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Recovery of results in H2; strategic initiatives on track

- Net operational result in 2016 of EUR 8.2 million (H2: EUR 7.3 million and H1: EUR 0.9 million; FY2015: 11.1 million). -
- Total net result of EUR 14.9 million (H2: EUR 14.0 million and H1: EUR 0.9 million; FY2015: EUR 15.3 million).
- Operating expenses decreased 7% and KAS BANK’s operating income declined by 8%.
- Strategic focus has resulted in steps taken towards our ambition to become the best administration bank.
- Assets under Administration increased by 9% from EUR 464 billion to EUR 504 billion at year-end 2016.
- Average capital ratio (26%) and liquidity coverage ratio (225%) remain at a high level.
- Fitch Ratings recognition of our financial robustness with reconfirmation of A- rating with stable outlook.
- Dividend of EUR 0.64 is in line with previous years, dividend yield of 7.6% (2015: 6.0%).

02 Mar 2017

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Key figures

In EUR 2016 2015 Change
Net result 14.9 million 15.3 million -3%
Net operational result* 8.2. million 11.1 million -26%
Operating income 106.0 million 115.5 million -8%
Operating expenses 95.8 million 103.2 million -7%
Assets under Administration 504 billion 464 billion 9%
Earnings per share 1.01 1.04 -3%
Dividend per share 0.64 0.64  
Capital ratio (average) 26% 20%  
Efficiency ratio
85%
85%
 
Net operational result excludes in 2015: Lehman claim and in 2016:
Sale office building (net EUR 15.9 million), IT outsourcing and
Restructuring provision (net EUR 9,2 million)
     

Chairman’s statement

“The year 2016 has proven to be a year with challenges, disappointments and successes. Market conditions have remained demanding, with continued low interest rates and political uncertainties. In the first half of the year, we experienced a disappointing decrease in profitability and, as a consequence, had to forego the interim-dividend. In the second half of 2016, the results recovered and overall KAS BANK managed to maintain a stable income in its core services and decreased its operating expenses” says Sikko van Katwijk, Chairman of KAS BANK’s Managing Board. “We reinforce our efforts to raise the quality of services and client satisfaction and it is our ambition to develop a modern and secure management platform for investors, acting as trusted custodian of our clients’ data.”

First results of strategic focus are visible

The strategic transformation is based on our focus and ambition to become the best administration bank. We support our investor clients to adapt to changing markets and client preferences, delivering the security and reliability they need from us. KAS BANK’s strategic plan is aimed at achieving higher financial performance, process efficiency and higher quality services. In 2016, KAS BANK made investments in continuous process improvement (LEAN). These initiatives have led to increased efficiency of processes, the first results of improved quality in our services and a reduction of personnel expenses and other costs.

The strategic focus is supported by welcoming new clients in all our home markets (the Netherlands, Germany and United Kingdom). The acquisition of new clients had a positive impact on the increase in our Assets under Administration to EUR 504 billion. The focus does not compromise our average capital and average liquidity coverage ratios. These remain stable at a high level of 26% and 225% respectively.

In the summer, KAS BANK signed and kick-started a partnership with Atos, ensuring the support of this scale player for our IT infrastructure. We have also launched various technology- and process initiatives to enhance efficiencies, lower risk and improve quality for our clients.

Affirmation of the rating

In December, Fitch Ratings published its Rating Action Commentary for KAS BANK. Fitch affirms KAS BANK’s A- long-term issuer default rating. The outlook is stable. Fitch expects KAS BANK to maintain critical mass in its core asset administration business. KAS BANK’s knowledge of local reporting and regulatory requirements enables it to offer tailor-made value-added services to its customers.

Financial performance

The financial performance for 2016 is driven by a reduction in the operational cost level, which emphasises the success of our cost reduction plans. The operating income in 2016 shows a shift from traditional products such as custody, clearing and settlement to more value-added products like fund accounting and regulatory reporting. Our strategy with a focus on more value-added products is showing results.

In 2016 operating income declined by 8%. Challenging circumstances within the interest and securities lending markets are the main drivers behind this decline. Capital and liquidity ratios remain stable at high levels, emphasising the solid position of the bank and our low risk appetite.

Dividend

KAS BANK will propose to the General Meeting of Shareholders a total cash dividend for 2016 of EUR 0.64 for each ordinary KAS BANK share (2015: EUR 0.64). This is in line with our policy of distributing a dividend of 60-80% of the total net result under normal market conditions.

Outlook

Looking forward, we understand the nature of the challenges that lie before us as well as the opportunities. KAS BANK continues its drive to improve client value and satisfaction and carries on its focus to improve financial performance through additional income and ongoing cost reduction initiatives. After the first half of 2016, we set a target for a structural annual cost reduction of EUR 20 million (based on the existing income level) to be implemented in the period up to and including 2019. The restructuring announced in 2016 for which a provision was made, will have a positive impact on the cost level in 2017. KAS BANK will continue to invest in its investment accounting platform and other business development initiatives (e.g. transparency benchmarking, regulatory reporting) to provide the service our clients expect and require to perform well themselves.

Financial markets rules and regulations will continue to change and increase. KAS BANK continues to be an expert in this field and supports its clients to remain in control. In order to allow our clients to focus on their core objectives of creating maximum asset value for their clients, we increasingly find ourselves being a back office partner to our clients supporting their core activities and delivering fully compliant services.

Read our full press release with our consolidated income statement and balance sheet.

 

Remko Dieker

For further information, please contact Remko

Remko Dieker

Secretary to the Managing Board / Investor Relations
+31 (0)20 557 51 80