IKB Deutsche Industriebank AG / Preliminary Results
03.07.2008
Release of a Corporate News, transmitted by DGAP - a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
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After-tax loss of -24 million
The crisis has a strong effect on financial figures
Positive contribution to earnings by core business areas
First structured securities portfolio sold
IKBs board of managing directors has prepared the preliminary IKB group
figures (IFRS) and finalised the preparation of the Banks uncon-solidated
annual financial statements pursuant to the German Commercial Code (HGB)
for the 2007/08 fiscal year which ended on 31 March 2008. All figures set
out herein have not yet been audited and remain prelimi-nary until approved
by the Supervisory Board.
IKB Deutsche Industriebanks group annual loss (after tax) for the fiscal
year 2007/08 (1 April 2007 to 31 March 2008 totalled -24 million. The
positive difference as compared to the management boards expectation at
the end of April 2008 of -0.2 billion results from significantly lower
deferred taxes than initially expected.
Losses on portfolio investments resulted in a negative fair value result of
-1.8 billion (fiscal year 2006/07: -38 million). This result comprises a
positive fair-value effect from liabilities amounting to 1.7 billion. Net
income from investment securities came in at -1.0 billion (-12 million).
These figures stand in contrast to the positive result from the assumption
of risks by the banking pool amounting to 2.4 billion.
Net interest income of 450 million in 2007/08 was down 33.2% on the same
period of the previous year (673 million). 90 million of this de-crease
resulted from the first reclassification of amortization from hedg-ing
relationships (IG60A and IG60B) in the interest income, and 50 mil-lion
stem from the segment Portfolio Investments. The remaining de-crease of 83
million resulted from lower income from interest rate man-agement, and from
increased refinancing costs.
The provisions for possible loan losses of 255 million are higher than in
the same period of the previous year ( 240 million). An increase in risk
provisions in the business segments contributed to this rise, while risk
provisions in the head office / consolidation segment decreased as a
re-sult of the cutting of old risks. The NPL ratio, ie. the portion of
loans within the credit volume classified as non-performing, decreased to
5.0% as of 31 March 2008 (31 March 2007: 5.6 %).
Net commission income increased slightly to 55 million (previous year: 52
million). The significant factor in the result was stable commission income
from the structured financing segment.
General administrative expenses rose by 19.1% to 377 million (316
million). Although personnel expenses declined slightly by 2.5%, other
administrative expenses rose by 49.8%. This can be primarily attributed to
increased expenses in particular consultant costs in order to resolve
the critical developments at IKB. The average number of staff during the
reporting period totalled 1,853 (1,728), as of the end of the fiscal year,
IKB had 1,839 employees (1,788).
The occurrence of extraordinary effects resulting from the IKB crisis in
particular caused a final operating result for the IKB Group in fiscal year
2007/08 of 140 million, in comparison with 115 million in the same period
of the previous year.
As regards the tax position, active deferred taxes on losses carried
for-ward from previous years were written down as they will cease to apply
as a result of the anticipated change of ownership. Deferred tax
liabilities on these positive result effects were also created out of the
valuation of the liabilities, in so far as these valuation effects contain
no immediately tax-attracting earnings. The group loss after allowing for
the tax liability of 165 million stands at -24 million.
Results for IKB AG and IKB International S.A., Luxembourg
IKB AG reported a net loss in its annual financial statements for fiscal
year 2007/08 of -1,761 million. The contribution of IKB hybrid capital
instruments to the loss totals 485 million, resulting in a balance sheet
loss of -1,276 million for IKB AG. As a result, no dividends will be paid
out for fiscal year 2007/08.
IKB International S.A., Luxembourg reported a loss in its financial
statements for fiscal year 2007/08 of 679 million before allocation of
loss to silent partnerships. The silent partnerships share in the loss
totals 126 million, resulting in a balance sheet loss of 533 million.
More detailed information on the IKB AG and IKB International S.A. hybrid
securities was published on 3 July 2008.
Positive Contribution to Income by the Core Segments
It was possible to continue customer business in IKBs core segments,
corporate clients, real estate clients and structured financing, despite
the crisis and overall, they delivered a positive operative contribution to
earn-ings.
In the corporate clients segment, new business volume increased to 4.6
billion, matching the high level from the previous year. For the first
time, IKB Leasing paid out over 1 billion. More than a third of the new
disbursements were to new clients. The operating result totalled 21
million (93 million). The result is impacted due to some particular
cases by the significant increase in risk provisions in the credit
business and the reported valuation losses in the fair-value result. In
addition, the new business margin fell to 1.02% (1.12%).
The real estate clients business segment achieved an operating result of
11 million (previous year: 23 million ). It was possible to increase the
volume of new business to 1.4 billion (1.3 billion). The margin on new
business fell due to the higher refinancing costs to 1.07 % (1.32%).
The structured financing segment showed an operating result of -3 million
(91 million). New business in fiscal year 2007/08 decreased in fiscal year
2007/08 as a result of the market situation to 3.8 billion, in comparison
with 5.3 billion in the previous year. It was possible to in-crease the
margin on new business to 2.09% (2.01%). Risk provisions increased to 63
million (previous year: 35 million ), due to additional individual value
write-downs and portfolio value adjustments. In invest-ments securities, in
accordance with the general development of the mar-ket, which has lead to a
significant widening of the spread, especially for subordinate tranches,
value adjustments totalling 35 million were formed on the first loss
pieces from the structuring of our own credits.
The portfolio investments segment shows an operating result of -1,627
million (previous year: 11 million), reflecting in particular IKBs
losses following the credit crisis. Specifically, the net income from
financial instruments at fair value fell to -3,190 million and net income
from in-vestment securities to -904 million . This stood in contrast to
the posi-tive result from risk assumption by the KfW with support from the
bank-ing pool of 2,401 million.
First Portfolio Investments Sold
As of June 2008, IKB began to implement the planned sale of securities from
the higher-risk component of its portfolio investments. To date, tranches
with a nominal value of 450 million, slightly over the book value as of 31
March 2008, have been sold.
Bidding Process in the Decisive Phase
The process of the sale of the KfW shares to IKB (45.5%) is in the
deci-sive phase. IKB fully supports the sales process.
Outlook
The 2008/09 financial year will still be substantially affected by the
ef-fects of the crisis This includes particularly the restriction in new
business since August 2007, the large increase in refinancing costs and the
high consultant costs. Once restructuring is complete, the Bank is expected
to have a substantially different earnings structure and lower earnings
level overall, because the income from portfolio investments will decline
sig-nificantly. The medium term objective is to achieve a reasonable return
from operating business on the capital deployed. The result of the sales
process will be of great importance to the future of the Bank.
The Board of Managing Directors
Düsseldorf, 3 July 2008
Dr. Jörg Chittka, Tel. +49 (0)211 8221-4349, Dr. Roland Nolte, Tel. +49 (0)
211 8221-4860, Volker Rapp, Tel. +49 (0) 211 8221-3043 Email:
investor.relations@ikb.de
DGAP 03.07.2008
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Language: English
Issuer: IKB Deutsche Industriebank AG
Wilhelm-Bötzkes-Straße 1
40474 Düsseldorf
Deutschland
Phone: +49 (0)211 8221-4511
Fax: +49 (0)211 8221-2511
E-mail: investor.relations@ikb.de
Internet: www.ikb.de
ISIN: DE0008063306
WKN: 806330
Indices: SDAX
Listed: Regulierter Markt in Berlin, Frankfurt (Prime Standard),
Düsseldorf, Hamburg, München; Freiverkehr in Hannover,
Stuttgart
End of News DGAP News-Service
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DGAP-News: IKB with Preliminary Figures for Fiscal Year 2007/08
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