Annual results 2008
NWB maintains high lending volume and solvency in 2008; profit for the year falls to EUR 9 million.
With just over € 7 billion in new lending, Nederlandse Waterschapsbank N.V. (NWB) was able to ride out the turbulence on the financial markets in 2008. The concept of the bank with a strong financial position, a high-grade credit portfolio in the public sector and low costs, is a good indicator of its strength in these difficult times. This is emphasised by the bank’s AAA ratings from Moody’s and Standard & Poor’s.
Impact of market value results
In 2008, profit for the year nevertheless fell significantly to € 9 million, as against a profit of € 71 million for 2007. This is the result of unrealised negative changes in the value of the portfolio totalling € 112 million. Excluding the effect of the unrealised results, the realised interest result (before operating expenses and tax) rose by 12% to just over € 128 million (2007: € 114 million). At € 10 million, the operating expenses were virtually the same as in previous years, which points to the favourable trend in the efficiency of the bank.
An important reason for the trend in the unrealised market value result is the considerable uncertainty on the financial markets, which emerged in the second half of 2008. This led to an increase in risk premiums for public sector lending, which caused the market value to fall by € 65 million. Another reason for the lower market value was the significant interest rate fluctuations and the abnormal yield curve in 2008. The Managing Board does not believe that there will be a real effect on the future profitability of the bank given that virtually all the assets in the portfolio consist of loans to governments or government-backed loans. In principle, the bank keeps these loans in its portfolio until their maturity. Payment obligations on these loans are expected to be met, in which case the market value result will ultimately have a positive effect on future earnings performance.
Lending
At just over € 7 billion, the volume of new lending in 2008 is slightly above the record volume achieved in 2007. In 2008, the bank once again increased its market shares. The historically low interest rate and the inverse yield curve in particular had a positive impact on the demand for long-term loans by the bank’s customers. The lion’s share of lending went to the housing corporations last year. Lending also focused on the water boards, municipal authorities, and to a lesser extent, healthcare institutions. NWB lends virtually exclusively to Dutch public sector institutions, and on a modest scale, to governments in the euro zone.
Solvency
At year-end 2008, equity fell slightly by € 44 million to € 1.047 billion. One of the reasons for the decline was an amount of € 13 million resulting from a revaluation of government bonds in the available for sale portfolio. In addition, equity was reduced by the dividend payment for the 2007 financial year. At the time of the transition from Basel I to Basel II on 1 January 2008, the BIS solvency ratio was adjusted from 96% to 68%. At year-end 2008, this ratio had fallen to 56%. This means that NWB still comfortably meets the standards applied by the supervisory authorities.
Dividend
It will be proposed to shareholders to pay an unchanged dividend of € 40 million. This payment is made up of profit for the year of € 9 million, supplemented by a payment of € 31 million from the general reserve, subject to the bank obtaining a certificate of no objection from the Dutch Central Bank. This proposal is in line with the basic assumption to follow a sound policy aimed at a consistent, and in relation to reasonable profit, reasonable dividend distribution insofar as the solvency targets of the bank allow.
Outlook
Owing to the ongoing turbulence on the financial markets, in connection with possible fluctuations in market value results, no forecast will be made for the profit for the year. Ignoring these fluctuations, a substantially higher profit is expected for 2009.
The Hague, 9 March 2009
NWB’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 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.
Press information: Ms H.N.W. van Rooijen, General Counsel, tel. +31 70 416 62 06, e-mail: persinfo@nwbbank.com
|
HEADLINE FIGURES | ||
|---|---|---|
|
2008 |
2007 |
|
|
BALANCE SHEET | ||
|
Long-term loans and advances |
35,934 |
31,992 |
|
Equity |
1,047 |
1,091 |
|
Total assets |
48,396 |
38,770 |
|
Risk weighted assets |
1,561 |
1,093 |
|
RESULTS | ||
|
Interest |
128 |
114 |
|
Operating income |
26 |
107 |
|
Operating expenses |
10 |
9 |
|
Donation to NWB Fonds |
4 |
4 |
|
Income tax |
3 |
23 |
|
Profit for the year |
9 |
71 |
|
DIVIDEND | ||
|
Dividend payment |
40.0 |
40.0 |
|
Dividend per share in euros |
678.08 |
678.08 |
|
RATIOS (%) | ||
|
BIS Solvency ratio ¹ |
56 |
68 ² |
|
Operating expenses/total income ratio |
34.6 |
8.4 |
|
Dividend pay-out ratio |
100 ³ |
56.6 |
|
Capital ratio |
2.2 |
2.7 |
|
1) to the end of 2007 BIS Tier-1 ratio | ||
|
2) comparative BIS Tier-1 ratio 96% | ||
|
3) excluding payment of € 31 million charged to the general reserve |
