NORD/LB achieves earnings of EUR 209 million for the first nine months
- Earnings before taxes of EUR 78 million in the third quarter
- Shipping crisis impacting on loan loss provisions
NORD/LB Norddeutsche Landesbank achieved earnings before taxes of EUR 209 million in the first nine months of 2012, while its consolidated profit totalled EUR 141 million. In the same period of the previous year the bank reported earnings before taxes of EUR 385 million and a consolidated profit of EUR 262 million.
“In view of continued difficult market environment, we can be satisfied with this result,” said Dr. Gunter Dunkel, Chairman of the Managing Board of NORD/LB. “We have strengthened the position of our operational business and in the third quarter generated earnings before taxes of EUR 78 million. Significant value drivers were Corporate Banking Customers, Renewable Energies Customers and Real Estate Banking Customers. We have also been successful in refinancing with innovative products. However, we have significantly increased loan loss provisions in our portfolio due to the continuing shipping crisis. This is squeezing our profit. Our customer-oriented business model is robust enough though to generate a respectable profit despite these pressures.”
The positive result for the first nine months of the current year was essentially generated by net interest income, which rose by 15 per cent to EUR 1,504 million (same period of the previous year: 1,311 million). Net commission income rose by 2 per cent to EUR 125 million (123 million).
Loan loss provisions were increased significantly and rose to EUR 352 million (111 million). These are primarily in the form of specific valuation allowances in ship financing. Loan loss provisions in the other business segments are in line with expectations. “In the shipping markets, however, there is still no sign of an end to the crisis that has now lasted several years; as a result we have again significantly increased our loan loss provisions in this segment. We know the cycles and have the staying power to overcome the crisis. With our know-how in this area, ship financing will remain a core business segment of NORD/LB in the future," Dunkel explained further.
The profit/loss from financial instruments at fair value including hedge accounting totalled EUR -114 million (-109 million). This result was affected in particular by the tension that has been present in the financial markets during the course of the year.
The profit/loss from financial assets totalled EUR -12 million (-16 million), while the profit/loss from investments accounted for using the equity method totalled EUR -15 million (-6 million).
Administrative expenses totalled EUR 824 million (792 million), while the other operating profit/loss, which includes the expenses for the bank levy in the amount of EUR 36 million, totalled EUR -68 million (-15 million). The reorganisation expenses in the amount of EUR -35 million include measures relating to the capital-boosting programme agreed with the EU Commission and in particular provisions for voluntary separation agreements which were made as part of the efficiency improvement programme launched in 2011.
Capital ratios further strengthened
NORD/LB's capital ratios improved again as at 30 September 2012. The regulatory core capital ratio rose from 9.4 per cent at the end of 2011 to 10.5 per cent, while the total capital ratio rose from 12.6 to 13.4 per cent.
“Our business model continues to enjoy a high level of acceptance among our customers, and as a result we have been able to further extend the market position of our main business segments,” explained Dunkel. “NORD/LB still has an excellent standing in the capital markets. This is also shown by the successful issue of our first public sector US dollar Pfandbrief with a volume of USD 1 billion in October, which allowed us to place our refinancing on an even broader base. Following the aircraft Pfandbrief, this is the second major product innovation in a short period of time.”
NORD/LB had already successfully launched onto the market the first issue worldwide of an aircraft Pfandbrief with a volume of EUR 500 million and in so doing created a new asset class. “Many years of experience in our core business segments on the one hand and innovative capacity on the other provide the basis for this success,” Dunkel explained further. “Investors appreciate the stability which characterises NORD/LB. The wide diversification and balance of our portfolio and the opposing cycles of the individual asset classes are a genuine strength of our business model.”
Dunkel was cautious about future earnings development: “The economic outlook has become bleaker of late. The shipping crisis will also continue to affect our earnings. We will therefore, as previously stated, achieve a positive result for 2012 as a whole, but it will of course remain well below the previous year's very good result, which included several one-off effects.”
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More information about Interim Report as at 30 September 2012:
NORD/LB Corporate Communication