DVB posts Q1 results

Dino D'Amore
By Dino D'Amore May 13, 2016 20:35

DVB posts Q1 results

During the first three months of 2016, DVB Bank generated reasonable consolidated net income before taxes of €25.9 million compared to €84.3 million in the prior-year period.

Ralf Bedranowsky, CEO and Chairman of DVB’s Board of Managing Directors, commented:
“In a challenging environment – in geopolitical, macroeconomic and industry-specific terms – the bank’s business model once again proved resilient. DVB’s clear focus on financing transportation assets has paid off, especially during these testing times.”

DVB highlights for the quarter include the origination of 27 new transactions in its core transport finance business, with an aggregate volume of €1.2 billion. This is lower than last year’s quarter, where the bank originated 51 new transactions with a total volume of €1.7 billion.

DVB advisory business net fee and commission income rose by 3.1% to €27.0 million, while general administrative expenses rose only slight from €44.8 million in the first quarter of 2015 to €46.2 million.

DVB’s credit losses increased from €13.4 million to €36.3 million, which Bedranowsky accredited legacy exposures in the shipping finance portfolio, and for financings in the offshore finance portfolio, which is burdened by the slump in oil prices.
The first quarter of 2015 included substantial non-recurring income from the sale of investment securities, due to the partial disposal of the stake in Wizz Air. This one-off effect, which was generated in DVB’s Aviation Investment Management activities, did not materialise during the reporting period 2016.

“We continue to assess the financial year 2016 with cautious optimism, and are endeavouring to achieve consolidated net income that should approach the previous year’s level. Given the persistent challenges on the shipping and offshore markets, we are aware that allowance for credit losses will continue to remain on an elevated level,” added Bedranowsky.

Net interest income decreased by 10.8%, from €64.8 million to €57.8 million, due to risk costs included in net interest income of €0.9 million.

DVB’s total assets decreased to €25.7 billion as at 31 March 2016, down 3.4% from the 2015 year-end (31 December 2015: €26.6 billion), mainly due to currency translation effects.

DVB’s nominal volume of customer lending (the aggregate of loans and advances to customers, guarantees and indemnities, irrevocable loan commitments, and derivatives) was down 4.7%, to €24.1 billion. In US dollar terms, it remained constant, at US$27.5 billion.

DVB employs key financial indicators to assess and manage its business: the return on equity (ROE) before taxes, the cost/income ratio (CIR) and the risk-adjusted Economic Value Added (EVA(TM)). In order to harmonise the calculation methodology and enhance transparency thereof, the Bank has included expenses for the bank levy and the BVR Deposit Guarantee Scheme, as well as the operative component of the IAS 39 result (the result from investment securities) in its calculation methodology for all three financial indicators since the first quarter of 2016. Expenses for the bank levy and the BVR Deposit Guarantee Scheme must be recognised at the beginning of each financial year, for the full year, and are then no longer amortised over the course of the year. However, in DVB’s view, amortising these charges over the periods within a financial year is commercially sensible for calculating key financial indicators, since this allows for a more realistic reflection of business performance.

Dino D'Amore
By Dino D'Amore May 13, 2016 20:35