KAS BANK has reported a 22% increase in operating profits in 2005 on the back of higher turnover, especially in “value-added” services – securities lending revenues were up particularly sharply – and treasury activities.
“The focus on added value services is bearing fruit,” says Albert Rell, Chairman of KAS BANK. “The relevant increase in income due to treasury, risk management on behalf of third parties and investment management services amounts to approximately 30% and underlines the positive growth potential of the bank. Our specialization as a bank for institutional investors is appreciated by the market and translates into a high-quality service range. In addition, our European platform provides an excellent basis to service banks, brokers and asset managers on the various European sub-markets.”
The operating result after taxation was €19.4 million, compared to €15.9 billion in 2004. The bank is proposing a final dividend for 2005 of €1.00 (2004: €0.95) per share, arguing that it is warranted by its strong solvency position. An interim dividend of €0.45 has already been paid.
During the first quarter of 2006, KAS BANK realized a net profit of approximately €8.4 million due to the partial sale of its shareholdings in the main European exchanges.
Revenues increased by 11% to €120.5 million (2004: €108.8 million). Growth mainly took place in treasury, risk management on behalf of third parties and investment management services.
Interest income amounted to €23.3 million (2004: €24.6 million), the decrease being attributable to the decline in market interest rates in 2005.
Commission income increased by 15% to €77.7 million (2004: €67.3 million),including custody and fund management fees, trading commissions, securities lending, clearing and settlement amend other commissions.
KAS BANK says the increase in income from custody was attributable to both an increase in exchange rates and an increase in the number of clients.
Income from securities borrowing and lending increased considerably, says the bank, across all activities, both in the Netherlands and abroad. The increase in agency lending – whereby the bank acts as intermediary instead of counterparty with reference to securities lending – was particularly sharp. The main foreign markets where KAS BANK operates are Germany, France and Italy.
Despite a significant increase in clearing and settlement income, KAS BANK says commission income rose only modestly because of competition.
Income from trading income and investments amounted to €19.1 million (2004: €16.8 million). Income from foreign exchange increased considerably, thanks to new products and more client activity.
Operating expenses amounted to €93.3 million (2004: €85.0 million), a 10% increase. Operating expenses were influenced in both 2005 and 2004 by a release in pension obligations resulting from one-off changes in the pension regulation (€1.4 million in 2005 and €3.6 million in 2004). In addition, non-recurrent restructuring expenses are included in 2005. Adjusted for these items, the increase of the operating expenses amounted to 5%.
The increase in staff expenses is mainly attributable to increases in collective agreement and periodic increases. The number of staff decreased marginally. In 2005, more temporary staff was employed for the purpose of IT- projects.
IT costs increased as a result of expansion in the capacity of the computer systems, as a result of which the license and maintenance expenses increased. This also affected depreciation expenses. By expanding IMS and Treasury services, expenses of exchange rate information services increased further.
The qualifying capital of the bank consists of core capital (Tier-1 capital) including the supplementary capital (Tier-2 capital). The qualifying capital is offset against risk weighted assets, which results in the BIS ratio. At year-end, the BIS ratio was 19% (2004: 21%). The Tier 1-ratio amounted to 16% (2004: 17%). The average BIS ratio in 2005 was 17% (2004: 23%). On average, the Tier 1-ratio amounted to 15% (2004: 17%).