KAS Bank’s custody income hit by markets
NETHERLANDS - KAS Bank saw its income from custody and investment management services decrease by 14% to €14m in the first six months of 2008, mainly because lower market prices forced a drop in value of assets under custody.
On the other hand, earnings from securities lending have risen sharply by 51% to €13m, as activity peaked again in the second quarter, said the Amsterdam-based bank in its first half report.
KAS Bank's net profits were down by 78% to €9.4m, partly thanks to an impairment loss of €5m on its shareholdings in NYSE and Euronext, according to officials.
The bank's board refrained from a forecast for the full year 2008 but warned: "If the trend of increased liquidity and credit risks continues, it may result in an added impairment loss during the second half year."
The bank made it clear it is not expecting further impairments of its €1.1bn fixed income portfolio, as the firm explained it is not holding material positions in high-risk bonds such as collateralized debt obligations or mortgage-backed securities.
Returns on its equity investments were 13% during the first half, after results of 12% for the full year 2007.
KAS Bank attributed the rise of its BIS ratio - for capital adequacy - by 2% to 16% to its low risk profile.
"The recently-completed acquisition of Delta Lloyd Investment Managers in Germany has strengthened our independent market position, and will have a slight effect on the 2008 results," the bank further stated.
It attributed the 40% decrease of its ‘available-for-sale' investment portfolio to "liquid investments having been invested on very short interest terms, in order to take advantage of high short-term interest rates,and to improve the organisation's liquidity".
KAS Bank provides wholesale securities services for corporate and institutional clients.
But in November last year, the bank was sacked as custodian of the three pension funds of food producer Royal Consun for undisclosed reasons. The schemes decided to choose State Street Corporation as their new custodian. (See earlier IPE article: Cosun sacks Kas Bank)