Baader Bank ends 2018 with a clearly negative consolidated annual result and gains a better starting position for future growth with comprehensive strategic measures
Unterschleißheim, 22 March 2019: As already reported on 22 February 2019, Baader Bank ends financial year 2018 with a negative pre-tax result of EUR -19.4 million (previous year: EUR 4.3 million). Group-wide, total income of EUR 98.1 million (previous year: EUR 121.3 million) was generated.
Net trading and commission income down
Net trading and commission income continue to account for the majority of the overall result (86%). At EUR 40.5 million (previous year: EUR 46.5 million), net commission income once again made a significant contribution and represents around 41% of the Group's earnings. The decline compared to the previous year was kept within limits. The negative effects of the discontinuation of promissory note loans and diminishing margins in the sale of research products as a result of the introduction of MiFID II were almost offset by the acquisition of a large number of new clients, above all in international brokerage. In the capital market business, Baader Bank was able to carry out fewer transactions than in 2017 and suffered a slight decline in earnings despite a record result in Special Execution.
Trading profit generated by the Baader Bank Group fell to EUR 41.0 million in the past financial year (previous year: EUR 57.7 million). It contributed 42% to the Group's total income. The decline in turnover in securities trading on the trading platforms, in which Baader Bank operates its market making business, contributed significantly to the decline in earnings.
The revenue generated exclusively by the Croatian wind farm Selan increased to EUR 13.1 million in 2018 (previous year: EUR 12.1 million).
Net interest income in financial year 2018 is only slightly negative and current income, mainly dividends, is positive. Net interest income and current income, representing less than 1.0% of gross profit, continued to be of secondary importance to the Baader Bank Group's net income performance.
Constant cost base shows cost discipline
Baader Bank countered the negative earnings development with a constant cost base, which was able to somewhat cushion the downturn in the operating business. Total expenses amounting to EUR 117.5 million (previous year: EUR 117.1 million) were relatively stable. This is a testament to the prevailing cost discipline of the Company.
Due to the deteriorating course of business in the second half of 2018, the Board of Directors of Baader Bank decided on further cost reductions, which are reflected in the corresponding expense items as restructuring costs and reduce the overall result in 2018 accordingly. In this context, the pre-tax result is impacted by depreciation, amortisation and write-downs on securities and equity investments, and by allocations for provisions for restructuring measures totalling EUR 10.4 million.
In operational terms, Baader Bank reported consolidated net income of EUR -14.2 million in 2018 (previous year: EUR 7.7 million). Pre-tax earnings amounted to EUR -19.4 million (previous year: EUR 4.3 million), while post-tax earnings stood at EUR -21.3 million (previous year: EUR 2.4 million). The tax expense in the consolidated financial statements is mainly a result of the positive contributions to earnings made by subsidiaries that could not be netted against negative results for tax purposes.
Capital base remains strong
Total assets on the reporting date amounted to EUR 713.2 million (previous year: EUR 764.8 million). The balance sheet equity ratio is 11% (previous year: 13%); the modified equity ratio is 14% (previous year: 16%). Baader Bank AG's total regulatory capital ratio is 14% (previous year: 17%).
Restructuring measures, focusing certain business activities and new products shape the future
While growth in some of our core activities was negative and had a negative impact on earnings, the growth in the new Banking Services business lines, with asset managers, asset management for fund managers and the expansion of activities in new markets and in new products in Brokerage, Research and Market Making, was pleasing.
In response to the significant shift and decline in securities trading volumes, Baader Bank is accelerating its expansion in trading in open order books. In over-the-counter trading, slight sales growth was recorded within Germany in 2018. In the longer term, the aim is to extend OTC activity to non-German markets. In 2018, Baader Bank was mandated to act as a Market Maker for a total of nine IPOs in the Prime Standard segment of the Frankfurt Stock Exchange.
In capital market services, Baader Bank was involved in a total of ten transactions in 2018 with a total volume of around EUR 800 million. The increasingly volatile market environment over the course of the financial year kept many companies from their originally planned IPOs and transactions.
The increased cooperation with asset managers, both digitally and in the traditional sense, in the German-speaking region progressed extremely well in 2018. The number of client deposits recorded an increase of 69% to around 24,500. These had a deposit volume of EUR 3.5 billion, which represents an increase of 40% compared to the previous year. In Asset Management Services, the assets for which Baader Bank acted as portfolio manager on behalf of capital management companies recorded an increase of 25% to EUR 7.62 billion (previous year: EUR 6.10 billion).The number of fund mandates rose from 55 to 60 compared to the previous year.
In September 2018, Baader Bank announced the launch of "Baader Europe" in response to the changing market environment and as a valuable sales tool. With this platform, the inhouse research focusing on companies in Germany, Austria and Switzerland will be expanded to include the European product universe of the cooperation partner AlphaValue. The combined spectrum of Baader Europe products and the traditional Baader Helvea Equity Research thus involves coverage of approximately 600 equities.
The restructuring measures initiated, a more streamlined organisational structure and an adjustment of the strategic alignment of the Group, bank and business lines should, in the medium term, mean that Baader Bank can gradually regain its profitability in what remains a challenging market environment.
Baader Bank's 2018 financial statements will be made available on the Company's website under the heading "Financial Reports" in mid-May 2019 with the convening of the shareholders' meeting.
Overview of key figures
|BAADER BANK GROUP
|of which net interest income and current income
|of which net commission income
|of which net trading income
|of which revenue
|of which other income
|of which personell expenses
|of which administrative expenses and other operating expenses
|of which amortisation and depreciation
|of which additions to the fund for general banking risks
|of which net income from interests in associates
|Earnings before taxes (EBT)
|Operating result *
In accordance with the provisions of the German Commercial Code (HGB)
*Gross profit less personell and other adminstrative expenses as well as depreciation and amortisation on intangible assets and property, plant and equipment
Further information is available from:
Baader Bank AG
Weihenstephaner Strasse 4
85716 Unterschleissheim, Germany
Florian E. Schopf
Head of Group Strategy & Communication
T +49 89 5150 1013
M +49 160 718 88 26
About Baader Bank AG:
Baader Bank is the bank for the capital market. It allows its clients to access international capital markets and to invest in financial products in an effective, efficient and secure manner. The bank uses the latest innovations in the banking industry for products, processes and technology to generate added value for its clients. As a family-run, full-service bank with its headquarters in Unterschleissheim near Munich with 450 employees, it is active in the business lines of Market Making, Capital Markets, Multi Asset Brokerage, Asset Management Services, Banking Services and Research.
Further information can also be found online:
Company website: www.baaderbank.de
22.03.2019 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.
The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases.
Archive at www.dgap.de