Interim report 2017
BNG Bank is looking back on a good first half of 2017. The bank actively worked on solutions for socially relevant challenges in the field of, amongst others, sustainability projects, exports and small and medium-sized businesses (SME). This had led to a number of concrete transactions.
The bank financed, amongst others, projects such as the 'Boer kiest Zon' solar farming project comprising 140,000 solar panels on the roofs of agricultural buildings and the sustainable enhancement of a minimum of 8,500 rented Ymere housing association homes by an energy service company (ESCo). Shortly after the reporting period, the European Commission granted its approval for the Energy Transition Financing Facility (ETFF) announced jointly by the bank, the Ministry of Economic Affairs and the Netherlands Investment Agency at the end of last year. The bank has initially earmarked EUR 100 million for issuing subordinated loans under the ETFF. Other remarkable results are the first refinancing transaction of USD 200 million in support of the government's export financing policy and the first agreement of EUR 25 million in support of the SME sector. With these transactions, the bank is further implementing its strategy to be a committed partner for its customers and to support socially relevant challenges for a sustainable society.
The total volume of new long-term lending declined in the first half of 2017 to EUR 4.4 billion (H1 2016: EUR 4.7 billion) mainly due to the relatively low market demand from housing associations, municipalities and healthcare institutions. The bank's high market share was down slightly compared to preceding years on account of increasing competition from institutional investors, among other factors. Furthermore, the bank is facing growing competition from initiatives undertaken by the European Investment Bank and the European Fund for Strategic Investments.
Net profit higher
Net profit rose by 92% to EUR 242 million in the reporting period. The interest result climbed to EUR 222 million, an increase of EUR 31 million compared to the same period in 2016, thanks to low financing costs. The result from financial transactions totalled EUR 132 million in the reporting period. The result from financial transactions benefited from both realised and unrealised market value adjustments, mainly due to the European Central Bank's bond-buying programme and the increase in long-term interest rates during the reporting period.
Solvency ratio increases
BNG Bank's risk-weighted solvency ratio increased during the reporting period. The bank's Tier 1 ratio rose to 36%. Thanks to the increase in Tier 1 capital and the lower balance sheet total, the bank's leverage ratio rose by 0.3% compared to the end of 2016 to 3.3%. If the revaluation reserve and the profit for the reporting period, less the dividend payment, are included in full, the leverage ratio would amount to 3.5% in mid-2017.
As a consequence of the relatively low demand and stronger competition, partly as a result of the current monetary policy, BNG Bank expects that the volume of new long-term lending will be lower in 2017 than in 2016.
The long-term funding requirement is projected to be approximately EUR 5 billion in the second half of 2017. The bank will continue to focus its policy on achieving diversification in terms of product, currency and maturity. The bank expects to issue two new socially responsible investment bonds. With these issues, BNG Bank is responding to the growing demand for this kind of investments and promoting greater sustainability efforts by local authorities and housing associations.
The interest result for 2017 is expected to be within a range of EUR 420 to EUR 450 million. Owing to the volatility in the financial markets, it is not possible to give a reliable indication of the unrealised result within the 'result from financial transactions' component of the bank's profit and loss account. Hence the bank does not consider it wise to make a statement regarding the expected net profit for 2017.
This is an unofficial translation of the Dutch press release. This translation is provided for convenience only. In the event of any ambiguity, the Dutch text will prevail.
The Hague, 28 August 2017, 8.00 am.