Van Lanschot Kempen, the oldest independent financial institution in the Netherlands (since 1737), has reported its structured products team, which is part of the merchant banking division, achieved much higher income in 2017 than in 2016, due to strong demand. Merchant banking structured products generated a positive result of €3.3m, thanks to a large number of new products and attractive market circumstances, according to the bank.
The €400,000 negative figure for securities trading primarily reflected the result from positions in issued debt securities (medium-term notes) and, according to the bank, in comparison to 2016, the result achieved on the trading book increased by €3.7m to €2.5m.
Van Lanschot Kempen's €6.9m profit on the investment portfolio can be broken down into two separate parts: realised profits of €6.4m on the sale of bonds (2016: €8.5m) and €500,000 on the bank's mark-to-market portfolio (2016: €0.7m negative). The gain on interest rate hedges (€1.8m) largely relates to the result on economic hedges (€2.2m).
As part of the bank's funding programme, a 10-year €500m bond was issued in February 2017 under the Conditional Pass-Through Covered Bond programme. Overall issued debt securities increased by €400 million in 2017.
Private banking commanded net inflows of €500m, and total assets under management (AUM) for the division worked out at €22.8bn (2016: €19.0bn). Total client assets for private banking rose by 11% to €31.4bn (2016: €28.3bn) and the underlying net result for 2017 increased to €51.3m (2016: €31.8m), with commission income 20% higher on increased AUM and more investment transactions by clients.
Kempen distributed 12 public offers with combined sales of €83m in the Netherlands in 2017, compared to 13 products worth €66m in 2016, according to SRP data. Last year's products included nine structures issued on the paper of parent company Van Lanschot Bankiers (which had a 57% share of the Dutch market) with the remaining three products issued by UBS (14% market share).
The Eurostoxx 50 was used as the underlying index in five products, including the VL Worst of Trigger Plus Note Eurozone Emerging Markets, which was also linked to the Vanguard FTSE Emerging Markets ETF, while the local AEX and the S&P 500 were used in four and two structures, respectively. The remaining product, the VL Participation Note Banks, was linked to the Stoxx Europe 600 Banks.
Seven of the products had an autocallable feature, and provided soft protection only; three products protected minimum 90% of capital; and two products were fully protected.
Van Lanschot Kempen's underlying net result, at €112.3m, was up by more than 38% (2016: €81.3m) while the bank's net profit rose to €94.9m (2016: €69.8m); client assets of over 20% were added to €83.6bn (year-end 2016: €69.4bn); and AUM was up to €69.2bn (2016: €54.6bn), driven by €9.3bn, in net inflows among other factors, according to the bank.
Total operating expenses rose by 2% to €392.1m, partly due to higher costs associated with the acquisition of Staalbankiers and UBS Nederland, a wage increase, and IT costs related to the implementation of Mifid 2 and IRFS 9. 'In 2017, our underlying net result rose to €112.3m,' said Karl Guha (pictured), chairman, Van Lanschot Kempen, in a statement. 'We have made good progress every year since we started our transformation into a specialist wealth manager five years ago, and provide an increasingly enhanced service to our clients. The organic growth (17%) of our assets under management was strong.'
Click the link to view the Van Lanschot Kempen results and the financial report for 2017.
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