Karl Guha, Chairman, said: “Over the past six months, we have continued to work on strengthening our position as a specialist wealth manager. Our results – a sharp increase in commission income, net inflows at Private Banking and a robust capital position – made for a solid start to the year. That said, our efficiency ratio has risen, and has our full attention.
We’re happy that our strong capital position enables us to propose returning €1.50 per share to our shareholders. We thank our clients and shareholders for their loyalty and the trust they put in us.”
At €39.3 million, the net result in the first half of 2018 came in well below the year-earlier figure, but included no significant proceeds from sales of participating interests in Van Lanschot Kempen’s private equity portfolio and investment funds. The 13% advance in commission income reflects growth in assets under management (AuM) since last year and a strong performance at Merchant Banking. Private Banking continued to grow and saw net inflows of €0.3 billion. Merchant Banking recorded a 39% increase in commission income on the back of a high number of successful corporate finance and capital market transactions.
The first quarter’s equity market volatility calmed down as the second quarter progressed, resulting in a net positive market performance of €0.1 billion for the first half. Enjoying a slight net increase, AuM ended up at €69.1 billion, compared with €69.0 billion at year-end 2017. Private Banking grew its AuM by a net €0.2 billion to €22.8 billion, whereas Asset Management saw AuM reduce by €0.1 billion to €45.4 billion in the wake of outflows from its investment strategies. Growth is expected in Asset Management, with the Arcadis pension fund mandate coming into effect on 1 July and several other mandates in the pipeline. Evi saw client numbers up by 20% and its AuM grew to €1 billion.
The CET1 ratio* recorded a strong increase to 21.4% from 20.3%, and return on equity amounted to 8.7%. The robust capital position enables Van Lanschot Kempen to propose a capital return of €1.50 per share. If approved, over €60 million will be paid to shareholders, taking the total payment to over €210 million and staying on course to realise its ambition to return at least €250 million to shareholders before the end of 2020.
Cost levels were up on last year, driven by the acquisition of UBS’s wealth management activities in the Netherlands, increased staff costs and higher project and consultancy costs related to the implementation of Van Lanschot Kempen’s strategy. These higher costs combined with the impact of the current low interest rates on its income to push the efficiency ratio to 81.1%. The loan portfolio benefited from the positive economic climate, enabling a net release from loan loss provisions of €3.5 million.
Robust capital position and proposed return of capital of €1.50 per share
The capital base has strengthened further in the past six months, as shown by the sharp increase in the CET1 ratio, from 20.3% to 21.4% - well above the CET1 SREP requirement of 13.0%. The total capital ratio stood at 23.3% (year-end 2017: 22.1%).
The robust capital position enables Van Lanschot Kempen to propose a special capital return to shareholders of €1.50 per share (a total payment of over €60 million). Its aim is to return at least €250 million to shareholders in the period up to and including 2020. If approved, this payment will take the total capital returned to €210 million.
The return of capital will be charged to the share premium reserve available for distribution and will be exempt from dividend tax in the Netherlands. Total share capital in issue will be unchanged and the CET1 ratio target will remain at 15-17%. The proposal will be put to a vote at the Extraordinary General Meeting on 5 October 2018. The convocation, including the agenda will be available on the website as of 24 August 2018.
Financial report / presentation / webcast
For a detailed discussion of Van Lanschot Kempen’s results and balance sheet, please refer to our financial report and presentation on the 2018 interim results. In a conference call for analysts on 22 August at 9.00 am CET, we will discuss our 2018 half-year figures in greater detail. This may be viewed live and played back at any later date. Please see Financial results 2018.
*Fully loaded, excluding retained earnings.
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