Interim report as at 30 September 2020
There was no slowdown overall in the settlement of loans and securities, despite the conditions presented by the corona pandemic
The EAA concluded the third quarter of 2020 with a loss, too. As reported, shortfalls in this phase of the winding-up process are in line with expectations. The EAA still has a sufficient risk buffer. Equity and risk provisions add up to around EUR 1 billion, in addition to an equity capital drawing limit of around EUR 0.5 billion. The ratio of the risk buffer and the notional volume of the banking book portfolio is stable at the previous year’s level.
There was no slowdown overall in the settlement of loans and securities during the first three quarters, despite the conditions presented by the corona pandemic. From January to September 2020, the portfolio declined in notional terms by EUR 1.4 billion (-9.4%) to EUR 13.5 billion. The reduction was balanced, thus maintaining the good quality of the portfolio with an investment grade rating share of 72%.
The reduction of derivatives in the trading portfolio also continued. Since January, the notional volume has declined by around a quarter or around EUR 35 billion to EUR 101.6 billion, mainly as a result of active measures. In response to the market situation, the EAA has created short-term liquidity reserves. This led to a 1% increase in total assets to EUR 38.2 billion at the end of the third quarter, despite the ongoing portfolio reduction.
In order to minimise the losses resulting from the inevitable decline in interest income and net fee and commission income, the EAA is focused on reducing its general administrative expenses. These declined by around EUR 11 million (-10.7%) to EUR 88.9 million as of 30 September 2020 compared with the same period of the previous year.
Although the EAA also expects a loss at the end of the 2020 financial year, it assumes at the same time that its reserves will continue to develop steadily relative to the portfolio volume and portfolio quality. From today’s perspective, no significant impairment of the operating business is expected as a result of the corona pandemic.