Beneficial interest AvH: 78.75%
AvH Contact: Jan Suykens
2015 was an excellent year for Bank J.Van Breda & C° with a record result for the third year in a row. The consolidated net profit increased by 14% to 40.5 million euros. This result is due to the solid commercial performance in each of the three activities.
Client assets increased by 1.1 billion euros, confirming client confidence in the bank. This is reflected in the Net Promoter Score, where clients, who are advised on the accumulation, management and protection of their assets, are asked whether they would recommend the bank to their friends.
The cost-income ratio decreased from 60% in 2014 to 56% in 2015 as a result of increasing volume growth, limited margin decrease and further efficiency improvements.
The bank’s equity increased to 502 million euros (2014: 475 million euros), representing a Core Tier1 capital ratio of 14.5% and a return on equity (ROE) of 8%.
Increase in bank product with limited cost increase
The consolidated bank product increased by 12% to 134 million euros.
Entrusted funds and lending
Total client assets increased in 2015 by 1.1 billion euros to more than 11.1 billion euros (+11%), of which 3.9 billion euros were client deposits (+4%) and 7.2 billion euros entrusted funds (+16%). Delen Private Bank manages more than 4.2 billion euros for clients of Bank J.Van Breda & C° and ABK bank.
Provisions for loan losses (net) remained limited to 0.01% of the average loan portfolio, or 0.3 million euros, yet this cautious policy has done nothing to inhibit lending, as the loan portfolio grew to more than 3.9 billion euros (+8%).
Strong liquidity and solvency
The cautious approach guarantees a comfortable liquidity position at all times. The Liquidity Coverage Ratio (LCR) and the Net Stable Funding Ratio (NSFR) stood at 197% and 128% 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 bank has an investment portfolio which it keeps as a liquidity buffer. In light of this objective, the risk profile is deliberately kept low by investing mainly in gilt-edged government securities with limited maturity. As at 31/12/2015, the consolidated investment portfolio contained only 0.3% shares, 13.3% financial and corporate bonds and commercial paper, and 86.4% government bonds issued by European institutions, Germany, the Netherlands, Belgium, Austria, Sweden and Finland.
The equity (group share) increased from 475 million euros to 502 million euros, allowing the bank to sustain the rate of commercial growth without losing a healthy leverage, itors. The Basel III leverage ratio stood at 9.5%, well above the 3% which the regulator wants to introduce by 2018. The growth of the loan portfolio led to a slight decrease in the risk-weighted solvency ratio to 15.9% (16.8% in 2014), which is still well above the minimum requirement of 8%. The core capital ratio was 14.5% (14.9% in 2014), whereas the minimum requirement currently stands at 4.5%.
Since its takeover in 2011, ABK bank, a 99.9% subsidiary of Bank J.Van Breda & C°, has repositioned itself as an asset manager for private clients. This successful transition is confirmed by returning to an, albeit modest, growth of assets under management to 348 million euros (+2%), of which 284 million euros in deposits (-4%) and 64 million euros in client assets (+41%).
The loan portfolio decreased to 144 million euros (-13%). This decrease is almost entirely attributable to the decrease of professional loans, which has ceased to be the strategic focus since the takeover.
The bank’s external image building was reinforced by the conclusion of a sponsorship agreement with the Belgian Bullets, the successful Belgian women’s bobsleigh team, for a period up to the 2018 Winter Olympics.
Van Breda Car Finance
The portfolio grew to 297 million euros (+3%) as a result of a recovery in the number of applications, which at a like-for-like degree of approval and realization led to a 17% increase in the production volume. Loan impairments remained low. The operating costs decreased by more than 5%, while there was a slight increase in commissions paid. Fee income increased by 9%. This means that Van Breda Car Finance reported a very good result in 2015 as well.
It is difficult to make profit projections in the present climate of uncertainty. The underlying reasons are a flat yield curve, low interest rates, an at best hesitant economic growth in the euro zone and diminished growth in China, low inflation, volatile oil prices, and geopolitical tensions.
The pressure on the interest margin, the decrease in income from refinancing, an increase in the bank taxes and the necessary investments will affect future results. Nevertheless, Bank J.Van Breda & C° is 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 produce good results, even in difficult or uncertain conditions. The goodwill, reputation, positioning, constant investments and sound financial structure of the bank constitute a solid basis for a long-term financial growth.