Achmea Bank

On 21 November 2018 the Banking Confidence Monitor 2018 was presented. With this research, banks enter into a dialogue with consumers, representatives of interest groups and supervisors about the retail services of banks. Achmea Bank also participates in the Banking Confidence Monitor 2018 through our brands Woonfonds and Centraal Beheer. With the outcomes of this research, we are able to find out in which areas we are doing well and where we can improve.

Banking confidence monitor 2018

• Achmea Bank N.V. reports a profit before tax of EUR 18 million, EUR 14 million after tax for the first half-year 2018. 
• The Common Equity Tier 1 Capital Ratio remained stable at 20.3% (2017: 20.4%).
• Cost saving initiatives resulted in lower operating expenses of EUR 8 million.
• Introduction of new niche propositions for the Woonfonds brand.

Achmea Bank reported a profit before tax of EUR 18 million for the first half-year 2018 (first half-year 2017 EUR 13 million).

The operating result, excluding exceptional items, increased from EUR 6 million HY 2017 to EUR 18 million HY 2018. The growth in the operational result is mainly due to a higher interest margin of EUR 4 million and lower operational costs of EUR 8 million. The HY 2017 result included the following exceptional items: release of the Acier loan loss provision of EUR 7 million, addition to the provision compensation for income related to early redemptions of EUR 4 million and a positive fair value result of EUR 4 million.

In HY 2018 both the implementation of a new system for the administration of savings products and payments and the implementation of the new reporting standard IFRS 9 were finalized. In addition, the organization has been further optimized by the integration of the client services desks of our two brands at Centraal Beheer. In line with the Bank’s strategy, Woonfonds introduced several new niche propositions, among which a buy-to-let mortgage and a mortgage product for self-employed persons. Centraal Beheer has also introduced a self-employed proposition and continues to focuse on an excellent digital customer experience.

Production of new mortgages amounted to EUR 0.4 billion and was lower than HY 2017 (EUR 0.8 billion) as Achmea Bank concentrates on niche propositions with better interest margins alongside mainstream mortgages. In a strong competitive market the production for Achmea Pensioen & Leven N.V. decreased to EUR 0.1 billion (HY 2017 EUR 0.3 billion). The regular mortgage portfolio of Achmea Bank decreased EUR 0.2 billion to EUR 10.2 billion with total prepayments stabilizing at EUR 0.6 billion.

The savings portfolio remained stable at EUR 6 billion. In January the Bank redeemed EUR 500 million senior unsecured notes and made the preparations to futher optimize the liquidity position. Achmea Bank retained a sound liquidity position with liquidity ratios well above internal limits.

As of 1 January 2018, Achmea Bank applies the IFRS 9 reporting standards for financial instruments. The impact of IFRS 9 on equity amounts to EUR 13 million negative after tax, mainly related to a change in the classification and measurement of a small part of the mortgage portfolio. The initial impact of IFRS 9 on the loan loss provision was largely compensated by the capped guarantee Achmea B.V. issued to Achmea Bank to cover credit risk and legal claims related to the Acier portfolio.

In line with Achmea Group’s policy to manage excess capital at group level and our dividend policy Achmea Bank paid out dividend of EUR 50 million in May 2018. The Total Capital ratio (20.4%) and Common Equity Tier 1 (CET1) Capital ratio (20.3%) remained stable. The negative impact on capital ratios of the dividend paid and IFRS 9 was compensated by the positive result of 2017 and the decrease of risk weighted assets. The new Basel IV guidelines will come into force in 2022 and are expected to have no material impact on the capital ratios.

In line with the simplified and more efficient organization, the responsibilities of the Director of Operations decreased and have been transferred to the other Board members. The position of Director of Operations, which has been held by Mr. Vincent Teekens, is no longer filled in as of April 1, 2018. As of April 1, the Board of Directors consists of Mr. Pierre Huurman and Mr. Pieter Emmen.

Since year-end 2017 Achmea Bank has retained its Issuer Default Rating of A/stable (Fitch) and its A-/Negative Issuer Credit Rating from Standard and Poor’s.

The full report can be downloaded here.

Achmea Bank reported a profit before tax of EUR 24 million (2016 a profit of EUR 17 million) over 2017. This result includes the following exceptional items: release of the Acier loan loss provision of EUR 7 million and a positive fair value result of EUR 2 million. The operating result for 2017, excluding the above mentioned exceptional items, amounts to EUR 15 million (2016: EUR 16 million). Compared to last year, a lower interest margin of EUR 6 million is partly compensated by higher fees of EUR 3 million and lower impairment charges relating to the regular portfolio of EUR 2 million.

Production of new mortgages increased to EUR 1.4 billion (2016: EUR 0.7 billion). As part of the retirement benefit strategy of Achmea, Centraal Beheer was successfully positioned as a mortgage label whereas Woonfonds will focus on niche segments alongside the “mainstream” mortgage market. The production was equally divided between Achmea Bank (2016: EUR 0.4 billion) and Achmea Pensioen & Leven N.V. (2016: EUR 0.3 billion). As the total prepayments stabilized at EUR 1.1 billion, the nominal value of the regular mortgage portfolio of Achmea Bank decreased to EUR 10.4 billion (2016: 10.8 billion).

The savings portfolio remained stable at EUR 6 billion. In November 2017, Achmea Bank set up a EUR 5 billion Conditional Pass Through Covered Bond Programme (“CPTCB”) to replace its existing covered bond programme which was terminated in October 2017. At inception the Bank issued bonds for an amount of EUR 0.5 billion. This transaction enables Achmea Bank to further diversify its funding sources and attract new long-term funding. In 2017 the Bank redeemed EUR 0.5 billion RMBS notes.  

Achmea Bank successfully transferred the servicing of its mortgage portfolio and part of its lending process connected to the mortgage portfolio to Quion in May 2017. Furthermore a new administration system for savings products and payments (Europort+ of Able) was implemented on 22 January 2018. Through the strategic partnerships with Quion and Able, Achmea Bank is able to improve customer service, increase flexibility and achieve a structural cost reduction. Achmea Bank has restructured the internal organization to align with these developments and to reposition itself for future growth.  

The Total Capital ratio increased to 20.5% (2016: 19.2%). The Common Equity Tier 1 (CET1) Capital ratio increased to 20.4% as per December 2017 (19.1% at the end of 2016). Profit 2016 and the decrease of the mortgage portfolio both contributed this increase.  

The estimated impact of IFRS 9 is a decrease of CET 1 ratio with approximately 30 basis points, mainly related to a change in the classification and measurement of a small part of the mortgage portfolio. The new BASEL IV guidelines come into force in 2022, on the basis of a preliminary impact assessment Achmea Bank expects that these guidelines will not have a material impact on the capital ratios.  

In line with Achmea Group’s policy to manage excess capital at group level, Achmea Bank has drawn up a dividend policy in 2017 whereby dividend is paid out if the Bank’s Total Capital Ratio exceeds a minimum limit. In accordance with this policy and given its solid capital position, the clear and lower than expected impact of both Basel IV and IFRS 9 and positive developments in the Acier portfolio, Achmea Bank proposes to pay out a total dividend of EUR 50 million. When the final Basel IV regulations are implemented in European legislation without change, our capital position remains strong enough to realize our growth strategy and pay out future dividends.  

Since year-end 2016 Achmea Bank has retained its long-term rating of A/stable (Fitch). Standard and Poor’s revised the rating per 31 March 2017 from A-/ Stable to A-/Negative.  

As of 1 April 2017 Mr. Pieter Emmen has succeeded Mr. Ronald Buwalda as Director of Finance & Risk of Achmea Bank. As a result of the completion of the operational transformation the position of Director of Operations will no longer be filled in as of April 1, 2018. As of the 1 January 2018, Mrs. Petri Hofsté stepped down as chairman of the Supervisory Board of Achmea Bank and has been replaced by Mr. Huub Arendse, who joined the Supervisory Board as from 1 August 2017. On 1 August 2017 Mrs. Bianca Tetteroo was also appointed as member of the Supervisory Board.  

The full press release can be downloaded here: