Half-Yearly Financial Report 2016

2016

Half-YearlyFinancial Reportas at 30 June

Futher information 34 – 36

34 DVB worldwide

36 Imprint

03 Key figures at a glance

Interim management report 04 – 13

05 Financial position and performance

10 Report on expected developments

12 Report on opportunities and risks

13 Report on major related party transactions

Interim financial statements 14 – 32

15 Condensed income statement

16 Condensed statement of comprehensive income

17 Statement of financial position

18 Condensed statement of changes in equity

18 Condensed cash flow statement

19 Segment report

20 Notes

Review report 33

Legal notice

Further information

Symbols

DVB Bank Group | Half-Yearly Financial Report 2016

Anhang2 Contents

€ mn1 Jan 2016 – 30 Jun 2016

1 Jan 2015 – 30 Jun 2015

%

Earnings data

Net interest income 124.5 92.5 34.6

Allowance for credit losses –83.4 –39.7 –

Net interest income after allowance for credit losses 41.1 52.8 –22.2

Net fee and commission income 56.5 52.3 8.0

Results from investments in companies accounted for using the equity method 4.1 3.1 32.3

Net other operating income/expenses1) 4.8 8.4 –42.9

Total income1) 106.5 116.6 –8.7

General administrative expenses1) –91.3 89.5 2.0

Net result from financial instruments in accordance with IAS 391) 10.0 63.5 –84.3

Consolidated net income before bank levy, BVR2) Deposit Guarantee Scheme and taxes1) 25.2 90.6 –72.2

Consolidated net income before taxes1) 14.1 75.7 –81.4

Consolidated net income1) 10.6 62.5 –83.0

Key financial indicators

Return on equity (before taxes, %)1) 0.6 8.8 –8.2 pp

Cost/income ratio (%)1) 52.6 49.9 2.7 pp

Economic Value Added (€ million)1) –47.2 8.0 –

€ mn 30 Jun 2016 31 Dec 2015 %

Key items from the statement of financial position

Business volume 27,768.4 28,207.6 –1.6

Customer lending volume 24,376.4 25,272.5 –3.5

Total assets 26,506.1 26,610.5 –0.4

Loans and advances to customers 22,543.4 22,975.5 –1.9

Deposits from customers 7,838.3 7,510.8 4.4

Securitised liabilities 12,594.4 13,141.9 –4.2

Subordinated liabilities 699.5 742.7 –5.8

Equity 1,424.0 1,429.5 –0.4

Total capital in accordance with the Capital Requirements Regulation

Common equity tier 1 capital 1,017.8 1,147.3 –11.3

Tier 2 capital 0.0 0.0 –

Modified available capital 365.1 432.0 –15.5

Capital ratios – Basel III (%)

Common equity tier 1 ratio 12.6 16.3 –3.7 pp

Total capital ratio 17.2 22.4 –5.2 pp

30 Jun 2016 30 Jun 2015 %

Staff by business division

Transport Finance/Investment Management 312 304 2.6

Service areas 241 227 6.2

LogPay Financial Services 61 57 7.0

Total active staff 614 588 4.4

Rating 2016 2015 2014

Standard & Poor’s

Long-term counterparty credit rating A+ A+ A+

Short-term credit rating A-1 A-1 A-1

Outlook stable stable stable

Fitch Ratings3)

Long-term issuer default rating AA- AA- A+

Short-term issuer default rating F1+ F1+ F1+

1) The correction of errors pursuant to IAS 8.41 results in an adjustment of the previous year’s figure.2) National Association of German Cooperative Banks (BVR)3) Within the scope of the German Cooperative Financial Services Network’s rating


Anhang 3Key figures at a glance

05 Financial position and performance

10 Report on expected developments

12 Report on opportunities and risks

13 Report on major related party transactions

Interim management report

Development of net income, as at 30 June

Net interest income Net fee and commission income Net other operating income/expenses Consolidated net income before taxes

1) Previous year’s figure adjusted (for a more detailed explanation, please refer to Note 3)

€ mn150

125

100

75

50

25

0

2012 2013

2014

2015 2016

112.5

54.6

43.9

116.2

55.7

6.5

105.0

51.0

2.3

92.5

52.3

8.41)

124.5

56.5

4.814.1

75.71)

41.4

66.4

70.8

Consolidated net income before taxes, as at 30 June

• Allowance for credit losses amounted to €83.4 million during the period under review (previous year: €39.7 million), in line with DVB’s expectations. The increase was largely required for legacy exposures in the Shipping Finance portfolio, and for financings in the Offshore Finance portfolio, which is to be burdened by the slump in oil prices.

• The Bank was successful in the fee and advisory businesses: net fee and commission income rose by 8.0%, from €52.3 million to €56.5 million.

• On another positive note, the Bank managed to keep general administrative expenses of €91.3 million almost in line with the previous year’s figure (€89.5 million) – in spite of continued high expenses incurred from regulatory-driven projects.

• Net income from financial instruments in accordance with IAS 39 – which is generally volatile – amounted to €10.0 million (previous year: €63.5 million). The considerable decline was primarily due to substantial non-recurring income from the sale of investment securities (the partial disposal of the stake in Wizz Air Holdings Plc) recognised in 2015 and generated by the Bank’s Aviation Investment Management activities.

The individual items of the half-yearly financial statements developed as follows:

Total income (before IAS 39) amounted to €106.5 million, thus 8.7% below the figure of the previous year (€116.6 million).

Net interest income increased by 34.6%, from €92.5 million to €124.5 million, driven mainly by lower interest expenses for securitised liabilities and for operating leases, as well as by currency translation effects.

DVB posts positive consolidated net income before taxes for the first six months

Thanks to the cycle-neutral, global market presence, sustaina-ble client service, and the proximity to transactions being origi-nated on the markets, DVB succeeded in generating positive consolidated net income before taxes. However, DVB’s perfor-mance during the first half of 2016 was burdened by the persis-tent shipping crisis, the ECB’s low-interest rate policy, and the high costs induced by banking regulation.

DVB generated positive consolidated net income before taxes, at €14.1 million (previous year: €75.7 million).

DVB’s results were largely shaped by the following components:

• In a continuously challenging environment, DVB originated 63 new transactions in its core Transport Finance business, with an aggregate volume of €2.8 billion in the first half of 2016 (previous year: 100 new transactions with a total volume of €3.6 billion). The Bank continues to be available to its clients in the persistently difficult segments of the shipping industry – given reduced opportunities to originate new business, however, on a lower level. New business in Aviation Finance with aircraft financings and in Land Transport Finance, where it finances rail rolling stock and other rail-related vehicles, continued to develop successfully.

The present interim management report and condensed consolidated financial statements of DVB Bank Group as at 30 June 2016 were subject to a review pursuant to section 37w (5) of the German Securities Trading Act (WpHG). The Half-Yearly Financial Report comprises the condensed interim financial statements and the interim management report of DVB Bank Group.

Figures in the interim management report and condensed con-solidated financial statements (including notes) are rounded, pursuant to standard business principles. This may result in slight differences when aggregating figures and calculating percentages.

Some financial figures of the previous year differ from the values stated in the Half-Yearly Financial Report 2015. For a detailed explanation of the reasons for these adjustments, please refer to Note 3 on pages 21.

1) Previous year’s figure adjusted (for a more detailed explanation, please refer to Note 3)

€ mn90

75

60

45

30

15

0

2012 2013 2014 2015 2016

70.8

66.4

41.4

75.71)

14.1

5


Financial position and performance

INTERIM MANAGEMENT REPOR T INTERIM F INANCIAL STATEMENTS RE VIE W REPORT FURTHER INFORMATION

Net fee and commission income, which primarily includes fees and commissions from new Transport Finance business, asset management fees, and fees generated from Corporate Finance advisory mandates, was up 8.0%, from €52.3 million to €56.5 million. Fee and commission income was up 1.5%, to €59.7 million (previous year: €58.8 million); fee and commission expenses declined by 50.8%, from €6.5 million to €3.2 million.

Results from investments accounted for using the equity method were up 32.3%, from €3.1 million to €4.1 million.

Net other operating income/expenses amounted to €4.8 million (previous year: €8.4 million).

Allowance for credit losses amounted to €83.4 million (pre-vious year: €39.7 million). Specifically, new allowances recog-nised for credit losses totalled €196.4 million (previous year: €69.2 million), of which €167.0 million (previous year: €49.0 million) was accounted for by Shipping Finance and Off-shore Finance, due to the persistently difficult environment sur-rounding the international shipping and offshore markets. Con-versely, allowance for credit losses of €112.2 million (previous year: €34.8 million) was reversed, of which €95.8 million (previous year: €20.9 million) was in Shipping Finance and Offshore Finance.

Net interest income after allowance for credit losses of €41.1 million was lower than the previous year’s figure of €52.8 million.

Total allowance for credit losses (comprising specific allowance for credit losses, portfolio-based allowances for credit losses, and provisions) rose to €340.6 million, up 16.7% from year-end 2015 (€291.8 million).

Allowance for credit losses by business division as at 30 June 2016 (€ mn)

Additions

Reversals

Direct write-offs

Recoveries on loans and

advances previously written off

Total

Shipping Finance –129.1 81.7 – 0.2 –47.2

Aviation Finance –3.9 2.7 – 0.5 –0.7

Offshore Finance –7.7 0.1 –0.1 – –7.7

Land Transport Finance –0.3 – – – –0.3

Investment Management –8.7 0.5 – – –8.2

ITF Suisse –12.5 9.9 0.0 – –2.6

Business no longer in line with DVB’s strategy –0.9 0.7 – 0.2 0.0

Other – – –0.1 0.1 0.0

Total specific allowance for credit losses –163.1 95.6 –0.2 1.0 –66.7

Shipping Finance –19.6 12.9 – – –6.7

Aviation Finance –2.3 1.9 – – –0.4

Offshore Finance –7.7 1.1 – – –6.6

Land Transport Finance –0.1 0.2 – – 0.1

Investment Management – – – – –

ITF Suisse –0.7 0.5 – – –0.2

Business no longer in line with DVB’s strategy – – – – –

Other – – – – –

Total portfolio-based allowance for credit losses –30.4 16.6 – – –13.8

Offshore Finance –2.9 – – – –2.9

Total provisions –2.9 – – – –2.9

Total as at 30 June 2016 –196.4 112.2 –0.2 1.0 –83.4

Total as at 30 June 2015 –69.2 34.8 –5.8 0.5 –39.7

6



This one-off effect, which was generated in the Bank’s Aviation Investment Management activities, did not materialised during the reporting period 2016.

Consolidated net income before bank levy, BVR Deposit Guarantee Scheme, and taxes decreased by 72.2%, to €25.2 million (previous year: €90.6 million). Estimated bank levy charges of €6.4 million (2015: €3.3 million in bank levy actually paid) as well as €4.7 million in expenses for the Deposit Guaran-tee Scheme of the National Association of German Cooperative Banks (BVR; 2015: €4.6 million in expenses for the BVR Deposit Guarantee Scheme) needed to be deducted from this figure already at the beginning of the year.

Consolidated net income before taxes amounted to €14.1 million (previous year: €75.7 million), and consolidated net income after taxes of €10.6 million was short of the previous year’s figure of €62.5 million.

General administrative expenses rose by 2.0%, to €91.3 million (previous year: €89.5 million). Staff expenses increased by 7.2%, to € 55.2 million (previous year: €51.5 million), which was largely due to additional staff required to fulfil a substantial range of new regulatory requirements. Together with its LogPay Financial Services subsidiary, DVB employed a total of 614 staff (in active employment) as at 30 June 2016, an increase of 26 compared to the previous year (588 employees). Non-staff expenses (including depreciation, amortisation and write-downs) decreased by 5.0%, from €38.0 million to €36.1 million.

Net income from financial instruments in accordance with IAS 39 (comprising the trading result, the hedge result, the result from derivatives entered into without intention to trade, and the result from investment securities) – which is generally volatile – amounted to €10.0 million (previous year: €63.5 million). The previous year’s figure included substantial non-recurring income from the sale of investment securities, due to the partial disposal of the stake in Wizz Air Holdings Plc.

Derivation of consolidated net income as at 30 June 2016 (€ mn)

Total income1) General

administrative

expenses

Net result from financial

instruments in accordance

with IAS 39

Expenses for the bank levy

and the BVR2) Deposit

Guarantee Scheme

(financial year)

Income

taxes

Consolidated

net income

1) Comprising net interest income after allowance for credit losses, net fee and commission income, result from investments in companies accounted for using the equity method, and net other operating income/expenses

2) National Association of German Cooperative Banks

106.5

–91.3

+10.0

–11.1 –3.5

10.6

7




Development of the customer lending volume

DVB’s total assets decreased to €26.5 billion as at 30 June 2016, down 0.4% from the 2015 year-end figure of €26.6 billion – largely due to currency translation effects.

DVB’s nominal volume of customer lending (the aggregate of loans and advances to customers, guarantees and indemni-ties, irrevocable loan commitments, and derivatives) decreased by 3.6%, to €24.4 billion. In US dollar terms, it was down 1.8%, from US$27.5 billion to US$27.0 billion.

The chart illustrates the breakdown of customer lending (in euro terms) across the Bank’s business divisions.

€ bn US$ bn30 Jun 2016 31 Dec 2015 % 30 Jun 2016 31 Dec 2015 %

Shipping Finance 11.2 11.8 –5.1 12.5 12.8 –2.3

Aviation Finance 7.8 7.7 1.3 8.6 8.3 3.6

Offshore Finance 2.2 2.4 –8.3 2.5 2.7 –7.4

Land Transport Finance 1.7 1.7 – 1.8 1.8 –

ITF Suisse 0.8 1.0 –20.0 0.9 1.1 –18.2

Investment Management 0.6 0.5 20.0 0.6 0.6 –

Business no longer in line with DVB’s strategy 0.1 0.2 –50.0 0.1 0.2 –50.0

Total 24.4 25.3 –3.6 27.0 27.5 –1.8

Shipping Finance 45.9 % (–0.7 pp)

Aviation Finance 32.0 % (+1.6 pp)

Offshore Finance 9.0 % (–0.5 pp)

Land Transport Finance 7.0 % (+0.3 pp)

ITF Suisse 3.3 % (–0.7 pp)

Investment Management 2.5 % (+0.5 pp)

Business no longer in line with the Bank’s strategy 0.4 % (–0.4 pp)

Distribution of customer lending by business division, as at 30 June 2016

8



The Bank employs key financial indicators to assess and manage its business: return on equity (ROE) before taxes, cost/income ratio (CIR) and risk-adjusted Economic Value Added (EVA™). In order to harmonise the calculation methodology and enhance transparency thereof, the Bank has included expenses for the bank levy and the BVR Deposit Guarantee Scheme, as well as the operative component of the IAS 39 result (the result from investment securities) in its calculation methodology for all three management indicators since the first quarter of 2016. Expenses for the bank levy and the BVR Deposit Guarantee Scheme must be recognised at the beginning of each financial year, for the full year, and are then no longer amortised over the course of the year. However, in DVB’s view, amortising these charges over the periods within a financial year is commercially sensible for calculating key financial indicators, since this allows for a more realistic reflection of business performance.

On this basis, the financial indicators developed as follows:

ROE (before taxes) of 0.6% (previous year: 8.8%) was calcu-lated as follows: consolidated net income before IAS 39 and taxes (but including the result from investment securities), in the amount of €3.8 million was divided by the pro-rata total of weighted capital in the amount of €1,335.4 million (issued share capital, capital reserve, retained earnings excluding funds for general banking risks, non-controlling interests and deferred taxes, as well as before appropriation of consolidated net income).

CIR totalled 52.6% (previous year: 49.9%) and was calculated in the following manner: the aggregate of general administra-tive expenses and pro-rata expenses for bank levy and BVR Deposit Guarantee Scheme (€96.9 million) was divided by the total of net interest income before allowance for credit losses, net fee and commission income, results from investments in companies accounted for using the equity method, net other operating income/expenses, and the result from investment securities (€184.1 million).

Risk-adjusted EVA™ amounted to €–47.2 million (previous year: €8.0 million). It was calculated by deducting risk capital costs (€51.0 million), on a pro-rata basis, from consolidated net income before IAS 39 and taxes, but including the result from investment securities (€3.8 million).

DVB discloses capital ratios determined in accordance with the Basel III framework (Advanced Approach). On this basis, DVB’s common equity tier 1 ratio as at 30 June 2016 was 12.6% (31 December 2015: 16.3%), whilst the total capital ratio amounted to 17.2% (31 December 2015: 22.4%).

9




Macroeconomic overview

There are no new insights that would indicate any material changes to the forecasts regarding the development of transport markets, Transport Finance and Investment Management port-folios, or to the financial outlook as set out in the group manage-ment report on pages 95–97, 107–109, 116–117, 128–129, 133, 139, 143, 146–147 and 148–151 of the Group Annual Report 2015.

Before the vote in the United Kingdom in favour of leaving the European Union (Brexit), economic data and financial market developments suggested that the global economy was evolving broadly as forecasted by the International Monetary Fund (IMF) in April 2016.

The outcome of the referendum, which surprised global financial markets, implies the materialisation of an important downside risk for the world economy. As a result, the global outlook for 2016 has worsened, despite the better-than-expected perfor-mance in early 2016. This deterioration reflects the expected macroeconomic consequences of a sizable increase in uncer-tainty, including on the political front.

With Brexit still very much unfolding, the extent of uncertainty complicates the already difficult task of macroeconomic fore-casting. The baseline global growth forecast by the IMF has been revised modestly downwards relative to the forecast made in April 2016 (by 0.1 percentage points for 2016 (3.1%), as com-pared to a 0.1 percentage point upward revision for 2016 envis-aged pre-Brexit). Pending further clarity on the exit process, this baseline reflects the benign assumption of a gradual reduction in uncertainty going forward, with arrangements between the European Union and the United Kingdom avoiding a large increase in economic barriers, no major financial market disrup-tion, and limited political fallout from the referendum. However, more negative outcomes are a distinct possibility.

DVB agrees with this expert opinion and expects economic growth in the foreseeable future to remain volatile.

One of the key drivers for DVB’s business model will continue to be the development of the oil price, which is expected to remain at a low level for a longer period of time. The reasons for this are the still very high (but continuously decreasing) production volumes of the OPEC member states and Russia, an expected increase in supply from Iran, as well as existing uncertainty regarding the resilience of global demand and the medium-term growth potential. In addition, investors are currently refraining from commodity and equity investments given the prevailing risk aversion on the financial markets.

This Half-Yearly Financial Report contains forward-looking statements, including statements concerning the future de-velopment of DVB.

As usual, any assessments and forecasts contained herein will always be subject to the risk of erroneous perception or judgement errors, and may thus turn out to be incorrect. By their very nature, any deliberations regarding developments or events in the future are based on conjecture rather than precise predictions. Actual future developments may there-fore diverge from expectations, not least as a result of fluctu-ations in capital market prices, exchange rates or interest rates, or similar causes of uncertainty; or due to fundamental changes in the economic environment.

Although we believe the forward-looking statements to be realistic, DVB cannot accept any responsibility that they will actually materialise, for the reasons outlined above.

10


Report on expected developments

Moreover, DVB will probably be heavily influenced by the following risk factors:

• geopolitical crises and their impact on the global economy through sanctions;

• global stock markets in decline and rising uncertainties surrounding market development in the future;

• increased capital withdrawal from commodity-exporting emerging countries as commodity prices continue to fall in the wake of the expected interest rate hikes in the US;

• impact of the interest rate turnaround in the US on asset prices in industrial countries, as well as on capital flows in major emerging economies;

• further development of the Chinese economy.

Developments on the track and transport markets have remained mixed during 2016.

The demand forecast for the aviation markets remains posi-tive. Worldwide, airlines have benefited from low oil prices and high load factors and are reporting excellent results. Industry profit has even made a new record high. The demand forecast for the land transport markets remains positive for Europe as well – transport price, lease rate and utilisation rate increases can be expected across the board – while the outlook for the Australian and North American markets is more challenging.

In the shipping markets, growth prospects for 2016 are worse than originally expected. As a consequence, most shipping sectors will probably have to wait longer for any significant increase in demand. Until such time, the excess capacity in the existing fleet will represent a challenge for the industry. The structural oversupply continues to burden vessel values and charter rates in the three troubled sectors (container vessels, dry bulk carriers, and crude oil tankers). The tanker market is currently reaping short-term benefits with clearly positive effects on demand, which are likely to curb during 2016, result-ing in a probable deceleration of demand growth.

Continued oil price uncertainty is leading to further cuts in exploration and production (E&P) spending on offshore markets, as oil and gas majors not only implement cost-cutting programmes, but also delay investments. A further decline in E&P spending is expected for 2016. Demand for offshore assets is likely to decline further from the levels seen in 2015, although at varying degrees depending on asset type and region. Offshore assets, largely involved in exploration will be most affected – while activity in lower-cost regions (Middle East) is expected to be more resilient. With the market continu-ing to remain difficult, cash reserves amongst rig owners and shipowners are gradually becoming depleted. Hence, we expect to see even more restructurings, distressed sales, and bankrupt-cies during 2016.

DVB’s outlook is as follows:

The Bank continues to assess the financial year 2016 with cautious optimism, and is endeavouring to achieve consolidated net income that should approach the previous year’s level. Given the persistent challenges on the shipping and offshore markets, DVB is of course aware that allowance for credit losses will continue to remain on an elevated level.

11


Report on expected developments


No risks which would jeopardise DVB’s continued existence are expected to materialise during the remainder of the financial year 2016. Please refer to the report on opportunities and risks on pages 152–176 of the Group Annual Report 2015, which con-tains detailed information regarding risk management principles and organisation, DVB’s risk-bearing capacity and risk capital, and on the different types of risk.

12


Report on opportunities and risks

Full reference is made in this respect to the information pro-vided on pages 244–245, note 65.4 of the Annual Report 2015. As part of DVB’s funding operations, the Bank’s securitised liabilities vis-à-vis DZ BANK Group amounted to €6,091.8 million as at 30 June 2016 (31 December 2015: €7,582.6 million – adjustment of the figure originally disclosed in the Group Annual Report 2015 in the amount of €10,829.8 million)). At the report-ing date, the Bank had no securities repurchase agreements in place where DZ BANK AG is the borrower (31 December 2015: two transactions). Given these transactions, an aggregate amount of €75.8 million was recognised in loans and advances to banks as at year-end 2015. Other than this, there were no material changes to related party transactions during the first half of 2016 which might have materially affected the financial position or financial performance of DVB.

13


Report on major related party transactions


Interim financial statements

15 Condensed income statement


17 Statement of financial position


18 Condensed cash flow statement

19 Segment report11)

20 Notes

1) This table is part of the Notes.

Shipping Finance Aviation Finance Offshore Finance Land Transport Finance Total Transport Finance results

1) Before IAS 39 and before allocation of general costs

2) The correction of errors pursuant to IAS 8.41 results in an adjustment of the previous year’s figure (see note under 3).

Total income1) development in Transport Finance, as at 30 June

€ mn

160

140

120

100

80

60

40

20

0

–20

2012 2013 2014 2015 2016

29.0

46.642.9

57.2 56.7 54.3 61.9

18.3

29.7 21.5

18.9

9.9 10.614.1 16.8

114.4

143.6

132.8 132.92

101.2

61.6

16.4

24.5

–1.3

35.32

€ mn Note1 Jan 2016 – 30 Jun 2016

1 Jan 2015 – 30 Jun 2015 %

Net interest income (4) 124.5 92.5 34.6

Allowance for credit losses (5) –83.4 –39.7 –

Net interest income after allowance for credit losses 41.1 52.8 –22.2

Net fee and commission income (6) 56.5 52.3 8.0

Results from investments in companies accounted for using the equity method 4.1 3.1 32.3

General administrative expenses1) (7) –91.3 –89.5 2.0

Net other operating income/expenses1) (8) 4.8 8.4 –42.9

Consolidated net income before IAS 39, bank levy,

BVR2) Deposit Guarantee Scheme and taxes1) 15.2 27.1 –43.9

Net result from financial instruments in accordance with IAS 391) (9) 10.0 63.5 –84.3

Consolidated net income before bank levy,

BVR2) Deposit Guarantee Scheme and taxes1) 25.2 90.6 –72.2

Expenses for the bank levy and the BVR2) Deposit Guarantee Scheme –11.1 –14.9 –25.5

Consolidated net income before taxes1) 14.1 75.7 –81.4

Income taxes –3.5 –13.2 –73.5


thereof: consolidated net income attributable to non-controlling interests 0.2 0.0 –

thereof: consolidated net income attributable to shareholders of DVB Bank SE1) 10.4 62.5 –83.4

Earnings per share

Average number of shares issued 45,581,303 45,696,269 –0.3

Basic earnings per share (€)1) 0.23 1.37 –83.2

Diluted earnings per share (€)1) 0.23 1.37 –83.2

1) The correction of errors pursuant to IAS 8.41 results in an adjustment of the previous year’s figure (see note under 3).2) National Association of German Cooperative Banks


15

INTERIM MANAGEMENT REPORT INTERIM FINANCIAL STATEMENTS RE VIE W REPORT FURTHER INFORMATION

Condensed income statement

€ mn1 Jan 2016 – 30 Jun 2016

1 Jan 2015 – 30 Jun 2015 %


Other comprehensive income reclassified subsequently to profit or loss –1.0 22.1 –

Revaluation of AfS financial instruments –6.5 20.4 –

thereof: changes in fair value –6.6 19.7 –

thereof: reclassifications to the income statement 0.1 0.7 –85.7

Cash flow hedges 4.5 2.9 55.2

thereof: changes in fair value 1.3 –19.1 –


Net investment hedges 6.7 –16.0 –

thereof: changes in fair value 4.4 –18.4 –


Currency translation –4.2 10.2 –

thereof: changes in fair value –4.2 10.2 –

thereof: reclassifications to the income statement – – –

Deferred taxes –1.5 4.6 –

Other comprehensive income from associates and

joint ventures reclassified subsequently to profit or loss 2.7 1.3 –

Revaluation of AfS financial instruments 2.1 2.0 5.0

thereof: changes in fair value 2.1 2.0 5.0


Cash flow hedges 1.2 0.0 –

thereof: changes in fair value 1.2 0.0 –


Currency translation –0.6 –0.7 –14.3

thereof: changes in fair value –0.6 –0.7 –14.3


Other comprehensive income not reclassified subsequently to profit or loss –1.7 –1.5 13.3

Revaluation of defined benefit plans –2.4 –2.1 14.3

Deferred taxes 0.7 0.6 16.7

Total comprehensive income1) 10.6 84.4 –87.4

thereof: total comprehensive income attributable to non-controlling interests 0.2 0.0 –

thereof: total comprehensive income attributable to shareholders of DVB Bank SE1) 10.4 84.4 –87.7




Assets (€ mn) Note 30 Jun 2016 31 Dec 2015 %

Cash and balances with the central bank 1,720.6 1,164.1 47.8

Loans and advances to banks (10) 1,056.3 1,116.8 –5.4

Loans and advances to customers (11) 22,543.4 22,975.5 –1.9

Allowance for credit losses (12) –338.1 –289.0 17.0

Positive fair values of derivative hedging instruments 362.8 321.3 12.9

Trading assets 121.0 95.0 27.4

Investment securities (13) 196.9 349.8 –43.7

Investments in companies accounted for using the equity method (14) 259.7 228.3 13.8

Intangible assets (15) 102.2 101.4 0.8

Property and equipment (16) 325.6 373.1 –12.7

Income tax assets 95.7 96.4 –0.7

Other assets (17) 60.0 56.9 5.4

Non-current assets held for sale – 20.9 –

Total 26,506.1 26,610.5 –0.4

Liabilities and equity (€ mn) Note 30 Jun 2016 31 Dec 2015 %

Deposits from other banks (18) 2,829.6 2,457.0 15.2

Deposits from customers (19) 7,838.3 7,510.8 4.4

Securitised liabilities (20) 12,594.4 13,141.9 –4.2

Negative fair values of derivative hedging instruments 133.5 169.4 –21.2

Trading liabilities 803.8 975.5 –17.6

Provisions (21) 55.9 60.9 –8.2

Income tax liabilities 51.6 53.3 –3.2

Other liabilities (22) 75.5 69.5 8.6

Subordinated liabilities (23) 699.5 742.7 –5.8

Equity (24) 1,424.0 1,429.5 –0.4

Issued share capital 116.1 116.7 –0.5

Capital reserve 316.3 321.3 –1.6

Retained earnings 974.1 975.5 –0.1

thereof: fund for general banking risks 82.4 82.4 –

Revaluation reserve 3.9 6.2 –37.1

Reserve from cash flow hedges –2.4 –6.7 –64.2

Reserve from net investment hedges –20.0 –24.5 –18.4

Currency translation reserve 22.2 26.9 –17.5

Distributable profit 10.4 13.9 –25.2

Non-controlling interests 3.4 0.2 –

Total 26,506.1 26,610.5 –0.4


17


Statement of financial position

Condensed cash flow statement

€ mn1 Jan 2016 – 30 Jun 2016

1 Jan 2015 – 30 Jun 2015 %

Equity as at 1 Jan1) 1,429.5 1,405.0 1.7

Consolidated net income attributable to shareholders of DVB Bank SE1) 10.4 62.5 –83.4

Other comprehensive income 0.0 21.9 –

Dividend payment –13.6 –27.9 –51.3

Changes in treasury shares –5.6 3.3 –

Changes in consolidated group and other changes 3.3 0.5 –

Equity as at 30 Jun 1,424.0 1,465.3 –2.8


€ mn1 Jan 2016 – 30 Jun 2016

1 Jan 2015 – 30 Jun 2015 %

Cash flow from operating activities1) 467.5 –212.1 –

Cash flow from investing activities1) 151.8 –151.4 –

Cash flow from financing activities –62.8 256.4 –

Net change in cash and cash equivalents1) 556.5 –107.1 –

Cash and cash equivalents at beginning of period 1,164.1 175.5 –

Cash and cash equivalents at end of period 1,720.6 68.4 –




Group

Shipping Finance

Aviation Finance

Offshore Finance

Land Transport

Finance

Investment Management

Treasury

Other

Reconcilia-tion/con-

solidation

€ mn 06/2016 06/2015 06/2016 06/2015 06/2016 06/2015 06/2016 06/2015 06/2016 06/2015 06/2016 06/2015 06/2016 06/2015 06/2016 06/2015 06/2016 06/2015

Net interest

income 124.5 92.5 61.5 42.5 38.4 39.5 11.4 12.4 11.2 14.0 –5.5 –18.7 –15.3 –18.2 5.4 5.7 17.4 15.3

Allowance for

credit losses –83.4 –39.7 –52.8 –26.7 –1.2 2.9 –16.7 –0.7 –0.2 –0.2 –8.2 –4.9 0.0 0.0 –2.8 –6.3 –1.6 –3.8

Net interest

income after

allowance for

credit losses 41.1 52.8 8.7 15.8 37.2 42.4 –5.3 11.7 11.0 13.8 –13.7 –23.6 –15.3 –18.2 2.6 –0.6 15.8 11.5

Net fee and

commission

income 56.5 52.3 15.5 16.2 24.3 20.1 4.0 7.2 5.2 2.9 2.2 –0.2 –0.2 –0.2 5.7 6.0 –0.1 0.3

Results from

investments

in companies

accounted for

using the equity

method 4.1 3.1 – – – – – – – – 4.1 3.5 – – 0.0 –0.4 0.0 0.0

Net other oper-

ating income/

expenses1) 4.8 8.4 0.2 3.3 0.1 –0.6 0.0 0.0 0.2 0.1 2.6 7.3 0.0 0.0 0.2 0.3 1.4 –2.0

Total income1) 106.5 116.6 24.5 35.3 61.6 61.9 –1.3 18.9 16.4 16.8 –4.8 –13.0 –15.5 –18.4 8.5 5.3 17.1 9.8

Staff expenses –55.2 –51.5 –9.1 –12.7 –9.2 –7.9 –1.5 –1.6 –1.5 –1.3 –4.1 –3.5 –0.5 –0.5 –22.3 –20.1 –7.0 –3.9

Non-staff

expenses1) –33.5 –35.6 –3.0 –4.4 –2.5 –2.5 –0.4 –0.6 –0.3 –0.5 –1.9 –3.5 –0.2 –0.2 –18.6 –17.0 –6.6 –6.9

Depreciation,

amortisation,

impairment

and write-ups –2.6 –2.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 –2.6 –2.3 0.0 –0.1

General

administrative

expenses1) –91.3 –89.5 –12.1 –17.1 –11.7 –10.4 –1.9 –2.2 –1.8 –1.8 –6.0 –7.0 –0.7 –0.7 –43.5 –39.4 –13.6 –10.9

Consolidated

net income

before IAS 39,

bank levy,

BVR Deposit

Guarantee

Scheme

and taxes1) 15.2 27.1 12.4 18.2 49.9 51.5 –3.2 16.7 14.6 15.0 –10.8 –20.0 –16.2 –19.1 –35.0 –34.1 3.8 –1.1

Net result

from financial

instruments

in accordance

with IAS 391) 10.0 63.5 0.9 –8.1 0.0 0.1 0.1 0.0 0.0 0.0 –6.0 47.8 14.9 32.4 0.0 –8.8 0.1 0.1

Consolidated

net income

before

bank levy,

BVR Deposit

Guarantee

Scheme

and taxes1) 25.2 90.6 13.3 10.1 49.9 51.6 –3.1 16.7 14.6 15.0 –16.8 27.8 –1.3 13.3 –35.0 –42.9 3.8 –0.1

Cost/income

ratio1) 2) (%) 52.6 49.9 15.7 27.6 18.7 17.6 12.2 11.2 10.7 10.6 –261.5 18.0 – – – – – –

Return on

equity1) 3) (%) 0.6 8.8 6.4 15.0 67.2 58.3 –4.7 89.6 96.5 102.3 –13.2 14.9 – – – – – –

Lending

volume4) 28,050.5 26,944.6 11,239.4 11,030.6 7,752.5 8,120.8 2,237.2 2,506.6 1,654.9 1,789.9 566.4 570.4 3,673.0 1,660.2 927.0 1,266.1 – –

1) The correction of errors pursuant to IAS 8.41 results in an adjustment of the previous year’s figure in relation to the Group and the Shipping segment (see note under 3).2) Excluding allowance for credit losses3) Before taxes4) According to internal management


19


Segment report

General notes

1 Summary of material accounting policies applied

The present interim consolidated financial statements for the period ended on 30 June 2016 have been prepared in accord-ance with the International Financial Reporting Standards (IFRS), as adopted by the European Union (EU). They also comply with the requirements for interim financial reporting set out in section 37w of the German Securities Trading Act (WpHG).

The present interim consolidated financial statements are pre-sented in the form of condensed interim financial statements in accordance with IAS 34. The accounting policies applied therein are in line with those applied for the consolidated finan-cial statements as at 31 December 2015, in which allowances for companies accounted for using the equity method were reported under the result from investment securities. So far, expenses from allowances for companies accounted for using the equity method were reported as other expenses. The change of presentation was consistently applied to the compar-ative figures of the previous year in the present interim consoli-dated financial statements. Regardless of this fact, operating income/expenses from investments in companies accounted for using the equity method are recognised in a separate item of the income statement.

The following amendments to accounting standards and new interpretations have been taken into account in the interim con-solidated financial statements for the first time:

• Amendments to IAS 19 – Employee Benefits• Amendments to IFRS 11 – Accounting for Acquisition of

Interests in Joint Operations• Amendments to IAS 16 and IAS 38 – Clarification of Accept-

able Methods of Depreciation and Amortisation• Amendments to IAS 1 – Disclosure Initiative • Improvements to the International Financial Reporting

Standards, period 2010–2012• Improvements to the International Financial Reporting

Standards, period 2012–2014

The amendments to IAS 19 – Employee Benefits govern the accounting for components of direct pension commitments. It is possible to recognise cost components that depend directly on the service period directly through profit or loss in the current period.

The amendments to IFRS 11 clarify that the rules of IFRS 3 and other standards have to be applied for the accounting for busi-ness combinations if the shares in a joint operation constitute a business as defined in IFRS 3. This applies to the extent that the rules are not in conflict with the basic rules of IFRS 11.

The amendments to IAS 16 and IAS 38 clarify which methods are appropriate for the depreciation of property, plant and equipment and the amortisation of intangible assets. In general, depreciation and amortisation have to be recognised in a man-ner that reflects the consumption of the expected future eco-nomic benefits generated by an asset. Firstly, a reduction in selling prices may be an indication to recognise a special write-down for the assets necessary for production. Secondly, the determination of an appropriate amortisation method for intan-gible assets has to take into consideration a predominant limit-ing factor for use of the asset (e.g. time limits, limits in relation to the number of produced units).

The other revised and amended standards set out above do not have a significant impact on DVB’s interim consolidated financial statements.

In the period under review, DVB did not enter into securities repurchase agreements. As at year-end 2015, DVB held two transactions structured as genuine repurchase agreements (with DVB as lender), all of which expired during the first half of 2016.

Currency translation differences related to companies with a different functional currency are recognised directly in equity, in the currency translation reserve. In total, 31 companies accounted for using the equity method have a different func-tional currency (31 December 2015: 27 companies).

To the extent that estimates are necessary for recognition and measurement, these were made in accordance with the relevant standards. The basis for these estimates is continuously reviewed and adjusted, if necessary, taking into account histori-cal experience as well as changed expectations with regard to future developments.

2 Consolidated group

The group of consolidated companies changed as a result of the establishment of the following, fully consolidated companies:

• Intermodal Investment Fund IX LLC, Majuro, Marshall Islands• Iron Maple Rail Ltd, Vancouver, Canada • SIIM Marlin Holdings LLC, Majuro, Marshall Islands

Notes20


The following newly-established companies were included in the group of consolidated companies using the equity method:

• MSEA Marlin Holdings LLC, Majuro, Marshall Islands• MSN 1272&1278 Aircraft Leasing (Cayman) Ltd, Grand

Cayman, Cayman Islands

After the acquisition of shares, the following companies were included in the group of consolidated companies using the equity method:

• Celestyal Cruises Ltd, Strovolos, Cyprus• TAP Ltd, Hamilton, Bermuda

The following companies are no longer included in the group of consolidated companies:

• American Flirtation N.V., Willemstad, Curaçao• Clementine Shipping LLC, Majuro, Marshall Islands• DVB Objektgesellschaft Geschäftsführungs GmbH, Frankfurt/

Main, Germany• Mount Kaba Shipping LLC, Majuro, Marshall Islands• S1 Offshore Pte Ltd, Singapore• Shipping Capital Antilles N.V., Willemstad, Curaçao• TEU Management Company N.V., Willemstad, Curaçao

3 Correction of errors

In the context of the audit of the 2013 consolidated financial statements, the German Financial Reporting Enforcement Panel (FREP) issued a letter dated 16 December 2015 in which it deter-mined an error regarding the presentation of a claim for dam-ages. This finding refers to the capitalised claim for damages in relation to arbitration proceedings against COSCO which DVB lost by virtue of the arbitral award dated 5 August 2015. The proceedings were in relation to claims for damages from the pre-delivery payment loan for the construction of a sixth-gener-ation drillship. The result of the arbitral award was published in an ad-hoc disclosure dated 7 August 2015.

The error identified by the FREP refers to the allegation that the claim for damages, in accordance with IAS 37, should only be recognised in relation to the contractually secured rights. The claim amounted to US$153.0 million as at 31 December 2013, of which US$116.9 million were secured by contractual rights. The FREP therefore determined that the receivable, which had been recognised for the first time in the consolidated financial statements as at 31 December 2013, had been overstated by €26.6 million (US$36.1 million).

Pursuant to the rules set out in IAS 8.41, the consolidated financial statements for 2013 and 2014 have to be adjusted ret-rospectively. For further information, reference is made to page 190, note 1.4.3 of the Group Annual Report 2015. The presented reconciliation shows the effects on the individual items in the income statement for the reporting date 30 June 2015, resulting

from the error correction made to the consolidated financial statements for the reporting date 31 December 2015.

4 Net interest income

Net interest income includes negative interest from financial assets in the amount of €3.2 million and positive interest from financial liabilities in the amount of €0.2 million.

Correction of errors

€ mn

30 June 2015 – before correc-

tion of errorsCorrection/adjustment

30 June 2015 – after correc-tion of errors

Income statement

General

administrative expenses –88.2 –1.3 –89.5Net other operating

income/expenses –36.8 36.4 –0.41)

Net result from

financial instruments in

accordance with IAS 39 75.0 –2.7 72.31)

Consolidated net

income before taxes 43.3 32.4 75.7Consolidated

net income 30.1 32.4 62.5

1) In addition, €8.8 million was reclassified from "Net other operating income/expenses" to the "Result from investment securities", which is part of the "Net result from financial instruments in accordance with IAS 39".

€ mn

1 Jan 2016 – 30 Jun 2016

1 Jan 2015 – 30 Jun 2015

%

Interest income

from lending and

money market transactions 461.6 400.2 15.3

from bonds and other

fixed-income securities 9.0 6.3 42.9

from finance leases 2.3 8.1 –71.6

Current income

from operating leases 37.6 99.6 –62.2

from equity investments and

other investment securities 0.0 2.6 –

Interest income 510.5 516.8 –1.2

Interest expenses

for deposits –199.5 –169.6 17.6

for securitised liabilities –130.3 –136.9 –4.8

for subordinated liabilities –13.5 –11.7 15.4

for operating leases –40.2 –106.1 –62.1

Interest expenses –386.0 –424.3 –9.0

Net interest income 124.5 92.5 34.6

Notes 21



5 Allowance for credit losses

6 Net fee and commission income

7 General administrative expenses

8 Net other operating income/expenses

€ mn

1 Jan 2016 – 30 Jun 2016

1 Jan 2015 – 30 Jun 2015

%

Additions –196.4 –69.2 –

Reversals 112.2 34.8 –

Direct write-offs –0.2 –5.8 –96.6

Recoveries on loans and advan-

ces previously written off 1.0 0.5 –

Total –83.4 –39.7 –

€ mn

1 Jan 2016 – 30 Jun 2016

1 Jan 2015 – 30 Jun 2015

%

Fee and commission income

from guarantees and indemnities 2.7 2.3 17.4

from the lending business 46.6 53.1 –12.2

Other fee and commission income 10.4 3.4 –

Fee and commission income 59.7 58.8 1.5

Fee and commission

expenses –3.2 –6.5 –50.8

Net fee and commission

income 56.5 52.3 8.0

€ mn

1 Jan 2016 – 30 Jun 2016

1 Jan 2015 – 30 Jun 2015

%

Staff expenses –55.2 –51.5 7.2

Non-staff expenses1) –33.5 –35.6 –5.9

Depreciation,

amortisation, impairment

and write-ups –2.6 –2.4 8.3

Total1) –91.3 –89.5 2.0


€ mn

1 Jan 2016 – 30 Jun 2016

1 Jan 2015 – 30 Jun 2015

%

Other operating income 17.2 30.2 –43.0

Other operating

expenses1) –12.3 –21.8 –43.6

Total1) 4.8 8.4 –42.9


9 Net result from financial instruments in accordance with IAS 39

9.1 Trading result

9.2 Hedge result (hedge accounting)

€ mn

1 Jan 2016 – 30 Jun 2016

1 Jan 2015 – 30 Jun 2015

%

Trading result1) –1.0 4.7 –

Hedge result 2.1 7.1 –70.4

Result from derivatives

entered into without

intention to trade 14.7 13.5 8.9

Result from

investment securities –5.8 38.2 –

Total1) 10.0 63.5 –84.3


€ mn

1 Jan 2016 – 30 Jun 2016

1 Jan 2015 – 30 Jun 2015

%

Trading result

from derivatives 0.8 –0.6 –

from foreign

currency transactions1) –2.1 5.0 –

from interest and

dividend payments 0.3 0.3 –

Other – – –

Total1) –1.0 4.7 –


€ mn

01.01.2016– 30.06.2016

01.01.2015– 30.06.2015

%

Result from derivative

hedging instruments 207.9 –199.8 –

Result from hedged items –206.5 205.4 –

Result from remeasurement 1.4 5.6 –75.0

Ineffectiveness of

cash flow hedges 0.7 1.5 –53.3

Total 2,1 7,1 –70,4

Notes22


13 Investment securities

DVB does not hold any investment securities from Greece, Ireland, Portugal, Spain or Italy.

14 Investments in companies accounted for using the equity method

15 Intangible assets

€ mn 30 Jun 2016 31 Dec 2015 %

Bonds and other

fixed-income securities 178.4 332.2 –46.3

thereof: bonds and notes 178.4 332.2 –46.3

Equities and other

non-fixed-income securities 4.9 4.9 –

Equity investments 13.6 12.7 7.1

Total 196.9 349.8 –43.7

€ mn 30 Jun 2016 31 Dec 2015 %

Investments in associates 212.4 179.7 18.2

Interests in joint ventures 47.3 48.6 –2.7

Total 259.7 228.3 13.8

€ mn 30 Jun 2016 31 Dec 2015 %

Goodwill 95.0 95.0 –

Other intangible assets 7.2 6.4 12.5

Total 102.2 101.4 0.8

10 Loans and advances to banks

11 Loans and advances to customers

DVB does not hold any claims against Greece, Ireland, Portugal, Spain or Italy.

Loans and advances to clients domiciled in these countries are not exposed to any country-specific risks, especially due to the fact that the relevant claims are collateralised by the financed transport assets.

12 Allowance for credit losses

Interest income arises from unwinding impaired loans and advances to customers, recognised at their present value as specified in IAS 39.AG93.

€ mn 30 Jun 2016 31 Dec 2015 %

Loans and advances 1,056.0 1,037.3 1.8

thereof: payable on demand 1,053.2 1,037.3 1.5

thereof: with a limited term 2.8 – –

Money market transactions – 79.2 –

thereof: with a limited term – 79.2 –

Other loans and advances

to banks 0.3 0.3 9.0

Total 1,056.3 1,116.8 –5.4

German banks 483.3 588.8 –17.9

Foreign banks 573.0 528.0 8.5

Total 1,056.3 1,116.8 –5.4

€ mn 30 Jun 2016 31 Dec 2015 %

Loans and advances 22,528.4 22,962.0 –1.9

thereof: payable on demand 415.5 344.2 20.7

thereof: with a limited term 22,112.9 22,617.8 –2.2

Other loans and advances

to customers 15.0 13.5 10.9

Total 22,543.4 22,975.5 –1.9

German customers 828.7 984.5 –15.8

Foreign customers 21,714.7 21,991.0 –1.3

Total 22,543.4 22,975.5 –1.9

Specific allowance for credit losses

Portfolio-based allowance for credit losses

Total

€ mn 30 Jun 2016 31 Dec 2015 30 Jun 2016 31 Dec 2015 30 Jun 2016 31 Dec 2015

Allowance for credit losses as at 1 Jan 253.0 183.9 36.1 35.0 289.1 218.9

Additions 166.0 174.2 30.4 21.3 196.4 195.5

Utilisation –25.5 –61.3 – – –25.5 –61.3

Reversals –95.6 –42.4 –16.6 –23.7 –112.2 –66.1

Interest income –4.8 –19.7 – – –4.8 –19.7

Changes resulting from

exchange rate fluctuations –4.3 18.3 –0.6 3.4 –4.9 21.7

Allowance for credit losses

as at the reporting date 288.8 253.0 49.3 36.0 338.1 289.0

Notes 23



16 Property and equipment

17 Other assets

18 Deposits from other banks

€ mn 30 Jun 2016 31 Dec 2015 %

Land and buildings – 0.0 –

Operating and office equipment 7.5 8.3 –9.6

Assets held under

operating leases 96.3 120.7 –20.2

Other property and equipment 221.8 244.1 –9.1

Total 325.6 373.1 –12.7

€ mn 30 Jun 2016 31 Dec 2015 %

Receivables from taxes

not related to income 3.0 3.3 –9.1

Advance payments and

prepaid expenses 2.7 3.9 –30.8

Miscellaneous other assets 54.3 49.7 9.3

Total 60.0 56.9 5.4

€ mn 30 Jun 2016 31 Dec 2015 %


thereof: payable on demand 25.9 66.9 –61.3

thereof: with a limited term 2,343.1 2,227.6 5.2

Money market transactions 460.6 162.5 –

thereof: payable on demand 99.6 – –

thereof: with a limited term 361.1 35.5 –

Total 2,829.6 2,457.0 15.2

German banks 2,713.7 2,278.7 19.1

Foreign banks 115.9 178.3 –35.0

Total 2,829.6 2,457.0 15.2

19 Deposits from customers

20 Securitised liabilities

During the first half of 2016, the Bank issued securitised liabili-ties with a nominal value of €1,000.0 million and a term of five to seven years. Bearer bonds were due in the nominal amount of €1,495.1 million. €6,091.8 million (31 December 2015: €7,582.6 million) of securitised liabilities were related to trans-actions with the DZ BANK Group.

€ mn 30 Jun 2016 31 Dec 2015 %


thereof: payable on demand 715.4 729.8 –2.0

thereof: with a limited term 7,093.5 6,715.2 5.6

Money market transactions 18.1 53.4 –66.1

thereof: payable on demand – – –

thereof: with a limited term 18.1 53.4 –66.1

Other deposits from customers 11.3 12.4 –8.9

Total 7,838.3 7,510.8 4.4

German customers 7,173.0 6,801.4 5.5

Foreign customers 665.3 709.4 –6.2

Total 7,838.3 7,510.8 4.4

€ mn 30 Jun 2016 31 Dec 2015 %

Ship covered bonds 724.7 794.9 –8.8

Bearer bonds 11,869.7 12,347.0 –3.9

Total 12,594.4 13,141.9 –4.2

Notes24


21 Provisions

22 Other liabilities

23 Subordinated liabilities

€ mn 30 Jun 2016 31 Dec 2015 %

Provisions for

pension obligations 21.8 19.7 10.7

Provisions for early and

partial retirement plans 0.3 0.4 –25.0

Other provisions 33.8 40.9 –17.4

Total 55.9 60.9 –8.2

€ mn 30 Jun 2016 31 Dec 2015 %

Other tax liabilities 0.7 1.4 –50.0

Miscellaneous other liabilities 74.9 68.1 10.0

Total 75.5 69.5 8.6

€ mn 30 Jun 2016 31 Dec 2015 %

Subordinated

promissory note loans 299.5 345.3 –13.3

Subordinated bearer bonds 399.9 397.4 0.6

Other subordinated capital 0.1 0.0 –

Total 699.5 742.7 –5.8

24 Equity

Net retained profit of DVB Bank SE for the financial year 2015 amounted to €13,940,211.0. On 23 June 2016, the Annual General Meeting of DVB Bank SE resolved to pay dividends in the amount of €13,940,211.0 from this net retained profit (€0.30 for each no-par value share entitled to dividends). The portion of dividends paid from net retained profit attributable to treasury shares held by DVB Bank SE on the date of the Annual General Meeting was transferred to retained earnings.

Notes 25



Notes to financial instruments

25 Classes and categories of financial instruments

The carrying amounts and fair values of financial assets and financial liabilities are allocated to the classes and categories (or subcatego-ries) of financial instruments as indicated in the tables below:

30 Jun 2016 31 Dec 2015 € mn

Carrying amount

Fair value Carrying amount

Fair value

Financial assets held for trading 121.0 121.0 95.0 95.0

thereof: trading assets 121.0 121.0 95.0 95.0

Financial assets designated as at fair value through profit or loss – – – –

thereof: loans and advances to banks – – – –

thereof: loans and advances to customers – – – –

thereof: investment securities – – – –

Derivative hedging instruments 362.8 362.8 321.3 321.3

thereof: positive fair values of derivative hedging instruments 362.8 362.8 321.3 321.3

Financial assets available for sale 179.3 179.3 332.3 332.3

thereof: investment securities 179.3 179.3 332.3 332.3

Non-current assets held for sale – – 20.9 20.9

Financial assets measured at fair value 663.1 663.1 769.5 769.5

Loans and receivables 24,914.5 25,518.5 24,854.3 25,600.3

thereof: cash and balances with the central bank 1,720.6 1,720.6 1,164.1 1,164.1

thereof: loans and advances to banks 1,056.3 1,056.3 1,116.8 1,116.8

thereof: loans and advances to customers 22,137.6 22,741.6 22,573.4 23,319.4

thereof: investment securities – – – –

Financial assets available for sale 17.6 17.6 17.6 17.6

thereof: investment securities 17.6 17.6 17.6 17.6

Other assets 43.3 43.3 27.0 27.0

Financial assets measured at amortised cost 24,975.4 25,579.4 24,898.9 25,644.9

Finance leases 67.9 68.5 113.1 103.9

thereof: loans and advances to customers 67.9 68.5 113.1 103.9

Other financial assets 67.9 68.5 113.1 103.9

Notes26


Changes in fair value were induced by changes in yield curves, exchange rate fluctuations, and changes in credit quality.

Some of the investment securities available for sale are measured at cost since it is impossible to identify market prices for these instruments, nor can fair values be reliably estimated for them. During the first half of 2016, gains from the disposal of financial assets measured at cost were recognised in profit or loss in the amount of €0.0 million (31 December 2015: €47.3 million).

26 Derivatives

30 Jun 2016 31 Dec 2015 € mn

Carrying amount

Fair value Carrying amount

Fair value

Financial liabilities held for trading 803.8 803.8 975.5 975.5

thereof: trading liabilities 803.8 803.8 975.5 975.5

thereof: other liabilities – – – –

Fair value option – – – –

thereof: deposits from other banks – – – –

thereof: deposits from customers – – – –

thereof: securitised liabilities – – – –

thereof: subordinated liabilities – – – –

Derivative hedging instruments 133.5 133.5 169.4 169.4

thereof: negative fair values of derivative hedging instruments 133.5 133.5 169.4 169.4

Financial liabilities measured at fair value 937.3 937.3 1,144.9 1,144.9

Deposits from other banks 2,829.6 2,707.5 2,457.0 2,414.1

Deposits from customers 7,838.3 7,723.0 7,510.8 7,358.4

Securitised liabilities 12,594.4 12,613.7 13,141.9 13,213.3

Other liabilities 36.3 36.3 23.9 23.9

Subordinated liabilities 699.5 719.9 742.7 772.0

Financial liabilities measured at amortised cost 23,998.1 23,800.4 23,876.3 23,781.7

Finance leases – – – –

thereof: deposits from customers – – – –

Other financial liabilities – – – –

Market values %30 Jun 2016 31 Dec 2015

€ mn positive negative positive negative positive negative

Interest rate products 423.8 168.5 367.1 204.4 15.4 –17.6

Currency-related products 60.0 768.8 49.2 940.5 22.0 –18.3

Other products – – – – – –

Total 483.8 937.3 416.3 1,144.9 16.2 –18.1

Notes 27



27 Determination of fair values of financial instruments

The fair value is the amount for which an asset could be exchanged or a liability settled between knowledgeable, willing parties in an arm's length transaction.

The fair value of financial instruments which are listed on an active market is determined on the basis of market prices. The fair values of the financial instruments are allocated to Level 1.

The fair value of financial instruments which are not listed on an active market is determined on the basis of accepted valuation models used uniformly throughout all classes and allocated to Level 2. Non-derivative financial instruments as well as deriva-tive financial instruments with no option components are measured using the Discounted Cash Flow method (DCF).

The basis for deriving the discount rate is the use of currency- specific swap curves. Derivative financial instruments with option components are measured using an accepted option pricing model with a normal distribution of risk factors (Bachelier model) using implied volatilities that can be observed on the market.

To the extent that the measurement models use inputs that are largely not observable on the market, the resulting fair values are allocated to Level 3.

The fair value of over-the-counter derivative financial instru-ments is measured using the net risk exposure, using the excep-tion provided in IAS 13.48. In a second step, credit risk exposure from derivative financial instruments is recorded after determin-ing the net risk exposure. Credit valuation adjustments (CVA) and debit valuation adjustments (DVA) are applied to derivative financial instruments, whereby the instruments at hand are largely non-optional. A semi-analytical approach is applied to determine CVA/DVA, calculating the relevant values using economic loss rates as well as probabilities of default matching the terms of the instruments.

Determination of fair values of financial instruments (€ mn)

Level 1 Level 2 Level 330 Jun 2016 31 Dec 2015 30 Jun 2016 31 Dec 2015 30 Jun 2016 31 Dec 2015

Loans and advances to banks – – – – – –

Loans and advances to customers – – – – – –

Trading assets – – 121.0 95.0 – –

Positive fair values of

derivative hedging instruments – – 362.8 321.3 – –

Investment securities 179.3 332.3 – – – –

Non-current assets held for sale – 20.9 – – – –

Financial assets

measured at fair value 179.3 353.2 483.8 416.3 – –

Deposits from other banks – – – – – –

Deposits from customers – – – – – –

Trading liabilities – – 803.8 975.5 – –

Negative fair values of

derivative hedging instruments – – 133.5 169.3 – –

Subordinated liabilities – – – – – –

Financial liabilities

measured at fair value – – 937.3 1,144.8 – –

Notes28


Determination of fair values of the financial instruments measured at amortised cost (€ mn)

Level 1 Level 2 Level 330 Jun 2016 31 Dec 2015 30 Jun 2016 31 Dec 2015 30 Jun 2016 31 Dec 2015

Loans and receivables – – 1,720.6 1,164.1 23,797.9 24,436.2

thereof: cash and balances

with the central bank – – 1,720.6 1,164.1 – –

thereof: loans and advances to banks – – – – 1,056.3 1,116.8

thereof: loans and advances to customers – – – – 22,741.6 23,319.4

thereof: investment securities – – – – – –

Financial assets available for sale – – – – 17.6 17.6

thereof: investment securities – – – – 17.6 17.6

Other assets – – – – 43.3 27.0

Financial assets

measured at amortised cost – – 1,720.6 1,164.1 23,858.8 24,480.8

Finance leases – – – – 68.5 103.9

thereof: loans and advances to customers – – – – 68.5 103.9

Other financial assets – – – – 68.5 103.9

Deposits from other banks – – 2,707.5 2,414.1 – –

Deposits from customers – – 7,723.0 7,358.4 – –

Securitised liabilities – – 12,613.7 13,213.3 – –

Other liabilities – – – – 36.3 23.9

Subordinated liabilities – – 719.9 772.0 – –

Liabilities measured at amortised cost – – 23,764.1 23,757.8 36.3 23.9

Finance leases – – – – – –

thereof: deposits from customers – – – – – –

Other financial liabilities – – – – – –

Notes 29



28 Financial assets and liabilities not offset

Amounts with unrecognised offsetting agreements

Gross amountof financialinstruments

not offset

Offsetting Net amountsof items

carried on the balance sheet

Financial instruments

Amounts ofcash collateral

received/provided

Net amountof financial

instruments not offset

€ mn30 Jun

2016

31 Dec

2015

30 Jun

2016

31 Dec

2015

30 Jun

2016

31 Dec

2015

30 Jun

2016

31 Dec

2015

30 Jun

2016

31 Dec

2015

30 Jun

2016

31 Dec

2015

Positive fair values

of derivative financial

instruments 1,128.7 883.5 –653.8 –476.0 474.9 407.6 –216.8 –278.0 –108.2 –127.0 149.9 2.6

Negative fair values

of derivative financial

instruments 1,071.0 1,208.1 –133.7 –63.2 937.3 1,144.9 –216.8 –278.0 –716.7 –807.7 3.8 59.2

29 Unrecognised differences upon initial recognition

Unrecognised gains upon initial recognition in 2011 resulted from the purchase of financial assets. The related amortisation amounts were €0.8 million in the first half of 2016 (31 December 2015: €1.5 million). Taking currency translation effects of €0.1 million (31 December 2015: €–0.8 million) into account, the closing balance was €4.8 million (31 December 2015: €5.7 million)

Notes30


Other disclosures

30 Financial guarantee contracts, contingent liabilities and other commitments

€ mn 30 Jun 2016 31 Dec 2015 %

Financial guarantee

contracts from guarantees 336.4 343.9 –2.2

Contingent liabilities from

irrevocable loan commitments 1,262.3 1,597.1 –21.0

Other commitments 22.4 21.4 4.7

thereof: within one year 8.0 6.7 19.4

thereof: within one to five years 14.2 14.5 –2.1

thereof: five years or more 0.2 0.2 –

Total 1,621.1 1,962.4 –17.4

Notes 31



Responsibility statement

To the best of our knowledge, and in accordance with the appli-cable reporting principles for interim financial reporting, the interim consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the DVB Bank Group, and the interim management report of the DVB Bank Group includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the DVB Bank Group for the remaining months of the financial year.

Frankfurt/Main, 8 August 2016

DVB Bank SE

The Board of Managing Directors

Ralf Bedranowsky CEO and Chairman of the Board of Managing Directors

Bertrand Grabowski Member of the Board of Managing Directors

L. H. (Bart) Veldhuizen Member of the Board of Managing Directors

Notes32


To DVB Bank SE, Frankfurt/Main

We have reviewed the interim condensed consolidated financial statements, comprising the condensed income statement, the condensed statement of comprehensive income, the statement of financial position, the condensed statement of changes in equity, the condensed cash flow statement and selected explan-atory notes, and the interim group management report of DVB Bank SE, Frankfurt/Main, for the period from 1 January 2016 to 30 June 2016, which are part of the six-monthly financial report pursuant to section 37w of the German Securities Trading Act (WpHG). The preparation of the interim condensed consolidated financial statements in accordance with IFRSs on interim finan-cial reporting as adopted by the EU and of the group manage-ment report in accordance with the requirements of the WpHG applicable to interim group management reports is the responsi-bility of the Company’s management. Our responsibility is to issue a report on the interim condensed consolidated financial statements and the interim group management report based on our review.

We conducted our review of the interim condensed consolidated financial statements and the interim group management report in accordance with German generally accepted standards for the review of financial statements promulgated by the Institut der Wirtschaftsprüfer (Institute of Public Auditors in Germany). Those standards require that we plan and perform the review to obtain a certain level of assurance in our critical appraisal to preclude that the interim condensed consolidated financial statements are not prepared, in all material respects, in accord-ance with IFRSs on interim financial reporting as adopted by the EU and that the interim group management report is not pre-pared, in all material respects, in accordance with the provi-sions of the WpHG applicable to interim group management reports. A review is limited primarily to making inquiries of com-pany personnel and applying analytical procedures and thus does not provide the assurance that we would obtain from an audit of financial statements. In accordance with our engage-ment, we have not performed an audit and, accordingly, we do not express an audit opinion.

Based on our review, nothing has come to our attention that causes us to believe that the interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with IFRSs on interim financial reporting as adopted by the EU or that the interim group management report is not prepared, in all material respects, in accordance with the provisions of the WpHG applicable to interim group manage-ment reports.

Eschborn, Frankfurt/Main, 8 August 2016 Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft

Lösken Wirtschaftsprüfer (German Public Auditor)

Stapel Wirtschaftsprüfer (German Public Auditor)

33

INTERIM MANAGEMENT REPORT FURTHER INFORMATION


Review report

INTERIM MANAGEMENT STATEMENTS RE VIE W REPOR T

Further information

34 DVB worldwide

36 Imprint

DVB worldwide

Piräus

Shipping Finance

Aviation Finance

Offshore Finance

Land Transport Finance

New York

Curaçao

EUROPEAMERICA ASIA/PACIFIC

Amsterdam

Oslo

Frankfurt/Main

Zurich

Hamburg

Singapore

Tokyo

London

Athens

Head office Frankfurt/MainDVB Bank SEPlatz der Republik 660325 Frankfurt/Main, GermanyPhone +49 69 9750 40, Fax +49 69 9750 4444 Europe AmsterdamDVB Bank SEAmsterdam Branch WTC Schiphol, Tower F, 6th FloorSchiphol Boulevard 255 1118 BH Schiphol, The NetherlandsPhone +31 88 3997 900, Fax +31 88 3998 301

AthensDVB Bank SERepresentative Office Greece3, Moraitini Street & 1, Palea Leof. Posidonos Bldg. K4 Delta Paleo Faliro175 61 Athens, GreecePhone +30 210 4557 400, Fax +30 210 4557 420

HamburgDVB Bank SEHamburg OfficeBallindamm 620095 Hamburg, GermanyPhone +49 40 3080 040, Fax +49 40 3080 0412

LondonDVB Bank SE London BranchPark House, 6th Floor 16–18 Finsbury CircusLondon, EC2M 7EB, United KingdomPhone +44 20 7256 4300, Fax +44 20 7256 4450

OsloDVB Bank SENordic BranchHaakon VII’s gate 10161 Oslo, NorwayPhone +47 2 3012 200, Fax +47 2 3012 250

ZurichITF International Transport Finance Suisse AGWasserwerkstrasse 128006 Zurich, SwitzerlandPhone +41 44 3656 100, Fax +41 44 3656 200

North and South America CuraçaoDVB Bank America N.V.Gaitoweg 35Willemstad, CuraçaoPhone +599 9 4318 700, Fax +599 9 4318 749

New York DVB Transport (US) LLC Representative Office of DVB Bank SE609 Fifth AvenueNew York, NY 10017-1021, USAPhone +1 212 588 8864, Fax +1 212 588 8936

DVB Capital Markets LLC 609 Fifth AvenueNew York, NY 10017-1021, USAPhone +1 212 858 2624, Fax +1 212 588 0424 Asia SingaporeDVB Bank SESingapore Branch77 Robinson Road # 30-02 Singapore 068896Phone +65 6511 3433, Fax +65 6511 0700

DVB Group Merchant Bank (Asia) Ltd77 Robinson Road # 30-02Singapore 068896Phone +65 6511 3433, Fax +65 6511 0700

TokyoDVB Transport Finance LtdTokyo BranchThe Imperial Hotel Tower, 14th Floor (A-2)1-1, Uchisaiwaicho 1-chome, Chiyoda-ku Tokyo 100-0011, JapanPhone +81 3 3593 7700, Fax +81 3 3593 7860

www.dvbbank.com e-mail: [email protected]

35

INTERIM MANAGEMENT REPORT RE VIE W REPORT


DVB worldwide

INTERIM MANAGEMENT STATEMENTS FUR THER INFORMATION

Cover page photosShipping FinanceGasLog Ltd, Monaco

Aviation FinanceBert van Leeuwen, DVB Bank SE, Amsterdam, The Netherlands

Offshore FinanceSonga Offshore Management Ltd, Limassol, Cyprus

Land Transport FinanceWouter Radstake, DVB Bank SE, Frankfurt/Main, Germany

The Half-Yearly Finacial Report 2016 is published inEnglish and German. It is available as PDF file on our webpagewww.dvbbank.com > Investors > Publications > Financial reports.

DVB Bank SEPlatz der Republik 660325 Frankfurt/Main, Germanywww.dvbbank.com, [email protected]

Elisabeth WinterHead of Group Corporate CommunicationsManaging DirectorPhone: +49 69 9750 4329

Lisa Boose-KirwelGroup Corporate CommunicationsManager Investor RelationsPhone: +49 69 9750 4435

Design realisationMPM Corporate Communication Solutions, Mainz

After scanning this QR code with your smartphone, you will have direct access to our website.

36


Imprint

Financial calendar 2016/2017

14 November 2016 Publication of the Quarterly Statement during the second half of 2016 (for the first nine months, ending on 30 September 2016)

2 December 2016 Publication of the 15th Declaration of Compliance for 2016/2017

22 June 2017 Annual General Meeting in Frankfurt/Main