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Baader Bank had slightly positive earnings before tax in the 2019 financial year due to an increase in trading income, a reduction in expenses and the dissolving of the Fund for general banking risks

DGAP-News: Baader Bank AG / Key word(s): Preliminary Results
20.03.2020 / 08:30
The issuer is solely responsible for the content of this announcement.

Press release:

Baader Bank had slightly positive earnings before tax in the 2019 financial year due to an increase in trading income, a reduction in expenses and the dissolving of the Fund for general banking risks

Unterschleissheim, 20/03/2020: Baader Bank reports slightly positive EBT of EUR 68,000 for the 2019 financial year (previous year: EUR -19.4 million). Earnings before tax improved significantly as a result. This was mainly attributable to 13% higher trading income, a reduction in expenses of 11% and the dissolving of the Fund for general banking risks. Total revenue increased by 6% to EUR 104.3 million (previous year: EUR 98.1 million).

Decline in earnings from commission income compared to improved trading income

Commission income declined by 21% in 2019, lagging behind expectations at EUR 32.1 million (previous year: EUR 40.5 million). This was mainly due to a sluggish market and mandate situation in the capital market business in Europe as well as restructuring of the business area at Baader Bank in 2019 which also led to a lower placement volume in the Group as a whole. In contrast, Brokerage - especially Cash Equity - and Account and Custody business with asset managers continued to develop very well, having an underpinning effect on the development of Commission income.

In the past financial year, Baader Bank trading income rose pleasingly by 13% to EUR 46.1 million (previous year: EUR 41.0 million). This increase arose out of inconsistent sentiment in the first three quarters as well as increasing volatilities and securities revenue in the final quarter, added to an optimised distribution structure for Baader Bank's market-making activities. The drivers here were trading in bonds, funds and ETFs.

At EUR 12.8 million, Baader Bank Group revenue was slightly below the previous year (EUR 13.1 million) at -2%, fed by the electricity yields generated from the Bank's own wind farm. Of negligible significance for the Group, interest income and current income for 2019 stood at EUR -799,000 (previous year: EUR 527,000).

Other income increased by EUR 11.0 million to EUR 14.0 million in 2019 compared to the previous year (EUR 3.0 million), resulting almost entirely from the partial dissolution of the Fund for general banking risks (under section 340e HGB). With the dissolution of the Fund, Baader Bank achieved slightly positive consolidated earnings (before tax) for the 2019 financial year. Fund endowment occurred in high-income years based on average trading income with the aim of balancing dips in earnings in weaker periods. In this respect, the Board of Directors of Baader Bank made use of the opportunity to dissolve parts of the Fund for 2019 earnings and used period-shifting for services already rendered.

Cost measures were already resulting in noticeable burden relief in 2019 with operating earnings continuing to be negative, although greatly improved

Significant savings were achieved in both personnel expenses and other administrative expenses which were already reflected in 2019 and will continue to have a positive impact on overall earnings in coming years. The cost-cutting measures implemented by the Board of Directors in the previous year have therefore already largely been implemented effectively. As a result, total costs declined significantly in 2019 and fell by EUR 13.2 million to EUR 104.3 million (previous year: EUR 117.5 million). Personnel expenses were significantly reduced by 15% at Group level with a total of EUR 46.5 million (previous year: EUR 54.7 million). Other administrative expenses and other operating expenses also fell by EUR -781,000 to EUR 44.6 million (previous year: EUR 45.3 million).

Although Baader Bank Group operating earnings before tax, depreciation and amortisation were still in negative territory at EUR -8.0 million, they increased noticeably by 44% (previous year: EUR -14.2 million). The implemented adjustment can already be seen in the individual strategies of the six business lines.

Depreciation and amortisation in Baader Bank Group decreased by EUR 4.2 million to EUR 13.1 million compared to the 2018 financial year (previous year: EUR 17.4 million). This mainly related to depreciation and value adjustments on intangible assets and property, plant and equipment as well as amortisation and value adjustments on receivables and certain securities treated as assets.

Overall, Baader Bank Group generated EBT of EUR 68,000 in the 2019 financial year (previous year: EUR -19.4 million) and slightly negative consolidated earnings after tax of EUR -591,000 (previous year: EUR -21.3 million).

Stable capitalisation ratios, decrease in the number of employees

The balance sheet total amounted to EUR 617.4 million on the reporting date of 31/12/2019 (previous year: EUR 713.2 million). The balance sheet equity ratio was 12% (previous year: 11%), the modified equity ratio remained unchanged at 14% (previous year: 14%), the regulatory aggregated capital ratio of Baader Bank AG was also unchanged and remained at 14% (previous year: 14%).

As at 31/12/2019, the number of employees employed in the Baader Bank Group decreased from 442 to 403 compared to 31/12/2018.

Outlook for 2020 - the year started with record revenue on international stock exchanges, normal market conditions advised for the full year

In 2019, the Board of Directors of Baader Bank implemented restructuring and organisational measures in a wide-ranging strategy project and significantly developed the overall banking and business line strategies. In addition, far-reaching cost and efficiency potentials were identified in the Group as a whole. The Board of Directors sees Baader Bank as resilient and competitive, on the one hand, and ready for future market conditions while, on the other, generating the existing earnings potential in the corresponding historically core markets while also having targeted growth markets in its sights.

In the first two months of the new financial year, the activities of the trading participants on the international capital and financial markets were noticeably lively. At the end of February, investors' continued uncertainty led to a visible and significant increase in securities revenue. Volatility in the securities markets increased enormously. This development peaked at the start of the second week of March, driven by uncertainties surrounding the oil sector and the coronavirus pandemic. With a high dependence on trading volume and volatility, the earnings situation, especially in Baader Bank's market-making, was also significantly better than forecast as a result. However, this market behaviour - with index highs and considerable valuation corrections, partly within a single trading day - are not set to continue for the whole of 2020. No reliable sales or earnings forecasts can be deduced from this.

Given normal market conditions, the Board of Directors expects a positive operating profit for the Baader Bank Group for the whole of the 2020 financial year. The medium-term objective is to gradually return Baader Bank to a suitable level of profitability in a market environment which continues to be challenging.

Baader Bank's annual report for 2019 will be made available in the "Financial Reports" section of the Company's website in mid-May 2020 when the annual shareholders' meeting is convened.

Overview of key figures

BAADER BANK GROUP
Income Statement
01/01-31/12/2019 01/01-31/12/2018 Delta
  EUR'000 EUR'000 %
Income 104,336 98,121 6.3
of which net interest income and current income -799 525 -
of which net commission income 32,111 40,520 -21.1
of which net trading income 46,149 40,976 12.6
of which revenue 12,808 13,095 -2.2
of which other income 14,014 3,005 >100.0
Expenses -104,268 -117,496 -11.3
of which personnel expenses -46,522 -54,686 -14.9
of which administrative expenses and other operating expenses -44,604 -45,385 -1.7
of which amortisation and depreciation -13,142 -17,391 -24.4
of which net income from interests in associates 0 -34 -
Earnings before taxes (EBT) 68 -19,375 -
       
Operating result -8,017 -14,222 43.6
 
BAADER BANK GROUP
Balance Sheet
30/12/2019
EUR'000
31/12/2018
EUR'000
Delta %
Total Assets 617,375 713,190 -13.4
Balance Sheet Equity Ratio 12% 11% -
Supervisory Capital Ratio 14% 14% -
 

In accordance with the provisions of the German Commercial Code (HGB)

Further information is available from:

Baader Bank AG
Weihenstephaner Strasse 4
85716 Unterschleissheim, Germany

Florian E. Schopf
Company Spokesperson
Managing Director
Head of Group Strategy & Communication

T +49 89 5150 1013
M +49 160 718 88 26
florian.schopf@baaderbank.de

About Baader Bank AG:

Baader Bank is the bank for the capital market. It allows its clients to access international capital markets and to invest in financial products in an effective, efficient and secure manner. The bank uses the latest innovations in the banking industry for products, processes and technology to generate added value for its clients. As a family-run, full-service bank with its headquarters in Unterschleissheim near Munich with around 400 employees, it is active in the business lines of Market Making, Capital Markets, Multi Asset Brokerage, Asset Management Services, Banking Services and Research.

Further information can also be found online:

Company website: www.baaderbank.de
Twitter: https://twitter.com/Baader_Bank
LinkedIn: https://www.linkedin.com/company/98924/
Xing: https://www.xing.com/companies/baaderbankag?sc_o=da980_e
YouTube: https://www.youtube.com/channel/UCDJ7PGKWwtafrPSFDI3nmsQ



20.03.2020 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases.
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