customer lending for regulatory purposes (the aggregate of loans and advances to customers, guarantees and indemnities, derivatives, and irrevocable loan commitments) increased by 11.0%, to EUR19.2 billion (2009: EUR17.3 billion).

DVB's capital ratios, determined in accordance with Basel II and following the confirmation of profits in the financial statements, developed as follows: the tier 1 ratio in accordance with Basel II was 18.9% (2009: 14.2%), and the total capital ratio 22.4% (2009: 18.0%).

DVB Group's key strategic indicators also improved: return on equity before taxes was 13.9% (2009: 9.4%), and the cost/income ratio stood at 49.0% (2009: 49.6%).

The Board of Managing Directors and the Supervisory Board will propose to DVB Bank SE's Annual General Meeting, which will be held on 9 June 2011, to pay an unchanged dividend of EUR0.60 per notional no-par value share. In this way, DVB will provide its shareholders with a good dividend yield of 2.40%, whilst further strengthening the Bank's liable capital. DVB's capitalisation already complies with capital requirements under Basel III which are currently under discussion.