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Bank J.Van Breda & C°

Beneficial interest AvH: 78.75%
AvH Contact: Jan Suykens
www.bankvanbreda.be

Bank J.Van Breda & C° is a specialized advisory bank focusing exclusively on entrepreneurs and liberal professionals. Subsidiary ABK bank positions itself as an asset manager for private clients. Van Breda Car Finance offers car finance and leasing services through car dealers.

Information from the 2016 annual report

Financial overview 2016

In 2016, Bank J.Van Breda & C° again reported a solid commercial performance in each of its three activities: asset management for entrepreneurs and liberal professionals (Bank J.Van Breda & C°), asset management for private clients (ABK bank), and car finance & leasing services through dealers (Van Breda Car Finance).

The commercial volumes (total client assets + lending to clients) increased by 11%, from 15.1 billion euros at year-end 2015 to 16.7 billion euros at year-end 2016.

With a consolidated net profit of 37.7 million euros (-7% compared with 2015), the bank recorded the second best result in its history. As in previous years, the profit is based on solid underlying commercial results. Despite the volume growth, the net profit decreased due to pressure on the interest margin and higher bank taxes.

The bank’s equity increased to 518 million euros, with a 7.4% return on equity (ROE).

 

Bank product holds up despite pressure on the interest margin

The consolidated bank product amounted to 134 million euros in 2016. This result is almost entirely commercially driven, as realized capital gains, dividends and results of hedging instruments represent less than 2% of the total bank product.

  • Despite the increase in deposits (+7%) and loan portfolio (+7%), the interest result decreased by 4%. This is a consequence of a flat yield curve, the pressure on the interest margin, and the bank’s strategy of prioritizing security over performance in its investment portfolio.
  • The increase in fee income (+5%) was driven by a solid growth of entrusted funds (+14%).
  • The 7% cost increase is almost entirely due to the increase in the bank taxes to 8.2 million euros (+66%). Without the bank taxes, costs increased by only 3%, despite investments in additional account managers and IT. The cost-income ratio stood at 59%, compared with 56% in 2015. This makes Bank J.Van Breda & C° still one of the best performing Belgian banks.

 

Entrusted funds and lending

Total client assets increased by 1.3 billion euros (+12%), to more than 12.4 billion euros, of which 4.2 billion euros client deposits (+7%) and 8.2 billion euros entrusted funds (off-balance sheet investments, +14%). The loan portfolio totalled more than 4.2 billion euros, a 7% increase on 2015.

The provisions for loan losses represented 0.01% of the average loan portfolio, or 0.6 million euros. Nevertheless, this cautious policy has done nothing to inhibit lending, causing the loan portfolio to grow by 7%.

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Strong liquidity and solvency

Its cautious approach guarantees a comfortable liquidity position for Bank J.Van Breda & Co at all times. The Liquidity Coverage Ratio (LCR) and the Net Stable Funding Ratio (NSFR) stood at 150% and 123% respectively, which is well above the requisite lower limit of 100%. The loan portfolio is financed entirely from client deposits, making the bank independent from external funding on the international markets.

The equity (group share) increased from 502 million euros to 518 million euros, allowing the bank to sustain the rate of commercial growth without losing a solid balance sheet structure, which is the best protection for the depositors. The solvency expressed as equity to assets (leverage ratio) stood at 9.8%, well above the 3% which the regulator wants to introduce at the earliest by 2018 under Basel III.

Operational overview 2016

Bank J.Van Breda & C°

The trend of steady commercial growth continued in 2016. With an overall increase of 1.3 billion euros (+12%), the client assets of entrepreneurs and liberal professionals amounted to 12.1 billion euros.

Despite a context of low interest income, the client deposits increased by 294 million euros (+8%) to a total volume of 4 billion euros. Because of its asset management strategy, Bank J.Van Breda & C° has a substantial volume of long-term deposits. As a result of the low interest rates, however, the bank reported a bigger increase in short-term deposits over the past year.

Entrusted funds increased by 1 billion euros (+14%) to 8.1 billion euros, of which 4.7 billion euros is managed by Delen Private Bank.

Despite an uncertain economic climate, the volume of lending to entrepreneurs and liberal professionals increased by 288 mill ion euros (+8%) to 3.8 billion euros. Bank J.Van Breda & C° and the receivers of Optima Bank reached an agreement in 2016 on the acquisition by Bank J.Van Breda & C° of the portfolio of supplementary pension plans at the Belgian insurance companies Baloise Insurance and Ergo Insurance. As an asset manager for entrepreneurs and liberal professionals, Bank J.Van Breda & C° has a thorough expertise in supplementary pension plans. By acquiring this insurance portfolio, Bank J.Van Breda & C° gains access to more clients. The portfolio comprises around 6,600 contracts, which together represent approximately 140 million euros worth of accumulated reserves. These are mainly pension savings contracts and socalled second-pillar contracts: free supplementary pensions for the self-employed, health insurance contracts for medical liberal professionals and individual pension plans for business managers. As a result of this acquisition, policyholders can now call upon the services of Bank J.Van Breda & C°.

 

ABK bank

ABK bank advises its clients with a long-term vision on the accumulation, management and protection of assets.

ABK bank reported a strong performance in 2016, both in commercial and operational terms. The number of new accounts increased further, as did the average assets under management. At yearend 2016, clients had entrusted 344 million euros worth of assets. Within the category of client deposits, there was a loss of non-core clients, which was almost entirely offset by the increase in entrusted funds of banking core clients. This increase was to be found in asset management and the funds of Delen Private Bank as well as in investment insurance.

The loan portfolio decreased by 19.3 million euros to 124 million euros. This decrease is almost entirely attributable to the decrease of professional loans, which has ceased to be the strategic focus since the acquisition.

ABK bank took its first step outside Antwerp province with the opening of a branch office in Ghent. It is a confirmation of the bank’s national ambitions.

 

Van Breda Car Finance

As a division of ABK bank, Van Breda Car Finance is active throughout Belgium in the sector of car finance and financial car leasing.

The new production volume increased by 12% in 2016, while the portfolio increased by 8% to 319 million euros. This significant increase is due in part to the positive trend in the sales of new and used cars on the Belgian market. Thanks to the further increase of the share of financial leasing in the total production volume, the interest margin remained stable. The increased production volumes generated increasing fee income. Nevertheless, the impact of this was largely neutralized by the increased commissions paid to car dealers. The operating costs decreased by 2%. Provisions for loan losses represented only 0.04% of the average loan portfolio. This means that Van Breda Car Finance reported a good result in 2016 as well.

 

Outlook 2017

Interest rate volatility, elections in Europe in challenging geopolitical conditions, uncertainty over future US policy, and a European context of fragile growth mean that it is difficult to make profit projections.

The pressure on the interest margin, the bank taxes and the necessary investments in the future affect the results. Nevertheless, Bank J.Van Breda & C° remains well equipped for the future in each of its three areas of activity.

Over the last few years, the bank has proven that it can show good results, even in difficult or uncertain conditions. The goodwill, reputation, positioning, constant investments and sound financial structure of the bank all constitute a solid basis for a long-term financial growth.

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