- All operating segments make a positive contribution to earnings
- Net interest income increases to EUR 450 million
- Very solid capital base: CET1 ratio of 14.6 percent fully loaded
Munich - BayernLB posted profit before taxes of EUR 237 million in the first quarter of 2018, slightly exceeding the very good figure in the year-before period (Q1 2017: EUR 230 million). All the operating segments made a positive contribution to earnings. In the first three months, BayernLB recognised almost in full the charge for the European bank levy and the contribution to the deposit guarantee scheme amounting to EUR 100 million (Q1 2017: EUR 79 million).
“We kicked off the year strongly with earnings that were even slightly higher than Q1 of the previous year. We therefore seamlessly continued BayernLB’s successful performance of 2017,” commented CEO Johannes-Jörg Riegler. “Along with constantly improving our efficiency and developing our digital platforms and offerings in the next few months and years, we will also work continuously on making BayernLB even more profitable.”
Although the environment remains challenging, BayernLB’s net interest income rose 4.5 percent to EUR 450 million (Q1 2017: EUR 430 million). Net commission income amounted to EUR 60 million (Q1 2017: EUR 71 million).
Thanks to the robust economy and the good quality of its loan book, BayernLB once again posted a gain in risk provisions in the credit business. The Bank benefited particularly from releases and recoveries on written down receivables. On balance, the figure was a positive EUR 117 million (Q1 2017: EUR 95 million). The NPL ratio reached a new best at EUR 1.3 percent.
The gains or losses on fair value measurement item came in at EUR 36 million (Q1 2017: EUR 71 million). Gains or losses on financial investments remained unchanged on the year-before period at EUR 7 million.
Administrative expenses were almost on a par with the year-before period at EUR 331 million (Q1 2017: EUR 323 million). Expenses for major regulatory projects and investment in digitalisation were the main drivers of cost increases, but they remained within budget, while ongoing efficiency measures largely offset the rise.
BayernLB’s total assets climbed 3.3 percent on the end of 2017 to EUR 221.6 billion (31 December 2017: EUR 214.5 billion). Risk-weighted assets (RWAs) at the end of the first quarter amounted to EUR 63.7 billion (31 December 2017: EUR 61.4 billion).
BayernLB still has a very solid capital base, with CET1 capital (fully loaded) amounting to EUR 9.3 billion (31 December 2017: EUR 9.4 billion). Credit and money market transactions and market risk positions pushed up risk-weighted assets (RWAs), which resulted in a CET1 ratio (fully loaded) of 14.6 percent (31 December 2017: 15.3 percent).
Return on equity (RoE) at BayernLB rose to 10.9 percent (Q1 2017: 10.5 percent). The cost-income ratio (CIR) remained stable at 60.1 percent (Q1 2017: 60.0 percent).
Earnings in the operating business segments
Corporates & Mittelstand
Earnings in BayernLB’s Corporates & Mittelstand segment were up at EUR 143 million in the first quarter of 2018 (Q1 2017: EUR 137 million). The main contribution came from the release of risk provisions. The good start to the year in business with capital market products for corporate customers provided an additional boost. The segment’s credit volume also rose compared to the year-before period while RWAs fell.
Real Estate & Savings Banks/Association
In Real Estate & Savings Banks/Association, profit before taxes was EUR 25 million (Q1 2017: EUR 52 million). The decline in earnings was primarily due to positive contributions from risk provisions that were included in the good figure for the year-before period. Earnings from net interest and net commission income in the segment were unchanged on the year-before period at EUR 91 million (Q1 2017: EUR 90 million). BayernLabo, BayernLB’s development bank, posted profit before taxes of EUR 9 million (Q1 2017: EUR 12 million).
In Financial Markets, profit before taxes amounted to EUR 19 million (Q1 2017: EUR 74 million). The drop in earnings was mainly the result of extraordinary items and measurement gains, which boosted earnings in the year-before period. The income generated from Financial Markets products remained stable on a par with the previous-year period, despite the tough market environment. These earnings were reported under the respective segments.
The good performance at DKB continued in the first quarter of 2018, with profit before taxes more than double that of the year-before period. It came in at EUR 114 million (Q1 2017: EUR 51 million). The growth is largely due to higher net interest income, which jumped to EUR 275 million (Q1 2017: EUR 209 million). DKB expanded its retail customer base to around 3.8 million, thereby further consolidating its position as Germany’s second-largest online bank and one of the country’s market leaders in digital banking.
Note: The figures for the year-before period differ from those reported in 2017. The reason for this is that non-core portfolios have since been transferred back to the business areas. The previous year’s figures have been adjusted retroactively to improve comparability.
Outlook for financial year 2018
BayernLB's earnings for full-year 2018 cannot, of course, be projected by extrapolating the first quarter results. However, in view of its sound operating business, good portfolio quality and stable customer base, BayernLB expects a profit before taxes in the mid triple-digit million range once again, providing macroeconomic conditions remain unchanged.
The complete press release, including tables, is available in the download box.