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Half-Yearly Financial Report 2015

Overall, DVB considers Group developments during the first half of 2015 to be stable and satisfactory. Consolidated net income before taxes was up 4.6%, to €43.3 million (previous year: €41.4 million).

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Half-Yearly Financial Report 2015

  1. 1. 2015 Half-Yearly Financial Report as at 30 June
  2. 2. DVB Bank Group | Half-Yearly Financial Report 2015 Contents2 Further informationen 34 – 36 34 DVB worldwide 36 Imprint 03 Key figures at a glance Interim management report 04 – 13 05 Financial position and performance 10 Report on expected developments 12 Report on opportunities and risks 13 Report on major related party transactions Interim financial statements 14 – 32 15 Condensed income statement 15 Earnings per share 16 Condensed statement of comprehensive income 17 Statement of financial position 18 Condensed statement of changes in equity 18 Condensed cash flow statement 19 Segment report 20 Notes Review report 33 Legal notice Further information Symbols
  3. 3. DVB Bank Group | Half-Yearly Financial Report 2015 3Key figures at a glance € mn 1Jan 2015– 30 Jun 2015 1Jan 2014– 30 Jun 2014 % Earnings data Net interest income 92.5 105.0 –11.9 Allowance for credit losses –39.7 –27.9 42.3 Net interest income after allowance for credit losses 52.8 77.1 –31.5 Net fee and commission income 52.3 51.0 2.5 Results from investments in companies accounted for using the equity method 3.1 0.3 – Net other operating income/expenses –36.8 2.3 – Total income 71.4 130.7 –45.4 General administrative expenses –88.2 –87.7 0.6 Net result from financial instruments in accordance with IAS 39 75.0 2.4 – Consolidated net income before bank levy, BVR1) and taxes 58.2 45.4 28.2 Consolidated net income before taxes 43.3 41.4 4.6 Key financial indicators Return on equity (before taxes, %) 8.7 6.5 2.2 pp Cost/income ratio (%) 47.4 54.4 –7.0 pp Economic Value Added (€ million) –34.6 –2.6 – € mn 30 Jun 2015 31 Dec 2014 % Key items from the statement of financial position Business volume 27,293.8 26,215.0 4.1 Customer lending volume 25,273.1 23,310.2 8.4 Total assets 25,351.7 24,510.8 3.4 Loans and advances to customers 22,547.5 20,633.0 9.3 Deposits from customers 7,190.4 7,097.0 1.3 Securitised liabilities 11,692.1 11,305.8 3.4 Subordinated liabilities 796.9 487.2 63.6 Equity 1,465.3 1,437.4 1.9 Total capital in accordance with the Capital Requirements Regulation Common equity tier 1 1,157.7 1,222.0 –5.3 Tier 2 capital 460.1 186.6 – Modified available capital 1,617.8 1,408.6 14.9 Capital ratios – Basel III (%) Common equity tier 1 ratio 16.6 18.7 –2.1 pp Total capital ratio 23.3 21.6 1.7 pp 30 Jun 2015 30 Jun 2014 % Staff by business division Transport Finance/Investment Management 304 308 –1.3 Service areas 227 216 5.1 LogPay Financial Services 57 51 11.8 Total active staff 588 575 2.3 Rating 2015 2014 2013 Standard Poor’s Long-term counterparty credit rating A+ A+ A+ Short-term credit rating A-1 A-1 A-1 Outlook stable stable stable Fitch Ratings2) Long-term Issuer Default Rating AA- A+ A+ Short-term Issuer Default Rating F1+ F1+ F1+ 1) National Association of German Co-operative Banks 2) Within the scope of the German Co-operative Financial Services Network’s rating
  4. 4. DVB Bank Group | Half-Yearly Financial Report 2015 Interim management report 05 Financial position and performance 10 Report on expected developments 12 Report on opportunities and risks 13 Report on major related party transactions € mn 150 125 100 75 50 25 0 –25 –50 112.2 74.9 53.5 6.2 2011 112.5 70.8 54.6 43.9 2012 116.2 66.4 55.7 6.5 2013 105.0 51.0 41.4 2.3 2014 92.5 52.3 43.3 –36.8 2015 Development of income, as at 30 June Net interest income Net fee and commission income Net other operating income/expenses Consolidated net income before taxes
  5. 5. DVB Bank Group | Half-Yearly Financial Report 2015 5 The individual items of the half-yearly financial statements developed as follows: Interest income rose by 18.9%, from €434.7 million to €516.8 million, with interest income from the lending transactions up 5.0%, from €381.1 million to €400.2 million. Current income from finance leases decreased slightly, to €8.1 million (previous year: €8.2 million), whilst interest income from operating leases – derived largely from those funds managed by the Investment Management division which must be consolidated – were up significantly, to €99.6 million (previous year: €41.1 million). DVB’s new business in Shipping Finance, Aviation Finance, Offshore Finance and Land Transport Finance during the first half of 2015 comprised 100 transactions with an aggregate volume of €3.6 billion (previous year: 78 transactions with an aggregate volume of €2.2 billion). Based on a generally cycle- neutral lending policy, DVB continued to successfully implement its tried-and-tested strategy of pricing exposures in line with the risks involved. It achieved an average gross interest margin of 235 basis points on new Transport Finance business (previous year: 279 basis points). Interest expenses rose by 28.7%, from €329.7 million to €424.3 million, including interest expenses from operating leases, which rose from €51.5 million to €106.1 million. The latter item includes expenses from funds managed by the Investment Management division which must be consolidated, as well as risk costs for ships held by the Bank within the scope of restructuring measures. Higher interest income was not sufficient to compen- sate these effects. As a result, net interest income declined by 11.9%, from €105.0 million to €92.5 million. DVB Bank’s consolidated net income before taxes in line with the previous year Overall, DVB considers Group developments during the first half of 2015 to be stable and satisfactory. Consolidated net income before taxes was up 4.6%, to €43.3 million (previous year: €41.4 million). Essentially, this result was characterised by five factors:  • Interest income, and fee and commission income from the Bank’s operating Transport Finance business developed favourably, thanks to attractive new business. • Allowance for credit losses amounted to €39.7 million (previous year: €27.9 million); as expected, this was due to legacy burdens in some segments of the shipping market. • The Investment Management division generated significant non-recurring income through the partial sale of a share- holding in Wizz Air Holdings Plc. Net result from financial instruments in accordance with IAS 39 was therefore boosted to a total of €75.0 million (previous year: €2.4 million). • Other operating expenses was burdened by a non-recurring effect: an unscheduled write-down of a claim for damages in the amount of €36.4 million which had to be recognised as a result of a final arbitration ruling issued by the London Court of International Arbitration with regard to DVB’s consolidated subsidiary Dalian Deepwater Developer. • Expected bank levy charges in the amount of €10.3 million as well as €4.6 million in expenses for the Deposit Guarantee Scheme of the National Association of German Co-operative Banks already needed to be deducted at the beginning of the year. The present interim management report and condensed consolidated financial statements of DVB Bank Group as at 30 June 2015 were subject to a review pursuant to section 37w (5) of the German Securities Trading Act (WpHG). The half-yearly financial report comprises the condensed interim financial statements and the interim management report of DVB Bank Group. Consolidated net income before taxes, as at 30 June € mn 90 75 60 45 30 15 0 74.9 2011 70.8 2012 66.4 2013 41.4 2014 43.3 2015  Financial position and performance INTERIM MANAGEMENT REPORT INTERIM FINANCIAL STATEMENTS REVIEW REPORT FURTHER INFORMATION
  6. 6. DVB Bank Group | Half-Yearly Financial Report 2015 6 Net fee and commission income, which primarily includes fees and commissions from new Transport Finance business, and asset management and advisory fees, was up 2.5%, to €52.3 million (previous year: €51.0 million). Fee and commission income was up 10.1%, to €58.8 million (previous year: €53.4 million); fee and commission expenses amounted to €6.5 million (previous year: €2.4 million). Results from investments in companies accounting for using the equity method increased from €0.3 million to €3.1 million. Net other operating income/expenses amounted to –€36.8 million (previous year: €2.3 million). Other operating expenses was burdened by a non-recurring effect: an unscheduled write-down of a claim for damages in the amount of €36.4 million which had to be recognised as a result of a final arbitration ruling issued by the London Court of International Arbitration with regard to DVB’s consolidated subsidiary Dalian Deepwater Developer Ltd, St Helier, Jersey, British Channel Islands. Allowance for credit losses amounted to €39.7 million (previous year: €27.9 million). Specifically, new allowance recognised for credit losses totalled €69.2 million (previous year: €49.1 million), of which €45.0 million (previous year: €32.8 million) was accounted for by Shipping Finance, due to the persistently difficult environ- ment in some segments of the international shipping market. Conversely, allowance for credit losses of €34.8 million (previous year: €25.2 million) was reversed (of which €19.5 million in Shipping Finance – previous year: €16.7 million). Net interest income after allowance for credit losses of €52.8 million was lower than the previous year’s figure of €77.1 million.  Total allowance for credit losses (comprising specific allowance for credit losses, portfolio-based allowances for credit losses, and provisions) rose to €232.5 million, up 6.2% from year-end 2014 (€219.0 million). Allowance for credit losses by business division as at 30 June 2015 (€ mn) Additions Reversals Direct write-offs Recoveries on loans and advances previously written off Total Shipping Finance –38.5 11.8 –2.8 0.3 –29.2 Aviation Finance –0.4 1.0 – – 0.6 Offshore Finance –3.2 – – – –3.2 Land Transport Finance – 0.1 – – 0.1 Investment Management –11.2 6.5 – – –4.7 ITF Suisse –5.6 0.8 – – –4.8 Business no longer in line with DVB’s strategy –0.1 – –2.8 0.2 –2.7 Other – – –0.2 0.0 –0.2 Total specific allowance for credit losses –59.0 20.2 –5.8 0.5 –44.1 Shipping Finance –6.5 7.7 – – 1.2 Aviation Finance –1.6 4.5 – – 2.9 Offshore Finance –0.8 1.4 – – 0.6 Land Transport Finance –0.7 0.4 – – –0.3 Investment Management – – – – – ITF Suisse –0.6 0.6 – – 0.0 Business no longer in line with DVB’s strategy – – – – – Other – – – – – Total portfolio-based allowance for credit losses –10.2 14.6 – – 4.4 Total provisions – – – – – Total as at 30 June 2015 –69.2 34.8 –5.8 0.5 –39.7 Total as at 30 June 2014 –49.1 25.2 –5.6 1.6 –27.9  Financial position and performance
  7. 7. DVB Bank Group | Half-Yearly Financial Report 2015 7  Given the arbitration ruling and the resulting non-recurring effect, the Bank published an ad-hoc disclosure on 7 August 2015 which is available on its website www.dvbbank.com Investors Publications Ad-hoc disclosures. For more detailed explanations, please refer to the Notes to DVB Bank Group’s half-yearly financial report (page 24). The report is also available as PDF file on DVB’s webpage www.dvbbank.com Investors Publications Financial reports. At €71.4 million, total income for the first six months of 2015 (comprising net interest income after allowance for credit losses, net fee and commission income, results from investments in companies accounted for using the equity method, and net other operating income/expenses), was down by 45.4% year-on-year (previous year: €130.7 million). General administrative expenses rose by 0.6%, to €88.2 million (previous year: €87.7 million). Staff expenses declined by 6.0%, to €51.5 million (previous year: €54.8 million), largely due to lower provisions for variable remuneration components and lower pension expenses. Together with its DVB LogPay Financial Services subsidiary, DVB employed a total of 588 staff (in active employment) as at 30 June 2015, an increase of 13 compared to the previous year (575 employees). Non-staff expenses (including amortisation, depreciation and impairment) rose by 11.6%, from €32.9 million to €36.7 million. Net result from financial instruments in accordance with IAS 39 (comprising the trading result, the hedge result, the result from the application of the fair value option, the result from derivatives entered into without intention to trade, and the net result from investment securities) – which is generally volatile – amounted to €75.0 million (previous year: €2.4 million). The net figure largely comprised a significant non-recurring operating income from the sale of investment securities – the partial sale of a shareholding in Wizz Air Holdings Plc. Accordingly, net result from investment securities was up by €44.3 million, to €47.0 million (previous year: €2.7 million). Consolidated net income before bank levy, BVR, and taxes thus improved by 28.2%, to €58.2 million (previous year: €45.4 million). The expected bank levy charges of €10.3 million (2014: actual bank levy of €3.6 million) as well as €4.6 million in expenses for the Deposit Guarantee Scheme of the National Association of German Co-operative Banks (2014: €4.4 million in expenses for the BVR Deposit Guarantee Scheme) needed to be deducted from this figure already at the beginning of the year. Consolidated net income before taxes was up 4.6% year- on-year, to €43.3 million (previous year: €41.4 million), whilst consolidated net income after taxes amounted to €30.1 million and thus almost reached previous year’s figure of €31.7 million. Financial position and performance INTERIM MANAGEMENT REPORT INTERIM FINANCIAL STATEMENTS REVIEW REPORT FURTHER INFORMATION Total income1) General administrative expenses Net result from financial instruments in accordance with IAS 39 incl. net result from investment securities Expenses for the bank levy and the BVR2) Deposit guarantee Scheme (fiscal year) Income taxes Consolidated net income 71.4 –88.2 +75.0 –14.9 –13.2 30.1 1) Comprising net interest income after allowance for credit losses, net fee and commission income, results from investments in companies accounted for using the equity method, and net other operating income/expenses 2) National Association of German Co-operative Banks  Consolidated net income, as at 30 June 2015 (€ mn)
  8. 8. DVB Bank Group | Half-Yearly Financial Report 2015 8 DVB’s consolidated total assets increased to €25.4 billion as at 30 June 2015, up 3.7% from the 2014 year-end (31 December 2014: €24.5 billion) mainly due to currency translation effects. DVB’s nominal volume of customer lending (the aggregate of loans and advances to customers, guarantees and indemnities, irrevocable loan commitments, and derivatives) increased by 8.6%, reflecting currency translation effects, to €25.3 billion. In US dollar terms, it was unchanged, at US$28.3 billion.  The distribution of customer lending amongst the Bank’s busi- ness divisions as at 30 June 2015 was as follows:   € bn US$ bn 30 Jun 2015 31 Dec 2014 % 30 Jun 2015 31 Dec 2014 % Shipping Finance 11.0 10.1 8.9 12.3 12.3 − Aviation Finance 8.1 7.1 14.1 9.1 8.6 5.8 Offshore Finance 2.5 2.3 8.7 2.8 2.8 − Land Transport Finance 1.8 2.0 –10.0 2.0 2.4 –16.7 ITF Suisse 1.1 1.0 10.0 1.2 1.2 − Investment Management 0.6 0.6 − 0.7 0.7 − Business no longer in line with DVB’s strategy 0.2 0.2 − 0.2 0.3 –33.3 Total 25.3 23.3 8.6 28.3 28.3 − Development of the customer lending volume, as at 30 June 2015  Shipping Finance 43.5% (+ 0.2 pp) Aviation Finance 32.0% (+ 1.5 pp) Offshore Finance 9.9% (0.0 pp) Land Transport Finance 7.1% (– 1.5 pp) ITF Suisse 4.3% (0.0 pp) Investment Management 2.4% (– 0.2 pp) Business no longer in line with DVB’s strategy 0.8% (0.0 pp) Distribution of customer lending by business division, as at 30 June 2015 Financial position and performance
  9. 9. DVB Bank Group | Half-Yearly Financial Report 2015 9 The risk-adjusted EVA™ is a key indicator used for the manage- ment and assessment of the Bank’s business; it represents residual profit and expresses net profit (as an absolute amount) after deduction of costs for risk capital employed. To date, the IAS 39 result was not included for calculating this indicator, due to the fact that it largely comprised measurement results which could not be allocated to the Bank’s operating business. Net result from investment securities now also regularly includes operating results. Since the beginning of the year, this portion of the IAS 39 result has been included in the calculation of the indicator. On this basis, EVA™ was calculated by deducting pro- rata risk capital costs of €49.9 million from consolidated net income before IAS 39 and taxes (but including net result from investment securities) of €15.3 million. DVB discloses capital ratios determined in accordance with the Basel III framework (Advanced Approach). On this basis, the common equity tier 1 ratio as at 30 June 2015 was 16.6% (31 December 2014: 18.7%), whilst the total capital ratio amounted to 23.3% (31 December 2014: 21.6%). DVB’s key financial indicators developed as follows: The return on equity (ROE) before taxes stood at 8.7% – up by 2.2 percentage points (previous year: 6.5%), and the cost/income ratio (CIR) declined by 7.0 percentage points, to 47.4% (previous year: 54.4%). Risk-adjusted Economic Value Added (EVATM ) – which has included operating net result from investment securities since the beginning of this year – amounted to –€34.6 million (previous year: –€2.6 million). The ROE was calculated as follows: consolidated net income before bank levy, BVR and taxes – attributable to shareholders of DVB Bank SE – of €58.2 million was divided by the total of the weighted capital (issued share capital, capital reserves and retained earnings, excluding the fund for general banking risks, non-controlling interests and deferred taxes, and before con­ firmation of consolidated net income) of €1,340.0 million (€670.0 million on a pro-rata basis). Expenses for the bank levy and the BVR Deposit Guarantee Scheme were previously reported in non-staff expenses, on a pro-rata basis. This calculation meth- odology was amended for the first time with the three-month results 2015: since then, the expected amount in expenses must be recognised already at the beginning of the year. The CIR was calculated by dividing general administrative expenses of €88.2 million by €186.1 million (the total of net interest income (before allowance for credit losses), net fee and commission income, results from investments in companies accounted for using the equity method, net other operating income/expenses, and the net result from financial instruments in accordance with IAS 39). Financial position and performance INTERIM MANAGEMENT REPORT INTERIM FINANCIAL STATEMENTS REVIEW REPORT FURTHER INFORMATION
  10. 10. DVB Bank Group | Half-Yearly Financial Report 2015 10 Report on expected developments Macroeconomic overview There are no new insights that would indicate any material changes to the forecasts regarding the development of transport markets, the Transport Finance and Investment Management portfolios, or to the financial outlook as set out in the Group Management Report on pages 85-87, 98-99, 107, 118-119, 123, 129, 133 and 136-137 of the Annual Report 2014. The recovery of the global economy continues to show a mixed picture in the industrial nations and emerging economies. The International Monetary Fund forecasts global economic growth of 3.3% in the year 2015 – slightly below the previous year’s level. Hence, economic growth remains inconsistent and is subject to certain risks, outlined below. For instance, at present it is impossible to predict the impact of the interest rate turnaround in the US on asset prices in industrial countries, as well as on capital flows in major emerging economies. The current economic environment in China might also lead to serious burdens for the international financial sector: • Chinese property prices are falling significantly. • Chinese companies and regional public-sector entities are highly indebted. • Following the long rally on Chinese equity markets, recent turbulence at the beginning of August 2015 has led to signifi- cant losses. In contrast, Greece’s persistent financial troubles pose a lower risk to the European economy. The crude oil price (Brent Crude) hit a trough at the beginning of 2015: it slightly recovered during the first half of the year, moving in a range between US$55 and US$70 per barrel. Looking at the most recent oil market developments, there is no discernible trend towards higher prices. On the other hand, constructive trends are evident in the industrial nations. The US economy is likely to show positive momentum, with GDP growth projected to be 2.5% in 2015. In this context, domestic demand remains the biggest contributor to US GDP growth which is being supported by lower oil prices and continued low interest rate policy of the US Federal Reserve. Although interest rates are expected to rise in the medium term, the economy appears to have gained stability at present. Euro-zone GDP growth is projected to remain positive, albeit at a low level, with the 2015 growth rate forecast at 1.5%. This raises the risk of a drawn-out phase of weak growth and low inflation. The difficult political climate between various member countries, however, holds significant risks for the region’s overall economic growth. Developments on the trade and transport markets have remained mixed during 2015. Demand forecasts for the aviation and land transport markets remain positive. Airlines around the globe are reporting strong incomes, and weak oil prices should add to their profitability. In passenger and freight transport, we expect increases in transport prices, lease rates and utilisation rates across the board – in ascending order: Europe, Australia and North America. This half-yearly financial report contains forward-looking statements, including statements concerning the future development of DVB. As usual, any assessments and forecasts contained herein will always be subject to the risk of erroneous perception or judgement errors, and may thus turn out to be incorrect. By their very nature, any deliberations regarding developments or events in the future are based on conjecture rather than precise predictions. Actual future developments may there- fore diverge from expectations, not least as a result of fluc- tuations in capital market prices, exchange rates or interest rates, or similar causes of uncertainty; or due to fundamental changes in the economic environment. Although we believe the forward-looking statements to be realistic, DVB cannot accept any responsibility that they will actually materialise, for the reasons outlined above.
  11. 11. DVB Bank Group | Half-Yearly Financial Report 2015 11Notes Demand growth in the shipping markets will generally be positive, with a cyclic recovery expected to take hold in some key con- suming markets – but also with an expected slowdown in the previous decade’s strong demand growth for dry bulk commodities. Oversupply remains the current key issue in most sectors, and additional newbuildings can weigh down the nascent recovery in fleet utilisation expected in some sectors within the next one or two years. Excess shipyard capacity remains a challenge. The tanker market is currently experiencing a short-term upswing, benefiting from the drop in oil prices. This leads to tankers being used as floating storage. As a result, demand for crude oil tankers is increasing more strongly than would be supported by funda- mentals. At the same time, spending for exploration and production in offshore markets has and is being cut, because of the low oil prices. Although EP spending in the offshore segment was expected to slow down, the extent of the cuts is greater than expected. Demand for all types of offshore assets in 2015 is thus likely to fall short of projections. In regions with relatively high break-even points in crude oil exploration – such as the North Sea, West Africa and Brazil – demand is expected to see a more pronounced decline than in regions where location costs are lower, such as the Middle East. Trend outlook and summary DVB remains cautiously optimistic for the development of its operating business in Transport Finance during the second half of the year. After all, experience shows that the Bank is usually able to increase profit contributions from its financing and advi- sory business with the international transport sector during the second half of the year. Risk costs will remain at the levels seen in previous years for the time being, due to the prevailing difficult situation in some segments of the shipping market. In contrast to the previous guidance for the consolidated net income to exceed the previous year’s level, taking the burden by the non-recurring effect on the net other operating income/expenses due to the unscheduled write-down mentioned into account, it is fair to assume that the Bank’s consolidated net income for 2015 will in fact be lower year-on-year. Report on expected developments Interim Management report Interim financial statements review report further information
  12. 12. DVB Bank Group | Half-Yearly Financial Report 2015 12 No risks which would jeopardise DVB’s continued existence are expected to materialise during the remainder of the 2015 financial year. Please refer to the report on opportunities and risks on pages 142–166 of the Annual Report 2014, which contains detailed information regarding risk management principles and organisation, DVB’s risk-bearing capacity and risk capital, and on the different types of risk. Report on opportunities and risks
  13. 13. DVB Bank Group | Half-Yearly Financial Report 2015 13Notes Full reference is made in this respect to the information provided on page 234, note 64.4 of the Annual Report 2014. As part of DVB’s funding operations, the Bank’s securitised liabilities vis- à-vis DZ BANK AG were virtually unchanged as at 30 June 2015, at €7,473.0 million (31 December 2014: €7,798.7 million). At the reporting date, the Bank had no securities repurchase agreements in place where DZ BANK AG is the borrower (31 December 2014: five transactions recognised in loans and advances to banks, in an aggregate amount of €1,407.2 million). Other than this, there were no material changes to related party transactions during the first half of 2015 which might have materially affected the financial position or financial performance of DVB. Report on major related party transactions INTERIM MANAGEMENT REPORT INTERIM FINANCIAL STATEMENTS REVIEW REPORT FURTHER INFORMATION
  14. 14. DVB Bank Group | Half-Yearly Financial Report 2015 14 Interim financial statements 15 Condensed income statement 15 Earnings per share1) 16 Condensed statement of comprehensive income 17 Statement of financial position 18 Condensed statement of changes in equity 18 Condensed cash flow statement 19 Segment report1) 20 – 32 Notes 1) These tables are part of the Notes. € mn 160 140 120 100 80 60 40 20 0 –20 2011 2012 2013 2014 2015 Shipping Finance Aviation Finance Offshore Finance Land Transport Finance Total Transport Finance results 1) Before IAS 39 and before allocation of general costs Transport Finance results1) as at 30 June 60.9 29.0 46.6 42.9 –2.2 55.7 57.2 56.7 54.3 61.9 14.0 18.3 29.7 21.5 18.9 10.8 9.9 10.6 14.1 16.8 141.4 114.4 143.6 132.8 95.4
  15. 15. DVB Bank Group | Half-Yearly Financial Report 2015 15Notes INTERIM MANAGEMENT REPORT INTERIM FINANCIAL STATEMENTS REVIEW REPORT FURTHER INFORMATION € mn Note 1 Jan 2015 – 30 Jun 2015 1 Jan 2014 – 30 Jun 2014 % Net interest income (3) 92.5 105.0 –11.9 Allowance for credit losses (4) –39.7 –27.9 42.3 Net interest income after allowance for credit losses 52.8 77.1 –31.5 Net fee and commission income (5) 52.3 51.0 2.5 Results from investments in companies accounted for using the equity method 3.1 0.3 – General administrative expenses (6) –88.2 –87.7 0.6 Net other operating income/expenses (7) –36.8 2.3 – Consolidated net income before IAS 39, bank levy, BVR1) and taxes -16.8 43.0 – Net result from financial instruments in accordance with IAS 39 (8) 75.0 2.4 – Consolidated net income before bank levy, BVR1) and taxes 58.2 45.4 28.2 Expenses for the bank levy and the BVR1) Deposit Guarantee Scheme –14.9 –4.0 – Consolidated net income before taxes 43.3 41.4 4.6 Income taxes –13.2 –9.7 36.1 Consolidated net income 30.1 31.7 –5.0 thereof: consolidated net income attributable to non-controlling interests 0.0 0.0 – thereof: consolidated net income attributable to shareholders of DVB Bank SE 30.1 31.7 –5.0 Earnings per share Average number of shares issued 45,696,269 45,621,519 0.2 Basic earnings per share (€) 0.66 0.69 –4.3 Diluted earnings per share (€) 0.66 0.69 –4.3 1) National Association of German Co-operative Banks (Bundesverband der Deutschen Volksbanken und Raiffeisenbanken – BVR) Condensed income statement
  16. 16. DVB Bank Group | Half-Yearly Financial Report 2015 16 € mn 1 Jan 2015 – 30 Jun 2015 1 Jan 2014 – 30 Jun 2014 % Consolidated net income 30.1 31.7 –4.3 Other comprehensive income reclassified subsequently to profit or loss 22.1 –1.5 – Revaluation of AfS financial instruments 20.4 1.6 – thereof: changes in fair value 19.7 3.3 – thereof: reclassifications to the income statement 0.7 –1.7 – Cash flow hedges 2.9 –4.7 – thereof: changes in fair value –19.1 –0.5 – thereof: reclassifications to the income statement 22.0 –4.2 – Net investment hedges –16.0 –3.7 – thereof: changes in fair value –18.4 –2.7 – thereof: reclassifications to the income statement 2.4 –1.0 – Currency translation 10.2 3.1 – Deferred taxes 4.6 2.2 – Other comprehensive income from associates and joint ventures reclassified subsequently to profit or loss 1.3 – – Revaluation of AfS financial instruments 2.0 – – thereof: changes in fair value 2.0 – – thereof: reclassifications to the income statement – – – Cash flow hedges 0.0 – – thereof: changes in fair value 0.0 – – thereof: reclassifications to the income statement – – – Currency translation –0.7 – – Other comprehensive income not reclassified subsequently to profit or loss –1.5 –0.2 – Revaluation of defined benefit plans –2.1 –0.3 – Deferred taxes 0.6 0.1 – Total comprehensive income 52.0 30.0 73.3 thereof: total comprehensive income attributable to non-controlling interests 0.0 0.0 – thereof: total comprehensive income attributable to shareholders of DVB Bank SE 52.0 30.0 73.3 Condensed statement of comprehensive income
  17. 17. DVB Bank Group | Half-Yearly Financial Report 2015 17Notes INTERIM MANAGEMENT REPORT INTERIM FINANCIAL STATEMENTS REVIEW REPORT FURTHER INFORMATION Assets (€ mn) Note 30 Jun 2015 31 Dec 2014 % Cash and balances with the central bank 68.4 175.5 –61.0 Loans and advances to banks (9) 954.2 1,491.6 –36.0 Loans and advances to customers (10) 22,547.5 20,633.0 9.3 Allowance for credit losses (11) –232.4 –218.9 6.2 Positive fair values of derivative hedging instruments 323.4 416.7 –22.4 Trading assets 109.5 88.2 24.1 Investment securities (12) 332.7 328.6 1.2 Investments in companies accounted for using the equity method (13) 224.6 193.4 16.1 Intangible assets (14) 101.7 100.5 1.2 Property and equipment (15) 738.8 1,087.7 –32.1 Income tax assets 98.1 99.8 –1.7 Other assets (16) 85.2 114.7 –25.7 Total 25,351.7 24,510.8 3.4 Liabilities and equity (€ mn) Note 30 Jun 2015 31 Dec 2014 % Deposits from other banks (17) 2,950.7 3,058.5 –3.5 Deposits from customers (18) 7,190.4 7,097.0 1.3 Securitised liabilities (19) 11,692.1 11,305.8 3.4 Negative fair values of derivative hedging instruments 211.1 192.6 9.6 Trading liabilities 788.4 604.5 30.4 Provisions (20) 60.7 65.1 –6.8 Income tax liabilities 74.7 75.6 –1.2 Other liabilities (21) 121.4 187.1 –35.1 Subordinated liabilities (22) 796.9 487.2 63.6 Equity (23) 1,465.3 1,437.4 1.9 Issued share capital 116.9 116.6 0.3 Capital reserve 323.5 320.6 0.9 Retained earnings 973.7 974.6 –0.1 thereof: fund for general banking risks 82.4 82.4 – Revaluation reserve 30.0 7.2 – Reserve from cash flow hedges –13.9 –15.9 –12.6 Reserve from net investment hedges –19.1 –8.2 – Currency translation reserve 23.9 14.4 66.0 Distributable profit 30.1 27.9 7.9 Non-controlling interests 0.2 0.2 – Total 25,351.7 24,510.8 3.4 Statement of financial position
  18. 18. DVB Bank Group | Half-Yearly Financial Report 2015 18 € mn 1 Jan 2015 – 30 Jun 2015 1 Jan 2014 – 30 Jun 2014 % Equity as at 1 Jan 1,437.4 1,398.9 2.8 Consolidated net income attributable to shareholders of DVB Bank SE 30.1 31.7 –5.0 Other comprehensive income 21.9 –1.7 – Dividend payment –27.9 –27.9 – Changes in treasury shares 3.3 –0.4 – Changes in consolidated group and other changes 0.5 0.1 – Equity as at 30 Jun 1,465.3 1,400.7 4.6 € mn 1 Jan 2015 – 30 Jun 2015 1 Jan 2014 – 30 Jun 2014 % Cash flow from operating activities –244.5 –2,043.7 –88.0 Cash flow from investing activities –151.4 99.7 – Cash flow from financing activities 288.8 –33.5 – Net change in cash and cash equivalents –107.1 –1,977.5 –94.6 Cash and cash equivalents at beginning of period 175.5 2,040.5 –91.4 Cash and cash equivalents at end of period 68.4 63.0 8.6 Condensed statement of changes in equity Condensed cash flow statement
  19. 19. DVB Bank Group | Half-Yearly Financial Report 2015 19Notes INTERIM MANAGEMENT REPORT INTERIM FINANCIAL STATEMENTS REVIEW REPORT FURTHER INFORMATION Segment report1) Group Shipping Finance Aviation Finance Offshore Finance Land Transport Finance Investment Management Treasury Other Recon- ciliation/ consolidation € mn 6/2015 6/2014 6/2015 6/2014 6/2015 6/2014 6/2015 6/2014 6/2015 6/2014 6/2015 6/2014 6/2015 6/2014 6/2015 6/2014 6/2015 6/2014 Net interest income 92.5 105.0 42.5 43.4 39.5 42.7 12.4 12.4 14.0 8.9 –18.7 –12.1 –18.2 –12.5 5.7 5.9 15.3 16.2 Allowance for credit losses –39.7 –27.9 –26.7 –21.8 2.9 –0.9 –0.7 –0.2 –0.2 1.2 –4.9 0.0 0.0 0.0 –6.3 –7.1 –3.8 0.9 Net interest income after allowance for credit losses 52.8 77.1 15.8 21.6 42.4 41.8 11.7 12.2 13.8 10.1 –23.6 –12.1 –18.2 –12.4 –0.6 –1.2 11.5 17.1 Net fee and commission income 52.3 51.0 16.2 17.3 20.1 12.5 7.2 9.3 2.9 4.0 –0.2 –0.5 –0.2 –0.1 6.0 6.3 0.3 2.2 Results from investments in companies accounted for using the equity method 3.1 0.3 – – – – – – – – 3.5 0.3 – – –0.4 – 0.0 0.0 Net other operating income/ expenses –36.8 2.3 –34.2 4.0 –0.6 0.0 0.0 0.0 0.1 0.0 7.3 –0.2 0.0 0.0 –8.5 2.1 –0.9 –3.6 Results 71.4 130.7 –2.2 42.9 61.9 54.3 18.9 21.5 16.8 14.1 –13.0 –12.5 –18.4 –12.5 –3.5 7.2 10.9 15.7 Staff expenses –51.5 –54.8 –12.7 –14.2 –7.9 –7.3 –1.6 –2.0 –1.3 –1.3 –3.5 –4.8 –0.5 –0.7 –20.1 –20.0 –3.9 –4.5 Non-staff expenses –34.3 –30.7 –2.9 –4.2 –2.5 –1.9 –0.6 –0.6 –0.5 –0.3 –3.5 –1.8 –0.2 –0.2 –17.0 –16.8 –7.1 –4.9 Depreciation, amortisation, impairment and write-ups –2.4 –2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 –2.3 –2.1 –0.1 0.0 General administrative expenses –88.2 –87.7 –15.6 –18.4 –10.4 –9.2 –2.2 –2.6 –1.8 –1.6 –7.0 –6.6 –0.7 –0.9 –39.4 –38.9 –11.1 –9.4 Consolidated net income before IAS 39, bank levy, BVR and taxes –16.8 43.0 –17.8 24.5 51.5 45.0 16.7 18.9 15.0 12.5 –20.0 –19.1 –19.1 –13.4 –42.9 –31.7 –0.2 6.3 Net result from financial instruments in accordance with IAS 39 75.0 2.4 –8.1 –0.5 0.1 0.0 0.0 0.1 0.0 0.0 47.8 2.4 35.1 0.2 0.0 0.0 0.1 0.2 Consolidated net income before bank levy, BVR and taxes 58.2 45.4 –25.9 24.0 51.6 45.0 16.7 19.0 15.0 12.5 27.8 –16.7 16.0 –13.2 –42.9 –31.7 –0.1 6.5 Expenses for the bank levy and the BVR Deposit Guarantee Scheme –14.9 –4.0 – – – – – – – – – – – – – – –14.9 –4.0 Consolidated net income before taxes 43.3 41.4 –25.9 24.0 51.6 45.0 16.7 19.0 15.0 12.5 27.8 –16.7 16.0 –13.2 –42.9 –31.7 –15.0 2.5 Cost/income ratio2) (%) 47.4 54.4 95.3 28.7 17.7 16.7 11.3 11.8 10.5 13.7 17.6 –65.9 – – – – – – Return on equity3) (%) 8.7 6.5 –20.8 14.8 56.9 57.8 87.6 124.5 100.0 90.8 15.0 –12.9 – – – – – – Lending volume4) 26,944.6 23,998.3 11,030.6 8,865.9 8,120.8 6,168.9 2,506.6 2,045.0 1,789.9 1,748.7 570.4 466.2 1,660.2 3,629.2 1,266.1 1,074.4 – – 1) Before allocation of general costs 2) Excluding allowance for credit losses 3) Before taxes 4) According to internal management
  20. 20. DVB Bank Group | Half-Yearly Financial Report 2015 Notes20 In the period under review, DVB did not enter into securities repurchase agreements. As at year-end 2014, DVB held five transactions structured as genuine repurchase agreements, in which the Bank acted as lender; all of these expired during the first half of 2015. Currency translation differences related to companies with a different functional currency are recognised directly in equity, in the currency translation reserve. In total, 21 companies accounted for using the equity method have a different functional currency (31 December 2014: 20 companies). To the extent that estimates are necessary for recognition and measurement, these were made in accordance with the relevant standards. The basis for these estimates is continuously reviewed and adjusted, if necessary, taking into account historical experi- ence as well as changed expectations with regard to future developments. 2 Group of consolidated companies The group of consolidated companies changed as a result of the establishment of the following, fully consolidated companies: • Berwick Shipping LLC, Majuro, Marshall Islands • Drem Shipping LLC, Majuro, Marshall Islands • Leith Shipping LLC, Majuro, Marshall Islands • Linton Shipping LLC, Majuro, Marshall Islands • Ocean Giant LLC, Majuro, Marshall Islands The following newly-established companies were included in the group of consolidated companies using the equity method: • Artemis Gas 1 Shipping LLC, Piraeus, Greece • Intermodal Investment Fund VIII LLC, Majuro, Marshall Islands The following companies are no longer included in the scope of consolidation: • Blue Moon Shipping Ltd, St. John’s, Antigua/Barbuda • DCAL 1 Leasing Ltd, Dublin, Ireland • DCAL 2 Leasing Ltd, Dublin, Ireland • France Maritime LLC, Majuro, Marshall Islands • Green Mountain Shipping Ltd, Willemstad, Curaçao • Intermodal Investment Fund VI LLC, Majuro, Marshall Islands • Mediterra LLC, Majuro, Marshall Islands • NFC Shipping Fund B LLC, Majuro, Marshall Islands • TEU Asset Company N.V., Willemstad, Curaçao • Tubbataha Aviation Ltd, George Town, Cayman Islands • Yellow Moon Shipping Ltd, St. John’s, Antigua/Barbuda General notes 1 Summary of material accounting policies applied The present interim consolidated financial statements for the period ended on 30 June 2015 have been prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted by the European Union (EU). They also comply with the requirements for interim financial reporting set out in section 37w of the German Securities Trading Act (WpHG). The present interim consolidated financial statements are pre- sented in the form of condensed interim financial statements in accordance with IAS 34. The accounting policies applied therein are in line with those applied for the consolidated financial state- ments as at 31 December 2014, with the following exceptions. The following amendments to accounting standards and new interpretations have been taken into account in the interim financial statements: • IFRIC 21 – Levies • Improvements to the International Financial Reporting Standards, period 2011–2013 The interpretation IFRIC 21 – Levies clarifies when obligations regarding levies that are imposed by government agencies and are not within the scope of another specific standard have to be reported in the financial statements. The activity which triggers the payment of a levy pursuant to applicable legislation is iden- tified as the obligating event that gives rise to the recognition of a liability. Economic compulsion and the going concern principle do not represent an obligating event. The standard is required to be applied for companies within the EU for business years beginning on or after 17 June 2014. To enhance the meaningfulness of the Notes, and given that expenses for the bank levy and the BVR Deposit Guarantee Scheme are no longer amortised, DVB has added the following new lines to its income statement: • Consolidated net income before bank levy, BVR, and taxes • Expenses for the bank levy and the BVR Deposit Guarantee Scheme In the previous year, these expenses were still amortised and reported in the general administrative expenses.
  21. 21. DVB Bank Group | Half-Yearly Financial Report 2015 21Notes INTERIM MANAGEMENT REPORT INTERIM FINANCIAL STATEMENTS REVIEW REPORT FURTHER INFORMATION 5 Net fee and commission income 6 General administrative expenses 7 Net other operating income/expenses 8 Net result from financial instruments in accordance with IAS 39 The following companies accounted for using the equity method are no longer included in the scope of consolidation: • Intermodal Investment Fund II LLC, Majuro, Marshall Islands The following company previously accounted for at cost is now included using the equity method: • Gram Car Carriers Holdings Pte Ltd, Singapore 3 Net interest income 4 Allowance for credit losses € mn 1 Jan 2015 – 30 Jun 2015 1 Jan 2014 – 30 Jun 2014 % Interest income from lending and money market transactions 400.2 381.1 5.0 from bonds and other fixed-income securities 6.3 2.4 – from finance leases 8.1 8.2 –1.2 Current income from operating leases 99.6 41.1 – from equity investments and other investment securities 2.6 1.9 36.8 Interest income 516.8 434.7 18.9 Interest expenses for deposits –169.6 –139.1 21.9 for securitised liabilities –136.9 –131.7 3.9 for subordinated liabilities –11.7 –7.4 58.1 from operating leases –106.1 –51.5 – Interest expenses –424.3 –329.7 28.7 Net interest income 92.5 105.0 –11.9 € mn 1 Jan 2015 – 30 Jun 2015 1 Jan 2014 – 30 Jun 2014 % Additions –69.2 –49.0 41.2 Reversals 34.8 25.1 38.6 Direct write-offs –5.8 –5.6 3.6 Recoveries on loans and advances previously written off 0.5 1.6 –68.8 Total –39.7 –27.9 42.3 € mn 1 Jan 2015 – 30 Jun 2015 1 Jan 2014 – 30 Jun 2014 % Fee and commission income from guarantees and indemnities 2.3 2.1 9.5 from the lending business 53.1 42.7 24.4 Other fee and commission income 3.4 8.6 –60.5 Fee and commission income 58.8 53.4 10.1 Fee and commission expenses –6.5 –2.4 – Net fee and commission income 52.3 51.0 2.5 € mn 1 Jan 2015 – 30 Jun 2015 1 Jan 2014 – 30 Jun 2014 % Staff expenses –51.5 –54.8 –6.0 Non-staff expenses –34.3 –30.7 11.7 Depreciation, amortisation, impairment and write-ups –2.4 –2.2 9.1 Total –88.2 –87.7 0.6 € mn 1 Jan 2015 – 30 Jun 2015 1 Jan 2014 – 30 Jun 2014 % Other operating income 30.2 15.6 93.6 Other operating expenses –67.0 –13.3 – Total –36.8 2.3 – € mn 1 Jan 2015 – 30 Jun 2015 1 Jan 2014 – 30 Jun 2014 % Trading result 7.4 3.6 – Hedge result 7.1 –3.6 – Result from the application of the fair value option – – – Result from derivatives entered into without intention to trade 13.5 –0.3 – Result from investment securities 47.0 2.7 – Total 75.0 2.4 –
  22. 22. DVB Bank Group | Half-Yearly Financial Report 2015 Notes22 9 Loans and advances to banks 10 Loans and advances to customers DVB does not hold any claims against Greece, Ireland, Portugal, Spain or Italy. Loans and advances to clients domiciled in these countries are not exposed to any country-specific risks, especially due to the fact that the relevant claims are collateralised by the financed transport assets. 8.1 Trading result 8.2 Hedge result (hedge accounting) € mn 1 Jan 2015 – 30 Jun 2015 1 Jan 2014 – 30 Jun 2014 % Result from derivative hedging instruments –199.8 269.4 – Result from hedged items 205.4 –272.9 – Result from remeasurement 5.6 –3.5 – Ineffectiveness of cash flow hedges 1.5 –0.1 – Total 7.1 –3.6 – € mn 30 Jun 2015 31 Dec 2014 % Loans and advances 952.8 596.8 59.7 thereof: payable on demand 952.8 596.8 59.7 thereof: with a limited term – 0.0 – Money market transactions 1.0 894.7 –99.9 thereof: payable on demand – – – thereof: with a limited term 1.0 894.7 –99.9 Other loans and advances to banks 0.4 0.1 – Total 954.2 1,491.6 –36.0 German banks 445.0 754.8 –41.0 Foreign banks 509.2 736.8 –30.9 Total 954.2 1,491.6 –36.0 € mn 30 Jun 2015 31 Dec 2014 % Loans and advances 22,529.5 20,610.2 9.3 thereof: payable on demand 377.5 252.7 49.4 thereof: with a limited term 22,152.0 20,357.5 8.8 Other loans and advances to customers 18.0 22.8 –21.1 Total 22,547.5 20,633.0 9.3 German customers 1,031.3 1,039.8 –0.8 Foreign customers 21,516.2 19,593.2 9.8 Total 22,547.5 20,633.0 9.3 € mn 1 Jan 2015 – 30 Jun 2015 1 Jan 2014 – 30 Jun 2014 % Trading result from derivatives –0.6 –0.3 – from foreign currency transactions 7.7 3.1 – from interest and dividend payments 0.3 0.8 –62.5 Other – 0.0 – Total 7.4 3.6 –
  23. 23. DVB Bank Group | Half-Yearly Financial Report 2015 23Notes INTERIM MANAGEMENT REPORT INTERIM FINANCIAL STATEMENTS REVIEW REPORT FURTHER INFORMATION 11 Allowance for credit losses Interest income arises from unwinding impaired loans and advances to customers, recognised at their present value as specified in IAS 39.AG93. 12 Investment securities DVB does not hold any investment securities from Greece, Ireland, Portugal, Spain or Italy. 13 Investments in companies accounted for using the equity method 14 Intangible assets 15 Property and equipment Specific allowance Portfolio-based allowance Total € mn 30 Jun 2015 31 Dec 2014 30 Jun 2015 31 Dec 2014 30 Jun 2015 31 Dec 2014 Balance at 1 January 183.9 159.5 35.0 45.0 218.9 204.5 Additions 59.0 133.5 10.2 13.7 69.2 147.2 Utilisation –25.5 –71.7 – – –25.5 –71.7 Reversals –20.2 –56.4 –14.6 –27.1 –34.8 –83.5 Interest income –11.1 – – – –11.1 – Changes resulting from exchange rate fluctuations 13.1 19.0 2.6 3.4 15.7 22.4 Balance as at the reporting date 199.2 183.9 33.2 35.0 232.4 218.9 € mn 30 Jun 2015 31 Dec 2014 % Bonds and other fixed-income securities 299.2 284.9 5.0 thereof: bonds and notes 299.2 284.9 5.0 Equities and other non-fixed-income securities 27.9 14.1 97.9 Equity investments 5.6 29.6 –81.1 Total 332.7 328.6 1.2 € mn 30 Jun 2015 31 Dec 2014 % Investments in associates 172.3 147.8 16.6 Interests in joint ventures 52.3 45.6 14.7 Total 224.6 193.4 16.1 € mn 30 Jun 2015 31 Dec 2014 % Goodwill 95.0 95.0 – Other intangible assets 6.7 5.5 21.8 Total 101.7 100.5 1.2 € mn 30 Jun 2015 31 Dec 2014 % Land and buildings 0.0 0.0 – Operating and office equipment 7.8 7.7 1.3 Assets held under operating leases 436.6 811.2 –46.2 Other property and equipment 294.4 268.8 9.5 Total 738.8 1,087.7 –32.1
  24. 24. DVB Bank Group | Half-Yearly Financial Report 2015 Notes24 16 Other assets In July 2010, DVB provided a US$175 million pre-delivery pay- ment loan for the construction of ”Dalian Deepwater”, a sixth- generation drillship, to Dalian Deepwater Developer Ltd, St Helier, Jersey, Channel Islands, a newly-established special purpose vehicle. In December 2012 and September 2013, additional amounts of US$25 million and US$6 million were provided. The company mentioned has been included in DVB’s consolidated financial statements in accordance with IFRS 10. In July 2010, Dalian Deepwater Developer entered into a pur- chase agreement with Cosco, a group of shipyards, for delivery of a turnkey drillship. The shipyard company is building this sixth- generation drillship at its shipyard in Dalian, China. It did not deliver the ship as agreed by 15 April 2013. In addition, serious technical problems occurred during the ship’s construction. The shipyard revised the estimated delivery date for the ship (31 March 2014). As a result of the substantial delay and the uncertainty surround- ing the delivery date for the ship and the associated negative consequences for marketing the ship, Dalian Deepwater Developer terminated the agreement on the purchase of the drillship on 5 August 2013. The termination of the purchase agreement was made primarily on the basis of a unilateral breach of contract under English law on the part of the shipyard, as well as on the basis of a contractual termination. On 5 September 2013, the legal counsel of Dalian Deepwater Developer filed a motion to initiate arbitration proceedings at the London Court of International Arbitration. This motion was followed by a letter from Dalian Deepwater Developer’s company lawyers to the shipyard in which the reasons for the termination of the purchase agreement were set out, and a claim for damages was made for an amount of US$215.6 million, which was due to be paid not later than 30 September 2013. At the end of November 2013, the shipyard offered payment of a first instalment plus interest accrued in a total amount of US$117 million. On 27 December 2013, Dalian Deepwater Developer accepted the offer, confirming that the claim for damages had not been settled completely. On 14 January 2014, the shipyard made a down payment to Dalian Deepwater Developer in the amount of US$110 million, followed by a further down payment of US$6.9 million on 17 January 2014. On 7 February 2014, the shipyard filed a written defence and counterclaim rejecting any obligations in addition to the payments already made. In a preliminary hearing before the arbitration court on 15 July 2014, a positive decision was made as to the termination of the purchase agreement, pursuant to which the damage resulting from the termination of the purchase agreement is not limited to the payment already made by the shipyard in January 2014 (US$116.9 million). The main trial before the arbitration court took place on 23 February 2015. The final drafts were submitted to the arbitration court by the shipyard and Dalian Deepwater Developer by 27 March 2015. In contrast to the result of the hearing on 15 July 2014, the arbitration ruling delivered on 7 August 2015 rejected a claim for damages by Dalian Deepwater Developer for consequential losses against the defending shipyard, in excess of the instalments already received. The residual claim for damages of €36.4 million (US$40.8 million), which had been carried under ”Other assets” in DVB Bank SE’s consolidated statement of financial position was therefore fully written down as at 30 June 2015. 17 Deposits from other banks € mn 30 Jun 2015 31 Dec 2014 % Receivables from taxes not related to income 2.0 4.6 –56.5 Advance payments and prepaid expenses 2.6 2.7 –3.7 Miscellaneous other assets 80.6 107.4 –25.0 Total 85.2 114.7 –25.7 € mn 30 Jun 2015 31 Dec 2014 % Loans and advances 2,423.1 2,855.8 –15.2 thereof: payable on demand 104.2 162.4 –35.8 thereof: with a limited term 2,318.9 2,693.4 –13.9 Money market transactions 527.6 202.7 – thereof: payable on demand – – – thereof: with a limited term 527.6 202.7 – Total 2,950.7 3,058.5 –3.5 German banks 2,650.7 2,686.6 –1.3 Foreign banks 300.0 371.9 –19.3 Total 2,950.7 3,058.5 –3.5
  25. 25. DVB Bank Group | Half-Yearly Financial Report 2015 25Notes INTERIM MANAGEMENT REPORT INTERIM FINANCIAL STATEMENTS REVIEW REPORT FURTHER INFORMATION 18 Deposits from customers 19 Securitised liabilities During the first half of 2015, the Bank securitised liabilities with a nominal value of €1,972.3 million and a term of three to ten years. Bearer bonds were due in the nominal amount of €1,606.0 million. €7,478.4 million of securitised liabilities related to transactions with the DZ BANK Group. 20 Provisions 21 Other liabilities 22 Subordinated liabilities 23 Equity Net retained profit of DVB Bank SE for the business year 2014 amounted to €27,880,422.00. On 25 June 2015, the Annual General Meeting of DVB Bank SE resolved to pay dividends in the amount of €27,880,422.00 from this net retained profit (€0.60 for each no-par value share entitled to dividends). The portion of dividends paid from net retained profit attributable to treasury shares held by DVB on the date of the Annual General Meeting was transferred to retained earnings. € mn 30 Jun 2015 31 Dec 2014 % Loans and advances 7,171.2 7,058.6 1.6 thereof: payable on demand 588.8 551.1 6.8 thereof: with a limited term 6,582.4 6,507.5 1.2 Money market transactions 6.0 30.3 –80.2 thereof: payable on demand – – – thereof: with a limited term 6.0 30.3 –80.2 Other deposits from customers 13.2 8.1 63.0 Total 7,190.4 7,097.0 1.3 German customers 6,518.1 6,398.4 1.9 Foreign customers 672.3 698.6 –3.8 Total 7,190.4 7,097.0 1.3 € mn 30 Jun 2015 31 Dec 2014 % Ship covered bonds 544.9 492.1 10.7 Bearer bonds 11,147.2 10,813.7 3.1 Total 11,692.1 11,305.8 3.4 € mn 30 Jun 2015 31 Dec 2014 % Provisions for pension obligations 23.5 21.6 8.8 Provisions for early and partial retirement plans 0.3 0.9 –66.7 Other provisions 36.9 42.6 –13.4 Total 60.7 65.1 –6.8 € mn 30 Jun 2015 31 Dec 2014 % Other tax liabilities 2.2 0.8 – Miscellaneous other liabilities 119.2 186.3 –36.0 Total 121.4 187.1 –35.1 € mn 30 Jun 2015 31 Dec 2014 % Subordinated promissory note loans 409.0 261.4 56.5 Subordinated bearer bonds 387.8 225.8 71.7 Other subordinated capital 0.1 0.0 – Total 796.9 487.2 63.6
  26. 26. DVB Bank Group | Half-Yearly Financial Report 2015 Notes26 Some of the investment securities available for sale are meas- ured at cost since it is impossible to identify market prices for these instruments, nor can fair values be reliably estimated for them. During the first half of 2015, gains from the disposal of financial assets measured at cost were recognised in profit or loss in the amount of €47.2 million (31 December 2014: €0.0 million). Notes to financial instruments 24 Classes and categories of financial instruments The carrying amounts and fair values of financial assets and financial liabilities are allocated to the classes and categories (or subcategories) of financial instruments as indicated in the tables below:  Changes in fair value were induced by changes in yield curves, exchange rate fluctuations, and changes in credit quality.  30 Jun 2015 31 Dec 2014 € mn Carrying amount Fair value Carrying amount Fair value Financial assets held for trading 109.5 109.5 88.2 88.2 thereof: trading assets 109.5 109.5 88.2 88.2 Financial assets designated as at fair value through profit or loss – – – – thereof: loans and advances to banks – – – – thereof: loans and advances to customers – – – – thereof: investment securities – – – – Derivative hedging instruments 323.4 323.4 416.7 416.7 thereof: positive fair values of derivative hedging instruments 323.4 323.4 416.7 416.7 Available-for-sale financial assets 323.2 323.2 286.7 286.7 thereof: investment securities 323.2 323.2 286.7 286.7 Financial assets measured at fair value 756.1 756.1 791.6 791.6 Loans and receivables 23,059.8 23,934.4 21,786.2 22,288.8 thereof: cash and balances with the central bank 68.4 68.4 175.5 175.5 thereof: loans and advances to banks 954.2 954.2 1,491.6 1,491.6 thereof: loans and advances to customers 22,037.2 22,911.8 20,119.0 20,621.7 thereof: investment securities – – – – Available-for-sale financial assets 9.5 9.5 41.9 41.9 thereof: investment securities 9.5 9.5 41.9 41.9 Other assets 66.3 66.3 61.5 61.5 Financial assets measured at amortised cost 23,135.6 24,010.2 21,889.6 22,392.2 Finance leases 277.9 261.6 295.1 286.5 thereof: loans and advances to customers 277.9 261.6 295.1 286.5 Other financial assets 277.9 261.6 295.1 286.5
  27. 27. DVB Bank Group | Half-Yearly Financial Report 2015 27Notes INTERIM MANAGEMENT REPORT INTERIM FINANCIAL STATEMENTS REVIEW REPORT FURTHER INFORMATION 25 Derivatives  30 Jun 2015 31 Dec 2014 € mn Carrying amount Fair value Carrying amount Fair value Financial liabilities held for trading 788.4 788.4 604.5 604.5 thereof: trading liabilities 788.4 788.4 604.5 604.5 thereof: other liabilities – – – – Fair value option – – – – thereof: deposits from other banks – – – – thereof: deposits from customers – – – – thereof: securitised liabilities – – – – thereof: subordinated liabilities – – – – Derivative hedging instruments 211.1 211.1 192.6 192.6 thereof: negative fair values of derivative hedging instruments 211.1 211.1 192.6 192.6 Financial liabilities measured at fair value 999.5 999.5 797.1 797.1 Deposits from other banks 2,950.7 2,964.2 3,058.5 3,084.8 Deposits from customers 7,190.4 7,100.3 7,097.0 7,081.9 Securitised liabilities 11,692.1 11,895.4 11,305.8 11,588.3 Other liabilities 78.7 78.7 114.6 114.6 Subordinated liabilities 796.9 839.3 487.2 518.0 Financial liabilities measured at amortised cost 22,708.8 22,877.9 22,063.1 22,387.5 Finance leases – – – – thereof: deposits from customers – – – – Other financial liabilities – – – – Market values %30 Jun 2015 31 Dec 2014 € mn positive negative positive negative positive negative Interest rate products 371.8 253.8 472.2 243.3 –21.3 4.3 Currency-related products 61.1 745.7 32.7 553.8 86.9 34.6 Other products – – – – – – Total 432.9 999.5 504.9 797.1 –14.3 25.4
  28. 28. DVB Bank Group | Half-Yearly Financial Report 2015 Notes28 26 Determination of fair values of financial instruments The fair value is the amount for which an asset could be exchanged or a liability settled between knowledgeable, willing parties in an arm’s length transaction.  The fair value of financial instruments which are listed on an active market is determined on the basis of market prices. The fair values of the financial instruments are allocated to Level 1. The fair value of financial instruments which are not listed on an active market is determined on the basis of accepted valuation models used uniformly throughout all classes and allocated to Level 2. Non-derivative financial instruments, as well as deriva- tive financial instruments with no option components, are meas- ured using the Discounted Cash Flow Method. The basis for deriving the discount rate is the use of currency- specific swap curves. Derivative financial instruments with option characteristics are measured using accepted option pricing models (Black-Scholes-/Black-76-Model). The measurement models use parameters that can largely be observed on the market. To the extent that the measurement models use inputs that are largely not observable on the market, the resulting fair values are allocated to Level 3. The fair value of over-the-counter derivative financial instruments is measured using the net risk exposure, using the exception provided in IAS 13.48. In a second step, credit risk exposure from derivative financial instruments is recorded after determin- ing the net risk exposure. Credit valuation adjustments (CVA) and debit valuation adjustments (DVA) are applied to derivative financial instruments, whereby the instruments at hand are largely non-optional. A semi-analytical approach is applied to determine CVA/DVA, calculating the relevant values using eco- nomic loss rates as well as probabilities of default matching the terms of the instruments. The participation in Wizz Air Holdings Plc was reclassified from “assets measured at amortised cost” (Level 3) to “assets meas- ured at fair value” (Level 1) as part of the initial public offering at the London Stock Exchange. Total acquisition costs of the reclassified participation amount to €1.7 million. Determination of fair values of financial instruments (€ mn) Level 1 Level 2 Level 3 30 Jun 2015 31 Dec 2014 30 Jun 2015 31 Dec 2014 30 Jun 2015 31 Dec 2014 Loans and advances to banks – – – – – – Loans and advances to customers – – – – – – Trading assets – – 109.5 88.2 – – Positive fair values of derivative hedging instruments – – 323.4 416.7 – – Investment securities 323.2 286.7 – – – – Financial assets measured at fair value 323.2 286.7 432.9 504.9 – – Deposits from other banks – – – – – – Deposits from customers – – – – – – Trading liabilities – – 788.4 604.5 – – Negative fair values of derivative hedging instruments – – 211.1 192.5 – – Subordinated liabilities – – – – – – Financial liabilities measured at fair value – – 999.5 797.0 – – 
  29. 29. DVB Bank Group | Half-Yearly Financial Report 2015 29Notes INTERIM MANAGEMENT REPORT INTERIM FINANCIAL STATEMENTS REVIEW REPORT FURTHER INFORMATION Determination of fair values of the financial instruments measured at amortised cost (€ mn) Level 1 Level 2 Level 3 30 Jun 2015 31 Dec 2014 30 Jun 2015 31 Dec 2014 30 Jun 2015 31 Dec 2014 Loans and receivables – – 68.4 175.5 23,866.0 22,113.3 thereof: cash and balances with the central bank – – 68.4 175.5 – – thereof: loans and advances to banks – – – – 954.2 1,491.6 thereof: loans and advances to customers – – – – 22,911.8 20,621.7 thereof: investment securities – – – – – – Financial assets available for sale – – – – 9.5 41.9 thereof: investment securities – – – – 9.5 41.9 Other assets – – – – 66.3 61.5 Financial assets measured at amortised cost – – 68.4 175.5 23,941.8 22,216.7 Finance leases – – – – 261.6 286.5 thereof: loans and advances to customers – – – – 261.6 286.5 Other financial assets – – – – 261.6 286.5 Deposits from other banks – – 2,964.2 3,084.8 – – Deposits from customers – – 7,100.3 7,081.9 – – Securitised liabilities – – 11,895.4 11,588.3 – – Other liabilities – – – – 78.7 114.6 Subordinated liabilities – – 839.3 518.0 – – Liabilities measured at amortised cost – – 22,799.2 22,272.9 78.7 114.6 Finance leases – – – – – – thereof: deposits from customers – – – – – – Other financial liabilities – – – – – – 
  30. 30. DVB Bank Group | Half-Yearly Financial Report 2015 Notes30 27 Financial assets and liabilities not offset 28 Unrecognised differences upon initial recognition Unrecognised gains upon initial recognition in 2011 resulted from the purchase of financial assets. The related amortisation amounts were €0.7 million in the first half of 2015 (31 December 2014: €1.3 million). Taking currency translation effects of €–0.6 million (31 December 2014: €–0.8 million) into account, the closing balance was €6.3 million (31 December 2014: €6.4 million). Amounts with unrecognised offsetting agreements Gross amount of financial instruments not offset Offsetting Net amounts of items carried on the balance sheet Financial instruments Amounts of cash collateral received/provided Net amount of financial instruments not offset € mn 30 Jun 2015 31Dec 2014 30 Jun 2015 31Dec 2014 30 Jun 2015 31Dec 2014 30 Jun 2015 31Dec 2014 30 Jun 2015 31Dec 2014 30 Jun 2015 31Dec 2014 Positive fair values of derivative financial instruments 874.5 1,018.6 –441.6 –513.8 432.9 504.8 –190.8 –224.3 –72.6 –92.5 169.5 188.0 Negative fair values of derivative financial instruments 1,076.6 818.7 –77.1 –21.6 999.5 797.1 –190.8 –224.3 –720.6 –443.5 88.1 129.3
  31. 31. DVB Bank Group | Half-Yearly Financial Report 2015 31Notes INTERIM MANAGEMENT REPORT INTERIM FINANCIAL STATEMENTS REVIEW REPORT FURTHER INFORMATION Other disclosures 29 Financial guarantee contracts, contingent liabilities and other commitments € mn 30 Jun 2015 31 Dec 2014 % Financial guarantee contracts from guarantees 300.8 268.9 11.9 Contingent liabilities from irrevocable loan commitments 1,942.1 1,704.2 14.0 Other commitments 23.9 23.9 – thereof: within one year 7.2 6.8 5.9 thereof: within one to five years 16.4 16.1 1.9 thereof: five years or more 0.3 1.0 –70.0 Total 2,266.8 1,997.0 13.5
  32. 32. DVB Bank Group | Half-Yearly Financial Report 2015 32 Notes Responsibility statement To the best of our knowledge, and in accordance with the appli- cable reporting principles for interim financial reporting, the interim consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the DVB Bank Group, and the interim management report of the DVB Bank Group includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the DVB Bank Group for the remaining months of the financial year. Frankfurt/Main, 11 August 2015 DVB Bank SE The Board of Managing Directors Ralf Bedranowsky CEO Chairman of the Board of Managing Directors Bertrand Grabowski Member of the Board of Managing Directors L. H. (Bart) Veldhuizen Member of the Board of Managing Directors
  33. 33. DVB Bank Group | Half-Yearly Financial Report 2015 33NotesReview report Based on our review, nothing has come to our attention that causes us to believe that the interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with IFRSs on interim financial reporting as adopted by the EU or that the interim group management report is not prepared, in all material respects, in accordance with the provi- sions of the WpHG applicable to interim group management reports. Eschborn, Frankfurt/Main, 11 August 2015 Ernst Young GmbH Wirtschaftsprüfungsgesellschaft Lösken Wirtschaftsprüfer (German Public Auditor) Stapel Wirtschaftsprüfer (German Public Auditor) To DVB Bank SE, Frankfurt/Main We have reviewed the interim condensed consolidated financial statements, comprising the condensed income statement, the condensed statement of comprehensive income, the statement of financial position, the condensed statement of changes in equity, the condensed cash flow statement and selected explanatory notes, and the interim group management report of DVB Bank SE, Frankfurt/Main, for the period from 1 January 2015 to 30 June 2015, which are part of the six-monthly financial report pursuant to section 37w of the German Securities Trading Act (WpHG). The preparation of the interim condensed consolidated financial statements in accordance with IFRSs on interim financial report- ing as adopted by the EU and of the group management report in accordance with the requirements of the WpHG applicable to interim group management reports is the responsibility of the Company’s management. Our responsibility is to issue a report on the interim condensed consolidated financial statements and the interim group management report based on our review. We conducted our review of the interim condensed consolidated financial statements and the interim group management report in accordance with German generally accepted standards for the review of financial statements promulgated by the Institut der Wirtschaftsprüfer (Institute of Public Auditors in Germany). Those standards require that we plan and perform the review to obtain a certain level of assurance in our critical appraisal to preclude that the interim condensed consolidated financial state- ments are not prepared, in all material respects, in accordance with IFRSs on interim financial reporting as adopted by the EU and that the interim group management report is not prepared, in all material respects, in accordance with the provisions of the WpHG applicable to interim group management reports. A review is limited primarily to making inquiries of company personnel and applying analytical procedures and thus does not provide the assurance that we would obtain from an audit of financial statements. In accordance with our engagement, we have not performed an audit and, accordingly, we do not express an audit opinion. INTERIM MANAGEMENT REPORT INTERIM FINANCIAL STATEMENTS REVIEW REPORT FURTHER INFORMATION
  34. 34. DVB worldwide Further information 34 DVB worldwide 36 Imprint Piräus Curaçao New York London Oslo Singapore Tokyo EUROPEAMERICA ASIA/PACIFIC Frankfurt/Main Zurich Hamburg Athens Shipping Finance Aviation Finance Offshore Finance Land Transport Finance Amsterdam
  35. 35. DVB Bank Group | Half-Yearly Financial Report 2015 35Notes Head office Frankfurt/Main DVB Bank SE Platz der Republik 6 60325 Frankfurt/Main, Germany Phone +49 69 9750 40, Fax +49 69 9750 4444 Europe Amsterdam DVB Bank SE Amsterdam Branch WTC Schiphol, Tower F, 6th Floor Schiphol Boulevard 255 1118 BH Schiphol, The Netherlands Phone +31 88 3997 900, Fax +31 88 3998 301 Athens DVB Bank SE Representative Office Greece 3, Moraitini Street 1, Palea Leof. Posidonos, Bldg. K4 Delta Paleo Faliro 175 61 Athens, Greece Phone +30 210 4557 400, Fax +30 210 4557 420 Hamburg DVB Bank SE Hamburg Office Ballindamm 6 20095 Hamburg, Germany Phone +49 40 3080 040, Fax +49 40 3080 0412 London DVB Bank SE London Branch Park House, 6th Floor 16–18 Finsbury Circus London, EC2M 7EB, United Kingdom Phone +44 20 7256 4300, Fax +44 20 7256 4450 Oslo DVB Bank SE Nordic Branch Haakon VII’s gate 1 0161 Oslo, Norway Phone +47 2 3012 200, Fax +47 2 3012 250 Zurich ITF International Transport Finance Suisse AG Wasserwerkstrasse 12 8006 Zurich, Switzerland Phone +41 44 3656 100, Fax +41 44 3656 200 North and South America Curaçao DVB Bank America N.V. Zeelandia Office Park Kaya W.F.G. Mensing 14 Willemstad, Curaçao Phone +599 9 4318 700, Fax +599 9 4652 366 New York DVB Transport (US) LLC Representative Office of DVB Bank SE 609 Fifth Avenue New York, NY 10017-1021, USA Phone +1 212 588 8864, Fax +1 212 588 8936 DVB Capital Markets LLC 609 Fifth Avenue New York, NY 10017-1021, USA Phone +1 212 858 2624, Fax +1 212 588 0424 Asia Singapore DVB Bank SE Singapore Branch 77 Robinson Road # 30-02 Singapore 068896 Phone +65 6511 3433, Fax +65 6511 0700 DVB Group Merchant Bank (Asia) Ltd 77 Robinson Road # 30-02 Singapore 068896 Phone +65 6511 3433, Fax +65 6511 0700 Tokyo DVB Transport Finance Ltd Tokyo Branch The Imperial Hotel Tower, 14th Floor (A-2) 1-1, Uchisaiwaicho 1-chome, Chiyoda-ku Tokyo 100-0011, Japan Phone +81 3 3593 7700, Fax +81 3 3593 7860 www.dvbbank.com e-mail: info@dvbbank.com DVB worldwide INTERIM MANAGEMENT REPORT INTERIM FINANCIAL STATEMENTS REVIEW REPORT FURTHER INFORMATION
  36. 36. DVB Bank Group | Half-Yearly Financial Report 2015 36 Cover page photos Shipping Finance Odfjell SE, Bergen, Norway Aviation Finance Bert van Leeuwen, DVB Bank SE, Amsterdam, The Netherlands Offshore Finance Harald M. Valderhaug, Skjongholmen, Norway Land Transport Finance Wouter Radstake, DVB Bank SE, Frankfurt/Main, Germany The Half-Yearly Finacial Report 2015 is published in English and German. It is available as PDF file on our webpage www.dvbbank.com Investors Publications Financial reports. After scanning this QR code with your smartphone, you will have direct access to our website. DVB Bank SE Platz der Republik 6 60325 Frankfurt/Main, Germany Elisabeth Winter Head of Group Corporate Communications Managing Director Phone +49 69 9750 4329 Lisa Boose-Kirwel Group Corporate Communications Manager Investor Relations Phone +49 69 9750 4435 Sabine Schlieben Group Corporate Communications Manager Investor Online Relations Phone +49 69 9750 4449 Design realisation Studio Oberländer GmbH, Frankfurt/Main, Germany Imprint
  37. 37. Financial calendar 2015/2016 12 November 2015 Publication of the Interim Management Statement during the second half of 2015 (for the first nine month, ending on 30 September 2015) 4 December 2015 Publication of the 14th Declaration of Compliance for 2015/2016 25 February 2016 Annual Accounts Press and Analysts’ Conference Frankfurt/Main 23 June 2016 Annual General Meeting Frankfurt/Main

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