NWB Bank saw its lending and profit increase in the first six months of 2021. Lending in the first half of the year amounted to €6.1 billion compared with €4.1 billion last year. Net profit for the first half of 2021 amounted to €67.0 million (H1 2020: €39.4 million). Once again, the bank did not suffer any impairment losses in the first six months, and the quality of the loan portfolio remains high. Total assets at the end of June were €108 billion (YE 2020: €107 billion).
The sustainable water bank
NWB Bank positions itself as the sustainable water bank of and for the public sector. By providing appropriate financing at the most favourable terms to its clients, the bank helps to alleviate the financial burden on citizens and minimise the costs of enhancing sustainability. Core clients such as the water authorities, housing associations and municipalities play an important role in the energy transition, and lending to these clients in particular has increased substantially in the past six months. Financing for the water authorities, for example, amounted to more than €800 million during this period.
Other organisations and projects in the public sector that involve water and/or sustainability are also eligible for financing. For example, earlier this year, the bank launched the Climate Fund for Agriculture with the Nationale Groenfonds and Rabobank. This is the first fund aimed at financing projects that help to achieve the goals of the Ministry of Agriculture, Nature and Food Quality (LNV) under the National Climate Agreement. In addition, the bank has joined forces with the European Investment Bank (EIB) to refinance the widening of the A6, the first energy-neutral motorway in the Netherlands, which opened in July 2019.
In the past year, NWB Bank was again in a good position to fund itself. In total, the bank raised €3.75 billion in long-term loans on the international capital market, €1 billion of which was in the form of sustainable bonds: a €500 million Water Bond and an SDG Housing Bond also worth €500 million. In addition, the bank made use of the targeted longer-term refinancing operation (TLTRO) of the European Central Bank (ECB) for an amount of €1 billion after €10 billion had already been raised in this way in 2020.
Ample capital and liquidity ratios
NWB Bank’s capital and liquidity ratios remain strong. The Tier 1 ratio, including interim net profit, was 47.8% (year-end 2020: 54.4%). The decrease of the ratio is in line with the bank’s strategy, which leads to more risk-weighted lending but is also the result of the fact that the bank now has to hold more capital for risks that evolve from its derivatives positions. At 201%, the Liquidity Coverage Ratio at the end of June was comfortably above the minimum requirement of 100%, as was the Net Stable Funding Ratio of 140%.
As of 30 June, the leverage ratio (including profit for the current financial year) stood at 8.3%. That is well above the 3% requirement that went into force on 28 June 2021. As a promotional bank, NWB Bank is allowed to exclude its lending to the public sector when calculating the leverage ratio.
Healthy profit and resumption of dividend payout
Thanks in part to the high volume of lending and higher net interest income, profit is at a healthy level. Just as in 2020, the participation in the TLTRO in the first half of 2021 contributed to this level of profit. The favourable rate of the TLTRO is valid for the initial two years, under certain conditions, but the lending that stands in return, and to which the favourable rate is passed on, has longer maturities. Consequently, the bank’s net interest income will shift over time.
NWB Bank does not pursue profit maximisation, but making a reasonable profit is necessary to achieve the bank’s ambitions and distribute an appropriate dividend. With regard to the latter, the bank will resume the dividend payment for the 2019 and 2020 financial years to its shareholders as soon as possible after September 30. This will involve an amount of approximately €47 million for 2019 and €45 million for 2020. The bank is able to make the payment because in late June the ECB announced it would not extend its recommendation to banks to withhold from paying dividends after September 30 and because the bank has a strong capital position.
The bank expects the net profit in 2021 to be higher than in 2020. However, given the uncertainties surrounding the COVID-19 crisis, the bank is cautious about the development of financing rates in the international money and capital markets, the market value development of the liquidity portfolio and any impact caused by the benchmark reform. The water authorities are likely to require additional financing in the near future as a result of recent flooding caused by heavy rainfall. The bank is ready to provide them with this.
|HEADLINE FIGURES (in millions of euros)|
|BALANCE SHEET||30 June 2021||31 December 2020|
|Long-term loans and advances (nominal value)1||50,488||49,844|
|Tier 1 capital2||2,150||2,085|
|RESULTS||30 June 2021||31 December 2020|
|Net interest income||138||244|
|Results from financial transactions||-12||-55|
|Bank tax and resolution levy||6||123|
|Impairment of receivables||-||-|
|Tax on profit from ordinary operations||384||54|
|DIVIDEND||30 June 2021||31 December 2020|
|Dividend (in euros per share)||-||762.9|
|RATIO’S (%)||30 June 2021||31 December 2020|
|Tier 1 ratio2||47.85||54.45|
|CET 1 ratio2||40.66||46.06|
|Dividend payout ratio||-||55.9|
|Leverage ratio (not adjusted for promotional assets)10||2.711||2.512|
|Liquidity Coverage Ratio||201||150|
|Net Stable Funding Ratio||140||122|
|CSR||30 June 2021||31 December 20200|
|Volume newly issued sustainable bonds||1,000||4,531|
|CO2 emission equivalent from operating activities p.p. (in tonnes)||0.7||1.5|
|CO2 emission equivalent PCAF portfolio coverage (in %)||9513||9514|
|CO2 emission equivalent loan portfolio (in kton)||1,59513||1,59514|
1) loans including interest-bearing securities provided to regional authorities
2) including profit for the financial year less dividend
3) including a restitution of €15 million for the years 2016 to 2018
4) applying the effective tax burden as a result of the bank levy to be paid in October
5) 46.3 excluding profit for the year (2020: 53.5)
6) 39.1 excluding profit for the year (2020: 45.1)
7) 'cost' concerns operating expenses and 'income' concerns the operating income
8) including profit for the financial year less dividend, taking into account the calculation for promotional banks according to CRR II as of 27 June 2019 and without applying Decision (EU) 2020/1306 of 16 September 2020 on the temporary exclusion of certain exposures to central banks from the total exposure measure in view of the COVID-19 pandemic (ECB/2020/44))
9) 50.5 including the Decision (EU) 2020/1306 of 16 September 2020 on the temporary exclusion of certain exposures to central banks from the total exposure measure in view of the COVID-19 pandemic (ECB/2020/44))
10) including profit for the financial year less dividend, not taking into account the proportional calculation for promotional banks
11) 2.6 (2020: 2.4) not taken into account Decision (EU) 2020/1306 of 16 September 2020 on the temporary exclusion of certain exposures to central banks from the total exposure measure in view of the COVID-19 pandemic (ECB/2020/44))
12) 2.1 (2020: 2.4) excluding profit for the current financial year and applying Decision (EU) 2020/1306 of 16 September 2020 on the temporary exclusion of certain exposures to central banks from the total exposure measure in view of the COVID-19 pandemic (ECB/2020/44))
13) will be updated at the end of the financial year
14) based on 94.5% of the loan portfolio (2019: 95.1%); the 2019 figure is recalculated to the most actual methodology
Learn more about how we collect, store, use and disclose your personal data when you interact with us.
This Disclaimer is defined according to the European Regulation act of General Data Protection Regulation (2016/679).
We use this data for the purposes described in our policy, which include:
Learn more here https://eapb.eu/disclaimer.html