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November 22, 2010updated 12 Apr 2017 4:18pm

Siemens seeks to grow sales finance with banking licence

Siemens bid to expand its financial services using an official banking licence has been justified by a strong performance at financing subsidiary Siemens Financial Services (SFS). SFS has reported a 5.1% rise in new orders to 597m for the nine months to 30 June 2010

By Claire Hack

Siemens’ bid to expand its financial services using an official banking licence has been justified by a strong performance at financing subsidiary Siemens Financial Services (SFS).

SFS has reported a 5.1% rise in new orders to €597m for the nine months to 30 June 2010. Profit before tax rose by 14.8% to €310m.

With the help of a licensed credit institution, Siemens aims to expand the product portfolio, particularly in the sales finance area, to add flexibility to group financing and to optimise its risk management.

The company would be among the first industrial businesses in Germany to gain such a licence, outside the car industry. Its consolidated interim report cited a strong performance in commercial financing, driven by significantly lower loss reserves and higher interest results.

In the third quarter of 2010, profit before tax was up 29.9% to €113m, compared to €87m in the third quarter of 2009. These factors more than offset lower results from Siemens Financial Services’ internal services business.

Early termination of financings had contributed to the strong performance in the third quarter and the company had benefitted from a favourable credit environment.

Margin at Siemens Financial Services rose from 26.4% in the second quarter of 2010, to 30.6% in the third.

The parent company’s application for a licence is still being considered by Germany’s Federal Financial Supervisory Authority (BaFin) at the time of writing.

In 2009 SFS reported an unexpected fall in profit of a third during the final quarter of the year.

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