Continued success for DVB Group during the first quarter of 2011 - consolidated net income before taxes up significantly year-on-year

DVB had a successful start into 2011. Consolidated net income before taxes rose to €52.8 million for the first quarter of 2011, up significantly from €16.7 million the year before.

Wolfgang F. Driese, CEO and Chairman of the Board of Managing Directors, commented on DVB’s quarterly results:

“We are very satisfied with the results for the first quarter of 2011, which affirm that we are on the right course.

But the figures for the first three months do not provide a sufficiently reliable basis for forecasting full-year results. This is because further uncertainty factors – specifically, events in Japan and the developments in Northern Africa – have been added to the volatility factors we already anticipated: a lack of balance in economic growth, and – especially – excess transport capacity.

Nonetheless, we are still confident that we will once again post good results for 2011, in a difficult environment."

Total income (comprising net interest income after allowance for credit losses, net fee and commission income, net income from financial instruments in accordance with IAS 39, results from investments in companies accounted for using the equity method, and net other operating income/expenses), increased by 68.1%, to €96.0 million during the first quarter of 2011 (Q1 2010: €57.1 million).

Net interest income after allowance for credit losses increased by 0.6%, to €51.8 million. The increase reflected 32 new Transport Finance transactions, with an aggregate volume of €1.0 billion (Q1 2010: 15 transactions with an aggregate volume of €0.3 billion), and with an adequate risk-reward ratio: the average interest margin on new business of 323 basis points remained at similarly attractive levels to those seen in the previous year (Q1 2010: 329 basis points). Interest expenses rose to €156.1 million, up 19.6%, particularly due to write-downs on operating leases in the Investment Management business. As a result, net interest income declined by 6.4%, to €48.4 million (Q1 2010: €51.7 million). Allowance for credit losses of €3.4 million could be released during the first quarter of 2011 (Q1 2010: €0.2 million recognised).

Net fee and commission income, which primarily includes fees and commissions from new Transport Finance business, and – to an increasing extent – Asset Management and Advisory fees, rose strongly to €27.2 million, up 74.4% year-on-year (Q1 2010: €15.6 million).

Net income from financial instruments in accordance with IAS 39 (comprising net trading income, the hedge result, the result from the application of the fair value option, the result from derivatives entered into without intention to trade, and net income from investment securities) showed a marked turnaround to €13.2 million (Q1 2010: €–11.4 million). This figure particularly reflects increased volatility on foreign exchange and interest rate markets.

General administrative expenses rose by 6.9% to €43.2 million. Staff expenses fell slightly, by 1.7%, to €23.5 million. Higher costs for legal advice and IT services meant that non-staff expenses (including depreciation, amortisation and write-downs) increased by €3.2 million, to €19.7 million.

DVB reported total assets of €18.9 billion as at 31 March 2011, down 2.1% from the 2010 year-end (31 December 2010: €19.3 billion). The nominal volume of customer lending (the aggregate of loans and advances to customers, guarantees and indemnities, and irrevocable loan commitments) decreased by 4.7%, to €18.3 billion. Due to the fact that 86.1% of customer lending is denominated in US dollars, a year-on-year comparison in US dollar terms (up 1.2% to US$25.9 billion) reflects business developments more accurately.

Calculated in accordance with Basel II, DVB’s tier 1 ratio rose to 19.6% (31 December 2010: 18.9%), and the total capital ratio increased slightly, to 22.6% (31 December 2010: 22.4%).

DVB’s successful business performance is also reflected in its key financial indicators. These developed as follows: return on equity before taxes rose to 22.3% (Q1 2010: 7.4%). The cost/income ratio declined by 24.1 percentage points, to 46.6% (Q1 2010: 70.7%).

You can find a video commentary by Wolfgang F. Driese, CEO and Chairman of the Board of Managing Directors of DVB Bank SE, on our website: www.dvbbank.com > Investor Relations.