NORD/LB: Nine-month profit up to €364 million
- Total assets reduced further
- Common Equity Tier 1 ratio reaches 10.6%
NORD/LB Norddeutsche Landesbank achieved earnings before taxes of € 364 million in the first nine months of the current year, while its consolidated profit totalled € 251 million. This was significantly higher than the previous year’s figure (€ 108 million before tax / € 112 million after tax).
“We are quite satisfied with the development of our business this year,” said Dr. Gunter Dunkel, Chairman of the Managing Board of NORD/LB. “The figures for the first three quarters are renewed proof of the fact that NORD/LB is not only resilient to crisis, but also profitable. This was not only shown by the stress test. The business results are a strong indicator that our business model works.”
Net interest income, which makes by far the biggest contribution to earnings in NORD/LB’s income statement, was € 1,492 million in the first nine months of this year. In spite of an environment of continued low interest rates and a reduction in total assets according to plan, interest income rose once again (previous year’s value: € 1,476 million). Loan loss provisions were increased by € 464 million (€ 642 million), with ship financing again accounting for most of this. This was primarily due to newly built specific valuation allowances.
“We stick to our conservative risk strategy and continue to keep a special fo-cus on risk cover in ship financing. We are concentrating on individual and value-preserving solutions,” said Dunkel.
Net commission income remained unchanged at € 124 million. The profit/loss from financial instruments at fair value including hedge accounting rose to € 104 million (€ 54 million). The profit/loss from financial assets totalled €66 million (€ 2 million), while the profit/loss from investments accounted for using the equity method totalled € 22 million (€ 24 million).
Administrative expenses fell by 3 percent to € 829 million in the course of the Efficiency Improvement Programme (€ 852m). Other operating profit/loss totalled minus € 82 million (minus € 21 million).
Earnings before reorganisation expenses and taxes rose to € 389 million (€ 165 million). Reorganisation expenses totalled minus € 24 million (minus € 57 million). These include expenses for measures relating to the capital-boosting programme agreed with the EU Commission. Earnings before taxes therefore rose to € 364 million (€ 108 million).
After deducting income taxes in the amount of € 113 million (minus € 4 mil-lion), consolidated profit totalled € 251 million (€ 112 million). Comprehen-sive income, which also includes the income recognised directly in equity, to-talled € 220 million (€ 242 million).
After the stress test: further capital-strengthening measures by our own efforts
As part of its balance sheet management, the total assets of the NORD/LB Group were reduced further and totalled €197.3 billion as at 30 September 2014 (at the end of 2013: €200.8 billion). Risk-weighted assets (RWA) totalled €68.3 billion (€68.5 billion).
The Common Equity Tier 1 ratio was 10.6 percent (simulated comparative value as at 31 December 2013: 10.3 percent), the total regulatory capital ratio was 13.7 percent (13.2 percent). Both ratios have been calculated since the start of the year in accordance with the new rules of the Capital Requirements Regulation (CRR) based on IFRS.
“The stress test showed that NORD/LB is adequately capitalised, even in an extreme crisis scenario,” said Dr. Dunkel. In the results of the comprehensive assessment of European banks, which were published at the end of October, NORD/LB had achieved a Common Equity Tier 1 ratio of 8.8 percent in the ad-verse scenario and thus exceeded the required minimum ratio of 5.5 percent by a significant margin.
“We will continue to pursue our policy adopted some years ago of boosting our capital by our own efforts. Both the strong business results as well as fur-ther capital-releasing measures give us the opportunity to increase our capital ratios further in future,” said Dr. Dunkel. “Our aim for 2014 was to improve on last year’s result. We have already achieved this aim, even if the dynamics of the year’s performance to date have been somewhat weaker – as was expected.”
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