VAN LANSCHOT KEMPEN N.V 
By
* The bank is weathering the liquidity and credit crisis very well
* Strong growth in new clients and funds entrusted continues
* Income from operating activities rose 28.6% to ? 648.0 million,
in particular thanks to substantially higher commission income
* Net profit up 16.7%, to ? 215.4 million;
* Earnings per share ? 5.94, an increase of 8.4%
* Proposed dividend of ? 3.00 per share, representing a 9.1%
increase
Floris Deckers, chairman of Van Lanschot NV's Board of Managing
Directors: "Even in a challenging year as 2007, Van Lanschot's
private banking strategy was successful. The bank managed to increase
net profit further. This is partly attributable to the acquisition of
Kempen & Co, which can also look back on a successful year. With its
private banking strategy and the associated risk management policy,
Van Lanschot is navigating the liquidity and credit crisis without
any problems. The bank focuses on its clients and not on investing
for its own account in complex financial constructions."
KEY FIGURES
(x ? million) 2007 2006* %
Income from operating activities 648.0 504.0 28.6%
Operating expenses 414.7 286.4 44.8%
Impairments 0.1 2.9 -97.5%
Operating profit before tax 233.2 214.7 8.6%
Net profit from continuing operations 189.4 178.0 6.4%
Net profit from discontinued operations 26.0 6.5 400.0%
Net profit 215.4 184.5 16.7%
Earnings per ordinary share (?) 5.94 5.48 8.4%
Amount available to shareholders (?) 6.04 5.68 6.3%
Efficiency ratio (%) 64.0% 56.8%
Return on average shareholders' funds (%) 16.9% 17.4%
Funding ratio 91.2% 77.4%
BIS total capital ratio (%) 12.0% 13.7%
BIS Tier 1 ratio (%) 9.0% 10.0%
BIS Core Tier 1 ratio (%) 6.7% 7.3%
* The figures for 2006 are adjusted for the results of Van Lanschot
Assurantiën, which are disclosed under 'discontinued operations'.
DEVELOPMENTS IN 2007
The bank's investment and trading portfolios neither contain any
positions in the subprime sector nor any positions in funds that
invest in the subprime sector. As a result, the bank did not
experience any direct impact from the liquidity and credit crisis
that caused turmoil on the financial markets in the second half of
the year. Van Lanschot has always consciously chosen a low risk
profile, this being in line with its position as a private bank.
Thanks to its focus on attracting savings and deposits from its
clients, the bank has an extremely solid liquidity position. Van
Lanschot's loan book does not comprise any loans that are affected by
the credit crunch. The bank grants loans almost exclusively to Dutch
companies and Dutch and Belgian wealthy private individuals. Please
refer to the appendix for a breakdown of the bank's investments and
loan book.
Van Lanschot builds further on its private banking strategy
In 2007, Van Lanschot further developed its private banking strategy.
In the market for high net worth individuals, the bank is
increasingly focusing on asset management and advice for the higher
segments. For instance, clients with assets of more than ? 1 million
available for investment are served by specialist teams delivering
tailor-made solutions. Van Lanschot's private banking and asset
management activities represented 54% of the 2007 operating profit
before tax, compared with 46% in 2006. The business banking
activities of the bank continue to focus on family businesses and
their directors/majority shareholders.
Within the scope of its private banking strategy, Van Lanschot has
deliberately increased its focus on attracting savings and deposits
since the end of 2006. The bank also enjoyed solid growth in the
number of clients against the background of the takeover battle in
the Dutch financial sector in 2007. This resulted in a significant
growth in savings accounts and deposits of private clients, from
? 4.0 billion to ? 7.1 billion, which is a 77.5% growth. In part
thanks to this, the funding ratio (the extent to which the bank's
total loans and advances are financed by funds entrusted by clients)
rose from 77.4% at year-end 2006 to 91.2% at the end of 2007.
In the reporting year, the number of private clients rose 7.2% and
the number of business banking clients 8.0%. External research in
2007 confirmed that our client satisfaction rate is clearly above the
market average.
Net profit (? million) and Earnings per share (?)
See attached PDF.
Kempen & Co
The acquisition of Kempen & Co in early 2007 reinforced Van
Lanschot's profile as a leading private bank. Kempen & Co's expertise
facilitates the shift in focus to the higher segments of the market.
Our clients can now benefit from an even wider range of specialised
and innovative products and services, in particular in the field of
asset management. In 2007, Kempen introduced a number of new
specialist funds, including the Kempen Property Hedge Fund, Orange
Global High Dividend Fund and Orange European Participations.
Kempen Capital Management is putting itself firmly on the map as an
asset manager for Dutch institutional parties. Fiduciary management
contracts were concluded with parties such as ZLM Verzekeringen and
Stichting Pensioenfonds Randstad in 2007. In addition, under the
collaboration agreement with Van Lanschot, De Goudse has commissioned
Kempen Capital Management to manage its investment portfolio worth
? 350 million and Kempen Capital Management will give strategic
advice on a portfolio worth ? 1.5 billion, with effect from 1 January
2008.
Van Lanschot Chabot
Within the scope of the bank's strategy, a 51% interest in Van
Lanschot Assurantiën was sold to De Goudse on 30 November 2007. Van
Lanschot realised a gain of ? 20.8 million on this transaction. The
activities of Van Lanschot Assurantiën will be continued under the
name Van Lanschot Chabot. Under the 20-year exclusive distribution
agreement with Van Lanschot Chabot, Van Lanschot will continue to
offer insurance products to its clients as part of its full-service
concept.
Investing in providing even better services
Van Lanschot continues to invest in its services. Education and
training of staff is essential in this context. The acquisition of
Kempen & Co on 2 January 2007 on the one hand and the transfer of
Assurantiën staff to Van Lanschot Chabot on the other, resulted in an
increase in the number of employees from 2,370 at year-end 2006 to
2,461 at year-end 2007. In order to further promote growth in private
banking, the bank has launched an intensive recruitment campaign for
new highly qualified relationship managers.
Good progress was made on modifying the systems in order to enhance
our service offerings to clients. The upgrading of the bank's IT
environment reached three important milestones in 2007. In the
autumn, the Customer Relationship Management system was successfully
implemented at all offices. Furthermore, the new online banking
application went live, allowing our clients to conduct their banking
affairs even more efficiently. The new information management systems
were also implemented, with which the bank was able to meet the new
reporting requirements under Basel II well on time. Within the scope
of this IT project, ? 4.6 million was charged to profit in 2007. To
date, a total amount of ? 52.1 million has been capitalised.
The year 2008 is for the IT project the year in which the new core
banking system will be tested and preparations will be made for its
implementation in 2009. It has been decided to implement the new core
banking system in one go. In this way, the bank avoids a complex
intermediate situation in which old and new systems have to be
temporarily interfaced. The upgrading of the IT environment requires
the hiring in of extensive expertise from outside the bank. Van
Lanschot believes it is essential to continually have this level of
expertise at the bank. It has decided not to build up this expertise
itself, but to outsource a significant part of its IT activities.
OUTLOOK FOR 2008
The bank will continue to pursue its private banking strategy with
vigour in 2008. Owing mainly to the recent consolidation in the Dutch
financial sector, the banking market is in a considerable state of
flux. Van Lanschot therefore expects that the inflow of new clients
will continue unabated in 2008. As in 2007, the bank will proactively
concentrate on recruiting and retaining experienced private bankers
and on investing in its people and systems.
Van Lanschot will continue to finance its activities as much as
possible from the funds entrusted by its clients. In this context,
Van Lanschot aims to further increase its funding ratio in 2008. In
view of its comfortable liquidity position, the bank decided on early
repayment of ? 600 million in Floating Rate Notes in March 2008, as
announced on 12 February 2008. In addition, the ? 400 million in
Floating Rate Notes that expire on 13 May 2008 will not be
refinanced.
Expectations are that the financial markets will continue to suffer
from the effects of the liquidity and credit crisis. This turmoil
will put pressure on commission income. Interest margins will recover
slightly, but the impact on profits will be noticeable with some
delay.
PERFORMANCE IN 2007
Net profit for 2007 amounted to ? 215.4 million, an increase of 16.7%
on 2006 (? 184.5 million). Earnings per share were ? 5.94, i.e. an
8.4% increase on 2006 (? 5.48). As part of the acquisition of Kempen
& Co, 2.4 million new shares were issued. The average number of
outstanding shares was thus 7.9% higher.
On 2 January 2007, Kempen & Co became a wholly-owned subsidiary of
Van Lanschot. To allow an adequate comparison between the periods,
the table below states the pro-forma 2006 results of Van Lanschot
inclusive of the results of Kempen & Co. On a pro-forma basis, net
profit for 2007 shows a 2.4% decline from ? 220.8 million to ? 215.4
million. This is caused by several exceptional items, i.e. the
release in 2006 of a provision for healthcare costs (? 19.5 million
income) and the amortisation on the intangible assets of Kempen & Co
in 2007 (? 13.6 million expense). The intangible assets include the
Kempen & Co brand name and the client base.
Furthermore, the figures are adjusted for Van Lanschot Assurantiën,
on account of the sale of a 51% interest in 2007. Net profit of Van
Lanschot Assurantiën is disclosed separately under 'discontinued
operations'. For 2007, this concerns the net profit up to and
including 30 November, the date on which Van Lanschot Assurantiën was
sold. With effect from 1 December 2007, 49% of the net profit of Van
Lanschot Chabot is included under 'income from securities and
associates'. The gain on sale, amounting to ? 20.8 million, is also
included under the item 'discontinued operations'.
2007 2006 2006 2006 %
Kempen & pro (A
(A) Co forma compared
(x ? million) (B) to B)
Interest 276.3 259.8 4.5 264.3 4.5%
Income from securities
and associates 27.5 45.1 0.3 45.4 -39.4%
Commission 295.4 159.4 99.3 258.7 14.2%
Profit on financial
transactions 48.8 39.7 8.0 47.7 2.3%
Income from operating
activities 648.0 504.0 112.1 616.1 5.2%
Staff costs 248.5 168.7 41.7 210.4 18.1%
Other administrative
expenses 129.8 99.6 19.8 119.4 8.7%
Depreciation and
amortisation 36.4 18.1 2.2 20.3 79.3%
Operating expenses 414.7 286.4 63.7 350.1 18.5%
Impairments 0.1 2.9 0.0 2.9 -97.5%
Total expenses 414.8 289.3 63.7 353.0 17.5%
Operating profit before
tax 233.2 214.7 48.4 263.1 -11.4%
Income tax 43.8 36.7 12.1 48.8 -10.2%
NET PROFIT from
continuing operations 189.4 178.0 36.3 214.3 -11.6%
Discontinued operations 26.0 6.5 0.0 6.5 300.0%
NET PROFIT 215.4 184.5 36.3 220.8 -2.4%
In order to ensure the comparability of results, reference is made in
this section to the pro forma figures for 2006 as included in the
above table.
Income from operating activities climbed ? 31.9 million (5.2%) from
? 616.1 million in 2006 to ? 648.0 million in 2007.
Commission income was up by 14.2% from ? 258.7 million in 2006 to
? 295.4 million in 2007. The growth in securities commission in
particular contributed towards this increase, thanks to the positive
sentiment on the stock exchanges in the first half of the year, and
the performance fees realised by several in-house funds that
performed extremely well compared with the benchmark defined in the
prospectus. The downturn in the sentiment on the stock exchanges as a
result of the credit crisis led to fewer securities transactions by
investors, in particular in the fourth quarter of the year. The
declining share prices also put pressure on the custody and asset
management fees. On balance, however, securities commission rose
strongly by 17.7% from ? 211.6 million to ? 249.0 million. Other
commission income (commission on cash transactions and other
commission) remained nearly stable at approx. ? 46,4 million.
Interest income rose 4.5% from ? 264.3 million to ? 276.3 million.
The positive trend of the underlying volumes suffered from a
declining interest margin (from 1.42% at year-end 2006 to 1.37% at
year-end 2007). In the second half of the year, the interest margin
recovered slightly, especially thanks to the favourable margins
realised on interbank lending as a result of the liquidity and credit
crisis. Penalty interest received on account of the early repayment
of loans was ? 4.6 million lower than in 2006 and came to ? 5.0
million. This decline can be attributed to the increasing interest
rate. An amount of ? 4.5 million was recognised in 2007 for the
amortisation of acquired surplus (resulting from the acquisition of
CenE Bankiers), which item will almost fully disappear in 2008.
Private client savings accounts and deposits rose to ? 7.1 billion,
i.e. a ? 3.1 billion (77.5%) increase. This increase can be
attributed to the strong rise in the number of target group clients
and higher funds entrusted per client. The consolidation battle in
the Dutch banking sector and the shift towards clients holding more
liquid assets were the reasons for this. Loans (including mortgage
loans) granted to private clients grew by ? 0.6 billion to
? 9.6 billion. For corporate clients, deposits declined by ? 0.4
billion (-18.2%) to ? 1.8 billion and the volume of corporate loans
grew ? 0.6 billion to ? 4.6 billion.
The item income from securities and associates went down by 39.4%
compared with 2006, from ? 45.4 million to ? 27.5 million. This
amount includes ? 19.0 million for the gain on the sale of
available-for-sale investments (2006: ? 35.6 million), ? 11.2 million
in dividend payments (2006: ? 15.2 million) and a negative
revaluation result of - ? 2.7 million (2006: - ? 5.4 million). Income
from securities and associates also comprises ? 0.2 million for Van
Lanschot Chabot. This is 49% of the net profit for December 2007.
The profit on financial transactions increased by 2.3% from ? 47.7
million in 2006 to ? 48.8 million in 2007. This item contains the
realised and unrealised value changes on the trading portfolio,
exchange differences and realised and unrealised gains and losses on
derivatives. Profit on financial transactions strongly depends on the
interest rate, the developments on the stock exchanges and exchange
rate movements.
In 2007, operating expenses increased 18.5%, from ? 350.1 million in
2006 to ? 414.7 million in 2007. Excluding the exceptional items,
operating expenses rose by ? 8.5% from ? 369.6 million to ? 401.1
million. The exceptional items are the release of the provision for
healthcare costs of ? 19.5 million in 2006 and the amortisation of
intangible assets of ? 13.6 million, which resulted from the
acquisition of Kempen & Co in 2007.
Staff costs rose by 18.1% from ? 210.4 million to ? 248.5 million.
Exclusive of the release of the provision for healthcare costs in
2006, staff costs were 8.1% higher. This increase in staff costs
results from the regular pay rises and profit-related bonuses.
Furthermore, Van Lanschot continues its investments in staff quality
through education and training. The costs of education and training
were 3.5% of wage costs (2006: 2.8%).
Other operating expenses grew by 8.7% from ? 119.4 million to ? 129.8
million. This increase can largely be attributed to a rise in the IT
costs due to external staff hired. Within the scope of this IT
project, ? 4.6 million was charged to profit in 2007. Of this amount,
? 1.6 million concerns the depreciation of the modules put into use.
Up to 2007 inclusive, an amount of ? 52.1 million has been
capitalised.
Depreciation and amortisation increased strongly by 79.3% from
? 20.3 million to ? 36.4 million. This increase was largely the
result of the amortisation of intangible assets due to the
acquisition of Kempen & Co. This involved an amount of ? 13.6 million
in 2007. For 2008, this amount will be ? 10.9 million.
The item impairments amounted to ? 0.1 on balance (2006: ? 2.9
million). For many years now, Van Lanschot has pursued a conservative
loan approval policy that has produced an extremely healthy loan
portfolio. Loans written off totalled ? 17.0 million in 2007 (13
basis points of risk-weighted assets). The percentage of
non-performing loans covered by the provision for impairments is
138.6% (year-end 2006: 138.3%).
Income tax on the operating profit for 2007 amounted to ? 43.8
million. This corresponds with a tax burden of 17.5%. The tax burden
was 17.7% in 2006.
The efficiency ratio, i.e. the ratio of operating expenses to income
from operating activities, rose to 64.0% from 56.8% in 2006. This is
inclusive of the amortisation of intangible assets arising on the
acquisition of Kempen & Co. Excluding this amortisation, the
efficiency ratio was 61.9%.
The item discontinued operations relates to the net profit of Van
Lanschot Assurantiën up to and including 30 November 2007. Compared
with the previous year, Van Lanschot Assurantiën's net profit
declined by 20.0% from ? 6.5 million to ? 5.2 million. This decline
can fully be attributed to lower commission income. In 2006,
commission income was boosted by one-off prior-year income items
resulting from new rules for the disclosure of commission by
intermediaries. In addition, the item discontinued operations
contains the gain on the sale of Van Lanschot Assurantiën of ? 20.8
million.
DIVIDEND
The annual dividend to be distributed is determined based on the
amount available to shareholders. This represents the net profit for
the year, adjusted for the interest on perpetual loans and the
amortisation of acquired surplus. Van Lanschot aims to distribute
between 40% and 50% of the amount available to shareholders.
Earnings per share for the year 2007 amounted to ? 5.94, an 8.4%
increase on 2006 (? 5.48). Compared with 2006, the average number of
outstanding ordinary shares rose by 7.9% due to the issue of new
shares for the financing of the acquisition of Kempen & Co.
(x ? million) 2007 2006
Net profit 215.4 184.5
Interest on perpetual loans -10.7 -9.7
Net profit for calculation of earnings per 204.7 174.8
share
Earnings per share (?) 5.94 5.48
Net profit 215.4 184.5
Interest on perpetual loan -10.7 -9.7
Net effect of amortisation of acquired +3.4 +6.5
surplus
Net profit available to shareholders 208.1 181.3
Amount available to shareholders (?) 6.04 5.68
Average number of ordinary shares (x 1,000) 34,422 31,888
Earnings per share available to shareholders amounted to ? 6.04,
compared with ? 5.68 in 2006. It will be proposed to the Annual
General Meeting of Shareholders that a dividend of ? 3.00 per share
be distributed for 2007. This corresponds with a pay-out ratio of
49.7% relative to the earnings per share available to shareholders.
The dividend will be payable in cash.
BALANCE SHEET
(x ? million) 31-12-2007 31-12-2006 %
Public and private sector
liabilities 14,597 11,413 27.9%
- savings accounts 5,014 3,716 34.9%
- deposits 3,813 2,489 53.2%
- other funds entrusted 5,770 5,208 10.7%
Loans and advances to the public
and private sectors 16,006 14,746 8.5%
- mortgages 8,017 7,790 2.9%
- loans to private clients 1,616 1,214 33.1%
- corporate loans 4,617 4,058 13.8%
- other 1,756 1,684 4.3%
Shareholders' funds 1,687 1,367 23.4%
Total assets 21,719 18,739 15.9%
BIS total capital ratio (%) 12.0% 13.7%
BIS Tier 1 ratio (%) 9.0% 10.0%
BIS core Tier 1 ratio (%) 6.7% 7.3%
Total assets at 31 December 2007 came to ? 21.7 billion (31 December
2006: ? 18.7 billion). This increase can be attributed to the
acquisition of Kempen & Co, which was partly financed by a share
issue, as well as a solid growth in the public and private sector
liabilities. This last item increased strongly (+27.9%) thanks to the
focus on attracting savings and deposits from target group clients.
Total loans and advances rose 8.5% from ? 14.7 billion to ? 16.0
billion. The bank's funding ratio (the ratio of public and private
sector liabilities to total loans and advances to the public and
private sectors) was 91.2% at the end of December 2007. At year-end
2006, this ratio was 77.4%.
Shareholders' funds climbed from ? 1.4 billion at 31 December 2006 to
? 1.7 billion at 31 December 2007. This increase can be attributed to
the retained earnings and the issue of new shares in connection with
the acquisition of Kempen & Co. For the movements in shareholders'
funds, reference is made to the appendix.
Return on average shareholders' funds for 2007 declined from 17.4% to
16.9%. This decline resulted from the issue of shares in order to
finance the acquisition of Kempen & Co. This means that the increase
in shareholders' funds was relatively higher than the increase in net
profit, which had a negative impact on the return on average
shareholders' funds.
The BIS total capital ratio dropped from 13.7% to 12.0% and is now
below the target of 12.5%. This decline was mainly caused by an
increase in the risk-weighted assets compared with a qualifying
capital which stayed more or less stable. Capital grew during the
reporting period thanks to the capital increase by virtue of the
acquisition of Kempen & Co, revaluations and the net profit for the
current year. For the calculation of the solvency ratios, deductions
are made for goodwill paid (an amount of ? 169.7 million), as well as
the capitalised intangible assets in connection with the acquisition.
As a result, the qualifying capital remained more or less unchanged.
The risk-weighted assets rose by ? 1.9 billion to ? 13.6 billion.
ASSETS UNDER MANAGEMENT
The combination of the asset management departments of Van Lanschot
and Kempen & Co prompted the redefinition of the concept of 'assets
managed and held in custody' into 'assets under management'. The item
'assets under management' represents the assets deposited with Van
Lanschot by our clients. The part which is managed by Van Lanschot is
included under the item 'assets under discretionary management'.
Previously, the bank used the concept 'assets managed'. 'Assets under
discretionary management' also include the Index Guarantee Contracts.
31-12-2007 31-12-2006 %
(x ? 1 billion) pro forma
Assets under management 28,1 29,9 -6,0%
Assets under discretionary
management 14.7 15.4 -4.5%
Assets under non-discretionary
management 13.4 14.5 -7.6%
Assets under management 28.1 29.9 -6.0%
Private clients 18.6 19.3 -3.6%
Institutional clients 5.1 5.8 -12.1%
In-house funds 4.4 4.8 -8.3%
The assets under management declined by ? 1.8 billion in 2007 (-6.0%)
from ? 29.9 billion (pro forma) to ? 28.1 billion.
In 2007, assets under discretionary management fell by ? 0.7 billion,
from ? 15.4 billion to ? 14.7 billion. The net inflow of new funds in
assets under discretionary management was ? 0.2 billion in 2007. This
inflow was more than counteracted by a ? 0.9 billion decline in value
as a result of the negative sentiment on the stock exchanges and in
the property sector.
Assets under discretionary management for private clients posted an
increase of ? 0.6 billion, from ? 5.7 billion to ? 6.3 billion
(+10.5%). This increase consists of an inflow of ? 0.5 billion and an
increase in value of ? 0.1 billion. The inflow was largely caused by
the further growth in the Manager of Funds concept and the Index
Guarantee Contracts and the introduction of the Private Assets
Management concept. Assets under discretionary management for
institutions declined by ? 0.9 billion from ? 4.9 billion to ? 4.0
billion. This decline was made up of a net outflow of ? 0.1 billion
and a negative stock exchange performance of ? 0.8 billion. This
decrease in value can be attributed to the negative trend in the
property sector. Assets under discretionary management of the
in-house funds declined by ? 0.4 billion from ? 4.8 billion to ? 4.4
billion, due to a net outflow of ? 0.1 billion as a result of the
termination of several in-house funds and a decline of ? 0.3 billion
due to the negative market trend.
Assets under non-discretionary management decreased 7.6%, from
? 14.5 billion at year-end 2006 to ? 13.4 billion at year-end 2007.
On the one hand, a part was converted into assets under discretionary
management, and on the other hand, clients started to hold a larger
part of their assets in the form of liquidity, in particular
deposits.
SECURITISATION
In June 2007, Van Lanschot securitised a home mortgages portfolio of
? 1.5 billion under the name Citadel 2007-I. The bonds issued by
Citadel 2007-I were purchased by Van Lanschot and can be used as
collateral with the ECB and Euroclear. This transaction does not have
any impact on the BIS ratios, but it does enlarge the bank's
potential liquidity position.
DEVELOPMENTS BY SEGMENT
The division of the results over the segments was adjusted in 2007
due to the acquisition of Kempen & Co. The new division has resulted
in the following segments: Private Banking, Asset Management,
Business Banking, Corporate Finance and Securities, and Other
activities. The Other activities segment contains the income and
expenses that cannot be allocated to another segment. This segment
includes income from interest rate, market and liquidity risk
management.
The CenE Bankiers segment (Healthcare) is now recorded in the
Business Banking segment. Assurantiën (Insurance) as a segment is no
longer separately visible due to the sale of a majority interest to
De Goudse NV.
Operating profit before taxation by segment
See attached PDF.
In order to allow an adequate comparison between the periods, the
developments by segment are discussed based on the pro-forma results
for the year 2006, inclusive of the result of Kempen & Co.
The release of the provision for healthcare costs (? 19.5 million
positive) was divided over all segments in 2006. That is the reason
why all segments post higher staff costs in 2007 than in 2006. In
addition, in Kempen & Co's figures, a release of the pension
provision in 2006 (? 8.0 million positive) was divided over the
segments Asset Management, Corporate Finance and Securities, and
Other activities.
PRIVATE BANKING
2007 2006 pro forma %
(in ? million)
Interest 163.3 157.8 3%
Income from securities and
associates 0.0 0.2 -100%
Commission 133.4 122.8 9%
Profit on financial transactions 1.9 1.8 6%
Income from operating activities 298.6 282.6 6%
Staff costs 124.0 116.5 6%
Other administrative expenses 70.1 64.0 10%
Depreciation and amortisation 14.9 12.3 21%
Operating expenses 209.0 192.8 8%
Impairments 2.6 0.9 189%
Total expenses 211.6 193.7 9%
Operating profit before tax 87.0 88.9 -2%
The Private Banking segment recorded a solid growth in volumes,
partly as a result of the 7.2% increase in the number of private
clients. Assets under discretionary management showed a rise of ? 0.6
billion, from ? 5.7 billion to ? 6.3 billion thanks to a strong
inflow of new funds. Savings accounts and deposits grew strongly;
rising by ? 3.1 billion from ? 4.0 billion to ? 7.1 billion. This was
mainly caused by the consolidation battle in the Dutch banking sector
and the trend noticeable among investors of holding a larger part of
their assets in the form of liquidity on account of the negative
sentiment on the stock exchanges. Loans and advances to private
clients expanded by ? 0.6 billion, from ? 9.0 billion to
? 9.6 billion.
Income from operating activities for 2007 rose by ? 16.0 million.
This can mainly be attributed to the growth in commission by ? 10.6
million, and in particular to securities commission. In addition to
the increase in commission, interest income was also on the rise,
with the exception of penalty interest, which again showed a decline.
Total expenses were up 9% from ? 193.7 million to ? 211.6 million,
for a large part due to the higher staff costs on account of a
release in the provision for healthcare costs in 2006. Of this
release, 63% was taken in the Private Banking segment, i.e. an amount
of ? 12.3 million. Furthermore, other operating expenses grew 10%
from ? 64.0 million to ? 70.1 million. This was largely the result of
an increase in IT costs due to external staff hired. The higher
impairments were mainly caused by the recognition of a provision for
one large loan.
The operating profit for before tax of Private Banking was ? 87.0
million, representing a 2% decline on 2006. Excluding the release of
the provision for healthcare costs, this segment's operating profit
would have risen 13.6%, from ? 76.6 million to ? 87.0 million.
Van Lanschot Belgium
In Belgium, the positive trend continued. The number of target group
clients of Van Lanschot Belgium increased by 7.8% in 2007, and the
growth in Belgian private clients was 9.4%. The volume of loans and
advances declined as a result of higher one-off repayments and a more
focused loan target group policy. The gross operating profit was 8.1%
higher at ? 8.0 million. Income from operating activities increased
by 4.9% from ? 30.8 million to ? 32.3 million. Especially commission
income grew 14.7%, while interest income showed a slight decline due
to the contracting margin. Operating expenses moved up slightly by
3.9%. As in the Netherlands, Van Lanschot Belgium too is further
refining its service model and product offering for high net worth
individuals.
International Private Banking
International Private Banking (IPB) concentrates on Dutch and Belgian
clients who are in need of specific services due to emigration or
international business and investment activities. The target group,
clients with assets of at least ? 1 million, is served from Curacao,
Luxembourg and Switzerland.
Operating profit before tax of IPB was up 19.5% from ? 12.8 million
to ? 15.3 million. The growth in the operating profit before tax
compared with 2006 can especially be attributed to the higher
interest income of Van Lanschot Luxembourg and higher securities
commission of Van Lanschot Switzerland. The 20% increase in assets
under management at Van Lanschot Switzerland contributed towards the
higher securities commission.
ASSET MANAGEMENT
2007 2006 pro forma %
(x ? million)
Interest 2.9 2.5 16%
Income from securities and associates 0.0 0.0 0%
Commission 77.1 56.0 38%
Profit on financial transactions 0.6 0.0 0%
Income from operating activities 80.6 58.5 38%
Staff costs 30.9 16.3 90%
Other administrative expenses 10.8 10.6 2%
Depreciation and amortisation 0.3 0.4 -25%
Operating expenses 42.0 27.3 54%
Impairments 0.0 0.0 0%
Total expenses 42.0 27.3 54%
Operating profit before tax 38.6 31.2 24%
The Asset Management segment comprises the asset management
activities of Van Lanschot.
Income from operating activities, which mainly comprises commission,
of the Asset Management segment was up 38% from ? 56.0 million to
? 77.1 million. Additional income was recorded in 2007 thanks to
higher performance and management fees resulting from the extremely
good performance of several in-house funds compared with the
benchmark as defined in the prospectus.
Assets under discretionary management for institutions declined by
? 0.9 billion from ? 4.9 billion to ? 4.0 billion. This decline was
made up of a net outflow of ? 0.1 billion and a negative stock
exchange performance of ? 0.8 billion. This decrease in value can be
attributed to the negative trend in the property sector. Assets under
discretionary management of the in-house funds declined by ? 0.4
billion from ? 4.8 billion to ? 4.4 billion, due to a net outflow of
? 0.1 billion as a result of the termination of several in-house
funds and a decline of ? 0.3 billion due to the negative market
trend.
Operating expenses increased by 54% from ? 27.3 million to ? 42.0
million in particular due to the growth in the number of staff, a
higher accrual for bonuses, the costs of the employee option plan for
Kempen & Co staff and a release in the pension provision in 2006. Of
this release, 28% was taken in the Asset Management segment. This
concerned an amount of ? 2.2 million. The accrual for the bonuses was
higher in 2007 because they are performance related.
The operating profit before tax of Asset Management totalled ? 38.6
million, which is a 24% increase on the previous year. Excluding the
release of the pension provision, this segment's operating profit
would have risen 33%, from ? 29.0 million to ? 38.6 million.
BUSINESS BANKING
2007 2006 pro forma %
(x ? million)
Interest 94.9 93.5 1%
Income from securities and
associates 8.5 2.9 193%
Commission 21.4 21.3 0%
Profit on financial transactions 8.4 4.0 110%
Income from operating activities 133.2 121.7 9%
Staff costs 43.8 40.1 9%
Other administrative expenses 27.0 26.0 4%
Depreciation and amortisation 5.2 4.4 18%
Operating expenses 76.0 70.5 8%
Impairments -3.1 2.0 -255%
Total expenses 72.9 72.5 1%
Operating profit before tax 60.3 49.2 23%
The Business Banking segment also comprises the Healthcare
activities.
Income from operating activities rose 9% to ? 133.2 million. Compared
with the previous year, interest income was slightly up. The profits
on sale and valuation gains on associates and the venture capital
unit grew strongly by 193% to ? 8.5 million. The profit on financial
transactions doubled thanks to the profits realised on equity
kickers. Corporate loans and advances also showed substantial growth
in 2007 rising by ? 0.6 billion from ? 4.0 billion to ? 4.6 billion.
On the other hand, funds entrusted levelled off. The number of
business banking clients grew by 8.0%, with the number of healthcare
clients increasing 9.2% thanks to the growth in the target group
Medical Practitioners in particular.
Total expenses remained stable at a level of ? 72.9 million. The
increase in staff costs was mainly caused by the release of the
provision for healthcare costs in 2006. Of this release, 26% was
taken in the Business Banking segment, i.e. an amount of ? 5.0
million. The item impairments showed a decline because the provision
was reduced for a number of large loans. This was offset by a large
provision for one healthcare institution amounting to ? 8.4 million.
The operating profit before tax of Business Banking was ? 60.3
million, representing a 23% increase on 2006. Excluding the release
of the provision for healthcare costs, this segment's operating
profit would have risen 36%, from ? 44.2 million to ? 60.3 million.
CORPORATE FINANCE AND SECURITIES
2007 2006 pro forma %
(x ? million)
Interest 0.5 0.4 25%
Income from securities and associates 0.0 0.0 0%
Commission 65.0 56.6 15%
Profit on financial transactions 7.0 11.9 -41%
Income from operating activities 72.5 68.9 5%
Staff costs 29.0 26.7 9%
Other administrative expenses 17.4 14.8 18%
Depreciation and amortisation 0.1 0.9 -89%
Operating expenses 46.5 42.4 10%
Impairments 0.0 0.0 0%
Total expenses 46.5 42.4 10%
Operating profit before tax 26.0 26.5 -2%
This segment comprises the corporate finance activities and
securities broking to professional investors in Europe and the United
States.
In this segment, income from operating activities was up 5%, from
? 68.9 million in 2006 to ? 72.5 million in 2007. This income has a
volatile nature and depends on stock exchange trends and the number
of share issues, mergers and acquisitions led by the bank. After a
strong first half of the year, the turmoil on the stock markets put
pressure on commission income and trading income in the second half.
On balance, commission income was still 15% higher than in 2006. The
activities at Corporate Finance showed a decline in income due to
fewer mergers and acquisitions in which Van Lanschot was involved.
Total expenses were 10% up, from ? 42.4 million to ? 46.5 million, in
particular due to the costs of the employee option plan for Kempen &
Co staff and a release in the pension provision in 2006. Of this
release, 33% was taken in the Corporate Finance and Securities
segment, i.e. an amount of ? 2.6 million.
Operating profit before tax decreased by 2% from ? 26.5 million to
? 26.0 million. Excluding the release of the pension provision, this
segment's operating profit would have risen 8.8%, from ? 23.9 million
to ? 26.0 million.
OTHER ACTIVITIES
2007 2006 pro forma %
(x ? million)
Interest 14.7 10.1 46%
Income from securities and associates 19.0 42.3 -55%
Commission -1.5 2.0 -175%
Profit on financial transactions 30.9 30.0 3%
Income from operating activities 63.1 84.4 -25%
Staff costs 20.8 10.8 93%
Other administrative expenses 4.5 4.0 13%
Depreciation and amortisation 15.9 2.3 591%
Operating expenses 41.2 17.1 141%
Impairments 0.6 0.0 0%
Total expenses 41.8 17.1 144%
Operating profit before tax 21.3 67.3 -68%
This segment comprises, among other things, income and expenses that
can at present not be allocated to other segments. We are constantly
striving to refine this allocation. In addition, this segment
comprises income and expenses arising from interest rate, market and
liquidity risk management.
Income from operating activities decreased from ? 84.4 million to
? 63.1 million. Income from securities and associates declined due to
lower gains on sale and dividend income.
Total expenses rocketed by 144% from ? 17.1 million to ? 41.8
million. This was mainly the result of higher staff costs and
depreciation and amortisation. In addition to the release of the
provisions for healthcare costs and for pensions in 2006, the costs
of the employee option plan for Kempen & Co staff contributed towards
the rise in staff costs in 2007. Of the release of the provision for
healthcare costs, 5% (i.e. ? 1.0 million) was taken in the Other
activities segment; 39% percent of the release of the pension
provision (i.e. ? 3.1 million) was also recognised in this segment.
Depreciation and amortisation also comprises the amortisation of
intangible assets of Kempen & Co totalling ? 13.6 million.
Operating profit before tax decreased by 68% from ? 67.3 million to
? 21.3 million. Excluding the release of the provisions, this
segment's operating profit would have fallen 66%, from ? 63.2 million
to ? 21.3 million.
KEY DATES 2008/2009
Registration date AGM 17 April 2008
Annual General Meeting of Shareholders 8 May 2008
Ex-dividend date 12 May 2008
Dividend record date 14 May 2008
2007 dividend available for payment 20 May 2008
Publication of 2008 half-year results 15 August 2008
Publication of 2008 annual results 20 March 2009
Annual General Meeting of Shareholders 11 May 2009
Publication of 2009 half-year results 21 August 2009
's-Hertogenbosch, the Netherlands, 20 March 2008
Van Lanschot press contacts: 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 Bankiers stands
for high-quality services founded on integrated advice, personal
service and customised solutions. Van Lanschot NV is listed on the
Euronext Amsterdam Stock Market.
Click the link below to read the complete press release including all
tables and annexes:
http://hugin.info/133415/R/1202603/246344.pdf
Copyright © Hugin AS 2008. All rights reserved.VAN LANSCHOT : Net profit for 2007 climbs 16.7%
March 20, 2008 at 02:30 am EDT
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