NORD/LB: Shipping crisis affects earnings in first quarter
NORD/LB Norddeutsche Landesbank closed the first quarter of 2013 with a consolidated profit before taxes and reorganisation expenses of minus 30 million euros. The quarterly result was strongly affected by the significant increase in expenses for loan loss provisions in the amount of € 241 million, which were made primarily for ship financing. Consolidated profit after taxes totalled minus 32 million euros. In the first quarter of 2012 the bank had achieved a consolidated profit after taxes of 118 million euros.
“As we expected, the ongoing crisis in ship financing continues to present us with great challenges,” said Dr. Gunter Dunkel, Chairman of the Managing Board of NORD/LB. “Our operating profits in other business divisions were seen alongside very high loan loss provisions. Of course, we cannot be satisfied with this start to the year. However, we are confident due to the strong contributions to earnings made by the other core business segments. This is the case for business with corporate customers, institutional customers and real estate banking customers, as well as project financing in the energy and infrastructure sector. By continually building on our market position in these business segments, we are laying the foundations for strong results in the years that will follow the shipping crisis.”
In an environment of sustained low interest rates, interest income rose slightly to 498 million euros (same quarter of the previous year: 493 million euros). Expenses for loan loss provisions in the amount of 241 million euros (33 million euros) were largely due to a net allocation to specific valuation allowances in the amount of 183 million euros. Net commission income totalled 36 million euros (42 million euros).
The profit/loss from financial instruments at fair value including hedge accounting totalled minus 12 million euros (5 million euros). The profit/loss from financial assets rose to 40 million euros (6 million euros), while the profit/loss from investments accounted for using the equity method totalled 10 million euros (minus 16 million euros). Administrative expenses totalled 294 million euros (281 million euros). Other operating profit/loss, which included a provision for the bank levy for the whole of 2013, totalled minus 67 million euros (minus 27 million euros). The consolidated profit before taxes and reorganisation expenses therefore totalled minus 30 million euros (189 million euros).
The reorganisation expenses in the amount of minus 16 million euros included expenses for measures relating to the capital-boosting programme agreed with the EU Commission and in particular provisions for voluntary separation agreements. Earnings before taxes after reorganisation expenses therefore totalled minus 46 million euros (189 million euros), while the consolidated profit after taxes and reorganisation expenses totalled minus 32 million euros (118 million euros).
“The crisis in the shipping markets will continue to present us with great challenges in the next few quarters,” said Dunkel. “Thanks though to the successful performance of our other business segments and the robustness of our business model, we remain optimistic. We are therefore sticking to our goal of improving on the previous year’s results for 2013 as a whole.”
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