- Recovery of revenues leads to net profit for second half of 2009 of € 30.6 million; for the full year 2009, net loss of € 15.7 million
- Underlying operating profit on core activities for 2009 (adjusted for exceptional items): € 32.6 million
- Sound balance sheet: good liquidity and solvency
- Proposal: no dividend for 2009
- Outlook for 2010: an important step towards a normalised level of profit
Floris Deckers, Chairman of the Board of Managing Directors of Van Lanschot: "Van Lanschot came through the banking crisis by relying on its own strength. However the bank is now feeling the impact of the recession, which also goes for our clients - high net worth individuals and family businesses. In 2009, provisions for loan losses were at a level that can be termed high for Van Lanschot. We are however seeing the first signs of a recovery of the economy. Since the end of 2009 the inflow of impaired loans has declined. If the economic upswing continues, we expect this to translate into a lower addition to the loan loss provisions, in particular in the second half of this year and in 2011. Thanks to further improving revenues and cost control, Van Lanschot has been on a clear upward trend since the second half of 2009, a trend which continued into the first months of this year. If the economic revival continues, we expect that in 2010 Van Lanschot will be able to make an important step towards a normalised level of profit."
Core activities
Van Lanschot acquired all shares in Robein Leven on 10 August 2009. The results of this investment and other new investments are fully consolidated. These investments are however not of a strategic nature and the bank intends to sell them in due course. In order to provide insight into the developments in the core activities of Van Lanschot, this press release concentrates on the developments in Van Lanschot's results and balance sheet excluding the newly consolidated investments, unless otherwise indicated.
Net profit for the core activities amounted to € 31.5 million for the second half of 2009 (first half of 2009: net loss of € 46.3 million). The net loss for the full year 2009 was € 14.8 million (2008: net profit of € 30.1 million).
Recovery of revenues
Since April 2009, revenues have gradually improved. Income from operating activities amounted to € 568.5 million, i.e. a 15% increase on 2008 (€ 493.6 million).
The high savings rates offered in the first half of 2009 have gradually come down since the fourth quarter. In part thanks to this, the interest margin recovered from 1.22% in the first half of 2009 to a level of 1.40% in the second half of 2009 (average interest margin for the entire year 2009: 1.32%; average interest margin for the entire year 2008: 1.39%). Securities commission recorded a growth of 3.1% in 2009. Income from securities & associates and Profit on financial transactions made a contribution to total income in 2009 of € 26.5 million (2008: € 17.3 million negative) and € 44.5 million (2008: € 0.9 million negative) respectively. These items were hit extremely hard in 2008 by the banking crisis.
The cost control and efficiency measures introduced and completed by the bank in 2009 led to a decline in operating expenses adjusted for exceptional items in 2009 of 2% relative to 2008. The workforce of Van Lanschot decreased by 191 FTEs to 2,050 FTEs in 2009, which was according to plan. The financial impact of this decline will largely take effect in 2010.
In the fourth quarter, Van Lanschot formed a provision of € 7.6 million (before tax) for its obligations under the deposit guarantee scheme in connection with the bankruptcy of DSB Bank.
As announced previously, the upgrade of the IT environment is being carried out through partial re-use of the existing systems. This option provides a stable basis for the core banking activities. The costs of the IT project have fully been written off, involving a total amount of € 39.4 million (before tax) in 2009, of which € 4.9 million (before tax) was taken in the second half of the year.
The recession is also hitting a number of Van Lanschot clients hard. The addition to loan loss provisions in 2009 was € 113.2 million, i.e. 79 basis points of the average risk-weighted assets. The addition to loan loss provisions within the Business Banking segment was spread over all sectors and totalled € 75.9 million in 2009 (2008: € 12.0 million). Within the Private Banking segment, the addition to loan loss provisions totalled € 37.1 million (2008: € 6.7 million), mainly involving loans to high net-worth individuals. Only a very small provision was necessary on the mortgage portfolio. A further € 0.2 million was provided for other items.
Sound balance sheet
Van Lanschot consciously opts for a low risk profile. The balance sheet is sound. This is apparent from, among other things, the low leverage (total assets to shareholders' funds attributable to shareholders) of approximately 17 at year-end 2009. Traditionally, Van Lanschot only uses its balance sheet for client-related activities and hardly for the bank's own account; 82% of the balance sheet at 31 December 2009 comprised loans and advances to clients. The bank's lending activities are mainly financed with funds entrusted by clients (funding ratio at year-end 2009: 79.0%).
The balance sheet is more and more focused on private banking services. As a result, the main part of the institutional healthcare portfolio (approximately € 550 million) was sold in 2009. Part of this portfolio will be transferred in 2010.
At 31 December 2009, the bank reported a Core Tier I ratio of 6.6%, a Tier I ratio of 9.8% and a BIS total capital ratio of 11.9%. These ratios were achieved without state support.
Asset management
Asset management plays a key role in our services to private individuals and institutional clients. In 2009 total assets under management (for private and institutional clients and in-house funds) increased by 20% to € 29.4 billion (31 December 2008: € 24.6 billion), in particular thanks to the positive trend in share prices. In 2009, several large mandates were granted by institutional parties involving a total amount of over € 800 million. Client assets (assets under management plus savings accounts and deposits) of private clients increased 4% to € 27.6 billion at 31 December 2009 (31 December 2008: € 26.6 billion), partly due to active management of the interest margin.
In the second half of 2009, a new wealth management proposition was introduced offering the client more options and more transparency. Asset management clients may choose among various alternatives in line with their risk profile and investment wishes. Van Lanschot is the first Dutch bank to pass on distribution fees received from investment fund managers to its asset management clients.
Priorities for 2010
Van Lanschot sets itself apart by its unique service level. The bank has always sought close personal contact with its clients, valuing a direct line of communication. The fact that the balance sheet is primarily for the client protected Van Lanschot during the past banking crisis against major losses on for instance Collateralized Debt Obligations (CDO's), structured credit products and Structured Investment Vehicles (SIV's). Van Lanschot did not need any state support, as a result of which the bank retains its freedom of movement in all respects.
Van Lanschot aims to be the best private bank in the Netherlands and Belgium. For the implementation of its strategy, Van Lanschot has defined a number of priorities for 2010:
1. Focus on private banking; full-service banking and increased acquisition focus on high net-worth individuals and the entrepreneur and his business.
2. Enhance commercial effectiveness; growth in client satisfaction, number of clients and revenues.
3. Invest continually in service quality; duty of care and a transparent and high-quality product and service offering. By streamlining the processes, with a view to operational excellence, bankers will have more time to spend on their clients.
4. Maintain a solid profile; risk management, cost control and anticipation of the expected higher capital requirements through stricter deployment of capital for the client. Against the background of the expected higher capital requirements, Van Lanschot will adjust its capital targets. The capital targets will be presented to the shareholders during the Annual General Meeting of Shareholders on 6 May 2010.
Corporate Social Responsibility
Van Lanschot has signed both the UN Global Compact Principles and the UN Principles for Responsible Investment, which marks an important step towards formalisation of a number of principles in the field of sustainability, which principles have long governed the bank's activities. This follows logically from the bank's core values. These principles were fleshed out into the so-called engagement policy applicable to investment portfolios of the bank's clients and in the purchasing policy. The translation of these principles into the credit and client acceptation policy will follow in 2010.
Code for Banks
Van Lanschot is progressing well in implementing the Code for Banks. A number of elements from the Code are in line with common practice within Van Lanschot. For instance, at Van Lanschot, the balance sheet is primarily for the benefit of clients. The bank's regulations have been updated in line with the provisions of the Code and have been posted on the corporate website (www.vanlanschot.nl). In addition, the members of the Board of Managing Directors have signed a moral-ethical statement. Further information about the bank's current and future implementation of the Code will be provided in the 2009 annual report and during the Annual General Meeting of Shareholders.
Based on the Code for Banks, the remuneration structure of the Board of Managing Directors of Van Lanschot will also be amended. The proposal for the revised remuneration policy will be put to the shareholders for their approval on 6 May 2010. In view of the fact that the year 2009 as a whole was not profitable, no variable remuneration has been granted to the members of the Board of Managing Directors or to the general managers for 2009.
Outlook
The recovery in revenues following the low point in April 2009 continued into the first months of 2010. If the economic upswing continues, we expect this to translate into a lower addition to the loan loss provisions, in particular in the second half of this year and in 2011. Moreover, no further write-offs will be made for the IT project. Depending on how the economic upturn will develop, Van Lanschot expects to make an important step in 2010 towards a normalised level of profit.
Key Dates 2010/2011
| Annual General Meeting of Shareholders 2010 | 6 May 2010 |
| Trading update Q1 | 6 May 2010 |
| Publication of 2010 half-year results | 10 August 2010 |
| Trading update Q3 | 12 November 2010 |
| Publication of 2010 annual results | 11 March 2011 |
| Annual General Meeting of Shareholders 2011 | 11 May 2011 |
| Trading update Q1 | 11 May 2011 |
| Publication of 2011 half-year results | 16 August 2011 |
's-Hertogenbosch, the Netherlands, 12 March 2010
Van Lanschot Media Relations: Etienne te Brake, Corporate Communication spokesperson
Telephone +31 (0)73 548 3026; Mobile phone +31 (0)6 12 505 110; E-mail e.tebrake@vanlanschot.com
Van Lanschot Investor Relations: Geraldine Bakker-Grier, Investor Relations Manager
Telephone +31 (0)73 548 3350; Mobile phone +31 (0)6 13 976 401; E-mail g.a.m.bakker@vanlanschot.com
Van Lanschot NV is the holding company of F. van Lanschot Bankiers NV, the oldest independent bank in the Netherlands 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.
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