Corporate: Baader Bank on growth trajectory - positive half-year result

Press release:
Baader Bank on growth trajectory - positive half-year result

- Operating result turnaround with growth of EUR 8.6 million to EUR 5.8 million.

- Significant improvement in earnings before tax - growth of EUR 5.1 million to EUR 3.0 million.

- Selan Group retrospectively consolidated/restructuring expenses may negatively affect total annual earnings

- Earnings growth in all business areas

- Awards underline quality of brokerage and research

Unterschleissheim, 26 July 2017: The positive prevailing mood in the capital markets and the consolidation of Selan Group have had a visible influence on Baader Bank's half-year results.

As a result of this market environment, the trading and net commission result showed increased momentum, unlike the same period in the previous year. Net commission income improved by 17% from EUR 22.1 million to EUR 25.8 million. This growth is mainly due to higher client commission income compared to the previous year and a significant increase in income from Capital Markets. The trading result, which primarily comes from Market Making, also recorded growth of 18.1% to EUR 28.9 million.

In 2015, Baader Bank acquired all shares in Croatian wind farm operator Selan. As a result, the German associated company Selan Holding GmbH was established with the aim of selling on the wind farms at a profit at a later date. A current market survey led to the decision to hold off from the original intention to sell for the time being. Therefore, Selan Group was retrospectively consolidated as of 1 January 2017, which has had a major impact on the income, expenses and asset position of Baader Bank Group and has led to a significant expansion in the consolidated balance sheet (see overview of key figures).

The newly reported 'revenue' item due to the inclusion of Selan Group relates in full to the feed-in payment for electricity generated by the wind farm. The significantly lower interest expenses due to the maturity of higher interest-bearing promissory notes did not offset the interest expenses from the debt financing for the Selan wind farm of EUR 0.9 million, meaning that the interest result of EUR -0.3 million had a major influence on the accounts at the reporting date.

Administrative expenses increased slightly from EUR 46.3 million to EUR 48.3 million, mainly due to increased restructuring costs in the Market Making business area and operating costs for the Selan wind farm. Depreciation and amortisation on the wind farm of EUR 2.1 million increased the depreciation of property, plant and equipment and amortisation of intangible assets to EUR 6.9 million. Write-offs and impairments of EUR 3.2 million were made on receivables and securities in the reporting period.

The subsidiaries Selan Holding, Baader Helvea and Baader & Heins in particular made positive contributions to the Group result.

Overall, the operating result rose by EUR 8.6 million to EUR 5.8 million. Even excluding the consolidation of Selan Group, there was an increase in earnings of EUR 2.6 million. Earnings before tax (EBT) for Baader Group in H1 2017 were EUR 3.0 million, thus recording a growth of EUR 5.1 million. Earnings after taxes reached EUR 2.1 million.

Including the fund for general banking risks, Baader Bank Group had equity of EUR 119.9 million and an equity ratio of 13.7% as of 30 June 2017.

Business performance H1 2017

Exploiting new market potential in Market Making
In the Market Making business area, the Deutsche Börse Group's electronic trading platform Xetra was superseded by the new T7 trading platform. Baader Bank also assumed responsibility for trading in German and US equities in the new 'global market' segment of the Vienna Stock Exchange.

The low small number of IPOs in Germany continued in the first half of 2017. The IPOs of Vapiano and Delivery Hero at the end of June give rise to hopes for a turnaround of this trend. Both companies mandated Baader Bank as a specialist for their IPOs in the Prime Standard of the Frankfurt Stock Exchange, which allows Baader Bank to maintain its strong market position in specialist mandates issued in Germany.

Increased deal volume in Capital Markets business area
In the Equity Capital Markets area, Baader Bank advised on a total of ten transactions in H1 2017 and, with a volume of around EUR 2 billion, was one of the most active companies in this market.

Customer inflow for banking and asset management services resulted in a significant increase in securities account volumes
In the institutional customer business segment, Baader Bank recorded a significant increase in cooperations with traditional and online asset managers as well as family offices in the first half of 2017. Compared to the end of the first half of 2016, the number of customer securities accounts increased from around 4,200 to 10,500 and the volume of securities accounts increased by around 150% to EUR 2.2 billion in the same period. Finally, the second successful 'Open Door Day' event for asset managers also contributed to Baader Bank's established position in the market.

After the offer extension to buy side trading desk services in 2016, Baader Bank already recorded 149 mandates as of 30/06/2017 (30/06/2016: 0 Buy Side Trading Desk mandates).

The assets managed in the supporting business segment asset management services could almost be doubled within 12 months. By the end of the first half of 2017 it amounted EUR 5.55 billion (+ 109% compared with the previous year), and the trend is rising.

Awards signify the dominant market position of Baader Bank as a regional broker with first-class research expertise
In this year's Extel Survey 2017, Europe's most important external ranking of institutional equity brokers, Baader Helvea once again achieved top placings in the core regions of Germany, Austria and Switzerland for research, sales and trading/execution services. The result of the Thomson Reuters Awards 2017 were equally satisfying for the Baader Helvea Equity Research team, which is opening up new market potential particularly with regard to the forthcoming introduction of MiFID II at the start of 2018 and the associated pricing of analysis services.

Outlook for H2 2017

Trading volumes are expected to stabilise at the current level in the Market Making business area. In H2 2017, the smooth migration to T7 should be completed and offer new market potential. In the Capital Markets business area, a number of transactions have been arranged and should make corresponding contributions to earnings after the summer break in a receptive market environment. The in-depth contact with institutional clients, which was also confirmed by the excellent results of the Extel Rankings and the Thomson Reuters Survey 2017, should ensure that the positive initial position in respect of MiFID II can be strengthened. The Baader Investment Conference, which takes place in the second half of the year, is becoming larger than ever before. The development of business with asset managers and fintech companies should increase further in the second half of the year and have a positive effect on net commission income. Restructuring costs could have further negative effects on the result (see also half-year report).

Overview of key figures

*Gross profit less personnel and other administrative expenses, and amortisation of intangible assets and depreciation of property, plant and equipment
(Gross income = net interest income and current income, net commission income and trading profit/loss, revenue)

For further Information or media inquiries:
Baader Bank AG
Weihenstephaner Straße 4
85716 Unterschleissheim, Germany

Katharina Ariane Beyersdorfer
Senior Manager Group Management & Communication

T +49 89 5150 1016
F +49 89 5150 291016
M +49 172 6659 389
Katharina.Beyersdorfer@baaderbank.de
http://www.baaderbank.de

About Baader Bank:
Baader Bank AG is one of the leading German family-run full-service investment banks serving customers across the German-speaking region. Baader Bank, with its headquarters in Unterschleissheim, near Munich, employs around 450 personnel supporting customers and their needs across the business areas of Market Making, Capital Markets, Institutional Brokerage, Asset Management Services, Banking Services and Research.

Disclaimer:
This press release contains forward-looking statements. These statements reflect the current views, expectations, and assumptions of the management of Baader Bank Aktiengesellschaft and are based on information currently available to the management. Forward-looking statements involve known and unknown risks and uncertainties. They are no guarantees for future results, performance or events. Actual results, performance or events may differ materially from those expressed or implied in such statements. There are numerous factors which could influence the future performance by and future developments of Baader Bank Aktiengesellschaft and Baader Bank Group. Such factors include, but are not limited to, changes in the general economic and competitive environment, risks associated with capital markets, currency exchange rate fluctuations, changes in international and national laws and regulations and other factors. Baader Bank Aktiengesellschaft does not undertake any obligation to update or revise any forward-looking statements.