Helaba Pre-Tax Group Profit Develops Positively, Also in the Third Quarter

FRANKFURT and ERFURT, Germany, November 11, 2011 -

• Pre-tax group profit rises to EUR 371 million after EUR 284 million
• Increase of earnings still expected for 2011
• Haircut of 50 per cent taken on exposure to Greece
• Core-Tier 1-ratio in the “Flash Stress Test” about 10 per cent

Helaba Landesbank Hessen-Thüringen has continued its positive earnings trend and after three quarters generated a pre-tax group profit of EUR 371 million. This is an increase by EUR 87 million or 30.6 per cent on the previous year’s figure. The after-tax result amounts to EUR 278 million, after EUR 218 million in the year before. Hans-Dieter Brenner, CEO of Helaba, comments: “Thanks to the good operating activities in customer business, the third quarter has contributed EUR 38 million to pre-tax group profit in 2011. I nevertheless see Helaba’s performance on a positive course and for the whole of 2011, I expect group profit - as planned - to exceed the previous year’s result.”

Income Statement: Net interest income after risk provisions and net commission income are stabilizing , net trading income positive, but adversely affected by market disruptions.

Net interest income, amounting to EUR 777 million, exceeds the previous year’s figure by EUR 25 million. Loan loss provisions, which declined again - EUR 106 million compared with EUR 237 million in the year before - resulted in an increase of net interest income after loan loss provisions by 30.3 per cent to EUR 671 million.

Net commission income, amounting to EUR 194 million, is unchanged at the previous year’s level.

Net trading income, amounting to EUR 24 million is EUR 116 million below the previous year’s level and EUR 149 million below the semi-annual result for 2011. Here, the valuation effects from the widening of the credit spreads make themselves fully felt. The customer-based capital markets business (in particular dealings in the money market and derivatives business) with corporate customers and customers in the S-Group resulted in consistently positive contributions to earnings.

The result from hedges/derivatives, amounting to EUR 38 million, exceeds the previous year’s figure by EUR 86 million. This rise is essentially due to the valuation of banking book derivatives.

Income from non-current financial assets and companies valued at equity, is negative at EUR -11 million. It is down by EUR 10 million on the previous year’s figure. This result includes write-downs on Greek government bonds in an amount of EUR 43 million. This is a haircut of 50 per cent on the nominal volume of EUR 86 million.

The other operating result decline was down by EUR 82 million to EUR 178 million. Euro. This decline is essentially due to the deconsolidation of the Hannover Leasing Group as at 31 December 2010.

The same applies to general administrative expense which, amounting to EUR 723 million, is down by EUR 53 million o the previous year’s expense. General administrative expense includes the bank levy in the amount of EUR 31 million.

After-tax comprehensive income, which in addition to net income comprises other comprehensive income that is to be recognised in equity, amounts to EUR 303 million, compared with EUR 244 million in the year before.

Increase of the balance sheet total as a result of the systematic build-up of liquidity reserves and inflow of deposits. New business with customers above target. Further reduction of off-balance sheet obligations.

As at 30 September 2011, the consolidated balance sheet total of the Helaba Group has risen  from EUR 166.2 billion to EUR 172.8 billion. Drivers were the inflow of deposits and the systematic build-up of liquidity reserves.

The largest increase was seen for assets held for trading, which rose by 16.6 per cent to EUR 45.7 billion. One of the primary reasons is the systematic build-up of liquidity reserves for the adaptation of liquidity management to the new requirements under Basel III. In addition, the fair values of derivatives held for trading have risen considerably as a result of yield declines over the entire yield curve caused by the sovereign debt crisis in Europe and the USA.

Due to its sound business model and good creditworthiness, Helaba is a “safe haven” for short-term liquidity investments. In particular institutional investors, corporate customers and savings banks have taken advantage of this fact, leading to an increase of liabilities held for trading to EUR 47.2 billion.

The volume of loans and advances to customers declines by 4.2 per cent to EUR 84 billion. Here, extraordinary redemptions above all made themselves felt. Large enterprises in particular are at present reducing their leverage, to prepare for an imminent recession. Nevertheless, loans and advances to customers have risen again since 30 June 2011. Nearly all business fields contributed to this development, generating medium- and long-term new business with customers in an amount of EUR 9.4 billion, clearly exceeding the target.

The volume of off-balance sheet obligations was systematically reduced further. It declined by EUR 3.2 billion to EUR 22.8 billion. The strategic background is a deliberate reduction of off-balance sheet risk positions for reasons of liquidity management.

During the period ending 30 September 2011, Helaba raised medium- and long-term funding in a volume of EUR 9 billion in the capital market. Of this total, unsecured issues accounted for EUR 6.4 billion and Public Pfandbriefe and Mortgage Pfandbriefe accounted for EUR 2.6 billion. An increasing share of the unsecured funding is covered by the sale of structured retail issues via the savings banks. Customer deposits of Frankfurter Sparkasse and of 1822direkt continue to contribute to the broadening and diversification of the Group’s funding basis.

With a Core Tier-1 Ratio of 10.8 per cent (31 December 2010: 9.6 per cent) and a Total Capital Ratio of 16.4 per cent (31 December 2010: 14.4 per cent), the Helaba Group is appropriately endowed with liable capital.

The Bank has also successfully passed the “Flash Stress Test” initiated by the European Banking Authority (EBA). Despite the European sovereign debt crisis, the capital resources available to Helaba have proven to be robust and comfortable. Accordingly, Helaba clearly exceeds the threshold value (for Core Tier 1) of 9 per cent. There is no need for the Bank to increase its liable funds.

At the end of the year, the former silent participations held by the State of Hesse will be adapted to the future supervisory requirements. A corresponding agreement concluded between the State of Hesse and the Bank has been submitted to the supervisory authorities. “With this ‘capital contribution by the State of Hesse’ in the amount of EUR 1.92 billion, we will at the end of the current year already comply with the provisions of Basel III and other regulatory requirements,” underlines Hans-Dieter Brenner.

Outlook: Stable Earnings Development expected

As regards the business and earnings development until the end of 2011, the Helaba CEO remains optimistic: “We assume that the stable development of our business with customers will continue. Even though the early indicators are pointing to a cyclical downswing towards the end of the year, the German economy is nevertheless expected to grow also in 2012. It cannot be excluded either that the unresolved sovereign debt crisis will result in further strains on earnings. Nevertheless, I see Helaba’s performance on a positive course. For the whole of 2011, I expect group profit - as planned - to exceed the previous year’s result.”

    Earnings figures under IFRS Helaba Group at 30 September 2011
                             01/01/-30/09/ 01/01/-30/09/
                                 2011        2010             Change
                                in EUR      in EUR        in EUR
                                million     million      million      in %

    Net interest income           777          752          25        3.3
    Provisions for losses
    on loans and advances        -106         -237         131       55.3
    Net interest income after
    provisions for losses on
    loans and advances            671          515         156       30.3
    Net commission income         194          194           -          -
    Net trading income             24          140        -116      -82.9
    Result of hedges/derivatives   38          -48          86     >100.0
    Net income from non-current
    financial assets (incl.
    assets valued using the
    equity method)                -11           -1         -10    >-100.0
    Other operating result        178          260         -82      -31.5
    General administrative
    expenses*                    -723         -776          53        6.8
    Group earnings before taxes   371          284          87       30.6
    Taxes on income               -93          -66         -27      -40.9
    Group net profit              278          218          60       27.5

*includes bank levy in the amount of € 31 million

    Balance Sheet Development Helaba Group under IFRS at 30 September 2011
                                       30/06/2011 31/12/2010      Change
                                          in EUR    in EUR   in EUR   in EUR
    Loans and advances to banks           million   million  million  million

    incl. cash reserve                    16,012    14,848    1,164    7.8
    Loans and advances to customers       84,001    87,698   -3,697   -4.2
    Impairments on receivables            -1,117    -1,253      136   10.9
    Assets held for trading               45,697    39,176    6,521   16.6
    Positive market value of
    derivatives not held for trading       4,162     3,702      460   12.4
    Financial assets, incl. companies
    accounted for using the equity method 19,683    17,750    1,933   10.9
    Real property; property, plant and
    equipment; intangible assets           2,901     2,922      -21   -0.7
    Income tax assets                        453       452        1    0.2
    Other assets                           1,057       949      108   11.4
    Total assets                         172,849   166,244    6,605    4.0
    Liabilities due to banks              32,241    31,679      562    1.8
    Liabilities due to customers          40,567    40,896     -329   -0.8
    Securitised liabilities               37,043    40,389   -3,346   -8.3
    Liabilities held for trading          47,219    38,529    8,690   22.6
    Negative market value of derivatives
    not held for trading                   3,866     3,148      718   22.8
    Provisions                             1,240     1,190       50    4.2
    Income tax liabilities                   220       238      -18   -7.6
    Other liabilities                        496       484       12    2.5
    Subordinate capital                    4,489     4,488        1      -
    Shareholders' equity                   5,468     5,203      265    5.1
    Total liabilities                    172,849   166,244    6,605    4.0

    Financial Ratios
                                     1/1/ -30/09/2011 1/1/ -30/09/2010
                                           in %             in %

    Cost-Income Ratio                      60.3             59.8
    Return on equity (before taxes)         9.3              7.6
                                           30/09/2011       31/12/2010
                                           in %             in %

    Core Tier-1 Ratio                      10.8              9.6
    Total Capital Ratio                    16.4             14.4

Presse und Kommunikation
MAIN TOWER · Neue Mainzer Straße 52-58
60311 Frankfurt am Main · www.helaba.de
Tel: +49(0)69-9132-2192

Wolfgang Kuß    
E-Mail: wolfgang.kuss@helaba.de

Ursula-Brita Krück
E-Mail: ursula-brita.krueck@helaba.de

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