BNG Bank Interim Results 2017: Focus on Socially Relevant Challenges Leads to Tangible Results
THE HAGUE, The Netherlands, August 28, 2017 /PRNewswire/ --
BNG Bank is looking back on a good first half of 2017. The bank actively worked on solutions for socially relevant challenges in the field of, amongst others, sustainability projects, exports and small and medium-sized businesses (SME). This had led to a number of concrete transactions.
The bank financed, amongst others, projects such as the 'Boer kiest Zon' solar farming project comprising 140,000 solar panels on the roofs of agricultural buildings and the sustainable enhancement of a minimum of 8,500 rented Ymere housing association homes by an energy service company (ESCo). Shortly after the reporting period, the European Commission granted its approval for the Energy Transition Financing Facility (ETFF) announced jointly by the bank, the Ministry of Economic Affairs and the Netherlands Investment Agency at the end of last year. The bank has initially earmarked EUR 100 million for issuing subordinated loans under the ETFF. Other remarkable results are the first refinancing transaction of USD 200 million in support of the government's export financing policy and the first agreement of EUR 25 million in support of the SME sector. With these transactions, the bank is further implementing its strategy to be a committed partner for its customers and to support socially relevant challenges for a sustainable society.
The total volume of new long-term lending declined in the first half of 2017 to EUR 4.4 billion (H1 2016: EUR 4.7 billion) mainly due to the relatively low market demand from housing associations, municipalities and healthcare institutions. The bank's high market share was down slightly compared to preceding years on account of increasing competition from institutional investors, among other factors. Furthermore, the bank is facing growing competition from initiatives undertaken by the European Investment Bank and the European Fund for Strategic Investments.
Net profit higher
Net profit rose by 92% to EUR 242 million in the reporting period. The interest result climbed to EUR 222 million, an increase of EUR 31 million compared to the same period in 2016, thanks to low financing costs. The result from financial transactions totalled EUR 132 million in the reporting period. The result from financial transactions benefited from both realised and unrealised market value adjustments, mainly due to the European Central Bank's bond-buying programme and the increase in long-term interest rates during the reporting period.
Solvency ratio increases
BNG Bank's risk-weighted solvency ratio increased during the reporting period. The bank's Tier 1 ratio rose to 36%. Thanks to the increase in Tier 1 capital and the lower balance sheet total, the bank's leverage ratio rose by 0.3% compared to the end of 2016 to 3.3%. If the revaluation reserve and the profit for the reporting period, less the dividend payment, are included in full, the leverage ratio would amount to 3.5% in mid-2017.
Outlook
As a consequence of the relatively low demand and stronger competition, partly as a result of the current monetary policy, BNG Bank expects that the volume of new long-term lending will be lower in 2017 than in 2016.
The long-term funding requirement is projected to be approximately EUR 5 billion in the second half of 2017. The bank will continue to focus its policy on achieving diversification in terms of product, currency and maturity. The bank expects to issue two new socially responsible investment bonds. With these issues, BNG Bank is responding to the growing demand for this kind of investments and promoting greater sustainability efforts by local authorities and housing associations.
The interest result for 2017 is expected to be within a range of EUR 420 to EUR 450 million. Owing to the volatility in the financial markets, it is not possible to give a reliable indication of the unrealised result within the 'result from financial transactions' component of the bank's profit and loss account. Hence the bank does not consider it wise to make a statement regarding the expected net profit for 2017.
BNG Bank is a committed partner for a sustainable society. The bank supports government policies by providing affordable financing to municipalities, housing associations, healthcare and educational institutions and other public sector institutions based on its AAA rating. With a balance sheet of more than EUR 150 billion, BNG Bank is the fourth largest bank in the Netherlands.
This is an unofficial translation of the Dutch press release. This translation is provided for convenience only. In the event of any ambiguity, the Dutch text will prevail.
For more information, please refer to the full Interim Report on http://www.bngbank.com.
CONSOLIDATED BALANCE SHEET
Amounts in millions of euros
30/06/2017 31/12/2016
ASSETS
Cash and balances held with central banks 6,681 6,417
Amounts due from banks 13,415 11,795
Financial assets at fair value through the income statement 2,169 2,350
Derivatives 11,013 15,412
Financial assets available-for-sale 14,886 15,437
Loans and advances 85,879 87,576
Value adjustments of loans involved in portfolio hedge accounting 12,173 14,894
Investments in associates and joint ventures 45 46
Property and equipment 17 17
Current tax asset 14 -
Other assets 48 56
TOTAL ASSETS 146,340 154,000
LIABILITIES
Amounts due to banks 3,077 3,530
Financial liabilities at fair value through the income statement 1,132 1,190
Derivatives 22,277 24,780
Current tax liability - 31
Deferred tax liability 160 116
Debt securities 108,133 112,180
Funds entrusted 6,699 7,557
Subordinated debts 31 31
Other liabilities 66 99
Total liabilities 141,575 149,514
Capital 139 139
Share premium reserve 6 6
Revaluation reserve 290 275
Cash flow hedge reserve 134 3
Other reserves 3,221 2,961
Unappropriated profit 242 369
Equity attributable to shareholders 4,032 3,753
Hybrid capital 733 733
Total equity 4,765 4,486
TOTAL LIABILITIES 146,340 154,000
CONSOLIDATED INCOME STATEMENT
Amounts in millions of euros
First half First half of
of 2017 2016
- Interest income 2,973 3,070
- Interest expenses 2,751 2,879
Interest result 222 191
- Commission income 12 17
- Commission expenses 1 2
Commission result 11 15
Result from financial transactions 132 -28
Results from associates and joint ventures 2 2
Sales results from assets held for sale - 34
Other results 1 1
TOTAL INCOME 368 215
Staff costs 20 18
Other administrative expenses 13 12
Depreciation 1 1
TOTAL OPERATING EXPENSES 34 31
Impairments 3 2
Contribution to resolution fund 9 16
TOTAL OTHER EXPENSES 12 18
PROFIT BEFORE TAX 322 166
Taxes - 80 - 40
NET PROFIT 242 126
- of which attributable to the holders of hybrid capital 18 4
- of which attributable to shareholders 224 122
PRN NLD
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