Binck Bank

Review of the consolidated results

(x € 1,000)

Customer figures*	FY09	FY08	∆ FY08
Customer accounts	373,574	272,826	37%
Retail	348,188	264,299	32%
Professional Services	25,386	8,527	198%
Number of transactions	9,617,181	7,151,244	34%
Retail	9,144,980	6,807,997	34%
Professional Services	472,201	343,247	38%
Assets under administration	10,942,742	6,065,852	80%
Retail	8,031,695	5,001,484	61%
Professional Services	2,911,047	1,064,368	174%

Income statement
Net interest income	43,825	40,640	8%
Net commission income	129,240	101,181	28%
Other income	9,661	6,162	57%
Result from financial instruments	4,353	1,230	254%
Impairment of financial assets	(857)	(205)	318%
Total revenue from operating activities	186,222	149,008	25%

Employee expenses	43,185	38,443	12%
Depreciation and amortisation	35,939	31,789	13%
Other operating expenses	43,388	37,316	16%
Total operating expenses	122,512	107,548	14%

Result from continuing operations	63,710	41,460	54%

Share in profits of associates and joint ventures	(1,466)	520	-382%

Result before tax	62,244	41,980	48%
Tax	(15,083)	(8,941)	69%
Result after tax (continuing operations)	47,161	33,039	43%
Result after tax (discontinued operations)	-	106	-100%
Net profit	47,161	33,145	42%
IFRS amortisation	28,196	28,196
Fiscal goodwill amortisation	2,792	2,792

Adjusted net profit	78,149	64,133	22%
Average number of shares outstanding during the year	74,897,706	76,870,870
Adjusted earnings per share	1.04	0.83	25%

Balance sheet & capital adequacy
Balance sheet total	2,930,010	2,578,394	14%
Equity	480,359	477,641	1%
Total available capital (Tier 1)	95,569	77,295	24%
BIS ratio	18.4%	17.2%	7%
Solvency ratio	13.0%	13.6%	-4%

Cost / income ratio
Cost / income ratio	66%	72%
Cost / income ratio excluding IFRS amortisation	51%	53%

* The number of accounts for the Retail business unit has been adjusted to reflect the fact that in some cases an account has been opened and an account number allocated, but identification of the account holder has not taken place. Click here for further details. Starting from FY09 Q2, the customer details of the BPO customers are included in the Professional Services business unit. The comparative figures of Professional Services have not been amended.

Adjusted net profit in 2009

In 2009 the adjusted net profit rose by 22% to €78.1 million. This was largely due to the rise in the number of accounts (+37%) and the associated rise in the number of transactions (+34%). Operating expenses rose by 14%, partly because of a number of substantial one-off expenses. The adjusted net profit per share for 2009 was €1.04, a rise of 25% compared with 2008 (€0.83).

Net interest income

The net interest income in 2009 was €43.8 million, compared with €40.6 million in 2008. Interest rates on the money and capital markets fell still further over the last year, and because of this investments and reinvestments had to be made at lower rates than in 2008. Despite the falling market interest rates, BinckBank was able to maintain its interest margin by adjusting the credit interest on the brokerage and savings accounts in line with the diminished return on the investments.

In addition, in March 2009 the stock markets began a strong recovery. This led to a substantial rise of collateralised lending of €182.4 million (+80%), which supported the net interest income. Finally, in 2009 we also saw a rise in customer deposits from €342 million (+20%) to €2.1 billion. The rise in the customer deposits mainly occurred on the brokerage accounts, while the customer deposits on the savings accounts remained at approximately the same level.

Collateralised lending

(in € million)

Net commission income

The net commission income rose from €101.2 million in 2008 to €129.2 million in 2009 (+28%). The rise in the net commission income is dependent on three factors: the growth in brokerage accounts, the average number of transactions per account and the average net commission income per transaction. The growth in the number of brokerage accounts continued unabated in 2009, from 212,005 to 289,170 (+36%), partly as a result of the recovery of the stock markets stimulating many private individuals to start investing. This growth was coupled with a rise in the number of transactions from 7.2 million in 2008 to 9.6 million in 2009 (+34%). The fact that the average return per transaction nevertheless fell from €14.15 in 2008 to €13.44 in 2009 can largely be attributed to the large number of free transactions connected with marketing activities (sprinters and “member gets member” scheme). The higher number of transactions amply compensated for the fall in the average return per transaction, however.

Other income

Among other income, Syntel’s income is included. Syntel’s income rose mainly because of increased activities and the sale of software licences. In 2009 the other income category amounted to €9.7 million.

Result from financial instruments

The net result from financial instruments amounted to €4.4 million at the end of 2009. BinckBank built up its position in securities of financial institutions from the end of 2008. BinckBank reduced a part of this position later in the year for reasons of risk spreading. Thanks to favourable developments on the financial markets this sale was profitable. Alongside this, a number of financial instruments that were no longer compatible with BinckBank’s investment policy were sold at a loss.

Impairments of financial assets

The impairments of financial assets category includes an amount of €0.7 million concerning the downward revaluation of a loan to an associated participation.

Operating expenses

The operating expenses are made up of employee expenses, depreciation and amortisation and other operating expenses. The total operating expenses rose from €107.6 million in 2008 to €122.5 million in 2009 (+14%). Employee expenses rose by €4.7 million, depreciation and amortisation by €4.2 million and other operating expenses by €6.1 million. Despite this absolute rise in expenses the cost/income ratio excluding IFRS amortisation improved from 53% in 2008 to 51% in 2009.

Employee expenses rose as a consequence of the growth in the number of full-time employees from 475 to 526 and the contribution to the provision that had to be made in connection with the notional long term BinckBank phantom shares awarded to executive board members and key staff within the organisation, as well as the proposed termination of this scheme. Because of the substantial rise in the value of BinckBank shares from €5.45 to €12.54, reservations amounting to €3.1 million had to be made for the long term remuneration of the executive board members and key staff within BinckBank.

Depreciation and amortisation rose because BinckBank had to curtail the depreciable life of various components in the data centre as a result of the migration of the old Alex and Binck data centres to the new IT platform. The one-off depreciation expense adjustment on these IT components amounted to €1.7 million. The other operating expenses rose mainly as a result of extra marketing costs for Belgium and France (+ €2,7 million), extra IT consultancy costs connected with the migration of the data centres, advice costs incurred by various revenue-generating projects and costs connected with our new premises.

Finally, BinckBank had to make a contribution to the deposit guarantee system in connection with the bankruptcy of Icesave and Indover, and we have made a provision for the expected costs in connection with our contribution to the deposit guarantee system in connection with the bankruptcy of DSB. In total this means a rise of €3.3 million on other operating expenses for BinckBank.

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Annual report 2009

Review of the consolidated results

Customer figures*

Income statement

Balance sheet & capital adequacy

Cost / income ratio