DJ DGAP-IRE: IKB Deutsche Industriebank AG: 9-month figures 2009/10 (as of 31 December 2009)

IKB Deutsche Industriebank AG / Release of an announcement according to Article 37x of the WpHG [the German Securities Trading Act] 

26.02.2010 08:00 

Interim report according to Article 37x of the WpHG, transmitted by
DGAP - a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
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IKB: Interim announcement as of 31 December 2009 

The interim report covers the period from the start of the financial year
on 1 April 2009 to 31 December 2009. 

Earnings performance (consolidated income statement as of 31 December 2009) 

Condensed consolidated income statement of IKB Deutsche Industriebank (IKB)
for the first three quarters of the 2009/10 financial year: 

                                       1 Apr. to 31    1 Apr. to 31   Ch-
EUR million                               Dec. 2009      Dec. 2008*   ange
                                                                        -
                                                                      158
Net interest income                           149.9           308.2    .3
Provision for possible loan losses            297.1           230.6   66.5
                                                                        -
Net interest income (after provision                                  224
for possible loan losses)                    -147.2            77.6    .8
                                                                        -
Net fee and commission income                 -31.6            25.1   56.7
                                                                        -
Net income from financial instruments                                 312
at fair value                                -380.2           -67.8    .4
                                                                      267
Net income from investment securities          27.7          -239.8    .5
Net income from investment accounted
for using the equity method                    -0.5            -6.1   5.6
                                                                        -
Administrative expenses                       216.3           269.4   53.1
                                                                        -
Staff costs                                   119.5           133.9   14.4
                                                                        -
Other administrative expenses                  96.8           135.5   38.7
                                                                        -
Other operating result                        154.6           242.0   87.4
                                                                        -
                                                                      355
Operating result                             -593.5          -238.4    .1
                                                                      227
Tax expenses/income                             0.5          -227.2    .7
                                                                        -
                                                                      582
Consolidated net loss                        -594.0           -11.2    .8
Minority interests                              0.2            -0.2   0.4
                                                                        -
                                                                      582
Consolidated cumulative loss                 -593.8           -11.4    .4 

* Figures for the previous year adjusted in line with IAS 8 (see 6-month

report 2009/10) 
A consolidated net loss of EUR 594 million has been reported for the first

nine months of the 2009/10 financial year (1 April to 31 December 2009) (9M

2008/09: consolidated net loss of EUR 11 million). 
Net interest income halved from EUR 308 million in the same period of the

previous year to EUR 150 million in the reporting period. This was mainly

as a result of the following effects: 
  - Net interest income in the operating segments fell by EUR 11 million

    owing to the reduction in the portfolios of the Portfolio Investments

    segment and by EUR 25 million in the Corporate Clients, Real Estate

    Clients and Structured Finance segments where portfolios were reduced

    while margins remained largely stable (before SoFFin costs). 
  - Income from equity investments fell by EUR 131 million as a result of

    lower own funds and a significantly lower interest rate. This was also

    due to shifts as part of a more conservative investment strategy. 
Provision for possible loan losses increased by EUR 67 million to EUR 297

million in the reporting period as a result of the significant

deterioration in the economic situation as against the previous year. This

included portfolio allowances to which a net amount of EUR 17 million was

allocated in the reporting period. Compared to the pro rata figure for the

previous year, however, risk provisioning expenses were down by EUR 145

million. Overall, risk provisions were therefore in line with the

expectations of IKB's management for the 2009/10 financial year. 
Net fee and commission income amounted to EUR -32 million (EUR 25 million).

The EUR 57 million decline is primarily the result of increased costs for

procuring liquidity in connection with the SoFFin (Sonderfonds

Finanzmarktstabilisierung - Special Fund for the Stabilisation of the

Financial Market) guarantees. The previous year's figure had not included

any commission payments for these guarantees. There was also a decline in

commission income, mainly in the Structured Finance segment. 
As in the first half of the 2009/10 financial year, the fair value result

of EUR -380 million (EUR -68 million) includes conflicting earnings

components. Earnings contributions from portfolio investments of EUR 137

million (EUR -28 million) and fair value gains from long-term investments

and derivatives of EUR 219 million (EUR -774 million) had a positive

effect. The latter arose mainly as a result of the decline in interest rate

volatilities, which had risen to a historic level in the previous year.

There was also further narrowing in credit rating-driven spreads for public

sector and other issuers, which led to gains in fair value. 
The further narrowing of credit rating-driven spreads affects not only

investments on the assets side, but also spreads for IKB's own issues. This

led to measurement losses for Bank issues carried at fair value in the

first three quarters of the 2009/10 financial year, resulting in a partial

reversal of measurement gains generated in earlier periods as a result of

the crisis. The credit rating-driven measurement losses amounted to a total

of EUR 727 million in the reporting period after gains of EUR 759 million

in the same period of the previous year. 
As a result of considerably higher gains on portfolio investments in

particular, net income from investment securities was EUR 28 million

(previous year: net loss of EUR 240 million). 
Administrative expenses were reduced by EUR 53 million to EUR 216 million

as a result of cost-cutting measures. EUR 39 million of this decline

related to other administrative expenses, where consultancy costs in

particular were reduced. It should be noted that the previous year's figure

for other administrative expenses included additional payments for the

Deposit Protection Fund of EUR 9 million. Staff costs were down by EUR 14

million to EUR 120 million. 
The other operating income of EUR 155 million (EUR 242 million) is

essentially due to the income from the remeasurement of liabilities from

compensation agreements relating to debt waivers (Besserungsscheine). This

resulted in total income of EUR 133 million. Under IAS 39 AG 8, this

corresponds to the adjustment of the present value of the expected cash

flows for compensation agreements, profit participation certificates and

silent partnership contributions, while the unwinding of these liabilities

reduced net interest income by EUR 45 million. 
Overall, a negative operating result of EUR 594 million was therefore

generated (EUR -238 million). After taking into account the tax expense of

EUR 0.5 million (tax income of EUR 227 million), the consolidated net loss

amounted to EUR 594 million (EUR -11 million). 
Net assets (balance sheet as of 31 December 2009) 
At EUR 36.6 billion, total assets as of 31 December 2009 were EUR 8.1

billion lower than the level as of 31 March 2009. This decline was

essentially due to the reduction of loans and advances to customers (EUR

-3.4 billion) and investment securities (EUR -1.7 billion). At the same

time, risks were reduced and the Tier 1 capital ratio improved. Secondly,

assets held for trading were down significantly mainly as a result of the

settlement of transactions at Havenrock Ltd. (EUR -2.1 billion). The main

reduction on the equity and liabilities side of the balance sheet was in

liabilities to banks (EUR -3.7 billion) and securitised liabilities as a

result of repayments and measurement effects (EUR -1.0 billion). The drop

in liabilities held for trading (EUR -3.3 billion) should be seen in the

context of the development of assets held for trading. 
The Tier 1 ratio of the IKB Group was 10.4% on 31 December 2009. 
Financial position 
The liquidity situation of IKB has stabilised. Factors contributing to this

included the utilisation of the SoFFin guarantees, the substantial

reduction in assets and the increase in customer deposits. IKB has returned

SoFFin guarantees of EUR 2 billion (see below). It should still be noted

that the money and capital markets are only functioning to a limited

extent. Thus, only limited collateralised borrowing in particular is

possible as a financing option. Looking ahead to a more positive market

performance in future, IKB updated its debt issuance programme in February

2010 so as to also be able to float issues on the capital market on an

unsecured basis. 

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