Annual financial report 2023
apoBank with strong increase in earnings
11.04.2024
Deutsche Apotheker- und Ärztebank (apoBank) ended fiscal 2023 with an increase in net profit to €94.2 million (2022: €65.8 million). This enables apoBank to have its members share in its very good business result to a greater extent than in previous years. The Supervisory Board and the Board of Directors will propose a dividend of 6% at the Annual General Meeting. At €131.9 million, the Bank has also made a much higher allocation to reserves than in the prior year (€46.5 million). That leaves an operating result before tax of €237.9 million (2022: €151.5 million).
The leap in interest rates compared to previous years had a very positive effect on apoBank’s deposit business. Conversely, the higher interest rates had a negative impact on the new lending business – real estate loans in particular. The Bank could not escape the nationwide trend in this regard. The volume of its new lending business, totalling €3.3 billion, was thus significantly below the good prior-year level. Despite the challenging conditions, apoBank was able to expand its portfolio of loans for practice and pharmacy start-ups to €8.3 billion (2022: €8.2 billion).
In the year under review, the asset advisory business with retail clients benefited from a positive market performance and newly procured funds. The deposit volume increased to €11.7 billion (2022: €10.3 billion). The mandated volume in asset management grew by more than €1 billion, reaching €5.9 billion (2022: €4.8 billion).
Matthias Schellenberg, Chair of the Board of Directors: "Looking at the dynamic growth in earnings, 2023 was a very good year – but at the same time it was an exception. We would like our owners to share in our financial success, and together with our Supervisory Board we are therefore proposing a much higher dividend than in the previous year. This clearly shows, membership in our community pays off."
- Net interest income benefits from interest rate turnaround
- Sound development in financing for practices and pharmacies
- Asset management continues to grow
- 6% dividend proposed
Deutsche Apotheker- und Ärztebank (apoBank) ended fiscal 2023 with an increase in net profit to €94.2 million (2022: €65.8 million). This enables apoBank to have its members share in its very good business result to a greater extent than in previous years. The Supervisory Board and the Board of Directors will propose a dividend of 6% at the Annual General Meeting. At €131.9 million, the Bank has also made a much higher allocation to reserves than in the prior year (€46.5 million). That leaves an operating result before tax of €237.9 million (2022: €151.5 million).
The leap in interest rates compared to previous years had a very positive effect on apoBank’s deposit business. Conversely, the higher interest rates had a negative impact on the new lending business – real estate loans in particular. The Bank could not escape the nationwide trend in this regard. The volume of its new lending business, totalling €3.3 billion, was thus significantly below the good prior-year level. Despite the challenging conditions, apoBank was able to expand its portfolio of loans for practice and pharmacy start-ups to €8.3 billion (2022: €8.2 billion).
In the year under review, the asset advisory business with retail clients benefited from a positive market performance and newly procured funds. The deposit volume increased to €11.7 billion (2022: €10.3 billion). The mandated volume in asset management grew by more than €1 billion, reaching €5.9 billion (2022: €4.8 billion).
Matthias Schellenberg, Chair of the Board of Directors: "Looking at the dynamic growth in earnings, 2023 was a very good year – but at the same time it was an exception. We would like our owners to share in our financial success, and together with our Supervisory Board we are therefore proposing a much higher dividend than in the previous year. This clearly shows, membership in our community pays off."
Outlook 2024
For apoBank, the current year will continue to be characterised by the step-by-step implementation of Agenda 2025, which it adopted at the end of 2022. The objective of Agenda 2025 is to grow the customer business, optimise products and processes and make apoBank more profitable. It involves a clear focus on the Bank’s core business, i.e. the financing needs of and asset development for its customers in the health care professions.
Matthias Schellenberg: "With Agenda 2025, we have launched a fitness programme to make us faster, leaner and stronger. We are well on track. Our task now is to make that more visible to our customers." apoBank is working towards introducing a new native banking app and significantly speeding up its loan processes. This will include the possibility to grant initial loans of up to €100,000 online.
In addition to bolstering its financing business and asset advisory services, apoBank has set itself the goal of saving costs by making its processes more efficient and optimising its structures. Initially, the focus was on reducing operating expenditure and optimising processes. Over the next two years, the Bank will cut about 300 jobs across all its business areas and without terminations for operational reasons, mainly via natural attrition, early retirement arrangements and a voluntary programme. At the same time, apoBank is creating new jobs, especially around technological and regulatory topics.
Banks will continue to face many and varied challenges in 2024. There is no sign of any end to global economic uncertainties, and social challenges are on the rise. Precise forecasting therefore remains difficult. "Following the exceptional year 2023, operating income will decrease again, but will still remain well above the level of previous years. We will thus return to our original growth path. We are planning for a net profit on the same level as in 2023. This will once again create the conditions for an attractive dividend," says Chief Financial Officer Dr. Christian Wiermann.
Matthias Schellenberg: "With Agenda 2025, we have launched a fitness programme to make us faster, leaner and stronger. We are well on track. Our task now is to make that more visible to our customers." apoBank is working towards introducing a new native banking app and significantly speeding up its loan processes. This will include the possibility to grant initial loans of up to €100,000 online.
In addition to bolstering its financing business and asset advisory services, apoBank has set itself the goal of saving costs by making its processes more efficient and optimising its structures. Initially, the focus was on reducing operating expenditure and optimising processes. Over the next two years, the Bank will cut about 300 jobs across all its business areas and without terminations for operational reasons, mainly via natural attrition, early retirement arrangements and a voluntary programme. At the same time, apoBank is creating new jobs, especially around technological and regulatory topics.
Banks will continue to face many and varied challenges in 2024. There is no sign of any end to global economic uncertainties, and social challenges are on the rise. Precise forecasting therefore remains difficult. "Following the exceptional year 2023, operating income will decrease again, but will still remain well above the level of previous years. We will thus return to our original growth path. We are planning for a net profit on the same level as in 2023. This will once again create the conditions for an attractive dividend," says Chief Financial Officer Dr. Christian Wiermann.
Results for fiscal 2023 in detail
Compared to the previous year, net interest income was up by about a quarter. Here, apoBank benefited from higher interest rates, while refinancing costs in the customer business were moderate. Net interest income rose to €970.2 million (2022: €766.4 million).
Net commission income dropped by 3.2% to €178.3 million (2022: €184.1 million). Increases in revenues from payment transactions were not high enough to offset lower revenues from brokerage commissions and the securities business with customers. Regarding this item, it should also be noted that the Bank began to divest itself of its custodian function in 2023.
General administrative expenses remained stable in the year under review at €738.8 million (2022: €737.3 million). Personnel expenses, in particular, rose as a result of provisions for HR measures and higher wages and salaries. Operating expenditure including depreciation declined. Lower project costs, reduced regulatory fees and lower expenditure on services more than compensated for the higher expenditure on bank operations.
On balance, operating income, i.e. profit before risk provisioning, increased significantly, to €433.9 million (2022: €241.1 million).
Risk provisioning for the operating business was at -€64.1 million (2022: -€43.1 million). This rise is attributed mainly to individual cases in the corporate clients portfolio. In the retail customers portfolio, risk provisioning was lower than planned, although it was still higher than the previous year’s level. apoBank recorded a significant decline in hidden burdens in financial instruments in the investment portfolio. These fell markedly to €283.0 million (2022: €451 million).
Overall, apoBank was in a position to significantly boost its reserves. It made risk provisions with reserve character amounting to -€131.9 million (2022: -€46.5 million). Tax expenditure rose to €143.7 million (2022: €85.7 million) due to the increase in earnings. This left a net profit after tax of €94.2 million (2022: €65.8 million).
The balance sheet total decreased by 6.4% to €50.7 billion (2022: €54.2 billion). This decline was due mainly to lower customer deposits and a smaller customer loan portfolio. The common equity tier 1 capital ratio was 16.7% (2022: 15.8%), and the total capital ratio 18.0% (2022: 17.6%). Both ratios were thus at sound levels.
Net commission income dropped by 3.2% to €178.3 million (2022: €184.1 million). Increases in revenues from payment transactions were not high enough to offset lower revenues from brokerage commissions and the securities business with customers. Regarding this item, it should also be noted that the Bank began to divest itself of its custodian function in 2023.
General administrative expenses remained stable in the year under review at €738.8 million (2022: €737.3 million). Personnel expenses, in particular, rose as a result of provisions for HR measures and higher wages and salaries. Operating expenditure including depreciation declined. Lower project costs, reduced regulatory fees and lower expenditure on services more than compensated for the higher expenditure on bank operations.
On balance, operating income, i.e. profit before risk provisioning, increased significantly, to €433.9 million (2022: €241.1 million).
Risk provisioning for the operating business was at -€64.1 million (2022: -€43.1 million). This rise is attributed mainly to individual cases in the corporate clients portfolio. In the retail customers portfolio, risk provisioning was lower than planned, although it was still higher than the previous year’s level. apoBank recorded a significant decline in hidden burdens in financial instruments in the investment portfolio. These fell markedly to €283.0 million (2022: €451 million).
Overall, apoBank was in a position to significantly boost its reserves. It made risk provisions with reserve character amounting to -€131.9 million (2022: -€46.5 million). Tax expenditure rose to €143.7 million (2022: €85.7 million) due to the increase in earnings. This left a net profit after tax of €94.2 million (2022: €65.8 million).
The balance sheet total decreased by 6.4% to €50.7 billion (2022: €54.2 billion). This decline was due mainly to lower customer deposits and a smaller customer loan portfolio. The common equity tier 1 capital ratio was 16.7% (2022: 15.8%), and the total capital ratio 18.0% (2022: 17.6%). Both ratios were thus at sound levels.
apoBank’s key data
| € millions | 2023 | 2022 | change in %1 |
|---|---|---|---|
| Net interest income | 970.2 | 766.4 | 26.6 |
| Net commission income | 178.3 | 184.1 | -3.2 |
| General administrative expenses | -738.8 | -737.3 | 0.2 |
| Balance of other operating income/expenses | 24.3 | 27.8 | -12.5 |
| Operating profit before risk provisioning | 433.9 | 241.1 | 80.0 |
| Risk provisioning from the operating business | -64.1 | -43.1 | 48.7 |
| Risk provisioning with reserve character | -131.9 | -46.5 | >100 |
| Operating result | 237.9 | 151.5 | 57.1 |
| Taxes | -143.7 | -85.7 | 67.6 |
| Net profit after tax | 94.2 | 65.8 | 43.3 |
| in % | 2023 | 2022 | pts |
|---|---|---|---|
| Equity ratio | 18.0 | 17.6 | 0.4 |
| Common equity tier 1 ratio | 16.7 | 15.8 | 0.9 |
| €millions | 2023 | 2022 | change in %1 |
|---|---|---|---|
| Balance sheet total | 50,727 | 54,184 | -6.4 |
| Customer loans | 35,309 | 37,008 | -4.6 |
| Customer deposits | 29,422 | 33,934 | -13.3 |