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.