2008 full-year figures: strong bis ratio despite impairment losses
Press release 19 February 2009
KAS BANK publishes provisional results for 2008
- Profit excluding exceptional items down 20% at €18.8 million (2007: € 23.6 million); operating performance as expected in very difficult market conditions
- Total profit €39.9 million negative, reflecting impairment losses on the bank’s loans and investment portfolio (including Lehman, Madoff and NYSE/Euronext)
- Revenue fractionally lower at €132.3 million (2007: €133.2 million)
- BIS ratio increases to 18% as at 31 December 2008 (year-end 2007: 14%), with Tier 1 ratio of 15% (year-end 2007: 13%)
Key figures
| |
|
2008 |
2007 |
Change in % |
| Operating profit |
EUR |
18.8 million |
23.6 million |
-20% |
| Total profit |
EUR |
-39.9 million |
50.9 million |
|
| Operating profit per share |
EUR |
1.27 |
1.58 |
-20% |
| Total profit per share |
EUR |
-2.70 |
3.41 |
|
| Dividend per share |
EUR |
0.45 |
2.60 |
-83% |
| BIS ratio |
|
18% |
14% |
|
Operating results
Excluding exceptional items, operating profit after tax in 2008 was down 20% at €18.8 million (2007: €23.6 million). Despite the market turbulence and lower stock market prices, income was only fractionally lower at €132.3 million (2007: €133.2 million). Lower commission income was offset by higher interest income.
Operating expenses were 5.7% higher, in line with expectations, due to investments in IT, product development and quality of service. Compared with the second half of 2007, operating expenses in the second half of 2008 were 1% higher.
Impairment losses and items not related to operations
| Loans (including Lehman and Madoff) |
€ 26.3 million |
Available-for-sale investment portfolio
• Equities (especially NYSE)
• Bonds (including Tier 1 instruments issued by credit institutions) |
€ 8.2 million
€ 16.3 million |
| Goodwill |
€ 5.2 million |
| Other |
€ 2.7 million |
*net amounts
Investment portfolio quality
The composition of the available-for-sale investment portfolio as at 31 December is analysed by rating (Moody's) as follows:
| euro millions |
31 Dec 2008 |
Percentage |
31 Dec 2007 |
Percentage |
| P1 - P2 |
100 |
15% |
425 |
31% |
| Aaa - Aa3 |
509 |
75% |
870 |
64% |
| A1 - A3 |
35 |
5% |
21 |
2% |
| Baa1 - Baa3 |
10 |
1% |
11 |
1% |
| Equities |
28 |
4% |
42 |
3% |
| |
682 |
100% |
1.369 |
100% |
The 50% decrease in the available-for-sale investment portfolio compared with year-end 2007 is mainly due to liquidated investments being reinvested on very short (interest) terms.
Of the investments in portfolio, 99% are European and 1% American.
Financial positionKAS BANK’s BIS ratio as at year-end 2008 was 18% (year-end 2007: 14%) and the Tier 1 ratio was 15% (year-end 2007: 13%).
The revaluation reserve has increased compared with 2007 and currently stands at €20 million.
Action takenKAS BANK has taken the following additional steps to address the current unrest on the financial markets.
Collateral/counterparty risk:
- adjustment of haircuts to increase buffers and reduce risk
- lower counterparty limits, including intraday limits
- tighter collateral policy, including risk diversification, quality testing and explicit exclusions.
KAS BANK has launched a comprehensive internal risk management programme to match risk controls and risk awareness to the new environment.
There is now closer focus on balance sheet management and investment policy, with the aim of further reducing the investment risk profile and the volatility of the financial results.
The figures given in this press release have not been examined by the external auditors. KAS BANK will publish its 2008 full-year figures on 26 February 2009.