Report of the Managing Board
Last year defied many people’s pessimistic predictions as the global financial crisis waned somewhat after intensifying in 2008. Macroeconomic indicators turned more positive in 2009 and business activity began a tentative revival.
With strong capitalisation and increased liquidity, NIBC Bank N.V. (NIBC) was well and truly open for business. By moving early to de-risk our portfolio back in 2007 and to raise extra capital from our shareholders in 2008, we had carved out an excellent capital position, which we maintained in 2009 (Tier-1 ratio of 16.2% at 31 December 2009).
Four profitable quarters enabled us to achieve a full-year net profit of EUR 44 million compared to EUR 92 million in 2008, whereby the profit of 2008 was more than fully realised in the (pre-Lehman) first half of 2008. Our sharpened client strategy paid off with a series of high-quality transactions.
We further diversified our funding, ensuring a robust base for years to come. We successfully introduced the online retail savings programme NIBC Direct in Germany in February 2009. NIBC Direct, launched in the Netherlands in 2008, now represents some 20% of total funding. In addition, we raised EUR 5 billion of funding in 2009 under the Dutch State’s Credit Guarantee Scheme.
We applaud the steps the Dutch government took to help companies tackle the crisis, such as the ‘Garantie Ondernemingsfinanciering’ (GO facility) we used to guarantee a loan to shipping company Vroon Group and financing for Jumbo’s acquisition of fellow supermarket operator Super de Boer.
We put our capitalisation and liquidity to work where it mattered: doing transactions for our clients across our sectors, countries and disciplines. Though the weak economy reduced demand for credit, we saw business activity increase throughout the year. Our new corporate loan origination was three times higher in the second half of 2009 than in the first half, while we maintained a prudent approach to credit risk. However, the weak market conditions and phase of the economic cycle caused us to take EUR 59 million of impairments on our corporate loan book for the year.
Our liquidity buffer and higher funding costs dented our net interest income during 2009, though interest income began picking up again in the second half of the year and should increase further in 2010.
We maintained our focus on efficiency and managing operating expenses during 2009, with continued cost reductions and lower variable compensation. We are now growing the business again, and increased staff numbers from 625 to 644 last year. We were pleased to welcome Rob ten Heggeler and Jeroen van Hessen, two highly experienced bankers, to our Managing Board during 2009.
In the financial world as a whole, the crisis has triggered much activity on the corporate governance front. NIBC participated last year in the drafting of the Dutch Banking Code, a voluntary code of conduct to strengthen corporate governance that was agreed by the Dutch Banking Association. While NIBC wholly supports the principles of the Dutch Corporate Governance Code as well as the Dutch Banking Code, and has made sure they are incorporated where relevant in our corporate governance policies, we have also ensured they are aligned with the practices prevailing in private equity-owned environments.
As we enter 2010, the fragile and unpredictable business environment continues to be a risk to NIBC. Though cost cuts have helped clients return to profitability, the recovery is unlikely to trace a straight upward line. Yet demand for credit is returning; and with our ample liquidity we will respond to that by supporting our clients with crystal-clear solutions.
