NORD/LB starts 2014 with profit
- Earnings before taxes of EUR 133 million in the first quarter
- Common Equity Tier 1 ratio as defined by Basel III rises to 11 per cent
NORD/LB Norddeutsche Landesbank achieved earnings before taxes of EUR 133 million in the first quarter of 2014, while the consolidated profit totalled EUR 92 million. NORD/LB closed the first three months of the previous year due to a significant increase in loan loss provisions with earnings before taxes of minus EUR 46 million. In 2013 as a whole NORD/LB achieved earnings before taxes of EUR 161 million.
“We have made a good start to the year,” stated Dr. Gunter Dunkel, Chairman of the Managing Board of NORD/LB. “Although we continue to build up high loan loss provisions in ship financing, we have managed to record a profit for the quarter for the fourth time in a row. Our capital ratios have also improved. We owe this to our robust and proven business model with its highly diversified sources of income, which enables us to continually generate profits and more than compensate for the negative effects of the crisis in the shipping sector.”
Interest income was maintained at a stable level at EUR 492 million (same quarter of the previous year: EUR 498 million) despite the sustained low level of interest rates and further reduction in total assets. Expenses for loan loss provisions fell from EUR 241 million to EUR 100 million, with these again largely being made for ship financing business. While the net allocation to specific loan loss provisions totalled EUR 150 million (EUR 183 million), there was a net reversal of EUR 54 million for general loan loss provisions. In the same quarter of the previous year a net allocation of EUR 66 million was made here.
Net commission income rose to 40 EUR million (EUR 36 million). The profit/loss from financial instruments at fair value through profit or loss including hedge accounting was almost in balance at EUR 5 million (minus EUR 12 million).
The profit/loss from financial assets totalled EUR 35 million (EUR 40 million), while the profit/loss from shares in companies accounted for using the equity method totalled EUR 4 million (EUR 10 million). Other operating profit/loss totalled minus EUR 24 million (minus EUR 67 million). Administrative expenses fell slightly to EUR 291 million (EUR 294 million). Earnings before reorganisation and taxes therefore totalled EUR 153 million (minus EUR 30 million).
The reorganisation expenses in the amount of minus EUR 20 million (minus EUR 16 million) include expenses for measures relating to the capital-boosting programme agreed with the EU Commission as well as expenses for the provision of an optional guarantee by the federal states of Lower Saxony and Saxony-Anhalt that has not been utilised by NORD/LB. Earnings before taxes after reorganisation expenses therefore totalled EUR 133 million (minus EUR 46 million).
With income taxes in the amount of EUR 41 million, consolidated profit after taxes totalled EUR 92 million (minus EUR 32 million). Comprehensive income, which also includes the income recognised directly in equity, totalled EUR 123 million (EUR 94 million).
Total assets further reduced, capital ratios continue to rise
The total assets of the NORD/LB Group were reduced further, by EUR 3.4 billion to EUR 197.4 billion (31 December 2013: EUR 200.8 billion). Risk-weighted assets (RWA) totalled EUR 66.8 billion (EUR 68.5 billion).
The capital ratios of the NORD/LB Group, which were calculated for the first time based on the new rules of the Capital Requirements Regulation (CRR) applicable since the start of the year (Basel III “phased-in”), continued to rise. The Common Equity Tier 1 ratio rose to 11.0 per cent (simulation as at 31.12.2013: 10.3 per cent). The total regulatory capital ratio rose to 13.9 per cent (13.2 per cent).
“We are very satisfied with the start to the year,” stated Dunkel. “Of course, the first quarter cannot be extrapolated for the whole year, but what is important is that the key figures – profit, total assets and capital ratios, are pointing in the right direction. The business success in the first quarter endorses our goal of achieving a higher profit in the current year than in the previous year. We are also well prepared for the impending stress test by the new European banking supervision with our various capital-boosting measures.”
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More information about Interim Report as at 31 March 2014:
NORD/LB Corporate Communication