Bank J.Van Breda & C° NV

AvH: 78.75%

(€ 1,000) 2014 2015
Bank product 119,377 133,872
Net result 35,494 40,479
Shareholders' equity 474,981 501,633
Balance sheet total 4,487,430 4,717,833
Client assets 10,018,353 11,134,393
Loan portfolio 3,639,208 3,932,237
Net loan loss provision (%) 0.01 0.01
Cost-income ratio (%) 59.7 55.6
Return on equity (%) 7.7 8.3
Core Tier1-capital ratio (%) 14.9 14.5
Solvency ratio (RAR) (%) 16.8 15.9
Personnel 459 468

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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. 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 2015 annual report

Financial overview 2015

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%.

Tabel Vermogen UK

Increase in bank product with limited cost increase

The consolidated bank product increased by 12% to 134 million euros.

  • The interest result increased by 2% as a result of the 8% increase in the loan portfolio and the 4% increase in deposits. The interest result was supported by higher-than-usual reinvestment penalties from loan refinancing, but at the same time was adversely affected by the low interest rate, the flattening of the yield curve, and the bank’s strategy of prioritizing security over performance in its investment portfolio.
  • The growth in fee income (+18%) was driven by a solid growth of off-balance-sheet investments (+16%) with a slight increase in margin and an increase in fees from deposits and loans (+13%).
  • The capital gains in the securities portfolio, dividends and the results of hedging instruments amounted to 1.4 million euros, or just 1% of the bank product, which is almost entirely commercially driven.
  • The costs increased in 2015 by 4% to 74 million euros as a result of the increase of the bank tax to 4.9 million euros (+49%) and of investments in IT and efforts to enhance the bank’s future commercial strength. High operational efficiency and commercial effectiveness led to a decrease in the cost-income ratio to 56%, compared with 60% in 2014. This makes Bank J.Van Breda & C° one of the best performing Belgian banks. At year-end 2015, the bank had a workforce of 465 employees, of whom 28 at ABK bank and 35 at Van Breda Car Finance. Bank J.Van Breda & C° advises entrepreneurs and liberal professionals on their assets and investments from 35 locations. ABK bank currently has four branches of its own in the province of Antwerp. It has also been decided to open an ABK branch in Ghent.
  • The investment programme of recent years has continued unabated to take full advantage of the opportunities of digitization. The final phase of the migration to a modern and fully integrated IT platform was completed, and a new internet application and payment app for smartphone were launched.
  • The bank also invested in new locations in Mechelen and Bruges, in the renovation of the Brussels Basilica branch, and in commercial strength.

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%.

ABK bank

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.

Outlook 2016

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.

  • High client satisfaction means loyal clients and enthusiastic ambassadors to attract new clients.
  • The bank’s commercial strength and positioning should allow a further growth in assets under management. The impact of this growth on the operating result will partly depend on how the interest margin and the competitive environment will evolve.
  • The bank remains cost-conscious, but will also continue to invest in commercial strength and efficiency. The digitization process, with a modern and integrated IT platform, will continue to play a crucial role here.
  • The bank’s own portfolio is conservatively invested. Although this affects performance, it makes the result less volatile.
  • In the last few years, impairments on loans were limited. The prudent lending policy should help to limit loan losses in the future as well.
  • Competition in the car finance and leasing market will probably persist, while the evolution of car sales is uncertain. Nevertheless, Van Breda Car Finance has a good reputation and a solid enough relationship with its partners to maintain its market position.

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.

 

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