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Solid financial performance 1H 2018 with further stabilisation of net interest income and a strong performance in insurance
6 September 2018
Argenta continuously strengthens its foundations in order to improve customer’s service, and this increasingly in a digital way. The first half of 2018 was marked by the launch of our new banking platform which will now allow us to accelerate further enhancements to our digital offering.
At group level the net profit for the first half of 2018 reached 94 million euros, compared to 109 million euros in the first half-year of 2017. Client funds under management (banking and insurance combined) continues its growth trajectory with 3 % to 45.3 billion euros.
Argenta Spaarbank’s clients’ funds under management grew further to 39.3 billion euros. New loans were accorded for 2.2 billion euros, 20 % more in Belgium than in the first half-year of 2017, 9 % less in the Netherlands reflecting increased competition.
Net interest income has increased as a result of further diversification of funding sources from retail to wholesale with a second securitization of Dutch NHG mortgages as well as due to decreasing hedging cost as matured expensive hedging derivatives have been replaced. This has more than offset continued pressure on new loan margins on mortgages and lower reinvestment yields in the investment portfolio while funding cost for Belgian retail funding is at the legal floor. The roll out of the strategic diversification towards fee income continued with 13% growth in revenue to 49 million euros. Operating expenses increased with continued investment in improving the ICT base platforms, digitalisation and higher bank levies. As a result, net profit for the first half of 2018 was 71 million euros, compared to 77 million euros in 1H 2016. The liquidity position and capital buffers remain very strong.
Argenta Assuranties posted a net result of 28 million euros, compared to 33 million euros in the first half-year of 2017. Less favourable claims evolution with severe weather in January result in a lower profit from non-life Insurance.
Marc Lauwers, CEO: “Clients’ confidence in Argenta remains strong. The introduction of the new banking platform was more difficult than expected, but the impact on results is negligible. Simultaneously this further reinforces our intention to enhance customer experience. New clients continue to find Argenta and appreciate the high-quality and competitively priced product offer, accessible via our branch network, but increasingly via mobile and internet banking. More and more Argenta customers are using these digital channels, our branch network however remains the most important growth driver. Both in deposit taking, as in lending, we achieved our objectives without any compromise on our prudent risk standards.”
Geert Ameloot, CFO: “The strategic initiatives of diversification of revenue sources with fee income derived from the distribution of retail investment funds and diversification of funding sources to wholesale funding supports our financial performance in the first half of 2018. Despite the effects of the persisting low interest rate environment giving pressure on new and repricing asset yields, increased competition in the mortgage loan market and the legal floor on Belgium retail funding the net result of the bank is solid at 71 million euros1. Together with our excellent solvency and liquidity buffers, we are well positioned for further growth.”
For the full press release, we refer to the pdf below.