NWB Bank sees lending and profit increase in first half of 2021

  • New lending to the public sector increased to €6.1 billion (first half of 2020: €4.1 billion)
  • Sustainable finance portfolio continued to grow through financing of the Climate Fund for Agriculture and the energy-neutral A6 motorway, among others
  • Net profit increased as well, to €67.0 million (first half of 2020: €39.4 million)
  • The dividend payout for 2019 and 2020 will be resumed as soon as possible after 30 September

 

NWB Bank saw its lending and profit increase in the first six months of 2021. Lending in the first half of the year amounted to €6.1 billion compared with €4.1 billion last year. Net profit for the first half of 2021 amounted to €67.0 million (H1 2020: €39.4 million). Once again, the bank did not suffer any impairment losses in the first six months, and the quality of the loan portfolio remains high. Total assets at the end of June were €108 billion (YE 2020: €107 billion).

 

The sustainable water bank

NWB Bank positions itself as the sustainable water bank of and for the public sector. By providing appropriate financing at the most favourable terms to its clients, the bank helps to alleviate the financial burden on citizens and minimise the costs of enhancing sustainability. Core clients such as the water authorities, housing associations and municipalities play an important role in the energy transition, and lending to these clients in particular has increased substantially in the past six months. Financing for the water authorities, for example, amounted to more than €800 million during this period.

Other organisations and projects in the public sector that involve water and/or sustainability are also eligible for financing. For example, earlier this year, the bank launched the Climate Fund for Agriculture with the Nationale Groenfonds and Rabobank. This is the first fund aimed at financing projects that help to achieve the goals of the Ministry of Agriculture, Nature and Food Quality (LNV) under the National Climate Agreement. In addition, the bank has joined forces with the European Investment Bank (EIB) to refinance the widening of the A6, the first energy-neutral motorway in the Netherlands, which opened in July 2019.

Stable funding

In the past year, NWB Bank was again in a good position to fund itself. In total, the bank raised €3.75 billion in long-term loans on the international capital market, €1 billion of which was in the form of sustainable bonds: a €500 million Water Bond and an SDG Housing Bond also worth €500 million. In addition, the bank made use of the targeted longer-term refinancing operation (TLTRO) of the European Central Bank (ECB) for an amount of €1 billion after €10 billion had already been raised in this way in 2020.

Ample capital and liquidity ratios

NWB Bank’s capital and liquidity ratios remain strong. The Tier 1 ratio, including interim net profit, was 47.8% (year-end 2020: 54.4%). The decrease of the ratio is in line with the bank’s strategy, which leads to more risk-weighted lending but is also the result of the fact that the bank now has to hold more capital for risks that evolve from its derivatives positions. At 201%, the Liquidity Coverage Ratio at the end of June was comfortably above the minimum requirement of 100%, as was the Net Stable Funding Ratio of 140%.

As of 30 June, the leverage ratio (including profit for the current financial year) stood at 8.3%. That is well above the 3% requirement that went into force on 28 June 2021. As a promotional bank, NWB Bank is allowed to exclude its lending to the public sector when calculating the leverage ratio.

 Healthy profit and resumption of dividend payout

Thanks in part to the high volume of lending and higher net interest income, profit is at a healthy level. Just as in 2020, the participation in the TLTRO in the first half of 2021 contributed to this level of profit. The favourable rate of the TLTRO is valid for the initial two years, under certain conditions, but the lending that stands in return, and to which the favourable rate is passed on, has longer maturities. Consequently, the bank’s net interest income will shift over time.

NWB Bank does not pursue profit maximisation, but making a reasonable profit is necessary to achieve the bank’s ambitions and distribute an appropriate dividend. With regard to the latter, the bank will resume the dividend payment for the 2019 and 2020 financial years to its shareholders as soon as possible after September 30. This will involve an amount of approximately €47 million for 2019 and €45 million for 2020. The bank is able to make the payment because in late June the ECB announced it would not extend its recommendation to banks to withhold from paying dividends after September 30 and because the bank has a strong capital position.

Outlook

The bank expects the net profit in 2021 to be higher than in 2020. However, given the uncertainties surrounding the COVID-19 crisis, the bank is cautious about the development of financing rates in the international money and capital markets, the market value development of the liquidity portfolio and any impact caused by the benchmark reform. The water authorities are likely to require additional financing in the near future as a result of recent flooding caused by heavy rainfall. The bank is ready to provide them with this.

 

HEADLINE FIGURES (in millions of euros)

 

 

 

BALANCE SHEET

30 June 2021

31 December 2020

Long-term loans and advances (nominal value)1

50,488

49,844

Equity2

1,847

1,782

Tier 1 capital2

2,150

2,085

Total assets

108,417

106,882

Risk-weighted assets

4,502

3,833

 

 

 

RESULTS

30 June 2021

31 December 2020

Net interest income

138

244

Results from financial transactions

-12

-55

Operating income

126

189

Operating expenses

15

42

Bank tax and resolution levy

6

123

Impairment of receivables

-

-

Extraordinary income

-

-

Tax on profit from ordinary operations

384

54

Net profit

67

81

 

 

 

DIVIDEND

30 June 2021

31 December 2020

Dividend

-

             45.0

Dividend (in euros per share)

-

762.9

 

 

 

RATIO’S (%)

30 June 2021

31 December 2020

Tier 1 ratio2

             47.85

54.45

CET 1 ratio2

40.66

46.06

Cost/income ratio7

12.2

22.2

Dividend payout ratio

-

55.9

Leverage ratio8

8.39

13.5

Leverage ratio (not adjusted for promotional assets)10

2.711

2.512

Liquidity Coverage Ratio

201

150

Net Stable Funding Ratio

140

122

 

 

 

CSR

30 June 2021

31 December 20200

Volume newly issued sustainable bonds

1,000

4,531

CO2 emission equivalent from operating activities p.p. (in tonnes)

0.7

1.5

CO2 emission equivalent PCAF portfolio coverage (in %)

9513

9514

CO2 emission equivalent loan portfolio (in kton)

1,59513

1,59514

 

1)    loans including interest-bearing securities provided to regional authorities

2)    including profit for the financial year less dividend

3)    including a restitution of €15 million for the years 2016 to 2018

4)    applying the effective tax burden as a result of the bank levy to be paid in October

5)    46.3 excluding profit for the year (2020: 53.5)

6)    39.1 excluding profit for the year (2020: 45.1)

7)    'cost' concerns operating expenses and 'income' concerns the operating income

8)    including profit for the financial year less dividend, taking into account the calculation for promotional banks according to CRR II as of 27 June 2019 and without applying Decision (EU) 2020/1306 of 16 September 2020 on the temporary exclusion of certain exposures to central banks from the total exposure measure in view of the COVID-19 pandemic (ECB/2020/44))

9)    50.5 including the Decision (EU) 2020/1306 of 16 September 2020 on the temporary exclusion of certain exposures to central banks from the total exposure measure in view of the COVID-19 pandemic (ECB/2020/44))

10)  including profit for the financial year less dividend, not taking into account the proportional calculation for promotional banks

11)  2.6 (2020: 2.4) not taken into account Decision (EU) 2020/1306 of 16 September 2020 on the temporary exclusion of certain exposures to central banks from the total exposure measure in view of the COVID-19 pandemic (ECB/2020/44))

12)  2.1 (2020: 2.4) excluding profit for the current financial year and applying Decision (EU) 2020/1306 of 16 September 2020 on the temporary exclusion of certain exposures to central banks from the total exposure measure in view of the COVID-19 pandemic (ECB/2020/44))

13)  will be updated at the end of the financial year

14)  based on 94.5% of the loan portfolio (2019: 95.1%); the 2019 figure is recalculated to the most actual methodology

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Simon Zwagemakers
Head of Legal & Corporate Affairs / Corporate Secretary
+31 6 574 579 06
+31 70 416 62 59
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