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Van Lanschot's 2010 half-year results[*]

CONTINUED RECOVERY OF OPERATING PROFIT

  • Total income for H1 2010 up 11% to  287.5 million (H1 2009:  258.9 million)
  • Interest margin up to 1.59% for H1 2010 (H1 2009: 1.22%) 
  • Operating expenses for H1 2010 down 7% to  205.7 million (H1 2009:  220.0 million)
  • Addition to loan loss provision lower at  43.9 million in H1 2010 (H1 2009:  50.6 million, H2 2009:  62.6 million)
  • Operating profit before tax  30.7 million (H1 2009: operating loss of  59.8 million)
  • Net profit for H1 2010  22.1 million (H1 2009: net loss of  46.3 million) 

GOOD INFLOWS OF ASSETS UNDER MANAGEMENT

  • Total assets under management up 7% to  31.6 billion at 30 June 2010 (31 December 2009:  29.4 billion)
  • 59% of increase in assets under management comes from inflow of new assets and 41% from market performance
  • Assets under discretionary management for Private Banking represent 33% of total assets under management for Private Banking (31 December 2009: 30%) 

ROBUST BALANCE SHEET

  • Core Tier I ratio at 8.2% at 30 June 2010 (year-end 2009: 6.6%) thanks, in part, to conversion of preference shares into ordinary shares on 1 June 2010; Tier I ratio at 10.3% (year-end 2009: 9.8%), BIS total capital ratio at 12.2% (year-end 2009: 11.9%); low leverage of 14.0; the bank is ready for the higher capital requirements under Basel III
  • F-IRB introduced for retail portfolio as of 1 July 2010, to be introduced for non-retail portfolio as of 1 July 2011
  • 82% of balance sheet comprises client loans as a result of the bank's premise that the balance sheet is for the bank's clients
  • Funding ratio (the ratio of lending to funds entrusted by clients) of 79.6% at 30 June 2010; successful issue of  400 million in bonds to institutional investors in March 2010
  • Liquidity buffer of over  1.5 billion at 30 June 2010 

RISK MANAGEMENT

  • European stress test: consolidated Tier I ratio under adverse stress scenario (including sovereign risk impact) of 9.0% at the end of 2011; impact of stress scenario on Tier I ratio is limited: 1.1%. Of total sovereign bond portfolio at 30 June 2010, 98% comprised Dutch and German government bonds or Dutch state-guaranteed bonds
  • Standard & Poor's stable outlook Single A minus credit rating reconfirmed in July 2010

MESSAGE FROM THE CHAIRMAN
Floris Deckers, Chairman of the Board of Managing Directors of Van Lanschot: "The first half of this year confirms the gradual recovery of income which kicked in in the second quarter of last year. Van Lanschot's income recovery originates from its core operations: the bank's income is made up of interest and commission and hardly from trading for the bank's own account. With a clear business model, a low risk profile and specific services focused on high net-worth individuals and entrepreneurs and their businesses, the bank has put the banking crisis behind it, and has taken the first steps towards a normalised profit level.

Confidence has not yet been fully restored in the banking sector as a whole. In the private banking market, this translates into clients being hesitant to switch banks. As this confidence returns, there will be more room for an independent private bank of Van Lanschot's nature and calibre. We expect that our full-service concept, in which duty of care, transparency and provision of high-quality products and services take centre-stage, will lift customer satisfaction to an even higher level, leading to an increase in the number of clients and income growth. This supports the ambition we expressed in 2009 to become the best private bank in the Netherlands and Belgium.

The reconfirmation by rating agency Standard & Poor's of its stable outlook Single A minus credit rating in July 2010, in a time of sector-wide downgrades, underscores Van Lanschot's managed risk profile. This was recently confirmed by the outcome of the European stress test. The bank has zero exposure to bonds in the European periphery and is able to withstand any future stress scenarios by relying on its own strength."

DEVELOPMENTS BY SEGMENT

PRIVATE BANKING
Private Banking's operating result before tax rose to  50.6 million for H1 2010 (H1 2009:  15.4 million). Interest income was up 19% to  124.3 million for H1 2010 (H1 2009:  104.2 million). Commission income dropped 1% to  57.9 million. The headcount in FTEs was down 6% compared with 30 June 2009. Staff costs for H1 2010 fell by 8% to  64.9 million (H1 2009:  70.3 million). The addition to the loan loss provision decreased strongly by 25% to  9.1 million for H1 2010 (H1 2009:  12.2 million; H2 2009:  24.9 million).

Assets under management at Private Banking increased to  19.2 billion at 30 June 2010 (year-end 2009:  18.3 billion). Of this increase, 44% was attributable to an inflow of new assets; the other 56% was due to market performance. 'A La Carte' and 'Select', two new and improved asset management concepts, led to an inflow of new assets. Managed assets under A La Carte and Select rose to  1.6 billion at 30 June 2010 (year-end 2009:  0.1 billion). Clients increasingly opt for discretionary mandates: assets under discretionary management made up 33% of total assets under management for Private Banking at 30 June 2010 (year-end 2009: 30%).

Van Lanschot's investment policy delivered excellent returns: all investment profiles of 'A La Carte' outperformed the strategic benchmarks in the first half of 2010. The outperformance ranged from 0.9% (2.7% versus the 1.8% benchmark) for the income-oriented profile to 2.9% (4.5% versus the 1.6% benchmark) for the aggressive profile.

ASSET MANAGEMENT
The operating result before tax for Asset Management went up to  6.0 million for H1 2010 (H1 2009:  2.1 million), which was primarily attributable to the 30% increase in commission income to  22.8 million for H1 2010 (H1 2009:  17.5 million). The higher value of assets under management resulted in a rise in management fees. 

Assets under management for institutional clients increased to  7.4 billion at 30 June 2010 (year-end 2009:  6.6 billion); 50% of this increase was attributable to an inflow of new assets and the other 50% to market performance. The in-house funds rose to  4.3 billion at 30 June 2010 (year-end 2009:  3.7 billion), which was due chiefly to an inflow of new assets.

BUSINESS BANKING
At Business Banking, the operating result before tax rose to an operating profit of  9.9 million for H1 2010 (H1 2009: operating loss of  5.1 million). Interest income rose 12% to  66.6 million. Staff costs fell by 6% to  16.2 million (H1 2009:  17.2 million). The headcount in FTEs was down 3% compared with 30 June 2009. The addition to the loan loss provision decreased to  34.7 million in H1 2010 (H1 2009:  38.3 million). In addition, shareholdings were written down by an amount of  5.8 million. 

CORPORATE FINANCE & SECURITIES
Corporate Finance & Securities saw its operating result before tax increase by 41%, rising to  5.5 million for H1 2010 (H1 2009:  3.9 million). The 33% increase in commission income, which rose from  19.7 million to  26.2 million, was largely attributable to success fees earned by Corporate Finance and higher transaction fees posted by Securities.

OTHER ACTIVITIES
The operating result before tax of Other Activities improved to an operating loss of  41.3 million (H1 2009: operating loss of  76.1 million). The  4.4 million conversion premium on the preference shares has been taken as a cost in this segment. An exceptional item of  44.9 million was recognised in H1 2009.

OUTLOOK
As a private bank, Van Lanschot is sensitive to developments in savings rates. With the capital market remaining constrained for banks, the savings market will continue to be an important source of funding for banks. The interest margin is expected to stabilise at around the current level in the second half of the year. Commission income will again reach normal levels only when markets begin to steer a clear course and our clients start actively investing. Depending on economic trends, Van Lanschot expects that the fall in the number of new loans being transferred to the recovery section will lead to a lower addition to the loan loss provision as of the third quarter of 2010.

The cost savings resulting from the measures taken in early 2009 were fully achieved in the first half of 2010. The bank will continue to focus on cost control in the second half of the year, without this interfering with its investments in client service provision.

KEY DATA

INCOME STATEMENT
(x  million)
H1 2010

 
H1 2010
core activities[1]
H1 2009

 
Δ %

 
H2 2009

 
Δ %

 
             
Income from operating activities 356.1 287.5 258.9 11 309.6 -7
Operating expenses 276.2 205.7 220.0 -7 208.8 -2
Gross result 79.9 81.8 38.9 110 100.8 -19
Addition to loan loss provision 43.9 43.9 50.6 -13 62.6 -30
Other impairments 7.7 7.2 48.1 -85 14.7 -51
Operating profit before tax 28.3 30.7 -59.8   23.5 31
Net profit 20.3 22.1 -46.3   31.5 -30
             
BALANCE SHEET
(x  million)
30-6-2010

 
30-6-2010
core activities
30-6-2009 Δ % 31-12-2009

 
Δ %

 
             
Shareholders' funds attributable to
 shareholders
1,426 1,428 1,117 28 1,239 15
Shareholders' funds attributable to
 minority interests
307 307 312 -2 313 -2
Public and private sector liabilities 13,075 13,075 14,721 -11 13,380 -2
Loans and advances to the public and
 private sectors
16,498 16,418 17,487 -6 16,941 -3
Total assets 20,613 19,928 20,934 -5 20,569 -3
             
CAPITAL MANAGEMENT 30-6-2010 30-6-2010
core activities
30-6-2009 Δ %

 
31-12-2009

 
Δ %

 
             
Risk weighted assets (x  million) 13,521 13,459 14,386 -6 13,915 -3
BIS total capital ratio (%) 11.9 12.2 11.2   11.9  
BIS Tier 1 ratio (%) 10.1 10.3 9.2   9.8  
BIS core Tier 1 ratio (%) 8.0 8.2 6.1   6.6  
Leverage 14.5 14.0 18.7   16.6  
             
ASSETS UNDER
MANAGEMENT
(x  billion)
30-6-2010 30-6-2010
core activities
30-6-2009 Δ %

 
31-12-2009

 
Δ %

 
             
Total assets under management 31.6 31.6 25.2 25 29.4 7
Assets under discretionary management 18.1 18.1 13.0 39 15.7 15
Assets under non-discretionary
 management
13.5 13.5 12.2 11 13.7 -1
             
KEY FIGURES 30-6-2010 30-6-2010
core activities
30-6-2009   31-12-2009

 
 
             
Average number of ordinary shares
 (x 1,000)
35,901 35,901 34,856   34,870  
Earnings per share based on average
 number of ordinary shares ()
0.43 0.48 -1.48   -0.72  
Efficiency ratio (%) 77.6 71.5 85.0   75.4  
Return on average shareholders' funds
 (%)
2.3 2.5 -8.6   -2.0  
Funding ratio (%) 79.3 79.6 84.2   79.0  
Headcount (number of FTEs) 2,230,0 2,041,6 2,122,6   2,050,0  

RESULTS FOR FIRST HALF OF 2010


(x  million)
  H1 2010

 
 H1 2010
core
activities
H1 2009 Δ % H2 2009

 
Δ %
               
Interest   169.9 160.3 127.3 26 145.5 10
Income from securities and associates   9.1 7.0 5.0 40 21.5 -67
Commission   115.7 115.2 106.8 8 117.9 -2
Profit on financial transactions   4.9 5.0 19.8 -75 24.7 -80
Profit on investments for account and risk of policyholders   -3.2 - - - - -
Net insurance premium revenue   58.7 - - - - -
Other income   1.0 - - - - -
Income from operating activities   356.1 287.5 258.9 11 309.6 -7
               
Staff costs   112.7 109.1 115.5 -6 103.0 6
Other administrative expenses   80.0 78.6 85.8 -8 87.4 -10
Depreciation and amortisation   20.1 18.0 18.7 -4 18.4 -2
Underwriting expenses   63.4 - - - - -
Operating expenses   276.2 205.7 220.0 -7 208.8 -2
               
GROSS RESULT   79.9 81.8 38.9 110 100.8 -19
               
Addition to loan loss provision   43.9 43.9 50.6 -13 62.6 -30
Other impairments   7.7 7.2 48.1 -85 14.7 -51
               
Operating profit before tax   28.3 30.7 -59.8   23.5 31
               
Income tax   8.0 8.6 -13.5   -8.0  
               
NET PROFIT   20.3 22.1 -46.3   31.5 -30

 

RESULTS FOR FIRST HALF OF 2010 BY SEGMENT[§]


(x  million)
  Private
Banking
Asset
 Management
Business Banking Corporate
Finance & Securities
Other activities

 
Total
               
Income from operating activities   183.7 22.8 80.9 26.9 -26.8 287.5
               
Operating expenses   124.0 16.7 30.5 20.0 14.5 205.7
               
GROSS RESULT   59.7 6.1 50.4 6.9 -41.3 81.8
               
Addition to loan loss provision   9.1 0.0 34.7 0.1 0.0 43.9
Other impairments   0.0 0.1 5.8 1.3 0.0 7.2
               
Operating profit before tax   50.6 6.0 9.9 5.5 -41.3 30.7
               
Income tax   13.2 1.7 2.2 1.1 -9.6 8.6
               
NET PROFIT   37.4 4.3 7.7 4.4 -31.7 22.1
               
Efficiency ratio (%)   67.5 73.2 37.7 74.3 -54.1 71.5
               
Headcount (number of FTEs)   1,298.4 149.6 294.9 211.2 87.5 2,041.6

 

KEY DATES 2010/2011
Trading update Q3                                                         12 November 2010
Publication of 2010 annual results                                   11 March 2011

's-Hertogenbosch, the Netherlands, 10 August 2010

 

  
Van Lanschot Media Relations: Etienne te Brake, Corporate Communication spokesperson
Telephone +31 (0)73 548 3026; Mobile phone +31 (0)6 12 505 110; E-mail e.tebrake@vanlanschot.com 

Van Lanschot Investor Relations: Geraldine Bakker-Grier, Investor Relations Manager
Telephone +31 (0)73 548 3350; Mobile phone +31 (0)6 13 976 401; E-mail g.a.m.bakker@vanlanschot.com 

Van Lanschot NV is the holding company of F. van Lanschot Bankiers NV, the oldest independent bank in the
Netherlands with a history dating back to 1737. The bank focuses on three target groups: high net-worth individuals, medium-sized businesses (including family businesses) and institutional investors. Van Lanschot stands for high-quality services founded on integrated advice, personal service and customised solutions. Van Lanschot NV is listed on Euronext Amsterdam.

DISCLAIMER

FORWARD LOOKING STATEMENTS
This press release contains forward looking statements concerning future events. Those forward looking statements are based on the current information and assumptions of the Van Lanschot management concerning known and unknown risks and uncertainties. 

Forward looking statements do not relate to definite facts and are subject to risks and uncertainty. The actual results may differ considerably as a result of risks and uncertainties relating to Van Lanschot's expectations regarding such matters as the assessment of market risk and revenue growth or, more generally, the economic climate and changes in the law and taxation.

Van Lanschot cautions that expectations are only valid on the specific dates, and accepts no responsibility for the revision or updating of any information following changes in policy, developments, expectations or the like. The financial data regarding forward looking statements concerning future events included in this press release have not been audited.

ADDITIONAL INFORMATION
For additional information, please log on to www.vanlanschot.nl/aboutvanlanschot 

FINANCIAL REPORT AND WEBCAST OF PRESENTATION FOR ANALYSTS
The half-year financial report contains a detailed explanation of the results and balance sheet of Van Lanschot NV. 

The presentation for analysts will be held in Amsterdam on 10 August 2010 at 2.00 pm, and can be followed live online via a video webcast on the website.

The financial report and the webcast can be found on via www.vanlanschot.nl/results 

2010 INTERIM FINANCIAL STATEMENTS OF F. VAN LANSCHOT BANKIERS NV
The 2010 interim financial statements of F. van Lanschot Bankiers NV are available online at the corporate website (www.vanlanschot.nl/aboutvanlanschot) from Tuesday 10 August 2010.  


[*] All figures represent Van Lanschot's core activities, unless otherwise indicated.
[1] The impact of the acquisition of a number of non-strategic investments is reflected in the figures as from the second half of 2009. To allow an adequate comparison, the figures in this press release have been adjusted for these investments. The comparative figures in all cases relate solely to the core activities.
[§] More detailed segment information is provided in the half-year financial report.