Lower first quarter result in turbulent markets
As a consequence of the ongoing financial crisis, KAS BANK’s revenue in the first quarter of 2009 was down slightly on the same period last year, mainly due to the effect of lower prices on commission income, lower stock exchange turnovers and reluctance to engage in securities lending. Interest income was down fractionally compared with the fourth quarter of 2008, partly due to falling long-term interest rates. Expenses showed little change on the first quarter of last year, but were over 10% lower compared with the fourth quarter of 2008. The operating profit in the first quarter of 2009 was € 4,4 million net (2008: € 5,2 million). The bank’s capital adequacy and liquidity positions held up extremely well.
Despite the exceptionally difficult market conditions, KAS BANK’s client base grew strongly in the first quarter of 2009, in the Netherlands and outside and among institutional investors and financial institutions.
KAS BANK’s added-value services, such as institutional risk management and reporting to regulators, have gained from clients valuing objectivity and transparency more highly in the wake of the credit crisis. KAS BANK’s European clearing and settlement platform, which was again expanded in the first quarter with the addition of more alternative trading platforms (NYSE Arca Europe and SmartPool), is profiting from the ‘pure play’ service strategy, ensuring the closest possible alignment with the client.
Reflecting to some extent the additional risk-management measures adopted by KAS BANK, no further losses have accrued from counterparty risk or lending against the collateral of securities. The events on the financial markets resulted in an impairment loss of about €5 million net on KAS BANK’s own investments, but had practically no repercussions for the BIS ratio.
The BIS ratio as at 31 March 2009 stood at 20% (2008: 18%), still well above the minimum of 12.5% set by the external regulator. The Tier 1 ratio as at 31 March 2009 was 17%, compared to 15% at year-end 2008. The bank has substantial surplus liquidity of €1.7 billion, higher than the statutory minimum and stable to slightly rising. KAS BANK has not had recourse to any form of government support.
In the light of the conditions on the financial markets, the Managing Board prefers not to give a firm profit forecast for the full year at this stage.