NORD/LB reports profit for first quarter
- Earnings before taxes at EUR 255 million
- Thomas Bürkle: "Good start into the year, but still no all-clear for the shipping crisis"
- Shipping finance portfolio reduced further
NORD/LB Norddeutsche Landesbank concluded the first quarter of 2017 with earnings before taxes of EUR 255 million. Consolidated profit stood at EUR 214 million. In the first quarter of the previous year, the Bank posted a pre-tax loss of EUR 107 million.
"We started well into the new year. With this result, we have made the first step towards our target of generating a profit for the full-year. We are sticking with this target and will work hard over the coming months to ensure it is achieved. Even if business is going well and loan loss provisions have declined, the shipping crisis continues to present major challenges. We are still unable to sound the all-clear," commented Thomas Bürkle, Chairman of the Managing Board of NORD/LB.
"We are on the right track for the complete integration of Bremer Landesbank (BLB) into NORD/LB," Bürkle continued. "We aim to secure the legal merger of BLB and NORD/LB on 31 August 2017. Work on our One Bank transformation programme, which will place the Group on a new foundation, is also moving forward as planned. In order to place the Group on a sustainably profitable footing overall, we want to tap into cost potential of between EUR 150 million and EUR 200 million by the end of 2020." To this end, the Group intends to shed up to 1,250 jobs compared with today's figure. In the course of the transformation programme all group units including subsidiaries and associate companies will be scrutinized, including the option of the divestiture of the latter. To fully secure the synergy effects of the transformation programme, increased restructuring costs will be incurred and must be absorbed over the near term.
Income statement for the first three months of 2017
In the first quarter, Group net interest income amounted to EUR 406 million (year-ago quarter: EUR 459 million). Net allocations to risk provisioning in credit business declined considerably to EUR 126 million (EUR 435 million). The lion's share of loan loss provisions cover risks from the shipping finance division. The shipping finance portfolio continued to be scaled back over the first three months and now totals EUR 15.9 billion.
Net commission income stood at EUR 43 million (EUR 54 million). The fair value result (including hedge accounting) came in at EUR 74 million (EUR 255 million), while profit/loss from financial assets rose to EUR 51 million (EUR 7 million). The profit/loss from investments accounted for using the equity method stands at EUR 3 million and is therefore EUR 10 million higher than it was in the same period of the previous year (minus EUR 7 million).
The rise in administrative expenses to EUR 318 million is due, in particular, to extended regulatory requirements (EUR 297 million). It comprises expenditure of EUR 25 million for the Landesbanks' deposit security reserve and the ECB provision. The other operating result increased to EUR 125 million, having also benefited from non-recurring effects (minus EUR 136 million). It includes expenditure for the EU banking levy in the amount of the anticipated annual contribution of EUR 54 million. In accordance with IFRS, income taxes totalling EUR 41 million are included on the income statement (minus EUR 14 million).
In the first quarter of 2017, the cost-income ratio was 48.9 per cent (47.5 per cent) and the return on equity stood at 17.8 per cent (minus 5.2 per cent).
Total assets as at the end of the first quarter came to EUR 175.5 billion (year-end 2016: EUR 174.8 billion). The total risk exposure amount contracted to EUR 57,789 million (EUR 59,896 million).
The Common Equity Tier-1 ratio (CET-1 ratio) of NORD/LB was at 10.5 per cent (11.3 per cent) as at 31 March 2017, while the total regulatory capital ratio stood at 15.2 per cent (16.3 per cent). The deterioration of capital ratios compared with values at year-end 2016 is explained through the proportional consideration of the loss for financial year 2016, which was published in April. NORD/LB expects its capital ratios to rise again over the coming quarters. This will also be boosted by positive effects from the recently announced further outplacement of a tranche of the Northvest transaction to institutional investors, which will become effective as per 30 June. In the first quarter, the Group's capital ratios could already be strengthened through similarly structured securitisation transactions of the Bremer Landesbank.
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Dr. Thomas Klodt
Tel: +49 (0) 511 361-2758
With total assets of EUR 176 billion, NORD/LB Norddeutsche Landesbank is one of Germany’s leading merchant banks. Its core business segments include structured finance in the energy and infrastructure sector, ship and aircraft finance, corporate client business, commercial real estate finance, capital market business and private and commercial client business. The Bank has headquarters in Hanover, Braunschweig and Magdeburg as well as offices in Düsseldorf, Hamburg, Munich, Schwerin and Stuttgart. Outside Germany, NORD/LB is active in Luxembourg with a covered bond bank (NORD/LB Covered Bond Bank) and also has offices in London, New York, Singapore and Shanghai.
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