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Operating income and net result under pressure in 2018 in line with expectations

In a separate press release, KAS BANK announced it has reached conditional agreement with CACEIS on a public offer for all KAS BANK shares. The combination of CACEIS and KAS BANK will provide the operations of KAS BANK with access to critical size in terms of balance sheet, boost KAS BANK’s competitive strength and position KAS BANK as the combination’s global centre of excellence for pension fund services

25 Feb 2019

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  • Operating income of EUR 100.1 million (2017: EUR 104.6 million) down as anticipated due primarily to continued client churn.
  • Operating expenses of EUR 90.3 million (2017: EUR 84.7 million) up due to extra investments in the transformation of our business, partly offset by cost reductions as part of our 2016-2019 savings target of EUR 20 million. Target within reach and a new target set.
  • Net result of EUR 8.3 million (2017: EUR 15.1 million).
  • Strong financial position, with capital ratio of 37% (2017: 35%) and liquidity coverage ratio of 238% (2017: 221%).
  • Investments in transformation and expansion of product range to establish a new growth path.
  • In a separate press release, KAS BANK announced it has reached conditional agreement with CACEIS on a public offer for all KAS BANK shares. The combination of CACEIS and KAS BANK will provide the operations of KAS BANK with access to critical size in terms of balance sheet, boost KAS BANK’s competitive strength and position KAS BANK as the combination’s global centre of excellence for pension fund services.

Results

IN MILLIONS OF EUROS 2018 2017 Change %
Operating Income 100.1 104.6 -4.5 -4%
Operating Expenses -90.3 -84.7 -5.6 7%
Impairment Results 0.5 0.1 0.4 400%
Tax Expense -2.0 -4.9 2.9 -59%
Net Result 8.3 15.1 -6.8 -45%

2018 was financially a difficult year with pressure on the topline, which also resulted in a higher cost level. This seeming contradiction was the result of a delay in FTE reduction to ensure a higher client satisfaction and a stable operational performance and the result of additional investments in efficiency (future lower cost level) and in product development and enhancement of our services (future higher topline). Because of these trends we realized a net result of EUR 8.3 million (2017: EUR 15.1 million) and a return on equity of 4% (2017: 7%).

In 2018, both operating income and operating expenses were also influenced by the sale of our investment in a Dutch mortgage fund. We have decided to divest our position in this mortgage fund to avoid volatility in results due to the implementation of IFRS9. In total, this divestment contributed EUR 8.1 million to the operating income. The proceeds have been reinvested in strategic and improvement projects (EUR 6.0 million), resulting in a higher cost level.

In 2016 KAS BANK announced a cost saving programme of EUR 20 million in the period up to and including 2019. If the 2018 operating expenses are adjusted for the expenses made for the strategic and improvement projects and the contribution to the resolution fund these savings are almost realized ahead of planning.   

The positive impairment results in 2018 mainly relate to a partial reversal of an impaired loan. The impact of IFRS 9 expected loss accounting on performing loans is included in the opening balance and has no (material) impact on the 2018 results.

Tax expense over 2018 amounts to EUR 2.0 million. The effective tax rate is 19% and is positively impacted by a tax adjustment related to (former) German activities.

Please download the full press release below

Press release KAS BANK - Operating income and net result under pressure in 2018 in line with expectations

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Remko Dieker

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Remko Dieker

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