NIBC delivers strong performance with 18% growth in core business over 2022
Financial Press Release - 3 Mar 2023, 08:00 CET
- NIBC had a strong year with an underlying net profit of EUR 179 million (2021: EUR 193 million) before a non-recurring net loss of EUR 23 million mainly related to the sale of two non-core portfolios.
- Strong performance of the core portfolios:
- the mortgage portfolio grew 15% to EUR 25.5 billion, including Originate-to-Manage business
- the Asset-Backed Finance segment increased its exposure by 25%
- platforms Beequip and yesqar continue to report strong growth, with the portfolio reaching EUR 1.4 billion, up 53%
- Non-core portfolio reduced by 29% to EUR 3.8 billion.
- Recurring interest income increased to EUR 420 million (+8%), driven by the positive development of our core portfolio volumes and improved funding costs.
- The cost/income ratio of 48% includes continued investments in our IT environment, process improvements and strategic projects.
- Credit losses amount to EUR 30 million (2021: EUR 37 million).
- Strong capital position with a CET 1 ratio of 17.8% (2021: 18.4%), absorbing additional regulatory requirements, and a return on equity of 9.9%.
Statement of the CEO
“The successful execution of our focused strategy is reflected in the growth of our core activities: Mortgages, Asset-Backed Finance and Platforms. Across these asset classes, exposure increased by a total of EUR 4.8 billion, also adding new clients. Furthermore, our retail savings grew by EUR 0.4 billion. On the other hand, our non-core activities were reduced by EUR 1.6 billion. On behalf of NIBC, I am thankful for the trust of all clients, existing and new, as they have chosen us to support them in achieving their ambitions.
Looking back at 2022, I am proud that NIBC has been able to make these major steps. These positive developments were achieved against the backdrop of economic uncertainty with flaring inflation, hampered supply chains and the global tensions following the war in Ukraine. Looking at the composition of our balance sheet, we have made good progress in transforming NIBC into a true asset-based financier. In light of this transformation, I am happy to introduce NIBC’s new brand proposition, which reflects our modern and to-the-point approach to fulfilling our purpose, which is to enable ambitions by financing assets.
With this transformation in mind, I am even more proud to report a strong financial performance as well. A net profit of EUR 179 million or a return on equity of 9.9% excluding non-recurring results of EUR 23 million illustrates that our focus on asset-based financing provides an outstanding basis for future growth. Together with our strong capital position, reflected in a CET I ratio of 17.8%, we are well-positioned to continue to provide asset financing to both individuals and companies ranging from private housing to rental property, commercial real estate, vessels, data centres, fibre networks, cars and equipment.
Based on our core values (professional, adaptive, collaborative, entrepreneurial), we are and will continue to be an entrepreneurial financing partner to our clients. Recognition of our commitment to servicing our clients is illustrated by the increased client satisfaction scores from both retail and corporate clients as well as by receiving the ‘best mortgage lenders of 2022’ for both NIBC Direct and Lot Hypotheken, awarded by market professionals. In 2022, we saw our Mortgage Loan portfolio increase further to EUR 25.5 billion, an increase of 15%. Loan exposures within the Asset-Backed Finance segment increased by 25%, driven by strong origination and double-digit growth in all of its asset classes. Our financing platforms, including Beequip, the largest alternative financier of equipment in the Netherlands, and yesqar, a financier to the automotive businesses, continued their strong growth with a year-on-year increase of 53% in these portfolios, passing the EUR 1 billion milestone in 2022 and growing to EUR 1.4 billion.
The non-recurring result relates to the steps taken to reduce exposure in the non-core portfolios. Through portfolio transactions, we have sold both the Offshore Energy and the Leveraged Finance portfolios and additionally, we have sold several structured finance exposures. We have also decided that our CLO platform and the investment franchise (NIBC investment Partners) are no longer considered as core activities. In combination with our continued efforts to further reduce our non-core exposures in active dialogue with our clients, we have been able to reduce the non-core exposures by 29%, to EUR 3.8 billion, with the ambition to further reduce this in 2023 to below EUR 2.0 billion. These steps have led to further de-risking of the balance sheet of NIBC. As a consequence, we have decided to adjust our medium-term objective for the CET I ratio, as lower risks translate into lower capital requirements. Going forward, we will steer on a CET I ratio of 13% as our new medium-term objective.
As sustainability is part of our targeted strategy, we continue to actively manage our ESG profile. We are well positioned to contribute to a more sustainable, resilient and inclusive future for the communities we serve. In 2022, we have sold our Offshore Energy portfolio, taking an important step towards our net-zero ambition by putting our promises in the Climate Action Plan into practice. Our ‘green’ mortgage label Lot was nominated for the SEH Sustainability Award, as one of the most progressive mortgage lenders to actively incorporate sustainability into its mortgage policy. In April, our North Westerly CLO VII was awarded European ESG Deal of the Year. Through all these steps, we continue to align our activities and portfolios with our overall business strategy, which integrates a balanced ESG approach.
I would like to thank Herman Dijkhuizen for his contribution to the development of NIBC over the past 9.5 years. He has had a major contribution to bringing NIBC where it is today, a well-performing and well-capitalised bank. I look forward to working with Claire Dumas, who will succeed Herman Dijkhuizen as Chief Financial Officer and member of NIBC's Managing Board per 1 April 2023.
I am grateful for the commitment and dedication of our people towards their work and our clients. The past year has, in different and unexpected ways, been demanding for our people as well as our clients. Looking ahead, we understand the nature of the challenges before us as well as the opportunities. Economic conditions are likely to remain challenging. Nevertheless, NIBC is well-positioned to face these challenges and continue the execution of its business strategy as a focused asset-based financier. Supported by our ‘Think Yes’ mentality, the entrepreneurial spirit of our people and today’s results, we are moving into 2023 with confidence. We will continue to be there for our clients, now and in the future.”