Report of the Executive
Board
1993 was the second year in which the company
operated under its new name of FGH BANK N.V.
The new name was a logical development of the
company having acquired the status of general bank
(in 1991).
The newly acquired status has enabled us to provide
our clients with additional financial services as from
January 1, 1992. These services have included the
provision of transfer facilities, checking accounts and
various forms of short-term investments, such as
fixed-term and call deposits. The fact that
FGH BANK N.V. has been allowed to operate as
general bank has added a new dimension to its role
as the 'realty bank'. This was again evidenced in the
present reporting period.
Earlier this year, we published our views on the
commercial real estate market in the Netherlands in
our Annual Review, thereby setting the scene for the
present Annual Report.
Financial Results
FGH BANK N.V. achieved a gross result of
NLG 144.0 million in 1993, which was appreciably
higher than the NLG 82.4 million earned in 1992.
Although this increase partly reflects the transfer of
FGH BANK'S North American lending business to
AEGON US Holding Inc. at the end of 1992, better
operating results at the Dutch arm of FGH BANK N.V.
also contributed to the rise in earnings.
The net result achieved by FGH BANK N.V. in 1993
was NLG 100.3 million, which represents a
considerable improvement on the NLG 31.3 million
reported for 1992.
The 'value adjustments to receivables' (previously
referred to as 'addition to provision for general
contingencies') amounted to NLG 10.0 million in 1993,
compared with NLG 20.0 million in 1992.
While interest income rose by NLG 56.6 million in
1993 to NLG 608.4 million (1992: NLG 551.8 million),
the interest expense figure remained unchanged at
NLG 441.2 million. Included in the interest income for
1993 was a non-recurrent revenue item amounting to
NLG 24.9 million earned on lending activities
(1992: NLG 21.4 million). The improvement in this
figure can be mainly attributed to an increase in the fees
earned from early redemptions.
The income earned from securities and
(non-consolidated) participating interests in 1993 was
NLG 5.9 million, which was little changed from the
NLG 5.8 million earned in 1992.
A figure of NLG 0.1 million was included under the
heading 'Result on financial transactions' in 1993 to
account for 'Valuation changes to securities'.
The corresponding figure for 1992 was NLG 0.2 million.
In addition, a figure of NLG 0.9 million was included
under the same heading to account for a negative result
being recorded on 'Currency and financial instruments'.
This compares with a positive result of NLG 0.1 million
in 1992.
'Other revenue' amounted to NLG 3.3 million in 1993,
which was some NLG 2.9 million lower than in 1992.
This was principally due to lower 'Proceeds from
previous years'.
Operating expenses fell by NLG 11.1 million in 1993,
largely as the result of the sale of
FGH North America Inc. at the end of 1992.
The consolidated loan portfolio amounted to
NLG 6,784 million at the end of 1993, compared with
NLG 6,564 million at the end of 1992.
The financial position of FGH BANK N.V. was further
improved in 1993, partly as a result of a rise in the level
of retained earnings. Group equity amounted to
NLG 707.4 million at the end of 1993, compared with
NLG 608.5 million on December 31, 1992.
At the end of 1992, the company was confronted with
an unexpected claim lodged by the Dutch Ministry of
Finance concerning the sale in the early 1980s of a
number of companies with fiscal replacement reserves.
FGH BANK N.V. strongly disputes the validity of this
claim, which could amount to some tens of millions of
guilders. We are supported in this view by the expert
opinion of our advisers and are confident that we will be
able to contest this claim successfully.
Real Estate
The market value of FGH's real estate portfolio,
including that of non-consolidated participating
interests, rose by some NLG 74 million to NLG 224
million.
T reasury
During the present reporting period, some NLG 602
million of funding was arranged with a term longer than
one year in order to provide new loans and for
