Los datos y los conceptos

Table 7: SNS Retail Bank

In € millions 2013 2012 Change

Result

Net interest income 957 705 36%

Net fee and commission income 50 54 (7%)

Investment income 38 23 65%

Result on financial instruments (8) 52 (115%)

Other operating income 6 9 (33%)

Total income 1,043 843 24%

Impairment charges to loans and advances 214 224 (4%)

Other impairment charges 10 4 150%

Total operating expenses 522 479 9%

Other expenses 8 8 0%

Total expenses 754 715 5% Result before tax 289 128 126%

Taxation 105 33 218%

Minority interests - 1

Net result for the period 184 94 96%

One-off items (79) (36) (119%)

Adjusted net result for the period 263 130 103%

Efficiency ratio 50.0% 56.8%

Impairment charges to loans and advances as a % of gross outstanding loans to customers 0.39% 0.40%

Risk-weighted assets Basel II 14,578 13,081 11%

Savings 33,276 32,815 1%

8.3.1 Result 2013 compared to 2012

SNS Retail Bank’s net profit in 2013 increased by € 90 million to € 184 million (+96%). Net profit included a € 7 million one-off gain from the nationalisation measures, consisting of the impact of the expropriation of privately placed subordinated debt and gains from unwinding derivatives related to subordinated debt, partly offset by a € 53 million charge for compensation of holders of expropriated participation certificates. Furthermore, the 2013 net result included a one-off charge of € 86 million net, consisting of results of derivatives related to securitisations of the legacy DBV mortgage portfolio. The securitisations involved are not part of SNS Bank’s regular securitisation programmes and are structured differently in a number of key components. These securitisations contain conditions that the expenses for early settlement of the derivatives contracts under current market circumstances lead to a negative result. In total, a charge of € 86 million net was taken to reflect the potential early settlement expenses of these securitisations. The 2012 net result had included a € 9 million loss on the exchange of Greek government bonds and restructuring charges of € 27 million net. Adjusted for these one-off items, net profit of SNS Retail Bank was € 263 million compared to € 130 million for 2012. The main factor behind this increase was higher net interest income.

8.4 Income

Net interest income showed a considerable increase of € 252 million (+36%) driven by lower interest expenses due to the expropriation of subordinated debt, declining interest rates offered on savings accounts and redemption of relatively expensive term deposits.

In total, retail savings balances increased slightly from € 32.8 billion to € 33.3 billion. After a decline of € 1.3 billion in January, retail savings showed a gradual growth and SNS Retail Bank’s market share in savings recovered to 10.1% (year-end 2012: 10.3%). Bank savings, included in retail savings, continued to increase from € 2.4 billion at year-end 2012 to € 3.0 billion (+25%).

Also SME savings, included in ‘Other amounts due to customers’, rebounded after the nationalisation to € 3.1 billion compared to € 2.9 billion at year-end 2012.

SNS Retail Bank’s residential mortgage portfolio decreased to € 47.0 billion (year-end 2012: € 49.4 billion), due to redemptions in combination with limited sales of new mortgages. Redemptions were significantly higher than 2012 driven by a higher level of prepayments. SNS Retail Bank’s market share in new mortgages was at 1.8% again limited (2012: 2.1%). Given SNS Retail Bank’s improved financial strength after nationalisation, it aims to gradually increase its market share. The distribution share in mortgages already showed a growth in the last months of 2013.

The decrease in loans and advances to customers, in combination with a modest increase in retail funding, led to an improvement of the loan-to-deposit ratio of SNS Retail Bank from 132% at year-end 2012 to 122%.

Net fee and commission income showed a limited decrease to € 50 million compared to 2012 driven by lower fees for payments.

Investment income increased by € 15 million to € 38 million mainly due to € 12 million gains from the expropriation of privately placed subordinated debt and the absence of a loss of € 13 million gross on the exchange of Greek government bonds, partly offset by lower realised gains on fixed-income investments.

The result on financial instruments decreased by € 60 million to € 8 million negative, mainly driven by a € 115 million gross negative result related potential early settlement expenses securitised mortgage portfolios. This was partly

8.5 Expenses

Total operating expenses increased by € 43 million. Operating expenses included a charge of € 53 million for compensation of former holders of the third tranche of participation certificates, as well as a structural additional cost allocation from SNS REAAL holding of € 37 million. This was partly compensated by a release of € 7 million related to adjustments of SNS Retail Bank’s share in the savings guarantee scheme for DSB Bank. In 2012 there had been a release of € 15 million related to DSB Bank and Icesave. Operating expenses in 2012 had also included a restructuring charge of € 37 million. Adjusted for these items, total operating expenses decreased by € 18 million (-4%) mainly driven by a reduction in the number of staff.

The efficiency ratio improved from 56.8% in 2012 to 50.0% driven by higher net interest income, more than absorbing the additional cost allocation from the holding.

Table 8: Breakdown impairment charges SNS Retail Bank

Net fee and commission income 2013 2012 Change

Impairment charges of retail mortgages 173 161 7%

Impairment charges of other retail loans 5 19 (74%)

Impairment charges of SME loans 36 44 (18%)

Total impairment charges to loans and advances 214 224 (4%)

Other impairment charges 10 4 150%

Total impairment charges 224 228 (2%)

Total impairment charges to loans and advances remained high and relatively stable at € 214 million. This equates to 39 basis points of gross outstanding loans compared to 40 basis points in 2012. The high level of impairment charges reflects the fragile economic situation in the Netherlands and lower recovery amounts on mortgages as a result of the pressure on housing prices.

Impairment charges of retail mortgages increased by € 12 million to € 173 million. This equates to 37 basis points of gross outstanding retail mortgages compared to 31 basis points in 2012. Impairment charges in 2013 included an additional provisioning for lower recovery amounts due to the weak housing market, while 2012 included a charge related to the implementation of more stringent risk assessment models.

Impairment charges of other retail loans decreased from € 19 million to € 5 million. Impairment charges in 2012 had included an amount of € 11 million due to the default of one major debtor.

Impairment charges of SME loans decreased to € 36 million compared to € 44 million in 2012, with both years impacted by the fragile economic situation and lower recovery amounts as a result of the pressure on prices of collateral.