Van Lanschot: Net profit for 2007 climbs 16.7%

  • The bank is weathering the liquidity and credit crisis very well
  • Strong growth in new clients and funds entrusted continues
  • Income from operating activities rose 28.6% to  648.0 million, in particular thanks to substantially higher commission income
  • Net profit up 16.7%, to  215.4 million;
  • Earnings per share  5.94, an increase of 8.4%
  • Proposed dividend of  3.00 per share, representing a 9.1% increase
 
Floris Deckers, chairman of Van Lanschot NV's Board of Managing Directors: "Even in a challenging year as 2007, Van Lanschot's private banking strategy was successful. The bank managed to increase net profit further. This is partly attributable to the acquisition of Kempen & Co, which can also look back on a successful year. With its private banking strategy and the associated risk management policy, Van Lanschot is navigating the liquidity and credit crisis without any problems. The bank focuses on its clients and not on investing for its own account in complex financial constructions."
 
KEY FIGURES

* The figures for 2006 are adjusted for the results of Van Lanschot Assurantiën, which are disclosed under 'discontinued operations'.
 
DEVELOPMENTS IN 2007

The bank's investment and trading portfolios neither contain any positions in the subprime sector nor any positions in funds that invest in the subprime sector. As a result, the bank did not experience any direct impact from the liquidity and credit crisis that caused turmoil on the financial markets in the second half of the year. Van Lanschot has always consciously chosen a low risk profile, this being in line with its position as a private bank. Thanks to its focus on attracting savings and deposits from its clients, the bank has an extremely solid liquidity position. Van Lanschot's loan book does not comprise any loans that are affected by the credit crunch. The bank grants loans almost exclusively to Dutch companies and Dutch and Belgian wealthy private individuals. Please refer to the appendix for a breakdown of the bank's investments and loan book.
 
Van Lanschot builds further on its private banking strategy
In 2007, Van Lanschot further developed its private banking strategy. In the market for high net worth individuals, the bank is increasingly focusing on asset management and advice for the higher segments. For instance, clients with assets of more than  1 million available for investment are served by specialist teams delivering tailor-made solutions. Van Lanschot's private banking and asset management activities represented 54% of the 2007 operating profit before tax, compared with 46% in 2006. The business banking activities of the bank continue to focus on family businesses and their directors/majority shareholders.
 
Within the scope of its private banking strategy, Van Lanschot has deliberately increased its focus on attracting savings and deposits since the end of 2006. The bank also enjoyed solid growth in the number of clients against the background of the takeover battle in the Dutch financial sector in 2007. This resulted in a significant growth in savings accounts and deposits of private clients, from  4.0 billion to  7.1 billion, which is a 77.5% growth. In part thanks to this, the funding ratio (the extent to which the bank's total loans and advances are financed by funds entrusted by clients) rose from 77.4% at year-end 2006 to 91.2% at the end of 2007.
 
In the reporting year, the number of private clients rose 7.2% and the number of business banking clients 8.0%. External research in 2007 confirmed that our client satisfaction rate is clearly above the market average.
 
Net profit ( million) and Earnings per share ()
See attached PDF.

Kempen & Co
The acquisition of Kempen & Co in early 2007 reinforced Van Lanschot's profile as a leading private bank. Kempen & Co's expertise facilitates the shift in focus to the higher segments of the market. Our clients can now benefit from an even wider range of specialised and innovative products and services, in particular in the field of asset management. In 2007, Kempen introduced a number of new specialist funds, including the Kempen Property Hedge Fund, Orange Global High Dividend Fund and Orange European Participations.
 
Kempen Capital Management is putting itself firmly on the map as an asset manager for Dutch institutional parties. Fiduciary management contracts were concluded with parties such as ZLM Verzekeringen and Stichting Pensioenfonds Randstad in 2007. In addition, under the collaboration agreement with Van Lanschot, De Goudse has commissioned Kempen Capital Management to manage its investment portfolio worth  350 million and Kempen Capital Management will give strategic advice on a portfolio worth  1.5 billion, with effect from 1 January 2008.
 
Van Lanschot Chabot
Within the scope of the bank's strategy, a 51% interest in Van Lanschot Assurantiën was sold to De Goudse on 30 November 2007. Van Lanschot realised a gain of  20.8 million on this transaction. The activities of Van Lanschot Assurantiën will be continued under the name Van Lanschot Chabot. Under the 20-year exclusive distribution agreement with Van Lanschot Chabot, Van Lanschot will continue to offer insurance products to its clients as part of its full-service concept.
 
Investing in providing even better services
Van Lanschot continues to invest in its services. Education and training of staff is essential in this context. The acquisition of Kempen & Co on 2 January 2007 on the one hand and the transfer of Assurantiën staff to Van Lanschot Chabot on the other, resulted in an increase in the number of employees from 2,370 at year-end 2006 to 2,461 at year-end 2007. In order to further promote growth in private banking, the bank has launched an intensive recruitment campaign for new highly qualified relationship managers.
 
Good progress was made on modifying the systems in order to enhance our service offerings to clients. The upgrading of the bank's IT environment reached three important milestones in 2007. In the autumn, the Customer Relationship Management system was successfully implemented at all offices. Furthermore, the new online banking application went live, allowing our clients to conduct their banking affairs even more efficiently. The new information management systems were also implemented, with which the bank was able to meet the new reporting requirements under Basel II well on time. Within the scope of this IT project,  4.6 million was charged to profit in 2007. To date, a total amount of  52.1 million has been capitalised.
 
The year 2008 is for the IT project the year in which the new core banking system will be tested and preparations will be made for its implementation in 2009. It has been decided to implement the new core banking system in one go. In this way, the bank avoids a complex intermediate situation in which old and new systems have to be temporarily interfaced. The upgrading of the IT environment requires the hiring in of extensive expertise from outside the bank. Van Lanschot believes it is essential to continually have this level of expertise at the bank. It has decided not to build up this expertise itself, but to outsource a significant part of its IT activities.
 
OUTLOOK FOR 2008
 
The bank will continue to pursue its private banking strategy with vigour in 2008. Owing mainly to the recent consolidation in the Dutch financial sector, the banking market is in a considerable state of flux. Van Lanschot therefore expects that the inflow of new clients will continue unabated in 2008. As in 2007, the bank will proactively concentrate on recruiting and retaining experienced private bankers and on investing in its people and systems.
 
Van Lanschot will continue to finance its activities as much as possible from the funds entrusted by its clients. In this context, Van Lanschot aims to further increase its funding ratio in 2008. In view of its comfortable liquidity position, the bank decided on early repayment of  600 million in Floating Rate Notes in March 2008, as announced on 12 February 2008. In addition, the  400 million in Floating Rate Notes that expire on 13 May 2008 will not be refinanced.
 
Expectations are that the financial markets will continue to suffer from the effects of the liquidity and credit crisis. This turmoil will put pressure on commission income. Interest margins will recover slightly, but the impact on profits will be noticeable with some delay.
 
PERFORMANCE IN 2007
 
Net profit for 2007 amounted to  215.4 million, an increase of 16.7% on 2006 ( 184.5 million). Earnings per share were  5.94, i.e. an 8.4% increase on 2006 ( 5.48). As part of the acquisition of Kempen & Co, 2.4 million new shares were issued. The average number of outstanding shares was thus 7.9% higher.
 
On 2 January 2007, Kempen & Co became a wholly-owned subsidiary of Van Lanschot. To allow an adequate comparison between the periods, the table below states the pro-forma 2006 results of Van Lanschot inclusive of the results of Kempen & Co. On a pro-forma basis, net profit for 2007 shows a 2.4% decline from  220.8 million to  215.4 million. This is caused by several exceptional items, i.e. the release in 2006 of a provision for healthcare costs ( 19.5 million income) and the amortisation on the intangible assets of Kempen & Co in 2007 ( 13.6 million expense). The intangible assets include the Kempen & Co brand name and the client base.
 
Furthermore, the figures are adjusted for Van Lanschot Assurantiën, on account of the sale of a 51% interest in 2007. Net profit of Van Lanschot Assurantiën is disclosed separately under 'discontinued operations'. For 2007, this concerns the net profit up to and including 30 November, the date on which Van Lanschot Assurantiën was sold. With effect from 1 December 2007, 49% of the net profit of Van Lanschot Chabot is included under 'income from securities and associates'. The gain on sale, amounting to  20.8 million, is also included under the item 'discontinued operations'.

 
In order to ensure the comparability of results, reference is made in this section to the pro forma figures for 2006 as included in the above table.
 
Income from operating activities climbed  31.9 million (5.2%) from  616.1 million in 2006 to  648.0 million in 2007.
 
Commission income was up by 14.2% from  258.7 million in 2006 to  295.4 million in 2007. The growth in securities commission in particular contributed towards this increase, thanks to the positive sentiment on the stock exchanges in the first half of the year, and the performance fees realised by several in-house funds that performed extremely well compared with the benchmark defined in the prospectus. The downturn in the sentiment on the stock exchanges as a result of the credit crisis led to fewer securities transactions by investors, in particular in the fourth quarter of the year. The declining share prices also put pressure on the custody and asset management fees. On balance, however, securities commission rose strongly by 17.7% from  211.6 million to  249.0 million. Other commission income (commission on cash transactions and other commission) remained nearly stable at approx.  46,4 million.
 
Interest income rose 4.5% from  264.3 million to  276.3 million. The positive trend of the underlying volumes suffered from a declining interest margin (from 1.42% at year-end 2006 to 1.37% at year-end 2007). In the second half of the year, the interest margin recovered slightly, especially thanks to the favourable margins realised on interbank lending as a result of the liquidity and credit crisis. Penalty interest received on account of the early repayment of loans was  4.6 million lower than in 2006 and came to  5.0 million. This decline can be attributed to the increasing interest rate. An amount of  4.5 million was recognised in 2007 for the amortisation of acquired surplus (resulting from the acquisition of CenE Bankiers), which item will almost fully disappear in 2008.
 
Private client savings accounts and deposits rose to  7.1 billion, i.e. a  3.1 billion (77.5%) increase. This increase can be attributed to the strong rise in the number of target group clients and higher funds entrusted per client. The consolidation battle in the Dutch banking sector and the shift towards clients holding more liquid assets were the reasons for this. Loans (including mortgage loans) granted to private clients grew by  0.6 billion to  9.6 billion. For corporate clients, deposits declined by  0.4 billion (-18.2%) to  1.8 billion and the volume of corporate loans grew  0.6 billion to  4.6 billion.
 
The item income from securities and associates went down by 39.4% compared with 2006, from  45.4 million to  27.5 million. This amount includes  19.0 million for the gain on the sale of available-for-sale investments (2006:  35.6 million),  11.2 million in dividend payments (2006:  15.2 million) and a negative revaluation result of -  2.7 million (2006: -  5.4 million). Income from securities and associates also comprises  0.2 million for Van Lanschot Chabot. This is 49% of the net profit for December 2007.
 
The profit on financial transactions increased by 2.3% from  47.7 million in 2006 to  48.8 million in 2007. This item contains the realised and unrealised value changes on the trading portfolio, exchange differences and realised and unrealised gains and losses on derivatives. Profit on financial transactions strongly depends on the interest rate, the developments on the stock exchanges and exchange rate movements.
 
In 2007, operating expenses increased 18.5%, from  350.1 million in 2006 to  414.7 million in 2007. Excluding the exceptional items, operating expenses rose by  8.5% from  369.6 million to  401.1 million. The exceptional items are the release of the provision for healthcare costs of  19.5 million in 2006 and the amortisation of intangible assets of  13.6 million, which resulted from the acquisition of Kempen & Co in 2007.
 
Staff costs rose by 18.1% from  210.4 million to  248.5 million. Exclusive of the release of the provision for healthcare costs in 2006, staff costs were 8.1% higher. This increase in staff costs results from the regular pay rises and profit-related bonuses. Furthermore, Van Lanschot continues its investments in staff quality through education and training. The costs of education and training were 3.5% of wage costs (2006: 2.8%).
 
Other operating expenses grew by 8.7% from  119.4 million to  129.8 million. This increase can largely be attributed to a rise in the IT costs due to external staff hired. Within the scope of this IT project,  4.6 million was charged to profit in 2007. Of this amount,  1.6 million concerns the depreciation of the modules put into use. Up to 2007 inclusive, an amount of  52.1 million has been capitalised.
 
Depreciation and amortisation increased strongly by 79.3% from  20.3 million to  36.4 million. This increase was largely the result of the amortisation of intangible assets due to the acquisition of Kempen & Co. This involved an amount of  13.6 million in 2007. For 2008, this amount will be  10.9 million.
 
The item impairments amounted to  0.1 on balance (2006:  2.9 million). For many years now, Van Lanschot has pursued a conservative loan approval policy that has produced an extremely healthy loan portfolio. Loans written off totalled  17.0 million in 2007 (13 basis points of risk-weighted assets). The percentage of non-performing loans covered by the provision for impairments is 138.6% (year-end 2006: 138.3%).
 
Income tax on the operating profit for 2007 amounted to  43.8 million. This corresponds with a tax burden of 17.5%. The tax burden was 17.7% in 2006.
 
The efficiency ratio, i.e. the ratio of operating expenses to income from operating activities, rose to 64.0% from 56.8% in 2006. This is inclusive of the amortisation of intangible assets arising on the acquisition of Kempen & Co. Excluding this amortisation, the efficiency ratio was 61.9%.
 
The item discontinued operations relates to the net profit of Van Lanschot Assurantiën up to and including 30 November 2007. Compared with the previous year, Van Lanschot Assurantiën's net profit declined by 20.0% from  6.5 million to  5.2 million. This decline can fully be attributed to lower commission income. In 2006, commission income was boosted by one-off prior-year income items resulting from new rules for the disclosure of commission by intermediaries. In addition, the item discontinued operations contains the gain on the sale of Van Lanschot Assurantiën of  20.8 million.

DIVIDEND
 
The annual dividend to be distributed is determined based on the amount available to shareholders. This represents the net profit for the year, adjusted for the interest on perpetual loans and the amortisation of acquired surplus. Van Lanschot aims to distribute between 40% and 50% of the amount available to shareholders.
 
Earnings per share for the year 2007 amounted to  5.94, an 8.4% increase on 2006 ( 5.48). Compared with 2006, the average number of outstanding ordinary shares rose by 7.9% due to the issue of new shares for the financing of the acquisition of Kempen & Co.

 
Earnings per share available to shareholders amounted to  6.04, compared with  5.68 in 2006. It will be proposed to the Annual General Meeting of Shareholders that a dividend of  3.00 per share be distributed for 2007. This corresponds with a pay-out ratio of 49.7% relative to the earnings per share available to shareholders. The dividend will be payable in cash.

BALANCE SHEET

 
Total assets at 31 December 2007 came to  21.7 billion (31 December 2006:  18.7 billion). This increase can be attributed to the acquisition of Kempen & Co, which was partly financed by a share issue, as well as a solid growth in the public and private sector liabilities. This last item increased strongly (+27.9%) thanks to the focus on attracting savings and deposits from target group clients. Total loans and advances rose 8.5% from  14.7 billion to  16.0 billion. The bank's funding ratio (the ratio of public and private sector liabilities to total loans and advances to the public and private sectors) was 91.2% at the end of December 2007. At year-end 2006, this ratio was 77.4%.
 
Shareholders' funds climbed from  1.4 billion at 31 December 2006 to  1.7 billion at 31 December 2007. This increase can be attributed to the retained earnings and the issue of new shares in connection with the acquisition of Kempen & Co. For the movements in shareholders' funds, reference is made to the appendix.
 
Return on average shareholders' funds for 2007 declined from 17.4% to 16.9%. This decline resulted from the issue of shares in order to finance the acquisition of Kempen & Co. This means that the increase in shareholders' funds was relatively higher than the increase in net profit, which had a negative impact on the return on average shareholders' funds. 
 
The BIS total capital ratio dropped from 13.7% to 12.0% and is now below the target of 12.5%. This decline was mainly caused by an increase in the risk-weighted assets compared with a qualifying capital which stayed more or less stable. Capital grew during the reporting period thanks to the capital increase by virtue of the acquisition of Kempen & Co, revaluations and the net profit for the current year. For the calculation of the solvency ratios, deductions are made for goodwill paid (an amount of  169.7 million), as well as the capitalised intangible assets in connection with the acquisition. As a result, the qualifying capital remained more or less unchanged. The risk-weighted assets rose by  1.9 billion to  13.6 billion.
 
ASSETS UNDER MANAGEMENT
 
The combination of the asset management departments of Van Lanschot and Kempen & Co prompted the redefinition of the concept of 'assets managed and held in custody' into 'assets under management'. The item 'assets under management' represents the assets deposited with Van Lanschot by our clients. The part which is managed by Van Lanschot is included under the item 'assets under discretionary management'. Previously, the bank used the concept 'assets managed'. 'Assets under discretionary management' also include the Index Guarantee Contracts.

 
The assets under management declined by  1.8 billion in 2007 (-6.0%) from  29.9 billion (pro forma) to  28.1 billion.
 
In 2007, assets under discretionary management fell by  0.7 billion, from  15.4 billion to  14.7 billion. The net inflow of new funds in assets under discretionary management was  0.2 billion in 2007. This inflow was more than counteracted by a  0.9 billion decline in value as a result of the negative sentiment on the stock exchanges and in the property sector.
 
Assets under discretionary management for private clients posted an increase of  0.6 billion, from  5.7 billion to  6.3 billion (+10.5%). This increase consists of an inflow of  0.5 billion and an increase in value of  0.1 billion. The inflow was largely caused by the further growth in the Manager of Funds concept and the Index Guarantee Contracts and the introduction of the Private Assets Management concept. Assets under discretionary management for institutions declined by  0.9 billion from  4.9 billion to  4.0 billion. This decline was made up of a net outflow of  0.1 billion and a negative stock exchange performance of  0.8 billion. This decrease in value can be attributed to the negative trend in the property sector. Assets under discretionary management of the in-house funds declined by  0.4 billion from  4.8 billion to  4.4 billion, due to a net outflow of  0.1 billion as a result of the termination of several in-house funds and a decline of  0.3 billion due to the negative market trend.
 
Assets under non-discretionary management decreased 7.6%, from  14.5 billion at year-end 2006 to  13.4 billion at year-end 2007. On the one hand, a part was converted into assets under discretionary management, and on the other hand, clients started to hold a larger part of their assets in the form of liquidity, in particular deposits.
 
SECURITISATION
 
In June 2007, Van Lanschot securitised a home mortgages portfolio of  1.5 billion under the name Citadel 2007-I. The bonds issued by Citadel 2007-I were purchased by Van Lanschot and can be used as collateral with the ECB and Euroclear. This transaction does not have any impact on the BIS ratios, but it does enlarge the bank's potential liquidity position.
 
DEVELOPMENTS BY SEGMENT
 
The division of the results over the segments was adjusted in 2007 due to the acquisition of Kempen & Co. The new division has resulted in the following segments: Private Banking, Asset Management, Business Banking, Corporate Finance and Securities, and Other activities. The Other activities segment contains the income and expenses that cannot be allocated to another segment. This segment includes income from interest rate, market and liquidity risk management.
 
The CenE Bankiers segment (Healthcare) is now recorded in the Business Banking segment. Assurantiën (Insurance) as a segment is no longer separately visible due to the sale of a majority interest to De Goudse NV.
 
Operating profit before taxation by segment
See attached PDF.
 
In order to allow an adequate comparison between the periods, the developments by segment are discussed based on the pro-forma results for the year 2006, inclusive of the result of Kempen & Co.
 
The release of the provision for healthcare costs ( 19.5 million positive) was divided over all segments in 2006. That is the reason why all segments post higher staff costs in 2007 than in 2006. In addition, in Kempen & Co's figures, a release of the pension provision in 2006 ( 8.0 million positive) was divided over the segments Asset Management, Corporate Finance and Securities, and Other activities.

PRIVATE BANKING

 
The Private Banking segment recorded a solid growth in volumes, partly as a result of the 7.2% increase in the number of private clients. Assets under discretionary management showed a rise of  0.6 billion, from  5.7 billion to  6.3 billion thanks to a strong inflow of new funds. Savings accounts and deposits grew strongly; rising by  3.1 billion from  4.0 billion to  7.1 billion. This was mainly caused by the consolidation battle in the Dutch banking sector and the trend noticeable among investors of holding a larger part of their assets in the form of liquidity on account of the negative sentiment on the stock exchanges. Loans and advances to private clients expanded by  0.6 billion, from  9.0 billion to  9.6 billion.
 
Income from operating activities for 2007 rose by  16.0 million. This can mainly be attributed to the growth in commission by  10.6 million, and in particular to securities commission. In addition to the increase in commission, interest income was also on the rise, with the exception of penalty interest, which again showed a decline.
 
Total expenses were up 9% from  193.7 million to  211.6 million, for a large part due to the higher staff costs on account of a release in the provision for healthcare costs in 2006. Of this release, 63% was taken in the Private Banking segment, i.e. an amount of  12.3 million. Furthermore, other operating expenses grew 10% from  64.0 million to  70.1 million. This was largely the result of an increase in IT costs due to external staff hired. The higher impairments were mainly caused by the recognition of a provision for one large loan.
 
The operating profit for before tax of Private Banking was  87.0 million, representing a 2% decline on 2006. Excluding the release of the provision for healthcare costs, this segment's operating profit would have risen 13.6%, from  76.6 million to  87.0 million.
 
Van Lanschot Belgium
In Belgium, the positive trend continued. The number of target group clients of Van Lanschot Belgium increased by 7.8% in 2007, and the growth in Belgian private clients was 9.4%. The volume of loans and advances declined as a result of higher one-off repayments and a more focused loan target group policy. The gross operating profit was 8.1% higher at  8.0 million. Income from operating activities increased by 4.9% from  30.8 million to  32.3 million. Especially commission income grew 14.7%, while interest income showed a slight decline due to the contracting margin. Operating expenses moved up slightly by 3.9%. As in the Netherlands, Van Lanschot Belgium too is further refining its service model and product offering for high net worth individuals.
 
International Private Banking
International Private Banking (IPB) concentrates on Dutch and Belgian clients who are in need of specific services due to emigration or international business and investment activities. The target group, clients with assets of at least  1 million, is served from Curacao, Luxembourg and Switzerland.
 
Operating profit before tax of IPB was up 19.5% from  12.8 million to  15.3 million. The growth in the operating profit before tax compared with 2006 can especially be attributed to the higher interest income of Van Lanschot Luxembourg and higher securities commission of Van Lanschot Switzerland. The 20% increase in assets under management at Van Lanschot Switzerland contributed towards the higher securities commission.
 
ASSET MANAGEMENT

 
The Asset Management segment comprises the asset management activities of Van Lanschot.
 
Income from operating activities, which mainly comprises commission, of the Asset Management segment was up 38% from  56.0 million to  77.1 million. Additional income was recorded in 2007 thanks to higher performance and management fees resulting from the extremely good performance of several in-house funds compared with the benchmark as defined in the prospectus.
 
Assets under discretionary management for institutions declined by  0.9 billion from  4.9 billion to  4.0 billion. This decline was made up of a net outflow of  0.1 billion and a negative stock exchange performance of  0.8 billion. This decrease in value can be attributed to the negative trend in the property sector. Assets under discretionary management of the in-house funds declined by  0.4 billion from  4.8 billion to  4.4 billion, due to a net outflow of  0.1 billion as a result of the termination of several in-house funds and a decline of  0.3 billion due to the negative market trend.
 
Operating expenses increased by 54% from  27.3 million to  42.0 million in particular due to the growth in the number of staff, a higher accrual for bonuses, the costs of the employee option plan for Kempen & Co staff and a release in the pension provision in 2006. Of this release, 28% was taken in the Asset Management segment. This concerned an amount of  2.2 million. The accrual for the bonuses was higher in 2007 because they are performance related.
 
The operating profit before tax of Asset Management totalled  38.6 million, which is a 24% increase on the previous year. Excluding the release of the pension provision, this segment's operating profit would have risen 33%, from  29.0 million to  38.6 million.

BUSINESS BANKING

 
The Business Banking segment also comprises the Healthcare activities.
 
Income from operating activities rose 9% to  133.2 million. Compared with the previous year, interest income was slightly up. The profits on sale and valuation gains on associates and the venture capital unit grew strongly by 193% to  8.5 million. The profit on financial transactions doubled thanks to the profits realised on equity kickers. Corporate loans and advances also showed substantial growth in 2007 rising by  0.6 billion from  4.0 billion to  4.6 billion. On the other hand, funds entrusted levelled off. The number of business banking clients grew by 8.0%, with the number of healthcare clients increasing 9.2% thanks to the growth in the target group Medical Practitioners in particular.
 
Total expenses remained stable at a level of  72.9 million. The increase in staff costs was mainly caused by the release of the provision for healthcare costs in 2006. Of this release, 26% was taken in the Business Banking segment, i.e. an amount of  5.0 million. The item impairments showed a decline because the provision was reduced for a number of large loans. This was offset by a large provision for one healthcare institution amounting to  8.4 million.
 
The operating profit before tax of Business Banking was  60.3 million, representing a 23% increase on 2006. Excluding the release of the provision for healthcare costs, this segment's operating profit would have risen 36%, from  44.2 million to  60.3 million.

CORPORATE FINANCE AND SECURITIES

 
This segment comprises the corporate finance activities and securities broking to professional investors in Europe and the United States.
 
In this segment, income from operating activities was up 5%, from  68.9 million in 2006 to  72.5 million in 2007. This income has a volatile nature and depends on stock exchange trends and the number of share issues, mergers and acquisitions led by the bank. After a strong first half of the year, the turmoil on the stock markets put pressure on commission income and trading income in the second half. On balance, commission income was still 15% higher than in 2006. The activities at Corporate Finance showed a decline in income due to fewer mergers and acquisitions in which Van Lanschot was involved.
 
Total expenses were 10% up, from  42.4 million to  46.5 million, in particular due to the costs of the employee option plan for Kempen & Co staff and a release in the pension provision in 2006. Of this release, 33% was taken in the Corporate Finance and Securities segment, i.e. an amount of  2.6 million.
 
Operating profit before tax decreased by 2% from  26.5 million to  26.0 million. Excluding the release of the pension provision, this segment's operating profit would have risen 8.8%, from  23.9 million to  26.0 million.

OTHER ACTIVITIES

 
This segment comprises, among other things, income and expenses that can at present not be allocated to other segments. We are constantly striving to refine this allocation. In addition, this segment comprises income and expenses arising from interest rate, market and liquidity risk management.
 
Income from operating activities decreased from  84.4 million to  63.1 million. Income from securities and associates declined due to lower gains on sale and dividend income.
 
Total expenses rocketed by 144% from  17.1 million to  41.8 million. This was mainly the result of higher staff costs and depreciation and amortisation. In addition to the release of the provisions for healthcare costs and for pensions in 2006, the costs of the employee option plan for Kempen & Co staff contributed towards the rise in staff costs in 2007. Of the release of the provision for healthcare costs, 5% (i.e.  1.0 million) was taken in the Other activities segment; 39% percent of the release of the pension provision (i.e.  3.1 million) was also recognised in this segment.
 
Depreciation and amortisation also comprises the amortisation of intangible assets of Kempen & Co totalling  13.6 million.
 
Operating profit before tax decreased by 68% from  67.3 million to  21.3 million. Excluding the release of the provisions, this segment's operating profit would have fallen 66%, from  63.2 million to  21.3 million.
 
 
KEY DATES 2008/2009
 

 
 
 
's-Hertogenbosch, the Netherlands, 20 March 2008
 
 
Van Lanschot press contacts: Etienne te Brake, Corporate Communication spokesperson.
Telephone +31 (0)73 548 3026; Mobile phone +31 (0)6 12 505 110; E-mail e.tebrake@vanlanschot.com
 
Van Lanschot Investor Relations: Geraldine Bakker-Grier, Investor Relations Manager.
Telephone +31 (0)73 548 3350; Mobile phone +31 (0)6 13 976 401; E-mail g.a.m.bakker@vanlanschot.com.
 
Van Lanschot NV is the holding company of F. van Lanschot Bankiers NV, the oldest independent bank in the Netherlands, with a history dating back to 1737. The bank focuses on three target groups: high net-worth individuals, medium -sized businesses (including family businesses) and institutional investors. Van Lanschot Bankiers stands for high-quality services founded on integrated advice, personal service and customised solutions. Van Lanschot NV is listed on the Euronext Amsterdam Stock Market.
 
 
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