Achmea Bank reported a profit before tax of EUR 50 million in 2019 (2018 EUR 39 million).
This result includes an accounting result of EUR 18 million, which relates to the a.s.r. transaction. The operating result for 2019, excluding this accounting result and fair value result, declined from EUR 39 million in 2018 to EUR 34 million in 2019. The decline in the operational result is mainly due to higher operating expenses of EUR 26 million partly compensated by higher interest margin of EUR 15 million and increased fee income of EUR 4 million. EUR 15 million of the higher operating expenses is due to a policy change by Achmea with respect to cost allocation within the group, EUR 5 million is due to increased project costs.
In 2019, Achmea Bank completed two balance sheet transactions. One is the acquisition of the a.s.r. banking activities which includes a mortgage portfolio (EUR 1.4 billion), the other is a mortgage portfolio of Achmea Pensioen- en Levensverzekeringen N.V. (EUR 0.6 billion). In 2019 the production of new mortgages increased sharply with EUR 0.9 billion to EUR 1.8 billion, of which EUR 1 billion for Achmea Pensioen- en Levensverzekeringen N.V. (2018 EUR 0.3 billion). Combined with the acquired portfolios and prepayments of EUR 1.2 billion, the regular mortgage portfolio of Achmea Bank increased with EUR 1.6 billion in 2019. Also Achmea Bank introduced a new niche proposition, the revolving credit mortgage in 2019, next to the existing Buy-to-Let and self-employed propositions.
Achmea Group has the ambition to grow in the mortgage market. In line with this ambition, Achmea will concentrate its operational mortgage activities at one location in Amsterdam. The commercial activities will be concentrated in Apeldoorn. For Achmea Bank this means transferring its mortgage operations activities from Tilburg to Amsterdam and its commercial activities to Apeldoorn. The expected reorganisation costs of EUR 3 million are provisioned for and included in the operating expenses of 2019.
The savings portfolio increased to EUR 7.1 billion (2018 EUR 5.7 billion), mainly driven by the acquisition of the a.s.r. saving portfolio of EUR 1.5 billion. In 2019 Achmea Bank redeemed EUR 0.6 billion RMBS notes and issued a conditional pass through covered bond of EUR 0.5 billion. The Bank has a diversified funding mix and retained its sound liquidity position with liquidity ratios well above internal and external limits. The Bank uses retail financing as well as unsecured and secured wholesale financing. In addition the Bank maintains different maturity profiles in its funding instruments to prevent potential future refinancing concentration risk.
The Total Capital ratio remained strong at 19.2% (2018: 20.9%). The Common Equity Tier 1 (CET1) Capital ratio decreased to 19.2% as per December 2019 (20.8% at the end of 2018), mainly due to the acquired mortgage portfolios. Achmea Bank currently applies the standardized approach to calculate the risk weighting of its assets. Achmea Bank is working towards the implementation of Advanced Internal Rating Based (AIRB) models.
In line with the dividend policy, Achmea Bank proposes to pay out a total dividend of EUR 23 million.