Successful start to financial year 2023: OLB continues highly profitable and efficient growth path in volatile market environment

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• Result after taxes increased by 40.7% year-on-year to EUR 56.7 million
• Earnings and return ratios sustainably at high levels
• High credit quality due to a diversified portfolio and conservative lending standards
• Granular and sticky customer deposits as a solid basis for refinancing

Oldenburgische Landesbank AG (“OLB” or “Bank”) once again impressed with growth, profitability and solidity in the first quarter of 2023, increasing its result after taxes to EUR 56.7 million (m) as of 31 March 2023 (Q1 2022: EUR 40.3 m)1. Compared to the first quarter of 2022, this represents an increase of 40.7%. The return on equity after taxes (RoE) improved to 15.5%, or 17.5% when considering the bank levy on a pro rata basis (Q1 2022: 12.7% and 14.2% respectively). The cost-income ratio improved to 36.8% (Q1 2022: 43.6%).

"We had a strong start to the year 2023, bolstered by our balanced business model, high liquidity and capital resources, as well as a solid balance sheet structure. All this provides us with an excellent position in the current volatile market environment. With this proven setup, we want to continue our highly profitable and efficient growth path," says Stefan Barth, CEO of OLB.

Strong customer business drives double-digit operating growth
In the first three months of 2023, OLB further expanded its customer business in both segments, Private & Business Customers and Corporates & Diversified Lending. The customer loan volume grew by more than 6% year-on-year to EUR 18.3 billion (bn) (Q1 2022: EUR 17.1 bn). In particular, Diversified Lending contributed to this improvement. Against the backdrop of rising interest rates, the demand for new private mortgage financing declined as expected. Nevertheless, the portfolio volume of private mortgage financing increased to EUR 7.4 bn (Q1 2022: EUR 6.8 bn). The high level of customer confidence in the Bank is reflected in the increase in customer deposits to EUR 16.1 bn (Q1 2022: EUR 14.2 bn).

In conjunction with the improved interest rate environment, the higher loan volume led to an increase in net interest income of more than 20% to EUR 120.6 m (Q1 2022: EUR 99.8 m). Net commission income was slightly above the first quarter 2022 level at EUR 31.3 m (Q1 2022: EUR 31.1 m). Overall, operating income rose by more than 18% to EUR 160.8 m (Q1 2022: EUR 136.1 m).

In addition to its strong customer business, OLB continues to emphasize rigorous cost management, which enables the Bank to actively counteract the current inflationary trends. With continuous investments in growth, products and technology, as well as other expenses in connection with the acquisition of Degussa Bank, operating expenses totalled EUR 59.3 m (Q1 2022: EUR 59.4 m).

The high quality of the credit portfolio, ensured by a diversified portfolio and conservative lending standards, leads to persistently low risk costs. As of 31 March 2023, risk provisioning amounted to EUR 2.9 m (Q1 2022: EUR 6.4 m), or 6 basis points (Q1 2022: 15 basis points). The volume of the non-performing exposure was reduced from around EUR 343 m in the first quarter 2022 to around EUR 258 m.

Targeted high capital resources in view of volatile market environment
In a market environment dominated by global macroeconomic uncertainties, OLB continues to consciously focus on a high level of liquidity and capital resources. The liquidity position remains very solid with a liquidity coverage ratio (LCR) of more than 210% (31 December 2022: ~174%) and is well above the minimum requirements of 100%. This shows that OLB maintains a high level of first-class liquid assets. The Common Equity Tier 1 capital ratio (CET1 ratio) improved to 14.1% (31 December 2022: 13.6%), which is well above the regulatory requirement of 9.3% (MDA threshold) and the self-imposed minimum CET1 ratio target of 12.25%. Part of the improvement is due to the synthetic risk transfer of a portfolio of corporate client loans that OLB implemented in March 2023. The transaction reduced risk-weighted assets (RWA) by more than EUR 400 m. RWA amounted to EUR 9.5 bn (31 December 2022: EUR 9.4 bn). The total capital ratio rose to 17.0% in the reporting period (31 December 2022: 16.6%).

"We manage the Bank conservatively in terms of capital and liquidity. We have maintained comfortable capital resources to be well positioned for further organic or inorganic growth, even in the current volatile environment," says Dr Rainer Polster, CFO of OLB.

Continued outperformance in uncertain macroeconomic environment
OLB confirms its medium-term targets of achieving a cost-income ratio of 40% or lower, a return on equity after taxes in the target range of 14% to 16% through the economic cycle, and a CET1 ratio well above 12.25%.

The Bank is set to continue its top line expansion and strict cost management compensating the inflationary environment and supporting its cost-income ratio. Strong revenue momentum, cost discipline and risk management are expected to lead to a return on equity ahead of target. The currently high capitalization reflects the uncertain macroeconomic outlook and the pending Degussa Bank acquisition.

After the closing of the Degussa Bank acquisition, which is expected to take place in the second half of 2023, OLB will focus on Degussa Bank’s smooth and efficient integration. In addition, the Bank continues to plan a potential IPO depending on a suitable time window in a stabilized market environment.

Feel free to visit us at www.olb.de and www.neelmeyer.de as well as on Facebook, Instagram and YouTube.

Disclaimer
This information does not contain any offer to acquire or subscribe the securities mentioned therein, nor should it be construed as an invitation to do so. The opinions expressed herein reflect our current assessment, which is subject to change even without prior notification. This information cannot be regarded as a substitute for individual advice tailored to the investor’s respective situation and investment objectives.
Likewise, this document does not, either in whole or in part, constitute a sales prospectus or any other stock exchange prospectus. The information contained in this document therefore merely provides an overview and should not form the basis of an investor’s potential decision to purchase or sell the securities.
The information and assessments (collectively referred to as "information") are intended solely for clients with their registered office in the Federal Republic of Germany. In particular, this information is not addressed to US citizens or US residents and US persons or Australian, Canadian, British or Japanese citizens or residents and must not be distributed to such persons or introduced into or disseminated in such countries. This document including the information contained therein may be used abroad only in accordance with the relevant applicable law. Any persons receiving this information shall be obliged to familiarise themselves with and observe the legal provisions applicable in their respective country.
This document has been prepared and published by Oldenburgische Landesbank AG, Oldenburg. The information has been carefully researched and is based on sources deemed to be reliable by Oldenburgische Landesbank AG. However, the information may no longer be up-to-date and may be obsolete by the time you receive this document. Furthermore, it cannot be ensured that the information is correct and complete. Oldenburgische Landesbank AG therefore assumes no liability for the contents of the information.
In addition, this document in connection with Oldenburgische Landesbank AG contains various forward-looking statements and information based on the management’s beliefs and on assumptions and information currently available to the management. Considering the known and unknown risks associated with the business of Oldenburgische Landesbank AG as well as uncertainties and other factors, the future results, performances and outcomes may differ from those deduced from such forward-looking or historical statements. The forward-looking statements speak only as of the date of this document. Oldenburgische Landesbank AG expressly disclaims any obligation or undertaking to release any updates or revisions to any forward-looking statements to reflect any change in its expectations with regard thereto or any changes in events, conditions or circumstances on which any forward-looking statements are based. Any persons receiving this document should not give undue influence to such historical statements and should not rely on such forward-looking statements. The Q1 financial information in this document has been derived from the management accounts of Oldenburgische Landesbank AG. Such financial information is unaudited and preliminary. All such information is subject to change without notice.
This document also contains certain financial measures that are not recognized under IFRS or German GAAP (“HGB”). These alternative performance measures are presented because Oldenburgische Landesbank AG believes that they and similar measures are widely used in the markets in which it operates as a means of evaluating its operating performance and financing structure. They may not be comparable to other similarly titled measures of other companies and are not measurements under IFRS, HGB or other generally accepted accounting principles.

1 Unless otherwise stated, all figures are based on IFRS

Firmenkontakt und Herausgeber der Meldung:

Oldenburgische Landesbank AG
Stau 15/17
26122 Oldenburg
Telefon: +49 (441) 221-0
Telefax: +49 (441) 221-1457
http://www.olb.de

Ansprechpartner:
Marthe Schepker
Telefon: +49 (441) 221-2742
E-Mail: marthe.schepker@olb.de
Sandra Büschken
Telefon: +49 (69) 756193-36
E-Mail: sandra.bueschken@olb.de
Timo Cyriacks
Telefon: +49 (441) 221-1781
E-Mail: timo.cyriacks@olb.de
Britta Silchmüller
Pressesprecherin
Telefon: +49 (441) 221-1213
E-Mail: britta.silchmueller@olb.de
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