BNG Bank Contributes to Financing Socially Relevant Activities - Seite 2

Net profit amounts to EUR 126 million 

In the first half of 2016, BNG Bank posted a net profit of EUR 126 million, down EUR 29 million on the first half of 2015. This decrease is primarily due to the continuously falling long-term interest rates, which have a negative effect on the interest result and the unrealised market value adjustments in the result on financial transactions. The further drop in interest rates in the first half of 2016 was caused mainly by the quantitative easing as a consequence of the European Central Bank's bond-buying programme and by the outcome of the British referendum.

Direct consequences of Brexit-referendum are limited for BNG Bank 

Soon after the outcome of the British referendum had been announced, growth forecasts worldwide were adjusted downwardly. Rating agencies reduced the United Kingdom's rating, based on their expectation that the United Kingdom would go into recession within the next few quarters. Except for the sharp drop in the pound sterling, the share prices of banks and the interest rates, there have been no structural changes yet in risk perception on the financial markets. The direct consequences of the referendum remained relatively limited for BNG Bank. Access to short-term and long-term funding has not been under threat, and the credit and liquidity risk spreads which the bank has to pay have hardly changed.

Contribution to European Resolution Fund 

The bank's contribution to the European Resolution Fund for 2016 was set at EUR 16 million in late April. The contribution was again relatively limited in 2016, because a large number of the loans provided by BNG Bank qualify as promotional loans. When the annual contribution is set, these loans may be deducted in determining the contribution base.

Outlook for 2016 

BNG Bank expects the total amount of new long-term lending to be slightly lower in 2016 than in the previous year. The bank's clients are expected to remain cautious in making new investments, partially as a result of the new regulations, despite the attractive interest levels for investments.

As part of its efforts to increase the leverage ratio, BNG Bank has entered into discussions with a number of municipal and provincial authorities regarding subsequent issues of hybrid capital. Based on these discussions, the bank expects to raise additional Tier 1 capital in the second half of 2016. The issues will depend on factors such as market conditions and the completion time of the approval process of the municipal and provincial authorities concerned. EUR 100 million was already raised in July 2016. By the end of 2017, BNG Bank expects to meet the anticipated European minimum level of 3% with retained earnings and further issuance of hybrid capital.