·Operating profit after taxation up 11.5% from Euro 80.8 million to Euro 90.0 million
·Earnings per ordinary share before extraordinary income up 10.7% from Euro 2.71 to Euro 3.00
·Dividend rose from Euro 1.35 to Euro 1.50, corresponding to a 50% pay-out ratio
·Fall in securities commission more than offset by higher interest income
·Efficiency ratio improved from 63.7% to 61.6%
·The Netherlands: 16% increase in corporate target group accounts, 5% increase in private target group accounts
·Extraordinary income of Euro 10.8 million on the sale of the interest in Kas Bank
·Prospects for 2002: barring unforeseen circumstances, both operating profit after taxation and earnings per ordinary share are set to increase further
"We are very pleased that Van Lanschot was able, in a difficult year for banks in general, to achieve a respectable rise in profit", says Mr H. Heemskerk, Chairman of the Board of Managing Directors of Van Lanschot NV. "Van Lanschot's strategy of targeting not only high net-worth individuals but also medium-sized family businesses once again proved very rewarding. Developments in the corporate market in particular were very favourable for the Bank during the financial year, providing an offset for the lower-than-expected income from securities commission. In addition, the Bank's regional focus entails a low risk profile since hardly any loans are granted to the ICT sector, emerging markets and large foreign companies. Our strict cost control policy also contributed to the profit. We furthermore again succeeded in attracting several thousands of new clients in what was a tough year for securities."
The Bank's total assets increased by 10.6% from Euro 9.7 billion at year-end 2000 to Euro 10.7 billion at year-end 2001. Assets in custody, however, fell 11.3% to Euro 15.4 billion (2000: Euro 17.3 billion) mainly due to a decline in share prices.
In 2001, Van Lanschot again further extended its client base. The number of corporate target group accounts at 31 December 2001 amounted to over 5,100, an increase of some 700 clients of which nearly 200 belong to the family businesses segment. The number of private target group accounts in the Netherlands increased by allmost 2,300 to more than 44,800. The slight increase, on balance, of the number of clients in Belgium resulted mainly from the loss of non-target group accounts and the inflow of new, chiefly Belgian clients. At year-end 2001, Van Lanschot, including its foreign branches, had over 50,000 private target group accounts.
Van Lanschot attaches great value to a sophisticated image. Within that context and with a view to the Bank's further growth, a number of new office buildings were opened this year and several office buildings still to be developed were acquired.
Results
Total income for 2001 increased by Euro 13.7 million (3.8%) to Euro 373.5 million. The fall in commission income was more than offset by the rise in interest income. Interest increased by 31.5% from Euro 148.6 million to Euro 195.3 million thanks to strong growth in core activities in 2000, which contributed in full to the profit in the year under review, and to the growth realised in 2001. Furthermore, the interest margin was wider.
Commission income fell by 16.6% to Euro 156.9 million (2000: Euro 188.2 million). This fall is attributable to the poor stock market conditions, as a result of which the stock exchange transactions conducted by private individuals in particular showed a strong decrease. Overall, the other commission categories maintained at 2000 levels, with insurance commission even increasing significantly.
Income from securities and participating interests grew 16.3% from Euro 9.8 million to Euro 11.4 million due to the sale of several minor interests. Profit on financial transactions fell by Euro 3.4 million to Euro 9.8 million due to lower-than-expected price gains on securities and foreign exchange trading.
Thanks to effective cost control, total expenses increased by a mere Euro 1.0 million (0.4%) to Euro 245.0 million. Regular operating expenses rose Euro 0.7 million to Euro 230.0 million. Staff costs were Euro 4.4 million (3.4%) higher at Euro 133.5 million, while other administrative expenses decreased by Euro 4.4 million (5.1%) to Euro 82.1 million.
The rise in staff costs was lower than might be expected on the basis of the salary increase under the collective labour agreement and the growth in the number of staff in 2000. This limited rise resulted from the decrease in the number of temporary staff hired, the bank-wide changeover to a 36-hour working week and a lower amount in bonuses. The average number of FTEs in 2001 was 1,890 (2000: 1,756). Other administrative expenses fell due to a decrease in IT expenses. Depreciation rose by Euro 0.7 million (5.1%) to Euro 14.4 million.
Although the regular operating expenses rose Euro 0.7 million, a decrease of Euro 12.9 million was reported due in part to the mandatory release under new annual reporting guidelines of an IT provision of Euro 13.6 million formed in earlier years. This amount was deducted from other administrative expenses. The non-recurring release of Euro 13.6 million was then used to increase the group capital base via a supplementary addition to the Fund for general banking risks.
The amount reserved and provided for to cover banking risks was set at Euro 15.0 million (2000: Euro 14.7 million), exclusive of the supplementary addition of Euro 13.6 million to the Fund for general banking risks. An amount of Euro 10.2 million (2000: Euro 8.2 million) was reserved for value adjustments to receivables. The 'regular' addition to the Fund for general banking risks was Euro 4.8 million (2000: Euro 6.6 million).
Despite the unfavourable securities climate, a satisfactory result was recorded in Belgium. In view of the poor stock exchange conditions the results in Luxembourg, Switzerland and Curaçao were also satisfactory.
Tax on the operating profit for 2001 amounted to Euro 38.4 million, Euro 3.5 million or 10.0% more than in 2000. The tax burden decreased from 30.2% to 29.9%.
Extraordinary income amounting to Euro 10.8 million was realised during the year on the sale of the interest in Kas Bank (formerly Kas Associatie). In 2000, extraordinary income amounted to Euro 67.1 million. Due to this difference in the amount of extraordinary income, net profit for 2001 was Euro 47.0 million lower than for 2000.
Dividend
After distribution of dividend on preference shares, the profit on ordinary activities attributable to holders of ordinary shares amounted to Euro 86.6 million (2000: Euro 77.4 million). Based on the average number of ordinary shares, earnings per ordinary share before extraordinary income amounted to Euro 3.00 against Euro 2.71 in 2000, a 10.7% increase.
In accordance with Van Lanschot's customary policy, the dividend declaration will take no account of extraordinary income. Thanks to the extraordinary income earned by the Bank in the past years its financial position is currently very strong indeed. It has therefore been proposed to apply a pay-out ratio of 50% for the purpose of declaring the 2001 dividend. Subject to the shareholders' approval of the annual accounts, the dividend per ordinary share for 2001 will therefore amount to Euro 1.50. The dividend will be made available in cash or new ordinary shares.
Balance sheet
Total assets increased by Euro 1.0 billion to Euro 10.7 billion in 2001. The loans portfolio increased thanks to growth in both the corporate and private markets. Loans and advances were Euro 0.6 billion higher at Euro 8.0 billion. The growth in the home loans market was considerably weaker than in 2000. Nonetheless, the home mortgage loans portfolio showed a net increase of Euro 285 million (2000: Euro 898 million) to nearly Euro 4.5 billion at 31 December 2001.
Other loans and advances to the private sector decreased. Influenced by the stock exchange climate, advances against securities decreased considerably. The expansion of the loans portfolio was therefore mainly attributable to the corporate market and more specifically to the sharp increase in loans to family businesses (+ Euro 300 million). On the assets side of the balance sheet, interest-bearing securities also increased strongly from Euro 705 million to Euro 910 million.
Funds entrusted were up Euro 0.9 billion in 2001 to over Euro 7.6 billion, owing mainly to funds entrusted by corporate clients. The growth in funds entrusted by private individuals is attributable in part to the introduction of the Van Lanschot Index Guarantee Contract, investment product whose return on investment depends on the movements in international stock exchange indexes, with downside risks being hedged. The amounts invested in this product and similar products totalled Euro 276 million.
Financial ratios
Due to strict cost control, the efficiency ratio (operating expenses as a percentage of operating income) improved from 63.7% in 2000 to 61.6% in 2001, after adjustment for the release of the IT provision. The return from ordinary activities on average group equity totalled 16.8% in 2001 as against 18.3% in 2000. The decrease results from the substantial addition to group equity in the previous financial year due to the large amount of extraordinary income earned at the time.
The Bank's risk-weighted assets amounted to almost Euro 6.8 billion at 31 December 2001, an increase of 11.4% compared with 31 December 2000. The BIS total capital ratio was 12.7%, comfortably above the minimum requirement of 8%. The BIS Tier I ratio stood at 8.6% at 31 December 2001. The minimum requirement for this ratio is 4%.
Prospects for 2002
After the sharp slowdown of the US and European economies in 2001, the current year seems to be showing hesitant signs of recovery. Even so, the economic prospects continue to be very uncertain. By way of precaution, Van Lanschot therefore expects market conditions to remain challenging in 2002.
New, concrete commercial initiatives were taken to further increase our client base, thus strengthening the Bank's foundation and improving the prospects of continued growth in activities and profit. In addition, the cross-selling opportunities will be utilised to greater effect. The product range of Van Lanschot Belgium will be expanded both horizontally and vertically.
In 2002, one of the priorities will again be strict cost control. New staff, for example, will only be recruited if the necessity therefor arises from an expansion of our activities. Van Lanschot will furthermore focus on making our business processes more efficient, thus further improving the ratio of front office to back office staff.
Given the above, Van Lanschot expects to achieve further growth in income in 2002, the bulk of which will again be contributed by interest. Provided that the stock exchange climate does not deteriorate any further the Bank expects commission income to reach a level similar to that of 2001. Operating expenses will only show a limited increase, with the number of staff remaining virtually the same. Barring unforeseen circumstances, Van Lanschot expects operating profit after taxation to increase further and, as a result, to achieve higher earnings per ordinary share compared to 2001.
's-Hertogenbosch, 15 March 2002
Annual General Meeting of Shareholders 8 May 2002 (2 p.m.)
Ex-dividend date 13 May 2002
Stock dividend option period 13-24 May 2002
Announcement of stock dividend rate 24 May 2002 (after close of trade)
2001 dividend available for payment 5 June 2002
Publication of half-year 2002 figures 23 August 2002 (pre-opening of trade)
F. van Lanschot Bankiers NV is the oldest independent Dutch bank with a history dating back to 1737. The bank focuses on three target groups: high net-worth individuals, medium-sized businesses (including family businesses) and institutional investors. Van Lanschot stands for high-quality services founded on integrated advice, personal service and customised solutions. Van Lanschot NV is listed on the Euronext Amsterdam Stock Market.
Annexes:
Key data
Consolidated balance sheet
Consolidated profit and loss account
Ten-year summary
Please click the following link to see the annexes:
