comdirect: Half-year pre-tax profit of €87.9m
- Earnings of more than €216m in the first half-year
- Non-recurring effect from VISA transaction of around €41m
- Profitability target for 2016 as a whole: more than 19% return on equity before tax
- On the way to becoming the first choice in saving, investing and trading with securities: 28,000 more custody accounts and €3.5bn net fund inflows to custody accounts
Quickborn. The comdirect group closed the first half of 2016 with a pre-tax profit of €87.9m. Behind the significant increase on the previous year (€51.3m) is the non-recurring income of around €41m before taxes announced in January and resulting from the membership of VISA Europe and its integration in VISA Inc. USA. The market-related decline in net interest income and net commission income was almost made up for by active cost and investment management. “Overall, we can look back on a reasonable first half-year”, said Arno Walter, CEO of comdirect bank AG. “We are seeing profitable growth, we are delivering good results and we are developing further strategically. This is demonstrated by the many new products that we have introduced in recent months, from the comdirect trading app to our own consumer loan. We are one of Germany’s most profitable retail banks: we are striving for a return on equity of more than 19% for the year as a whole. This corresponds to a pre-tax profit of around €110m for the year as a whole.”
The comdirect group generated total income of €216.1m in the first six months of the year (previous year: €190.3m). Of this, €41.1m was attributable to the extraordinary income from the VISA transaction, which is reported in the result from financial investments. At €108.4m, net commission income remained at a high level, although it was 7% below the previous year’s record level (€116.1m). The fall is primarily due to the sunken level of the share price, which had an impact on the sales follow-up commission from the funds business and led to a lower average order volume. It is also down to a change in the composition of trades in the B2C business line. At 7.5 million, the number of B2C trades was slightly above the previous year’s level (7.4 million) due to the high volatility, particularly at the start and end of the half-year. In view of the still worsened interest environment, net interest income after provisions for possible loan losses fell 9% below the previous year’s figure (€69.0m) to €63.0m. The administrative expenses of €128.2m fell 8% below the previous year’s figure (€138.9m). The decline is due to the active management of other administrative expenses with a focus on the strategic orientation and current market environment. The previous year’s value includes significantly higher other administrative expenses, associated, in particular, with the launch of the “Bank. Reenvisioned.” campaign.
The number of customers in the B2C business line (comdirect bank AG) has increased by 33 thousand to 2.034 million since the start of the year. Over the same period, the number of custody accounts rose by 28 thousand to 972 thousand and the number of current accounts increased by 44 thousand to 1.310 million. Despite the significant share price decreases, total assets under custody rose to €41.1bn in the first half-year, compared with €39.9bn at the end of 2015. Net fund inflows stood at €2.5bn, of which €1.8bn was invested in custody accounts (previous year: €0.5bn). According to Walter, “Our customers are increasingly investing in shares and securities savings plans and are not leaving their money to languish in noninterest- bearing accounts. We are very satisfied with this development. This is precisely the core of our strategy: using innovative and smart solutions to get our customers excited about investing, saving and trading with securities.” He continued by saying that this would be the focus of product development. As examples of new products, Walter mentioned the comdirect trading app, the extended range of shares savings plans and the bonus savings scheme, with which customers can incidentally invest in ETFs and thereby in their asset accumulation through online shopping discounts.
At 987 thousand, the number of customers in the B2B business line (ebase GmbH) in the first six months almost reached the level at the end of 2015 (988 thousand). The closures of custody accounts for capital-building payments usual in the spring were compensated for by new business. Despite the fallen level of the share price, total assets under custody rose slightly to €26.1bn (end 2015: €25.6bn). Net fund inflows, which were almost entirely attributable to the portfolio volume, stood at €1.8bn. This is partly due to a new partner who transferred their portfolio volumes to ebase.
The comdirect group’s total number of customers climbed to a record high of 3.021 million during the first half-year and its total assets under custody rose to €67.2bn (year-end 2015: €65.5bn). Net fund inflows to the group stood at €4.3bn overall, of which €3.5bn flowed into custody accounts.
“We have a clear aim for the second half of the year: we want to show our customers that we are earning their trust”, said Walter, making reference to a software update error on 18 July. In the course of this, some customers were able to view accounts belonging to others for a short time. No funds could be transferred to other people’s accounts, nor could securities be traded. Equally, login details were not visible and could not be changed. “Something happened that cannot be allowed to happen – and we sincerely apologise to all customers for this”, said Walter, who also gave a statement regarding the incident in an open letter (https://www.comdirect.de/cms/brief-des-vorstands.html). The error was corrected as quickly as possible on the same morning and steps were taken to ensure that this does not happen again. Intensive error analyses were also promptly initiated. Based on the results of these investigations, additional measures will be taken to further increase data security.
|in € thousand||Q1/15||Q2/15||Q3/15||Q4/15||Q1/16||Q2/16|
|Net interest income after provisions||35,179||33,771||32,869||32,690||32,024||30,973|
|Net commission income||60,519||55,596||58,659||53,591||54,876||53,568|
|in € thousand||H1 15||H1 16||H1 15 vs. H1 16|
|Net interest income after provisions||68,950||62,997||–8.6 %|
|Net commission income||116,115||108,444||-6.6 %|
|Other income||5,188||44,631||760.3 %|
|Pre-tax profit||51,330||87,878||71.2 %|
|After-tax profit||37,585||66,307||76.4 %|