De Volksbank posts 2017 net profit of € 329 million

Summary

The implementation of our mission 'Banking with a human touch' led to progress in achieving our shared value objectives and sustained commercial growth.

Customers: the customer-weighted Net Promoter Score rose to -3 (2016: -8); at a market share in new current accounts of 20%, the number of current account customers rose to 1.4 million
Society: the climate-neutral balance sheet rose to 27% (2016: 22%); de Volksbank is the first bank to introduce a quantitative objective for the financial resilience of its customers
Employees: commitment (7.6) and engagement (7.4) remained at the same level but the employee NPS showed a decline to -2 (2016: 30), notably due to the planned staff reductions
Shareholder: at 8.7% the adjusted return on equity, based on a very solid capital position, exceeded the 8% objective (2016: 10.8%)

Net profit remained at a high level, still supported by a net release of provisions for loans, although this release was considerably lower than in 2016

Result: net profit fell slightly to € 329 million (2016: € 349 million)
Net profit adjusted for incidental items decreased to € 316 million (2016: € 374 million); this decrease was mainly driven by a lower net release of provisions for loans
Income: net interest income was marginally lower at € 924 million (2016: € 938 million); the interest margin improved to 1.50% (2016: 1.48%)
Expenses: operating expenses decreased to € 603 million (2016: € 642 million); excluding regulatory levies and incidental items, operating expenses decreased only slightly to € 560 million (2016: 564 million): higher additions to non-credit risk related provisions largely offset the first positive effects of efficiency measures
Retail mortgages: the mortgage portfolio grew by € 1.0 billion to € 45.9 billion thanks to a 41% increase in new mortgage production; the new retail mortgages market share rose to 6.8% (2016: 5.7%)
Quality of the mortgage portfolio: retail mortgages in arrears fell further to € 559 million, 1.2% of total retail mortgages (year-end 2016: € 705 million, 1.5%)
Capital position: the Common Equity Tier 1 ratio rose to 34.1% (2016: 29.2%); the leverage ratio also rose, to 5.5% (2016: 5.2%)
Proposed dividend pay-out for 2017 of € 190 million to NLFI, corresponding to a pay-out ratio of 60% (2016: € 135 million; 41%)

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In 2017, de Volksbank's focus was on putting our strategy, which was revised in 2016, into practice: we aim to be a bank with a distinctive social profile that acts on its customers' needs. To this end, we developed a large number of initiatives in 2017. Examples are the introduction of a unique objective for the financial resilience of our customers, our policy on customer data and the discontinuation of calling in debt collection agencies for customers with payment arrears.

The positive development of customer satisfaction levels, the growth in the number of current account customers, and the increase in climate neutrality of our balance sheet, indicate that we are on the right track. At the same time, return on equity remained above our objective of 8%, along with a very solid capital position. One point of attention is the decline in the employee NPS due to uncertainty about employment in the banking sector as a whole and the efficiency initiatives at de Volksbank.

Thanks to a strong increase in new mortgage production, the total mortgage portfolio rose in 2017, despite a high level of (early) repayments. Net profit remained at a high level, again supported by a release of provisions for loans as a result of an improvement in the quality of our mortgage portfolio. Our capital position remained strong, more than sufficient to absorb the impact of new legislation such as Basel IV and IFRS 9, and to further implement our strategy.

Maurice Oostendorp, Chairman of the Board of de Volksbank

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