Interim report 2018
BNG Bank can look back on a good first half of 2018. The bank took various initiatives in fields such as climate and export financing in order to enable its clients to achieve socially relevant objectives. The volume of new loans was 30% higher than in the first half of 2017.
Together with the Dutch insurer NN, the bank has made available EUR 300 million in the past six months to make public real estate more sustainable via the company ‘Bewust Investeren’. Recently, the first loan was granted under the Energy Transition Financing Facility, which was established in 2017 together with the Dutch Ministry of Economic Affairs and Climate to stimulate investments in new markets within the energy transition. In the past six months, the bank also granted loans for various social initiatives such as the BNG Sustainability Fund, 'Energy Sponsoring' (Softs), high-speed internet in rural areas in the province of Friesland and export financing.
The volume of new long-term loans in the first half of 2018 amounted to EUR 5.8 billion, an increase of EUR 1,4 billion compared to the volume of EUR 4.4 billion in the first half of 2017. In particular, demand for credit from local authorities was higher. In the reporting period, the bank raised EUR 9.3 billion (first half of 2017: EUR 9.9 billion) in long-term funding. This included issuing five benchmark loans – in euros and US dollars – ranging in size from 500 million to 2.5 billion. The bank could benefited from favourable market conditions.
Lower net profit, interest result stableNet profit for the first half of 2018 was EUR 207 million, down EUR 35 million compared to the first half of 2017. This decrease was mainly attributable to a lower contribution from the unrealised fair value changes within the result on financial transactions, which amounted to EUR 85 million positive (first half of 2017: EUR 132 million positive). As in 2017, the positive result on financial transactions was mainly attributable to the effects of ECB’s asset purchase programme on the financial markets. At EUR 220 million, the interest result was virtually unchanged compared with the first half of 2017. As in 2017, the interest result benefited from the favourable rates for new funding raised.
Increased solvency ratiosThe balance sheet total increased by EUR 4.1 billion to EUR 144.1 billion in the first half of 2018. The new accounting standard (IFRS 9) for financial instruments became effective on 1 January 2018. The impact on equity was a reduction of EUR 266 million, of which EUR 33 million was attributable to the increase in the provision for doubtful debts. The item Loans and Advances decreased by EUR 1.7 billion to EUR 84.3 billion in the reporting period, mainly due to the reclassification as part of the transition to IFRS 9 of EUR 1.4 billion in interest-bearing securities of clients to the item Interest-Bearing Securities at amortised cost. The increase in the balance sheet total was almost entirely due to the wider liquidity position of the bank with the ECB.
Compared to the IFRS 9 opening balance, the bank’s equity grew by EUR 0.2 billion to EUR 4.9 billion in the reporting period. This increase was mainly attributable to the net profit in the first half of 2018. The risk-weighted solvency ratio increased further during the reporting period. The Tier 1 ratio rose to 38%. The leverage ratio increased to 3.6% from 3.5% at year-end 2017. The 0.1% increase was mainly due to the addition of the 2017 retained earnings to the bank's Tier 1 capital.
OutlookBNG Bank expects the volume of new long-term loans to exceed the level of EUR 9.5 billion recorded in 2017, mainly due to the increased demand from local authorities. The increase in demand from the housing association sector is lagging behind expectations. Irrespective of the strong need for new homes, the housing associations remain cautious about making new investments. The interest result for 2018 is expected to range between EUR 430 million and EUR 460 million. Unpredictable movements on the financial markets make it impossible to provide a reliable statement on the (unrealised) results on financial transactions. Therefore, the bank does not consider it wise to make a statement regarding the expected net profit for 2018.
Statutory name with effect from 27 August: BNG Bank N.V.Relevant legislative changes and the Dutch Corporate Governance Code have prompted BNG Bank to update and modernise the articles of association. On that occasion, with effect from 27 August 2018, the name 'BNG Bank N.V.' has been laid down in the articles of association as a replacement for the statutory name 'N.V. Bank Nederlandse Gemeenten'.
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, 27 August 2018, 8.00 am.