2014 Interim Statement – Nine-Month Results

Interim Statement –
Nine-Month Results
2014
Substantial events and deals
DVB Bank posts stable results for the first nine months
of 2014
DVB continued to provide financing solutions and advisory
services to its clients in the international transport sector during
the first nine months of 2014, but results fell short of the previous
year: consolidated net income before taxes was down 24.5%,
to €72.6 million (9m 2013: €96.2 million). The strong fluctuation
in net income from financial instruments in accordance with
IAS 39 was a key factor contributing to this decline. 
The flooding of international capital markets with liquidity by
central banks significantly burdened DVB‘s results, in two ways:
firstly, there was a marked increase in competition between banks
and other providers of capital in transport finance. Secondly,
market liquidity led clients to repay loans early, to a significant
and unexpected extent. It was not possible to fully replace these
repayments by additional new business, or only with a time lag.
These repayments increased the Bank‘s liquidity reserves and
burdened net interest income.
On a positive note, DVB‘s risk situation appears to be stabilising:
net allowance for credit losses was down by a significant 36.7%.
Nonetheless, DVB envisages allowance for credit losses for the
full year 2014 to be in line with the level of two previous years,
as planned.
The individual items developed as follows:
At €217.3 million, total income for the first nine months of 2014
(comprising net interest income after allowance for credit
losses, net fee and commission income, results from investments accounted for using the equity method, and net other
operating income/expenses), was up 7.1% year-on-year (9m 2013:
€202.8 million).
DVB concluded a total of 122 new transactions during the
period ending 30 September 2014, with an aggregate volume
of €4.0 billion (9m 2013: 101 transactions with a volume of
€2.7 billion). Net allowance for credit losses totalled
€28.5 million (9m 2013: €45.0 million). Specifically, new allowances recognised for credit losses amounted to €66.9 million
(of which €46.2 million was accounted for by Shipping Finance),
whilst €41.6 million was reversed (Shipping Finance:
€29.2 million). Net interest income after allowance for credit
losses of €134.0 million was up slightly year-on-year (9m 2013:
€129.0 million).
Accordingly, total allowance for credit losses (comprising
specific allowance for credit losses, portfolio-based allowances
for credit losses, and provisions) rose to €223.0 million, up 9.4%
from year-end 2013 (€203.8 million).
Net fee and commission income of €73.2 million (9m 2013:
€79.0 million) was down 7.3% on the previous year‘s figure; the
net figure primarily includes fees and commissions from new
Transport Finance business, and asset management and advisory
fees.
 Consolidated net income before taxes, as at 30 September
€ mn
150
125
119.1
106.4
104.3
100
96.2
75
72.6
50
25
0
2010
2011
2012
2013
2014
DVB Bank Group | Interim Management Statement – Nine-Month Results 2014
2
Substantial events and deals
Net other operating income/expenses rose from €–3.8 million
to €2.2 million.
atility levels on foreign exchange and interest rate markets.
During the first nine months of 2014, the net figure was negative,
at €–8.2 million, after a positive balance of €19.1 million during
the same period of 2013.
General administrative expenses increased by 8.6%, to
€136.5 million. Due to the increasing regulatory requirements,
which DVB has to comply with to the same extent as large
financial institutions, the Bank hired new staff members to
reinforce its service units. Together with its LogPay Financial
Services subsidiary, DVB employed a total of 577 staff as at
30 September 2014, an increase of 18 compared to the end of
the first nine months of 2013. Hence, staff expenses rose by 3.4%,
to €81.1 million, whilst non-staff expenses (including depreciation,
amortisation, impairment and write-ups) were up by €8.1 million
to €55.4 million.
At €72.6 million, consolidated net income before taxes was 24.5%
lower than in the same period of 2013 (9m 2013: €96.2 million),
whilst consolidated net income after taxes was down 29.0%, to
€58.1 million (9m 2013: €81.8 million).
Compared to the 2013 year-end, DVB‘s total assets as at
30 September 2014 increased marginally, from €23.4 billion to
€23.5 billion, reflecting the renewed strength of the US dollar.
DVB‘s nominal volume of customer lending (the aggregate of
loans and advances to customers, guarantees and indemnities,
irrevocable loan commitments, and derivatives) totalled
€22.0 billion in euro terms (+5.8%). In US dollar terms, customer
lending declined to US$27.7 billion, down 3.1%, in spite of higher
new business. 
Consolidated net income before IAS 39 and taxes improved by
4.8%, from €77.1 million in the previous year to €80.8 million.
The net result from financial instruments in accordance with
IAS 39 (comprising the trading result, the hedge result, the
result from the application of the fair value option, the result
from derivatives entered into without intention to trade, and the
result from investment securities) continued to reflect the vol-
The distribution of customer lending (in euro terms) amongst the
Bank‘s business divisions is shown in the following graph: 
 Development of customer lending
€ bn
US$ bn
30 Sep 2014
31 Dec 2013
%
30 Sep 2014
31 Dec 2013
%
Shipping Finance
9.7
9.2
5.4
12.2
12.7
–3.9
Aviation Finance
6.7
6.4
4.7
8.4
8.9
–5.6
Offshore Finance
2.1
2.0
5.0
2.6
2.8
–7.1
Land Transport Finance
1.9
1.6
18.8
2.4
2.2
9.1
Investment Management
0.5
0.5
–
0.7
0.6
16.7
ITF Suisse
0.9
0.8
12.5
1.1
1.1
–
Business no longer in line with DVB's strategy
0.2
0.3
–33.3
0.3
0.3
–
22.0
20.8
5.8
27.7
28.6
–3.1
Total
 Distribution of customer lending by business division, as at 30 September 2014
Shipping Finance 44.1% (–0.2 pp)
Aviation Finance 30.5% (–0.3 pp)
Offshore Finance
9.5% (–0.1 pp)
Land Transport Finance 8.6% (+0.9 pp)
ITF Suisse 4.1% (+0.3 pp)
Investment Management
2.3% (–0.1 pp)
Business no longer in line with the Bank‘s strategy
0.9% (–0.5 pp)
DVB Bank Group | Interim Management Statement – Nine-Month Results 2014
3
Substantial events and deals
DVB‘s key financial indicators developed as follows:
Earnings forecast
Return on equity before taxes stood at 7.6% (9m 2013: 10.6%).
The cost/income ratio was up by 10.3 percentage points, to 57.4%
(9m 2013: 47.1%).
The market environment remains difficult in some areas of maritime shipping. Despite the persistent negative business framework in certain market segments, the Bank expects to originate
high-volume new business during the fourth quarter, in order to
reduce its high liquidity stock. Considering these factors, DVB
anticipates satisfactory full-year results – which will, however,
not quite match the previous year‘s level.
DVB has calculated its capital ratios in accordance with the
Basel III framework since the beginning of 2014. As at 30 September 2014 both the tier 1 ratio (18.0%) and the total capital
ratio (21.1%) were at a high level.
Frankfurt/Main, November 2014
THE BOARD OF MANAGING DIRECTORS
DVB Bank Group | Interim Management Statement – Nine-Month Results 2014
4
Condensed income statement (IFRS)
€ mn
1 Jan 2014 –
30 Sep 2014
1 Jan 2013 –
30 Sep 2013
%
Net interest income
162.5
174.0
–6.6
Allowance for credit losses
–28.5
–45.0
–36.7
Net interest income after allowance for credit losses
134.0
129.0
3.9
73.2
79.0
–7.3
Net fee and commission income
Results from investments in companies accounted for using the equity method
General administrative expenses
Net other operating income/expenses
7.9
–1.4
–
–136.5
–125.7
8.6
2.2
–3.8
–
Consolidated net income before IAS 39 and taxes
80.8
77.1
4.8
Net result from financial instruments in accordance with IAS 39
–8.2
19.1
–
Consolidated net income before taxes
72.6
96.2
–24.5
–14.5
–14.4
0.7
58.1
81.8
–29.0
Income taxes
Consolidated net income
thereof: consolidated net income attributable to non-controlling interests
0.0
0.1
–
58.1
81.7
28.9
1 Jan 2014 –
30 Sep 2014
1 Jan 2013 –
30 Sep 2013
%
Basic earnings per share
1.27
1.77
–28.2
Diluted earnings per share
1.27
1.77
–28.2
1 Jan 2014 –
30 Sep 2014
1 Jan 2013 –
30 Sep 2013
pp
thereof: consolidated net income attributable to shareholders of DVB Bank SE
Earnings per share (€)
Key ratios in accordance with IFRS (%)
Cost/income ratio
57.4
47.1
10.3
Return on equity before taxes
7.6
10.6
–3.0
Return on equity after taxes
6.1
9.0
–2.9
DVB Bank Group | Interim Management Statement – Nine-Month Results 2014
5
Statement of financial position (IFRS)
Assets (€ mn)
Cash and balances with the central bank
Loans and advances to banks
Loans and advances to customers
Allowance for credit losses
Positive fair values of derivative hedging instruments
Trading assets
Investment securities
30 Sep 2014
31 Dec 2013
%
–93.6
131.6
2,040.5
1,840.4
212.3
–
19,932.5
18,896.9
5.5
–222.9
–203.7
9.4
392.5
590.0
–33.5
82.0
345.0
–76.2
335.8
496.5
–32.4
Investments in companies accounted for using the equity method
283.3
226.6
25.0
Intangible assets
100.8
101.4
–0.6
Property and equipment
464.7
459.2
1.2
66.9
49.3
35.7
Income tax assets
Other assets
69.2
149.1
–53.6
23,476.8
23,363.1
0.5
30 Sep 2014
31 Dec 2013
%
Deposits from other banks
2,738.0
3,783.6
–27.6
Deposits from customers
6,874.6
6,113.6
12.4
Securitised liabilities
11,123.4
11,134.5
–0.1
–26.2
Total
Liabilities and equity (€ mn)
Negative fair values of derivative hedging instruments
211.5
286.7
Trading liabilities
460.1
107.1
–
55.6
62.5
–11.0
Provisions
Income tax liabilities
37.3
32.0
16.6
Other liabilities
77.6
80.5
–3.6
32.6
Subordinated liabilities
482.1
363.7
1,416.6
1,398.9
1.3
Issued share capital
116.6
116.7
–0.1
Capital reserve
320.8
321.3
–0.2
Retained earnings
916.6
918.7
–0.2
82.4
82.4
–
7.6
7.7
–1.3
Equity
thereof: fund for general banking risks
Revaluation reserve
Reserve from cash flow hedges
–11.2
6.1
–
Reserve from net investment hedges
–10.2
2.4
–
Currency translation reserve
18.1
–2.9
–
Distributable profit
58.1
27.9
–
0.2
1.0
–80.0
23,476.8
23,363.1
0.5
30 Sep 2014
31 Dec 2013
%
22.0
20.8
5.8
30 Sep 2014
31 Dec 2013
pp
Tier 1 ratio
18.0
n/a
–
Total capital ratio
21.1
n/a
–
Non-controlling interests
Total
Customer lending volume (€ bn)
Nominal customer lending volume
Capital ratios – Basel III (%)
DVB Bank Group | Interim Management Statement – Nine-Month Results 2014
6
Imprint
DVB Bank SE
Platz der Republik 6
60325 Frankfurt/Main, Germany
info@dvbbank.com
www.dvbbank.com
Elisabeth Winter
Head of Group Corporate Communications
Phone +49 69 9750 4329
elisabeth.winter@dvbbank.com
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