• Net Income: EUR142 million, a 13% increase from 2023.
• Assets Under Management (AUM): Grew by 17% to almost EUR150 billion.
• Net Inflows: EUR9.2 billion, driven by private banking in the Netherlands and Belgium.
• Cost-Income Ratio: Improved by 1.5% to 70.1%.
• Return on CET1: Increased to 16.2%.
• Dividend Payout: EUR2.75 per share, translating to an 88.4% payout ratio.
• Capital Return: Proposed EUR1.40 per share.
• Commission Income: Increased by EUR84 million due to AUM growth.
• Interest Income: Decreased by 11% due to reduced interest margin.
• Operating Profit Before Tax (Private Clients Netherlands): Increased by 9% to EUR135 million.
• Operating Profit Before Tax (Private Clients Belgium): Increased by 36% to EUR37.8 million.
• Operating Profit Before Tax (Investment Management): More than doubled to EUR25 million.
• Interest Margin: Normalized to around 100 basis points.
• Loan Loss Provisions: Release of EUR1.4 million.
• CET1 Ratio: Ended at 19.3%, expected to be 18% after capital return.

• Warning! GuruFocus has detected 7 Warning Sign with FRA:VA3.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Van Lanschot Kempen NV (FRA:VA3) reported a successful year with a net result of EUR 142 million, a 13% increase from 2023.
• The company achieved a 17% growth in assets under management, reaching almost EUR 150 billion.
• Strong commercial momentum was observed across all segments, with significant net inflows of EUR 9.2 billion.
• The cost-income ratio improved by 1.5% compared to 2023, now at 70.1%, indicating better cost management.
• The company is on track to meet its 2027 financial targets, with a focus on scalable growth and investments in digital excellence and client-facing talent.

Negative Points

• Commission income from the investment banking segment was lower than expected, with some transactions delayed due to seasonality.
• Net interest income guidance for 2025 is slightly lower than anticipated, partly due to clients shifting assets from savings to investments.
• Operating expenses increased by 6%, driven by investments in growth and inflationary pressures, particularly in IT and wages.
• Margins in the Netherlands decreased due to a higher relative share of advisory products, which typically have lower margins.
• The integration of Robeco's online investment platform is still ongoing, with IT system integration expected to complete this year.

Q & A Highlights

Q: Why was there a miss on commission income from the merchant bank, and what actions are being taken to address this? A: Maarten Edixhoven, Chairman of the Management Board, explained that while the investment bank is profitable, commission income could have been higher. The trend is positive, and the bank is working on improving revenue. Some transactions were delayed due to seasonality, but the outlook is optimistic for returning to pre-2023 levels in the coming years.

Q: Can you elaborate on the net interest income (NII) guidance for 2025, and what factors are influencing it? A: Jeroen Kroes, CFO, stated that the NII guidance is slightly lower due to clients investing more in assets under management than expected, reducing savings. Additionally, banks in the Netherlands have been slow to adjust savings rates in response to ECB rate cuts, impacting margins.

Q: What is the outlook for expenses in 2025, particularly regarding wages and inflation? A: Jeroen Kroes mentioned that salaries will increase by 3.5% from January 1, 2025, and inflation remains a factor, especially in IT costs. The bank is investing in growth, including hiring mid-career bankers, but aims to ensure income grows faster than costs.

Q: What is the current momentum for net new money in 2025, and how does it compare to 2024? A: Maarten Edixhoven highlighted strong commercial momentum across private banking in the Netherlands, Belgium, and Switzerland. The bank is gaining market share, driven by new clients and existing clients increasing their share of wallet. The momentum is expected to continue in 2025.

Q: How is the integration of Robeco's online investment platform progressing? A: Jeroen Kroes reported that the integration is well on track, with teams already working together from the same location. The final stages involve integrating IT systems, expected to be completed within the year.

Q: What is the strategy for operational leverage and automation within the bank? A: Maarten Edixhoven explained that the bank is investing in client-facing staff and using AI and digital processes to support a highly personal client approach. Automation is focused on reducing the burden of client due diligence and enhancing service efficiency.

Q: What is the plan for distributing excess capital, given the CET1 ratio of 18%? A: Jeroen Kroes stated that the bank aims to steer towards a CET1 ratio of 17.5%. The current excess capital will be evaluated towards the end of the year, considering potential M&A and balance sheet growth.

Q: How do you expect margins in the Netherlands to evolve in 2025? A: Jeroen Kroes indicated that the focus is on increasing discretionary asset management inflows, which have higher margins than advisory products. The mix of client preferences will also influence margins.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.