- Nine-month profit increased to € 630 million
- Common Equity Tier 1 capital ratio up to 11.9 per cent
- Continued development of business model
NORD/LB Group achieved earnings before taxes of € 630 million in the first nine months of 2015, which represents a significant increase on the profit of € 364 million for the same period of the previous year, while its consolidated profit totalled € 539 million (previous year: € 251 million).
“We are very pleased with the business performance in the year to date, even though the current figures overstate the positive trend due to one-off effects,” explained the Chairman of the Managing Board of NORD/LB, Dr. Gunter Dunkel. “We have deliberately further reduced total assets, improved our capital ratios once again and further reduced costs. We are also making great progress in the further development of our business model and the internal reorganisation of the bank. In doing so we are preparing the bank for the future, which will present the entire industry with great challenges.”
Despite the persistently low level of interest rates, net interest income remained stable at € 1,494 million (previous year: € 1,492 million). Net allocations to loan loss provisions were reduced to € 367 million (€ 464 million), with ship finance again accounting for most of this. “Even though the situation concerning loan loss provisions has eased slightly of late, it is still too early to state that the crisis in the shipping sector is over. We are prepared for high loan loss provisions in the coming quarters as well.”
Net commission income increased significantly due to additional income in the area of investments to € 163 million (€ 124 million). The profit/loss from financial instruments at fair value (including hedge accounting) rose to € 175 million (€ 104 million), while the profit/loss from financial assets fell to € 56 million (€ 66 million). The profit/loss from investments accounted for using the equity method was € 6 million (minus € 22 million).
Administrative expenses fell by € 14 million to € 815 million (€ 829 million). Here a € 25 million increase in expenses due to the obligation from 2015 to contribute to the security reserve for landesbanks was more than compensated for by savings achieved in an efficiency improvement programme launched in 2011. Other operating profit/loss remained at around the same level of the previous year at minus € 77 million (minus € 82 million). This includes provisions for the new EU Single Resolution Fund in the amount of around € 70 million, which were already recognised in the first quarter. Reorganisation expenses totalled minus € 5 million (minus € 24 million). Also reported in the income statement in accordance with IFRS are income taxes in the amount of € 91 million (€ 113 million).
The cost-income ratio has improved in the first three quarters of 2015 to 46.3 per cent (51.3 per cent), while Return on Equity rose from 6.7 per cent to 11.5 per cent.
Total assets were reduced again to € 189.5 billion as at the end of September 2015 (end of 2014: € 197.6 billion). The total risk exposure amount (formerly risk-weighted assets) was reduced again and is now € 65.4 billion (€ 69.2 billion). The Common Equity Tier 1 capital ratio rose to 11.9 per cent (10.7 per cent), while the total regulatory capital ratio rose to 15.2 per cent (13.2 per cent). The leverage ratio improved to 3.9 per cent (3.5 per cent).
“All of the bank’s key figures are pointing in the right direction. NORD/LB is making good progress, all of the business segments performed positively in the first three quarters. However, we will have to continue to deal with difficulties in ship finance. On the whole the fourth quarter will be more difficult. We have already clearly achieved our target of improving the result of 2014, even after deducting the one-off effects,” stated Dunkel.
“In view of the tighter regulatory requirements, the increasing level of competition and the challenges due to the persistently low level of interest rates, we have further developed our proven business model. We will remain faithful to those business segments in which we possess excellent financing expertise. At the same time we are providing institutional investors with numerous opportunities to invest in our credit portfolio and in so doing benefit from NORD/LB’s strength in its main asset classes. This will allow us to turn the bank into one of the leading providers of alternative assets,” stated Dunkel.
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Consolidated Financial Statements for the third quarter of 2015
More information about Interim Report as at 30 September 2015:
NORD/LB reports
