Annual results 2009
NWB Bank in 2009:
• profit for the year increases to € 56.7 million;
• volume of new lending € 4.9 billion;
• robust financial position and AAA ratings maintained.
As in 2008, and against the background of the financial crisis and economic recession, the bank held its own very well, as may be expected from a bank exclusively operating as a financier of the public sector and of government-backed social institutions. It is gratifying to see that, since the crisis set in, NWB Bank has been able to continue providing its customers with long-term funding.
In line with expectations, profit for the year increased sharply in 2009, to reach € 56.7 million (2008: € 9.0 million). The growth in profit can be ascribed entirely to recovered market value results, although it was still slightly negative in 2009, at € - 1.9 million (2008: € - 102.4 million). The recovery of the market value results was driven mainly by a fall in risk spreads during the year, although by the end of 2009 they were still in excess of usual pre-crisis levels. For NWB Bank, these risk spreads concern loans granted to effectively risk-free parties, such as municipal authorities and water boards or loans under government guarantee. As it may be assumed that these parties will meet their future interest and repayment obligations, the unrealised market value losses currently reflected in the bank’s results will be reflected as corresponding gains during the remaining terms of these loans.
The interest result came to € 92.0 million in 2009 (2008: € 128.0 million). This means that, after interest income had plummeted to € 28.5 million in the first half, a sharp recovery occurred in the second half. Even so, it showed a considerable fall compared with 2008, which was a record year. Major factors were the pressure on margins in long-term lending caused by higher funding expenses and the exceptional fall in money market rates in the first months of the year. Between December 2008 and June 2009, the 3-month Euribor rate declined sharply from 5.3% to just upwards of 1.0%, squeezing interest income from the bank’s cash management in the first half.
In 2009, the volume of NWB Bank’s new lending totalled € 4.9 billion, considerably below the record volume of € 7.1 billion reached in 2008. A major factor in this decrease is the lower demand for loans from the public sector as many borrowers had taken out additional long-term funding in 2008. Additionally, risk spreads for longer-term loans are still above pre-crisis levels, causing borrowers to adopt a wait-and-see attitude in anticipation of risk spreads returning to normal levels. Indeed, we have noticed a marked decline in such spreads as from April 2009. Depending on a loan’s term and a debtor’s quality, they showed decreases of as much as half a percentage point and over. In spite of its lower lending, the bank managed to expand its market shares in the public sector once again.
With its low risk profile and AAA ratings, NWB Bank has never suffered losses on its loan portfolios. Its financial position remains very robust, its equity amounting to € 1,048 million (2008: € 1,047 million) and its BIS solvency ratio being 51.4% (year-end 2008: 53.2%), far in excess of the minimum ratio of 8% imposed by the Dutch Central Bank. The capital ratio, i.e. equity expressed as a percentage of total assets, edged down at year-end 2009 to 2.0% (year-end 2008: 2.1%), caused mainly by the bank’s expanding loan portfolios. Total assets went up by € 4.0 billion in 2009, to reach € 52.4 billion.
Operating expenses increased by 7.0% to € 10.2 million (excluding a € 4.0 million contribution to NWB Fonds) in 2009, chiefly due to higher advisory expenses related to studies into IFRS regulations, the effectiveness of the IT function and corporate social responsibility.
Addition to the reserve, and dividend
With the prior approval of the Supervisory Board, the Managing Board has decided to appropriate € 16.7 million of the profit for the year to the general reserve.
The Bank’s dividend policy is based on a strategy of consistency, which is aimed at distributing a dividend that is consistent and reasonable in relation to the profit realised insofar as the Bank’s capital position remains solid. Against this background and subject to the approval of the Supervisory Board, the Managing Board will propose to the shareholders that a cash dividend of € 678.08 per share be paid. This brings the dividend distribution to a total of around € 40 million, representing a pay-out ratio of 70% of the profit for the year.
Outlook
Barring new or unforeseen turbulence on the international money and capital markets, NWB Bank expects interest income in 2010 to be more or less unchanged from 2009. Besides the interest result, value fluctuations in the market value portfolio also affect the Bank’s profit. This chiefly concerns unrealised results on risk-free loans granted that we do not normally sell prematurely. Value fluctuations in this portfolio depend largely on interest rate trends and risk spreads on loans granted to the Dutch public sector. Against this background, NWB Bank makes no statement as to the market value result it expects for 2010.
The Hague, the Netherlands, March 9, 2010
The Managing Board
Nederlandse Waterschapsbank N.V., Rooseveltplantsoen 3, 2517 KT The Hague.
Press information can be obtained from Ms Heleen van Rooijen, General Counsel, by telephone, +31 (0)70 4166206, or e-mail, info@nwbbank.com.
NWB Bank’s main objective is aimed at the best and cheapest possible funding of the Dutch public sector. Its robust status and financial expertise allow the bank to raise sufficient funds on the international financial markets on favourable terms. The NWB Bank has a very low cost structure. The bank does not aim to generate maximum profit, but strives to achieve the best possible result in keeping with the character of the bank.
|
HEADLINE FIGURES | ||
|---|---|---|
|
2009 |
2008 |
|
|
BALANCE SHEET | ||
|
Long-term loans and advances |
40,172 |
35,934 |
|
Equity |
1,048 |
1,047 |
|
Total assets |
52,422 |
48,396 |
|
Risk weighted assets |
1,721 |
1,561 |
|
RESULTS | ||
|
Interest |
92 |
128 |
|
Operating income |
90 |
26 |
|
Operating expenses |
10 |
10 |
|
Contribution to NWB Fonds |
4 |
4 |
|
Income tax |
19 |
3 |
|
Profit for the year |
57 |
9 |
|
DIVIDEND | ||
|
Dividend payment |
40.0 |
40.0 |
|
Dividend per share in euros |
678.08 |
678.08 |
|
RATIOS (%) | ||
|
BIS Solvency ratio |
51.4 |
53.2 |
|
Operating expenses/interest resultratio |
10.9 |
7.8 |
|
Dividend pay-out ratio |
70.2 |
100.01 |
|
Capital ratio |
2.0 |
2.1 |
|
1) excluding payment of € 31 million charged to the general reserve |
