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DGAP-News: IKB Deutsche Industriebank AG: Results for the financial year 2013/14

June 17, 2014

DGAP-News: IKB Deutsche Industriebank AG / Key word(s): Final Results IKB Deutsche Industriebank AG: Results for the financial year 2013/14 18.06.2014 / 08:00 --------------------------------------------------------------------- IKB Deutsche Industriebank: Results for the financial year 2013/14 - Consolidated net income: EUR 32 million (2012/13: consolidated net loss of EUR 143 million) - Addition to the fund for general banking risks (common equity tier 1 capital) of EUR 402 million - IKB Group common equity tier 1 ratio (CET 1 ratio): 10.4% - IKB receives report on special audit under German stock corporation law [DÜsseldorf, 18 June 2014] In the financial year 2013/14 (1 April 2013 to 31 March 2014), the IKB Group generated consolidated net income of EUR 32 million after a consolidated net loss of EUR 143 million in the previous year, and strengthened its common equity tier 1 (CET 1) capital by EUR 402 million by making an addition to the fund for general banking risks. IKB used the positive capital market environment to realise valuation gains on financial instruments in its liquidity portfolio, while tax income and the higher level of net interest income also played a substantial role in the improved results of operations. The IKB Group had a CET 1 ratio of 10.4% as of 31 March 2014. The consolidated income statement for the 2013/14 financial year is composed as follows: Table: IKB consolidated income statement in accordance with the German Commercial Code (HGB) 1.4.2012 1.4.2013 to EUR million to 31.3.2014 31.3.2013 Change Net interest and lease income 310 210 100 Net fee and commission income 29 5 24 Net trading income 6 1 5 Administrative expenses -285 -304 19 Personnel expenses -161 -159 -2 Other administrative expenses -124 -145 21 Net other income* -73 21 -94 Net risk provisioning -87 -71 -16 Taxes 133 -6 139 Consolidated net income/loss 32 -143 175 Some totals may be subject to discrepancies due to rounding differences. * incl. addition to the fund for general banking risks of EUR 402 million The Group's net interest and lease income rose by EUR 100 million in the period under review to EUR 310 million (previous year: EUR 210 million), largely as a result of the more favourable refinancing conditions compared with the previous year. Net commission income increased from EUR 5 million in the previous year to EUR 29 million; this was due in particular to the absence of SoFFin guarantee expenses in the year under review. Administrative expenses were reduced by EUR 19 million to EUR 285 million. Personnel expenses climbed by EUR 2 million to EUR 161 million, while other administrative expenses declined by EUR 21 million to EUR 124 million. Net other income amounted to EUR -73 million (previous year: EUR +21 million). The main reasons for this development were the addition to the fund for general banking risks in the amount of EUR 402 million - which was recognised as an expense in net other income, with the CET 1 capital of IKB increasing by a corresponding amount - and the net gain on financial instruments totalling EUR 289 million. Net risk provisioning increased by EUR 16 million, from EUR -71 million to EUR -87 million, but remained at a moderate level when compared over several years. Tax income amounted to EUR 133 million in the period under review (previous year: tax expense of EUR 6 million). The recognition of deferred taxes in profit or loss resulted in income of EUR 101 million, while the reversal of tax provisions no longer required led to income of EUR 48 million. This was offset by expenses for current and other taxes in the amount of EUR 16 million. The Group's total assets declined by EUR 2.9 billion in the period under review and amounted to EUR 24.7 billion at the reporting date. As of 31 March 2014, the CET 1 ratio calculated in accordance with the Capital Requirement Regulation (CRR) for the IKB Group amounted to 10.4% and the total capital ratio amounted to 16.1%. Earnings of IKB AG and loss participation of hybrid securities IKB AG recorded a net result of EUR 0 in the financial year 2013/14 (previous year: net loss of EUR 162 million). The following financial instruments participate in this result by way of deferral of interest/distributions: DE0002731197, DE0002731429, DE0002731569, DE000A0GF758, DE0007490724, DE000A0AMCG6, DE0008592759, XS0194701487. There was no change in the repayment amount of hybrid securities as a consequence of the net result of IKB AG for the year under review. Profit participation certificates issued by IKB AG The table with the loss participation of profit participation certificates is available at https://www.ikb.de/en/press/news/. Silent partnership interests in the commercial enterprise of IKB AG securitised by way of securities issued by Capital Raising GmbH and Hybrid Raising GmbH The table with the loss participation of silent partnership interests is available at https://www.ikb.de/en/press/news/. Under certain circumstances set out in the terms and conditions of the profit participation certificates and the silent partner contributions, the reduced repayment claims of the profit participation certificates and the carrying amounts of the silent partner contributions can be replenished in future periods. Were such a claim to arise in a financial year, this would reduce the net retained profits available for distribution for the financial year in question. In addition, under specific conditions set out in the terms and conditions of the profit participation certificates, holders of profit participation certificates may be entitled to the subsequent payment of deferred interest in future periods, which would also reduce the net accumulated profits available for distribution for the financial year in question. However, the loss of interest on the other securities listed here is final. Special audit under German stock corporation law IKB has now received the special audit report on the investigation as to whether members of the Board of Managing Directors or the Supervisory Board committed breaches of duty in connection with certain transactions relating to the crisis at IKB. IKB has petitioned the court to have the personal data of employees of the Bank and other organisations redacted in the report due to data protection considerations. The inclusion of the full names of the members of the Board of Managing Directors and the Supervisory Board is not affected by the redaction proceedings. IKB expects the special audit report to be submitted to the commercial register in the applicable version once the redaction proceedings are concluded. Shareholders will be entitled to request a copy of the report from this date. Once the redaction proceedings are concluded, the Board of Managing Directors will include the special audit report as an agenda item when convening the next Annual General Meeting. The report comes to the conclusion that the former members of the Supervisory Board were not responsible for breaches of duty in connection with the events that triggered the crisis. Although the special audit report identifies individual breaches of duty for former members of the Board of Managing Directors, these breaches of duty did not lead to the subsequent crisis at IKB or there is insufficient certainty that this was the case. The Supervisory Board will assert claims for damages against individual former members of the Board of Managing Directors due to a violation of publication requirements at the end of July 2007. Outlook In Germany, IKB expects the relatively low level of credit demand among companies and the high competitive intensity in the Mittelstand banking market to remain unchanged. For the financial year 2014/15, the Bank expects to see a slight reduction in receivables from customers, as new lending business is likely to be more than offset by repayments in the lending business and asset-side reductions. The Bank will continue to be selective when it comes to new lending business in the financial year 2014/15 in order to generate appropriate income for the risks undertaken and to account for additional and heightened requirements imposed by the banking authorities at an early stage. The liability side of the balance sheet will be largely characterised by customer deposits, public programme loans for customers and repurchase agreements. IKB will continue to work on expanding its tier 1 capital and reducing its risk-weighted assets in order to increase its CET 1 ratio. The various regulatory measures mean that a continued reduction in administrative expenses in the near future is difficult. IKB will maintain its focus on improving the efficiency of its processes. The Bank expects the positive trends on the capital markets to continue, as they already have in the first few months of the financial year 2014/15, and assumes that positive operating results can again be generated from earnings in operating business in the current financial year. Servicing the compensation agreements of a total amount of EUR 1,151.5 million and the value recovery rights of the hybrid investors mean that, even if IKB AG generates an operating profit, it will probably not report any, or only minimal, net income for a long time to come. To the extent that net income is reported in future, the reduction in net accumulated losses and the backpayment of bank levies will mean that it is still not possible to distribute a dividend to the shareholders of IKB AG. Further details on developments in the 2013/14 financial year can be found in the 2013/14 annual report at https://www.ikb.de/en/investor-relations/financial-reports.IKB Deutsche Industriebank AG supports small and medium-sized enterprises in Germany and Europe with loans, risk management, capital market services and advisory services. Contact: Dr. JÖrg Chittka, telephone: +49 211 8221-4349; Armin Baltzer, telephone: +49 211 8221-6236, fax: +49 211 8221-6336, e-mail: presse@ikb.de End of Corporate News --------------------------------------------------------------------- 18.06.2014 Dissemination of a Corporate News, transmitted by DGAP - a company of EQS Group AG. The issuer is solely responsible for the content of this announcement. DGAP's Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------- Language: English Company: IKB Deutsche Industriebank AG Wilhelm-BÖtzkes-Straße 1 40474 DÜsseldorf Germany 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 Listed: Freiverkehr in Berlin, DÜsseldorf, Hannover, Stuttgart; Frankfurt in Open Market (Entry Standard) End of News DGAP News-Service --------------------------------------------------------------------- 274122 18.06.2014


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