Initiatives for a More Sustainable Society; Profit and Dividend Up
THE HAGUE, Netherlands, March 12, 2018 /PRNewswire/ --
BNG Bank can look back on a good year, reports Gita Salden, the new Chair of the Executive Board. In line with government policy, new products in the areas of sustainability and export financing were developed for clients. In addition, the bank's key financial targets were achieved. Profit and solvency ratios both increased. A proposal is made to the shareholders so as to raise the dividend pay-out percentage from 25% to 37.5%.
In order to further strengthen its role as a committed partner for a more sustainable society, BNG Bank financed more than 150,000 solar panels in the year under review through Rooftop Energy and the 'Boer Kiest Zon' solar farming project as well as through directly financing municipalities and housing associations, among others. Wind energy, biomass, bioenergy, geothermal and district heating network projects were also financed. In autumn, a public real estate scan was introduced. Municipalities used this online tool to identify - within just a few months - 1 million m2 of public real estate to be made more sustainable through investments. The bank established a Sustainability Fund in December. Associations, enterprises and other business initiators can raise a loan from EUR 100,000 with this Fund for projects which contribute to the sustainability goals of municipalities or provinces. BNG Bank will initially provide EUR 10 million to the Fund and intends to increase this amount to EUR 25 million in the coming three years. The interest and repayments received will in turn be made available for new investments.
To finance its sustainable activities, BNG Bank issued two new sustainable bonds in the year under review. Since 2014, the bank has issued a total of six sustainability bonds and social housing bonds valued at EUR 4.1 billion, making it one of the leaders in this field within the Dutch banking landscape.
BNG Bank also began providing refinancing under the export credit guarantee scheme operated by the central government in 2017. By now, three transactions totalling over USD 300 million were concluded. They are a tangible indication of BNG Bank's response to the government's wish of promoting Dutch exports and supporting Dutch businesses that export their goods and services to other countries.
The total amount of long-term lending in 2017 was EUR 9.5 billion, most of which was provided to municipalities, housing associations, and healthcare and educational institutions. The total amount decreased by EUR 0.7 billion compared to 2016 due to the relatively low market demand. At the end of 2017, the total long-term loan portfolio amounted to EUR 80.1 billion (end of 2016: EUR 81.0 billion).
Net profit up
Net profit rose by 6.5% to EUR 393 million in 2017. The interest result rose to EUR 435 million, an increase of EUR 30 million compared to 2016, thanks to the favourable rates for new loans. The result on financial transactions was EUR 181 million positive in 2017 (2016: EUR 118 million positive). The unrealised market value changes (EUR 128 million) strongly contributed to this result, which achievement was influenced by the rise in long-term interest rates in 2017 and the lower credit and liquidity risk spreads of most of the interest-bearing securities. Partly due to the European Central Bank's continuing buying programme, the realised results within the result on financial transactions also were highly positive.
Increased solvency ratios
BNG Bank's solvency further increased during the period under review. The bank's Tier 1 ratio rose to almost 37%. Due to the increase in Tier 1 capital and the lower balance sheet total, the bank's leverage ratio rose by 0.5% to 3.5% compared to year-end 2016.
Higher dividend pay-out percentage
Following the positive development of the leverage ratio BNG Bank proposes a higher pay-out percentage. This is possible because of the current and expected development of the bank's capital position. It is expected that certainty on the introduction of the leverage ratio will be obtained in the course of 2018, after which BNG Bank will review its capitalisation and dividend policy. Anticipating on final regulation, BNG Bank proposes distributing 37.5% (2016: 25%) of the profit available after taxes. This figure represents a dividend of EUR 141 million (2016: EUR 91 million). The remainder will be added to the reserves. The dividend amounts to EUR 2.53 (2016: EUR 1.64) per share with a nominal value of EUR 2.50.
Outlook for 2018
With effect from 1 January 2018, BNG Bank is required to report on its balance sheet and income statement in accordance with the new standard for financial instruments (IFRS 9). Based on the bank's current understanding, the transition to the opening balance sheet in accordance with the new standard will lead to a decrease in equity of approximately EUR 270 million, mainly attributable to adjustments related to hedge accounting. More than EUR 170 million relates to a decrease in the cash flow hedge reserve. As this reserve is not part of the Tier 1 capital, the impact on the Tier 1 ratio and the leverage ratio is relatively limited. The interest result for 2018 is expected to range between EUR 390 million and EUR 440 million. Unpredictable movements on the financial markets make it impossible to give a reliable expectation of the unrealised results within the financial transactions result. For this reason, the bank does not consider it wise to make a statement regarding the expected net profit for 2018.
BNG Bank will publish its Annual Report on Thursday 29 March 2018 via http://www.bngbank.com .
BNG Bank is a committed partner for a more sustainable society. The bank supports government policies by providing affordable financing to municipalities, housing associations, healthcare and educational institutions, project financing and other public sector institutions based on its excellent credit rating. With a balance sheet of EUR 140 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.
CONSOLIDATED BALANCE SHEET
Amounts in millions of euros
31-12-2017 31-12-2016
ASSETS
Cash and balances with central banks 2,996 6,417
Amounts due from banks 13,997 11,795
Financial assets at fair value through the
income statement 2,006 2,350
Derivatives 8,982 15,412
Financial assets available-for-sale 14,110 15,437
Loans and advances 86,008 87,576
Value adjustments on loans in
portfolio hedge accounting 11,813 14,894
Investments in associates and joint ventures 47 46
Property & equipment 17 17
Other assets 19 56
Assets held-for-sale 30 -
TOTAL ASSETS 140,025 154,000
LIABILITIES
Amounts due to banks 2,393 3,530
Financial liabilities at fair value
through the income statement 944 1,190
Derivatives 21,870 24,780
Debt securities 104,127 112,180
Funds entrusted 5,472 7,556
Subordinated debt 31 31
Other liabilities 235 247
Total liabilities 135,072 149,514
EQUITY
Capital and realised reserves 3,366 3,106
Hybrid capital 733 733
Revaluation reserve 268 275
Cash flow hedge reserve 193 3
Net profit 393 369
Total equity 4,953 4,486
TOTAL LIABILITIES AND EQUITY 140,025 154,000
CONSOLIDATED INCOME STATEMENT
Amounts in millions of euros
2017 2016
- Interest income 5,905 6,126
- Interest expenses -5,470 -5,721
Interest result 435 405
- Commission income 26 28
- Commission expenses -3 -3
Commission result 23 24
- Result from sales of AFS portfolio 47 34
- Other realised results 6 28
- Market value adjustments of financial
instruments 128 55
Result on financial transactions 181 118
Results from participating interests 2 4
Other results 2 2
Result from sales of assets held-for-sale - 34
TOTAL INCOME 643 588
Staff costs -44 -38
Other administrative expenses -26 -26
Depreciations -2 -2
TOTAL OPERATING EXPENSES -72 -66
Impairments 6 29
Change in incurred loss provision 4 4
Resolution Fund contribution -9 -16
Bank levy -36 -35
TOTAL OTHER EXPENSES -35 -19
PROFIT BEFORE TAX 536 502
Taxes -143 -134
NET PROFIT 393 369
BNG Bank is a trade name of N.V. Bank Nederlandse Gemeenten, with its registered office in The Hague, Trade Register number 27008387
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