DGAP-News: IKB Deutsche Industriebank AG / Key word(s): Half Year
IKB Deutsche Industriebank AG: Half-year figures for the 2013/14
09.12.2013 / 08:01
IKB Deutsche Industriebank:
Half-year figures for the 2013/14 financial year
- Reporting in accordance with HGB
- Consolidated net income of EUR 8 million (H1 2012/13: consolidated net
loss of EUR 51 million)
- EUR 128 million addition to fund for general banking risk (common
equity tier 1 capital) from current earnings
- Tier I capital ratio of the IKB Group rises to 11.2% (31 March 2013:
- Participation in ECB's comprehensive assessment leads to complex
management issues and high costs
- IKB target for common equity tier I ratio (CET I): more than 8% by 31
- Regulatory environment and consequences of debt crisis still
significant risk factors
[DÃ¼sseldorf, 9 December 2013] In the first six months of the 2013/14
financial year (1 April to 30 September 2013), IKB Deutsche Industriebank
AG generated consolidated net income of EUR 8 million and allocated EUR 128
million to the fund for general banking risk. The consolidated net loss in
the same period of the previous year (first half of 2012/13 financial year,
1 April to 30 September 2012), the consolidated net loss had amounted to
EUR 51 million.
The consolidated income statement for the first half of the 2013/14
financial year is as follows:
Table: Income statement of IKB (Group, HGB)
1 Apr. 2013 to 30 1 Apr. 2012 to 30
EUR million Sept. 2013 Sept. 2012* Change
Net interest and
lease income 140 91 49
Net fee and
commission income 14 -11 25
Net trading results 5 0 5
expenses -139 -145 6
Personnel expenses -79 -77 -2
expenses -61 -68 7
Net other income** -63 23 -86
provisioning -59 -6 -53
Tax income/expense 110 -4 114
income/loss 8 -51 59
Some totals may be subject to discrepancies due to rounding differences.
* Prior-year figures calculated in accordance with HGB for the
** Incl. EUR 128 million addition to fund for general banking risk
(expense in net other income); the common equity tier I capital of
IKB (including in accordance with Basel III) was increased by a
The Group's net interest and lease income rose by EUR 49 million in the
reporting period to EUR 140 million (previous year: EUR 91 million). Lower
refinancing costs, the reduction of non-strategic assets and profitable new
business enabled the increase in net interest income despite the lower
level of new business. In the past half-year, new business amounted to EUR
1.3 billion (previous year: EUR 1.5 billion) as credit demand in Germany
was low and competitive intensity was high, while pricing by credit
providers was not always adequate to risk. IKB maintained its lending
Net fee and commission income amounted to EUR +14 million (previous year:
EUR -11 million). A key reason for this increase was the absence of SoFFin
commission expenses in connection with the final repayment of the SoFFin
guarantees in the 2012/13 financial year (previous year: expenses of EUR 29
million). Increasing commission income proved to be difficult. Business
with capital market products developed satisfactorily, while commission
income from M&A business declined.
Administrative expenses (personnel expenses, other administrative expenses
and depreciation, amortisation and impairment losses) declined by EUR 6
million to EUR 139 million. Personnel expenses increased by EUR 2 million
to EUR 79 million due in particular to recruitment in front office.
Administrative expenses declined by EUR 7 million to EUR 61 million. The
drop is essentially due to the significant reduction in legal and advisory
Net other income amounted to EUR -63 million (previous year: EUR +23
million). This was primarily due to the allocation to the fund for general
banking risks in the amount of EUR 128 million, which is included in net
other income as an expense. The common equity tier 1 capital of IKB was
increased by a corresponding amount. Income totalling EUR 83 million was
also recognised on financial instruments.
Net risk provisioning increased to EUR 59 million in line with planning
(previous year: EUR 6 million). The prior-year figure was significantly
below the long-term average. In particular, the higher additions to risk
provisioning reflect the risks that still exist in connection with the
aftereffects of the European debt crisis.
Tax income amounted to EUR 110 million in the period under review (previous
year: tax expense of EUR 4 million). The recognition of deferred taxes in
profit or loss resulted in income of EUR 83 million. The reversal of tax
provisions no longer required led to income of EUR 31 million. The expenses
for current and other taxes amounted to EUR 4 million.
Total assets amounted to EUR 25.8 billion as at 30 September 2013, down on
the figure as at 31 March 2013 (EUR 27.6 billion). As at 30 September 2013,
the IKB Group had a tier I capital ratio of 11.2% (31 March 2013: 9.6%) and
an overall capital ratio of 14.8% (31 March 2013: 13.8%).
IKB generated consolidated net income in the first half of 2013/14 and
significantly increased its tier I capital. Current developments show that
IKB's restructuring is largely complete. The difficulties and restrictions
arising from crises that cost a great deal of time and money in the past
have now been overcome. Monitoring in connection with the EU's guarantee
controlling has been discontinued since IKB fulfilled its conditions. IKB
returned the last SoFFin guarantees almost one year ago, and major legal
risks resulting from the crisis have been settled.
IKB is further stepping up its focus on the needs of its SME customers.
Despite intensive competition for customer lending, the Bank is maintaining
its price and risk standards, and creating value added through expertise
and solutions that are tailored to the customer. IKB is building on its
long-standing customer relationships and experience. It provides customers
with support as a lender, advisor, risk manager and a link to the capital
markets. As part of its focus on core business, IKB expects to see a
further reduction in total assets and risk-weighted assets. Thanks to
strong demand on the capital market, IKB is also making good progress in
the reduction of non-strategic assets.
Participation in the comprehensive assessment under the European Central
Bank's single supervisory mechanism ('balance sheet test') came
unexpectedly for IKB, and has resulted in complex management issues, the
need to commit significant resources and therefore costs. Among other
things, the minimum tier I capital ratio (plus a mark-up of 1% for system
relevance) of 8% that was originally to be met by 2019 under the
established Basel III regulations must now be met by the end of 2013. The
timeframe was reduced surprisingly harshly in a notification from the ECB
on 23 October 2013, leaving little opportunity for banks to react.
Nonetheless, the Bank plans to comply with this benchmark as at 31 December
2013. At 11.2%, IKB clearly meets the existing minimum tier I capital ratio
The equity and liabilities side of the balance sheet will be characterised
by more diverse funding, in which deposit-taking business will be an
important component. IKB now has around 50,000 private customers. According
to planning, liquidity is ensured with a sufficient buffer.
In particular, the further reduction in administrative expenses will be
made more difficult by the expenses for the ECB's comprehensive assessment,
which are disproportionately high precisely for a relatively small bank.
With total assets of EUR 25.8 billion at present, IKB is the smallest
participating German bank and will take greater efforts to compensate for
these additional administrative costs.
If the positive trend on the capital markets essentially remains intact,
the Board of Managing Directors expects the fundamentally positive
development seen in the past six months to continue. Over the coming years,
the Bank will generate positive operating results from income in its
operating business and gains on the realisation of financial instruments
that will be used to strengthen common equity tier I capital through the
recognition of section 340g HGB reserves. Servicing the compensation
agreements of a total amount of EUR 1,151.5 million and the value recovery
rights of the hybrid investors mean that IKB AG will probably not report
any, or only minimal, profit for a long time to come, even if operating
activities are profitable.
Further details on developments in the first half of the 2013/14 financial
year can be found in 2013/14 half-year financial report at
Dr. JÃ¶rg Chittka, telephone: +49 211 8221-4349; Armin Baltzer, telephone:
+49 211 8221-6236, fax: +49 211 8221-6336, e-mail: email@example.com
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Company: IKB Deutsche Industriebank AG
Phone: +49 (0)211 8221-4511
Fax: +49 (0)211 8221-2511
Listed: Freiverkehr in Berlin, DÃ¼sseldorf, Hannover, Stuttgart;
Frankfurt in Open Market (Entry Standard)
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