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Van Lanschot trading update: first quarter of 2016

  • Net profit comes in at €14.0 million (Q1 2015: €28.9 million)
  • Unfavourable market conditions at the start of the year and lower returns on investment portfolio result in lower income in Q1
  • Sizeable drop in loan loss provisioning to €3.4 million (Q1 2015: €15.3 million)
  • Assets under management up 5% to €52.7 billion (year-end 2015: €50.2 billion) thanks to €2.3 billion net inflow at Asset Management
  • Solid capital base: Common Equity Tier I ratio [1] sharply up at 16.9%

Van Lanschot today publishes a detailed trading update for the first quarter of 2016, while at the same time releasing a strategy update, which will be presented via a webcast on the Van Lanschot website this afternoon.

Constant Korthout, Chief Financial & Risk Officer at Van Lanschot, comments: “We are happy with the quality of our income, which derived almost entirely from commission and interest this quarter with commission income again accounting for the largest proportion. Another positive is the steep fall in loan loss provisioning: a very low €3.4 million in the quarter.

“Despite the volatile start of the year in the world’s financial markets, our securities commission was only 6% below the year-earlier figure, at €50 million. Higher management fees partly offset
the – expected – drop in transaction fees. In fact, activity in the capital markets was significantly down across Europe at the start of 2016 and this pushed other commission income, which is mainly generated by Merchant Banking, down to €8.4 million. Merchant Banking was a party to capital market transactions in its selected niches in the quarter, such as the private placements of France’s Nanobiotix and Germany’s TAG Immobilien.

“Our interest income added 11% to €56.0 million, as amortisation charges on discontinued interest hedges came in lower. The profit on financial transactions (consisting of sales profits and revaluation results relating to our investment portfolio among other items) was significantly lower than last year, when a large gain was realised. Operating expenses fell by 5% to €93.3 million thanks to lower staff costs.

“Client assets of both private individuals and institutional clients advanced from €62.6 billion to €64.3 billion, while our assets under management were 5% higher at €52.7 billion (up from €50.2 billion) on the back of net inflows of €2.3 billion mainly from two major mandates won by Kempen Capital Management. Despite stock market jitters in January and February, our Private Banking clients kept their eyes firmly trained on the longer term and AuM outflow was limited to less than €0.1 billion. In line with our funding strategy, savings contracted further to €9.3 billion, while assets under administration were down €0.5 billion to €2.3 billion.

“Corporate Bank’s SME and real estate loan portfolio was run off further and currently stands at €1.7 billion. This made for another positive showing for our capital position: the phase-in Common Equity Tier I ratio  climbed further, to 16.9%. Our fully loaded Common Equity Tier I ratio [1] was also up, at 16.4%, while our leverage ratio [2] has held firm at 6.3%.”

[1] Excluding retained earnings for the current financial year.

[2] Fully loaded, excluding retained earnings for the current financial year.

Trading update first quarter of 2016 (pdf)