8:00 | 26.11.2009
DGAP-News: IKB Deutsche Industriebank AG: Six-month figures for financial year 2009/10
IKB Deutsche Industriebank AG / Half Year Results
26.11.2009
Dissemination of a Corporate News, transmitted by
DGAP – a company of EquityStory AG.
The issuer / publisher is solely responsible for the content of this announcement.
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The consolidated net loss (after taxes) of IKB Deutsche Industriebank AG in
the first half of FY 2009/10 (1 April 2009 to 30 September 2009) amounted
to EUR -398 million (H1 2008/09: consolidated net profit of EUR 240
million). The loss is mainly due to the negative fair value result as the
fair value gains on the assets side of the balance sheet were significantly
exceeded by the fair value losses on the equity and liabilities side. Loan
loss provisions also increased as anticipated. Significant gains were
generated on the remeasurement of compensation agreements, some
profit-participation certificates and silent partnership contributions.
These were reported under other operating income.
The income statement for the first half of FY 2009/10 is as follows.
EUR million 1 April - 30 1 April - 30 Diff-
Sept. 2009 Sept. 2008 erence
Net interest income 102 190 -88
Provision for possible loan 210 107 103
losses
Net interest income (after -108 84 -192
provision for possible loan
losses)
Net fee and commission income -13 24 -37
Net income from financial -279 163 -442
instruments at fair value
Net income from investment 13 -234 247
securities
Result of investments accounted -1 -8 7
for at equity
Administrative expenses 146 180 -34
Other operating income 140 423 -283
Operating result -394 272 -666
Taxes 5 32 -27
Consolidated net income -398 240 -638
Some totals may be subject to discrepancies due to rounding differences.
Net interest income declined by EUR 88 million to EUR 102 million. The
Treasury result was down by EUR 70 million as a result of volume declines
in business, while net interest income in the Portfolio Investments segment
fell by EUR 23 million.
As anticipated, the provision for possible loan losses increased
significantly by EUR 103 million year-on-year to EUR 210 million on account
of the continuing poor economic situation. Net interest income after
provision for possible loan losses declined accordingly by EUR 192 million
to a negative value of EUR 108 million.
Net fee and commission income amounted to EUR -13 million. The EUR 37
million decrease as against the same period of the previous year
predominantly resulted from the increase in costs of liquidity procurement.
There was no commission expense for SoFFin guarantees in the same period of
the previous year.
The fair value result of EUR -279 million (EUR 163 million) includes
opposing effects. On the assets side there were high remeasurement gains on
portfolio investments and long-term investments and derivatives totalling
EUR 359 million. However, these were more than offset by losses of EUR 629
million arising from the higher measurement of liabilities on account of
the improving perception of IKB’s credit rating (measured in terms of
capital market premiums). Thus, as anticipated, the strong fair value gains
that arose from the measurement of liabilities in the past are now
reversing.
The other operating income amounted to EUR 140 million (EUR 423 million).
In particular, this current figure is due to the remeasurement of
compensation agreements, some profit-participation certificates and silent
partnership contributions.
Administrative expenses were reduced by EUR 34 million to EUR 146 million
as part of the cost cutting measures. EUR 26 million of this decline
related to other administrative expenses, where the cost of external
consultancy in particular was reduced. Staff costs were down EUR 8 million
year-on-year to EUR 81 million. The average number of employees declined by
79 in the financial half-year to 1,670.
Overall, an operating result (before taxes) of EUR -394 million was
generated (EUR 272 million). After taxes of EUR 5 million, the consolidated
net loss amounted to EUR -398 million (consolidated net profit in first
half of FY 2008/09: EUR 240 million).
Taking into account the rise in the average number of shares outstanding
from 97 million to 609 million, earnings per share amounted to EUR -0.65 in
the first half of FY 2009/10 (EUR 2.48).
Total assets amounted to EUR 42.0 billion as of 30 September 2009, a
decline of EUR 2.7 billion in the first half of the financial year. This
drop is essentially due to the reduction of loans and advances to
customers, mainly on account of the EU requirements, and the reduction of
financial instruments and trading assets. The main reduction on the equity
and liabilities side of the balance sheet was in liabilities to banks and
trading liabilities.
The Tier 1 capital ratio of IKB Group was 10.4% on 30 September 2009. The
total capital ratio was 14.7%.
Outlook
In a market still characterised by high levels of uncertainty and
volatility and in a deep recession, IKB is still exposed to considerable
default, market price, liquidity and legal risks. The financial and
economic crisis will continue to impair IKB’s business development and
cause a high level of earnings volatility. This applies to the positions
carried at fair value and to core business.
Further on, it is necessary for IKB to meet the requirements of SoFFin, EU
Commission and the Deposit Protection Fund of private banks. The approval
of the extended SoFFin guarantees by the EU Commission is pending, after
checking the modified restructuring plan.
In order to maintain a Tier 1 capital ratio of at least 8%, IKB will in
particular continue to reduce risk items.
The Board of Managing Directors is assuming that the requirements will be
implemented on time and that the economic specifications will be complied
with at the same time. There has been considerable progress with regard to
satisfying EU requirements.
Once restructuring is complete, IKB is expected to have a substantially
different earnings structure and a lower overall income level than in the
financial years prior to 2007/08 as its total assets will be considerably
less. Income from the Portfolio Investments segment will be replaced by fee
and commission income from SME consulting business. The results for FY
2009/10 and FY 2010/11 are expected to be greatly squeezed by the
consequences of the financial crisis, defaults in the corporate sector and
the costs of compliance with the EU’s requirements.
In particular, earnings will be reduced by the limitations on
interest-bearing new business and the costs of reducing total assets. Other
factors include the increased provision for possible loan losses and the
sharp rise in refinancing costs. The Group’s costs will also be
significantly reduced by cutting operating expenses by 30% year-on-year and
the headcount reduction of provisionally 370 jobs.
The medium-term goal of achieving an appropriate return on operating
business will then depend on additional fee and commission income being
generated by the planned expansion of consulting business and on lending
business gradually achieving reasonable margins on a significantly reduced
administrative and risk cost basis.
Düsseldorf, 26 November 2009
Dr. Jörg Chittka, Phone: +49 211 8221-4349; Dr. Annette Littmann, Phone:
+49 211 8221-4745 Fax: +49 211 8221-3959, E-Mail: press@ikb.de
26.11.2009 Financial News distributed by DGAP. Medienarchiv at
www.dgap-medientreff.de
and
www.dgap.de
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Language: English
Company: IKB Deutsche Industriebank AG
Wilhelm-Bötzkes-Straße 1
40474 Düsseldorf
Deutschland
Phone: +49 (0)211 8221-4511
Fax: +49 (0)211 8221-2511
E-mail: investor.relations@ikb.de
Internet: www.ikb.de
ISIN: DE0008063306
WKN: 806330
Listed: Regulierter Markt in Frankfurt (General Standard)
End of News DGAP News-Service
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