DGAP-News: IKB Deutsche Industriebank AG: Results for the 2009/10 financial year
(firmenpresse) - IKB Deutsche Industriebank AG / Final Results
01.07.2010 08:00
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IKB: Results for the 2009/10 financial year
- Consolidated net loss (IFRS): EUR 974 million
- Net loss for the year at IKB AG (HGB): EUR 349 million
- Strong opposing extraordinary effects impact consolidated income
statement in the amount of EUR 464 million (net); measurement of
liabilities alone leads to losses of EUR 859 million
- Risk provisioning remains at high level
- Tier 1 capital ratios: 10.4% (Group) and 9.9% (IKB AG)
The result (after taxes) at IKB Deutsche Industriebank AG for the 2009/10
financial year (1 April 2009 to 31 March 2010) amounted to EUR -974 million
for the Group in line with IFRS (previous year: EUR -580 million) and EUR
-349 million for IKB AG in line with HGB (previous year: EUR -861 million).
The result after loss participation at IKB AG amounted to EUR -251 million.
The consolidated income statement for the 2009/10 financial year is as
follows.
Consolidated income statement
EUR million / FY 2009/10 / FY 2008/09 / Difference
Net interest income / 179 / 303 / -124
Provision for possible loan losses / 494 / 590 / -96
Net interest income (after provision for possible loan losses) / -315 /
-287 / -28
Net fee and commission income / -52 / 33 / -85
Net income from financial instruments at fair value / -599 / -162 / -437
Net income from investment securities / 159 / -282 / +441
Results from investments accounted for at equity / -1 / -8 / +8
Administrative expenses / 302 / 375 / -74
Other operating income / 164 / 131 / +33
Restructuring expenses / 6 / 52 / -46
Operating result / -951 / -1,002 / +51
Taxes / 23 / -422 / +445
Consolidated loss / -974 / -580 / -394
Some totals may be subject to discrepancies due to rounding differences.
Net interest income was impaired by the reduction of the asset volume in
accordance with the EU's conditions and the rise in refinancing costs,
resulting in a decline of EUR 124 million to EUR 179 million. A further
factor contributing to this development was the reduction in market price
and volatility risk positions.
The following extraordinary factors also affected current net interest
income: The compounding of liabilities carried at present value in
accordance with IAS 39.AG8 resulted in an interest expense of EUR -55
million (previous year: EUR -61 million). At EUR -65 million, a further
negative effect was the amortisation of adjustment items for discontinued
hedges in line with IFRS 1 IG 60 (previous year: EUR -49 million).
The provision for possible loan losses remained at a high level on account
of the persistently weak economic situation. The figure declined by EUR 96
million year-on-year to EUR 494 million and is therefore in line with
expectations.
Net fee and commission income was negative at EUR -52 million (previous
year: EUR +33 million). In particular, the change as against the previous
year is due to the expenses of EUR 77 million for the SoFFin guarantees
(previous year: EUR 5 million), which are reported as commission expense
under IFRS.
The net income from financial instruments at fair value amounted to EUR
-599 million after EUR -162 million in the previous year. The main element
of this item is losses of EUR 859 million from the measurement of own
liabilities through profit and loss. In the last two financial years, the
crisis situation at IKB had led to severe losses of value on its own issues
owing to credit rating changes and corresponding measurement gains. As
anticipated, the significant improvement in the market assessment of IKB's
credit rating in the past financial year has led to a partial reversal of
this non-recurring effect. Strong fair value gains in profit and loss
totalling EUR 270 million were generated on long-term investments and
derivatives and portfolio investments, though these only partially offset
the effect described above.
At EUR 159 million (previous year: EUR -282 million), net income from
investment securities also benefited from higher valuation gains
essentially resulting from IKB's portfolio investments.
Administrative expenses declined by EUR 74 million to EUR 302 million.
Personnel expenses decreased by EUR 15 million to EUR 164 million, largely
due to the reduced headcount. IKB had 1,537 employees at the end of the
financial year (31 March 2009: 1,718). Other administrative expenses were
down significantly year-on-year at EUR 137 million (EUR 196 million). This
development is due to cost-cutting measures and a decline in administrative
expenses relating to the crisis to EUR 13 million (previous year: EUR 57
million). Restructuring expenses of EUR 6 million (EUR 52 million) were
also incurred.
At EUR 164 million, other operating income was EUR 33 million higher than
in the previous year. This item was largely dominated by non-recurring
effects, including in particular gains from the measurement of equity and
liabilities in the form of subordinated capital in line with IAS39.AG8 (EUR
127 million).
The operating result (before taxes) amounted to EUR -951 million (EUR
-1,002 million). In addition to the non-recurring effects described above,
other factors contributing to this figure were the negative operating
results of the three market segments - Corporate Clients (EUR -86 million
after EUR -103 million in the previous year), Structured Finance (EUR -150
million after EUR -266 million in the previous year) and Real Estate (EUR
-48 million after EUR -47 million in the previous year) - all three of
which were largely influenced by high provisions for possible loan losses
due to the economic situation.
IKB reported a consolidated net loss after taxes of EUR 974 million
(consolidated net loss in 2008/09: EUR 580 million). Taking into account
the rise in the average number of shares outstanding from 308 million to
621 million, earnings per share amounted to EUR -1.57 (EUR -1.88).
Non-recurring factors (particularly the measurement effects described above
and expenses relating to the crisis) in the 2009/10 financial year totalled
EUR 464 million, resulting in an adjusted consolidated net loss of EUR 510
million.
Total assets amounted to EUR 35.7 billion as of 31 March 2010, representing
a decline of EUR 9.0 billion during the financial year. This is primarily
due to the reduction of loans and advances to customers to reflect EU
requirements and the lower level of investment securities and trading
assets. The main decrease on the equity and liabilities side of the balance
sheet was in liabilities to banks, securitised liabilities and trading
liabilities. In line with the EU conditions, consolidated total assets must
be reduced to EUR 33.5 billion by September 2011 (from an original figure
of EUR 63.5 billion).
The Tier 1 capital ratio of the IKB Group was 10.4% on 31 March 2010
(previous year: 8.1%). The overall capital ratio was 14.9% (12.5%),
significantly higher than the minimum statutory requirement. Key factors
contributing to this were the capital increase by Lone Star and the
targeted reduction in total assets. The Tier 1 capital ratio at IKB AG was
9.9% on 31 March 2010 (previous year: 8.3%), while the overall capital
ratio was 14.9% (13.0%). IKB is contractually required, particularly in
respect of SoFFin, to maintain minimumTier 1 capital of 8% at the level of
both the Group and IKB AG.
From a current planning perspective, IKB has sufficient liquidity resources
until the first quarter of 2012 thanks to the issues of EUR 10 billion
under the SoFFin guarantee, the planned sale of balance sheet assets and
deposits by customers. These resources would also allow the Bank to bridge
temporary, unexpected liquidity requirements, such as could emerge if the
crisis were to flare up again or if there were a credit crunch in the
corporate sector.
Overall, the Bank's business development and situation in the 2009/10
financial year were still greatly influenced by the after-effects of the
IKB crisis including the EU conditions and the ongoing financial and
economic crisis. The result has also been squeezed by the high risk
provisioning owing to the recession. The additional capital from Lone Star
and the reduction of risk positions have helped to stabilise the Bank.
Earnings of IKB AG and loss participation of hybrid securities
The net loss for 2009/10 at IKB AG amounted to EUR -349 million in line
with HGB. After the loss participation of profit participation certificates
and silent partner contributions of EUR 98 million and a loss carryforward
from the previous year of EUR -1,380 million, reported net accumulated
losses for the 2009/10 financial year amounted to EUR -1,631 million.
The loss participation of the profit participation certificates and the
silent partner contributions was calculated on the basis of the net loss of
IKB AG of EUR -349 million. The instruments affected by a capital reduction
or loss of interest (the aforementioned instruments as well as Trust
Preferred Securities) are described in detail in the annex.
Certain profit participation certificates participate in the losses based
on the reported net loss for 2009/10 (EUR -349 million); these instruments
bear losses of EUR 10 million, resulting in net accumulated losses before
appropriation of losses of EUR -339 million.
For the other profit participation certificates and silent partner
contributions, the loss participation amount is determined by reference to
the adjusted net accumulated losses before appropriation of losses of EUR
339 million; accordingly, these instruments bear proportionate losses of
EUR 24 million for the 2009/10 financial year.
In addition, two profit participation certificates and the silent partner
contributions participate in the loss carryforward (EUR -1,380 million)
from the previous year under their terms and conditions. This results in a
further loss participation of EUR 64 million for these four instruments.
Profit participation certificates issued by IKB AG
Maturity ISIN Total repayment amount
before loss participation
in EUR Denomination to original nominal amount
before loss participation
in EUR Repayment amount
per item
after loss participation 2007/08
in EUR Repayment amount
per item
after loss participation 2008/09
in EUR Repayment amount
per item
after loss participation 2009/10
in EUR
2010 DE0008063330 20,000,000 20,000,000.00 9,638,490.00 6,764,087.24
5,699,679.11
2012 DE0002730793 100,000,000 100.00 48.19 33.82 28.50
2012 DE0002730801 74,500,000 100.00 48.19 33.82 28.50
2015 DE0002731197 30,000,000 100.00 52.72 17.53 3.94
2017 DE0002731429 50,000,000 1,000.00 527.17 457.30 387.48
2017 DE0002731569 70,000,000 50,000.00 26,358.25 22,865.15 19,373.81
2015 DE000A0GF758 (ProPart Funding) 150,000,000 50,000.00 26,358.25
8,766.12 1,972.27
Silent partnership interests in the commercial enterprise of IKB AG
repackaged by way of securities issued by Capital Raising GmbH and Hybrid
Raising GmbH
Maturity ISIN Total book value of the silent partner-ship interest
before loss participation
in EUR Repayment amount
per security
before loss participation
in EUR Repayment amount
per security
after loss participation 2007/08
in EUR Repayment amount
per security
after loss participation 2008/09
in EUR Repayment amount
per security
after loss participation 2009/10
in EUR
Open DE0007490724 (Capital Raising) 200,000,000 100.00 52.72 17.53 3.94
Open DE000A0AMCG6 (Hybrid Raising) 200,000,000 100.00 52.72 17.53 3.94
Under certain circumstances set out in the terms and conditions of the
profit participation certificates and the silent partner contributions, the
reduced repayment claims of the profit participation certificates and the
carrying amounts of the silent partner contributions can be replenished in
future periods. Were such a claim to arise in a financial year, this would
reduce the net retained profits available for distribution for the
financial year in question.
In addition, under specific conditions set out in the terms and conditions
of the profit participation certificates, holders of profit participation
certificates (including those repackaged by the securities issued by
ProPart Funding LP) may be entitled to the subsequent payment of deferred
interest in future periods, which would also reduce the net accumulated
profits available for distribution for the financial year in question.
However, the loss of interest on the other securities listed here is final.
Outlook
IKB's business performance may continue to be impaired by the financial and
economic crisis and may be subject to strong earnings volatility depending
on its intensity and duration. This applies to its core business and, in
particular, to its positions carried at fair value.
It is essential for the successful restructuring of IKB that it can
increasingly focus on its financing business with SME customers. This has
been aided by the stabilisation of the situation as regards its liquidity,
capital resources and portfolio investments. Given the progress in meeting
the EU's conditions, the limitations and burdens these have placed on IKB
will be gradually lifted until September 2011.
In spite of the crisis situation, IKB has maintained its business with
German SMEs, albeit at a reduced level. It has streamlined its organisation
during the crisis and focused on new SME business. Customers are being
offered a growing range of services with corresponding consultancy
expertise and products. IKB is building the human resources capacity
required for this, as SMEs are increasingly seeking comprehensive service.
In particular, a crucial factor for the continuation of IKB as a going
concern will be the extent to which its modified business model -
especially the expansion of business with derivatives, customer-based
capital market products and consultancy services - leads to success and
generates the planned income in the Bank's customer business.
IKB's future ability to perform on the capital market is closely tied to
this development. Although IKB's new market presence will require
significantly less funding in the coming years than in the past, at least
some of the funds guaranteed by SoFFin must be replaced from 2012.
IKB's ability to continue as a going concern also depends on compliance
with the requirements
- of SoFFin for the provision of guarantees,
- of the European Commission for the approval of state aid and
- of the Deposit Protection Fund of the German Private Commercial Banks
The Board of Managing Directors is assuming that the EU requirements will
be implemented on time and the business conditions will be complied with,
the modified business model can be successfully implemented in the medium
term allowing the Bank to restore its ability to perform on the capital
market, and that the economic crisis situation will ease and the regulatory
environment will not worsen dramatically.
Once its restructuring is complete, IKB is expected to have a substantially
different earnings structure and a lower overall income level than in the
financial years prior to 2007/08 as its consolidated total assets, and
therefore its interest-bearing business in particular, will be considerably
less. In the medium term, the Bank is aiming to achieve an appropriate
return on the capital employed in its operating activities.
Further details on the developments in the 2009/10 financial year can be
found in the 2009/10 Annual Report and in the annual financial statementsand management report of IKB AG at www.ikb.de/IR/Finanzberichte.
Düsseldorf, 1 July 2010
Annex: Securities participating in losses by way of deferral of
interest/remuneration
Issuer Financial Instrument Maturity ISIN Exchange
IKB AG Profit participation certificates 2010 DE0008063330 Unlisted
IKB AG Profit participation certificates 2012 DE0002730793 Berlin,
Düsseldorf: Regulated market
Frankfurt, Hamburg, Stuttgart:
Unregulated market (Freiverkehr)
IKB AG Profit participation certificates 2012 DE0002730801 Berlin und
Düsseldorf: Regulated market
Frankfurt, Hamburg, Stuttgart:
Unregulated market (Freiverkehr)
IKB AG Profit participation certificates 2015 DE0002731197 Düsseldorf:
Regulated market
Frankfurt, Stuttgart: Unregulated market (Freiverkehr)
IKB AG Profit participation certificates 2017 DE0002731429 Düsseldorf:
Regulated market
Frankfurt, Stuttgart: Unregulated market (Freiverkehr)
IKB AG Profit participation certificates 2017 DE0002731569 Düsseldorf:
Regulated market and Unregulated market (Freiverkehr)
Frankfurt, Stuttgart: Unregulated market (Freiverkehr)
Capital
Raising GmbH Bond issued 2002 Open DE0007490724 Frankfurt, Euronext
Amster-dam: Regulated market
Hybrid Raising GmbH Bond issued 2004 Open DE000A0AMCG6 Frankfurt, Euronext
Amster-
dam: Regulated market:
ProPart Funding LP Dated Upper
Tier 2 Securities 2015 DE000A0GF758 Irish Stock Exchange: Main Market
Luxemburg: Regulated market
IKB Fun-
ding Trust I Trust Preferred Securities Open DE0008592759 Frankfurt:
Regulated market
Vienna: Official market
IKB Fun-
ding Trust II Trust Preferred Securities Open XS0194701487 Euronext
Amsterdam: Regulated market
Frankfurt: Unregulated market (Freiverkehr)
Contact: Dr. Jörg Chittka
Phone: +49 211 8221 4349
Fax: +49 211 8221 2349
Email: presse(at)ikb.de
Contact: Dr. Annette Littmann
Phone: +49 211 8221 4745
Fax: +49 211 8221 2745
Email: presse(at)ikb.de
01.07.2010 08:00 Ad hoc announcement, Financial News and Media Release distributed by DGAP. Medienarchiv atwww.dgap-medientreff.deandwww.dgap.de---------------------------------------------------------------------------
Language: English
Company: IKB Deutsche Industriebank AG
Wilhelm-Bötzkes-Straße 1
40474 Düsseldorf
Deutschland
Phone: +49 (0)211 8221-4511
Fax: +49 (0)211 8221-2511
E-mail: investor.relations(at)ikb.de
Internet: www.ikb.de
ISIN: DE0008063306
WKN: 806330
Listed: Regulierter Markt in Frankfurt (General Standard)
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