DVB Bank is focusing on improving the average margins for its aviation unit after closing fewer transactions in 2012 than the previous year.
Last year the bank's aviation unit closed 50 new transaction, compared with 78 new transactions in the year-earlier period, which included the purchase of an aircraft portfolio from RBS in a rumoured $800 million transaction.
Underwriting at the aviation unit, which totalled €1.61 billion ($2 million), represented 34% of DVB's new transport business in 2012. It syndicated €72.6 million, or 4.5% of its €183.3 million annual underwriting volume, compared with €183.3 million, or 6.7% of underwriting volume in 2011.
DVB's aviation unit completed €1.55 billion worth of transactions, representing 33.5% of the bank's new transport business, although the bank closed more club deal transactions, says Bertrand Grabowski, member of the board of managing directors.
During the year, DVB increased its lead arranger role in aviation. It acted as a lead arranger on 90% of all transactions compared with 72% in the previous year.
New lending activity average margin in the aviation unit increased to 380 basis points (bps) from 325 bps in the year earlier. In 2011, the bank's aviation average margin was 12 bps above DVB's new transport business. In 2012, it reached 28 bps.
Aviation finance represented 31% of the bank lending activity in 2012, a 0.7 percentage point decrease compared with 2011.
Customer lending volume remained at €6.9 billion, unchanged from the previous year. The bank's lending volume increased 2.3% from 2011's balance of €22.2 billion.
Despite increased liquidity available from banks for aviation deals, Grabowski expects DVB to underwrite a similar amount in financings this year.