NORD/LB records significant increase in profit in first half-year
- Earnings before taxes up to € 348 million
- Common Equity Tier 1 ratio comfortable at 10.7 per cent
- Administrative expenses reduced
NORD/LB Norddeutsche Landesbank achieved earnings before taxes of € 348 million in the first half of 2014, while its consolidated profit totalled € 243 million. The bank’s half-year earnings are therefore well above the previous year’s figures (earnings before taxes € 96 million, consolidated profit € 87 million).
“This is a very satisfying result. It confirms that our robust business model also works under difficult conditions. We were able to achieve a quarterly profit for the fifth time in a row,” stated Dr. Gunter Dunkel, Chairman of the Managing Board of NORD/LB. “However, it would be a mistake to extrapolate the half-year result for the whole year. The environment remains difficult, and the shipping crisis will occupy us for some time yet. We remain cautious.”
Net interest income increased in the first six months despite the sustained low level of interest rates and further reduction in total assets to € 995 million (previous year: € 974 million). Loan loss provisions were increased by € 224 million (€ 432 million), with ship financing again accounting for most of this. Net allocations to specific valuation allowances were slightly above the previous year’s level, while general loan loss provisions saw net reversals related to IFRS. “In recent years we have built up an extraordinarily high risk cover for this segment,” stated Dunkel. “We will remain alert and continue to make additional risk provisions.”
Net commission income rose to € 84 million (€ 77 million). The profit/loss from financial instruments at fair value including hedge accounting totalled € 105 million (€ 102 million). The profit/loss from financial assets improved to € 50 million (minus € 4 million), while the profit/loss from investments accounted for using the equity method totalled minus € 8 million (€ 18 million). Administrative expenses fell to € 557 million (€ 575 million), with in particular a reduction in material costs as part of an efficiency improvement programme. Other operating profit/loss totalled minus € 84 million (minus € 24 million).
Earnings before reorganisation expenses and taxes for the first six months rose to € 361 million (€ 136 million). Reorganisation expenses were reduced to minus € 13 million (minus € 40 million); they include expenses for measures relating to the capital-boosting programme agreed with the EU Commission. Earnings before taxes therefore rose to € 348 million (€ 96 million).
With income taxes in the amount of € 105 million (€ 9 million), consolidated profit after taxes totalled € 243 million (€ 87 million). Comprehensive income, which also includes the income recognised directly in equity, also increased significantly to € 279 million (€ 176 million).
Total assets further reduced, capital ratios comfortable
The total assets of the NORD/LB Group were reduced further and fell to € 198.6 billion (31 December 2013: € 200.8 billion). Risk-weighted assets (RWA) totalled € 66.9 billion (€ 68.5 billion).
The Common Equity Tier 1 ratio is comfortable at 10.7 per cent, and the same applies for the total regulatory capital ratio at 14.1 per cent. 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 and are above the simulation values for 31 December 2013.
“We have already met our target of beating the result for the financial year 2013.” It is unlikely that the second half-year will be as strong as the first, but key indicators (earnings, total assets, risk-weighted assets and equity) are pointing in the right direction. We are well prepared for the challenges ahead of us,” stated Dunkel.
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