Helaba Reports Best Semi-Annual Performance EverBy Helaba Landesbank Hessen-thringen, PRNE
Wednesday, August 17, 2011
FRANKFURT, Germany, August 18, 2011 -
- Pre-tax group profit rises to EUR 333 million after EUR 126 million
- Brenner confirms increased earnings target for 2011
- All risks in connection with Greece have been comprehensively taken into account
- Hardening of silent participationswill be implemented in due course
Helaba Landesbank Hessen-Thüringen ended the first six months of fiscal 2011 on the basis of the semi-annual accounts with an IFRS group pre-tax profit of EUR 333 million. This is an increase by EUR 207 million on the previous year’s first half. The after-tax result amounts to EUR 271 million (previous year: EUR 95 million). Hans-Dieter Brenner, CEO of Helaba, is highly satisfied: “Helaba has generated its best semi-annual result in its history. It is characterised by two factors. The positive economic environment supported a strong increase of earnings from operating activities in customer business. The earnings components that are more strongly affected by markings-to-market also had a positive effect during the first half of the year, in particular on net trading income. Due to the uncertainty surrounding high sovereign debt in some Euro countries and in the USA further developments have to be assessed as highly ambiguous. I am nevertheless confident that we will attain our increased earnings target at the end of this year.”
Net interest income after risk provisions and net trading income are increasing;
banking levy adversely affects general administrative expenses
Net interest income, amounting to EUR 488 million, remained nearly at the previous year’s level (EUR 492 million), in particular because volume-related declines were offset by satisfactory margins. Net interest income increased both in the real estate business and at Frankfurter Sparkasse.
Loan loss provisions declined again, to EUR -99 million (previous year: EUR -134 million). Net interest income after loan loss provisions accordingly amounted to EUR 389 million, an improvement of EUR 31 million on the year before.
Net commission income, amounting to EUR 131 million, is also at the previous year’s level. The discontinuation of commission payments due to the deconsolidation of the Hannover Leasing Group at the end of last year was offset by higher commission income from other business segments.
Net trading income rose strongly, by EUR 140 million, to EUR 173 million. The previous year’s result had been adversely affected by negative valuation effects from the widening of the credit spreads and a general weakening of the Euro. Drivers of success in the first half of 2011 were not only the positive development of spreads but in particular the excellent customer business in securities and derivatives.
The result from hedges/derivatives, amounting to EUR 38 million, exceeds the previous year’s figure by EUR 88 million. This rise is essentially due to the valuation of banking book derivatives.
Net income from non-current financial assets, amounting to EUR -20 million (EUR -1 million in the year before), is adversely affected by the write-downs on Greek government bonds in an amount of EUR 30 million. This corresponds to a value adjustment in an amount of 34 per cent of the nominal volume of EUR 86 million.
The decline of the other operating result, from EUR 171 million to EUR 101 million, is due to the deconsolidation of the Hannover Leasing Group.
General administrative expenses declined from EUR 516 million to EUR 479 million. Adjusted for the effect of deconsolidation, there is however an increase of EUR 22 million which is nearly exclusively (EUR 20 million) due to the banking levy, which has been taken into account pro rata temporis.
After-tax comprehensive income, which in addition to net income comprises other comprehensive income that is to be recognised in equity, amounts to EUR 319 million in the first half of the year; this is an increase of EUR 227 million on the previous year’s figure. Valuation gains of financial assets in particular contributed to this result.
Balance Sheet Total declines - Systematic Reduction of off-balance sheet Risks
The consolidated balance sheet total has declined to EUR 157.7 billion. This is a decrease by EUR 8.5 billion as compared with 31 December 2010. The positions loans and advances to banks, loans and advances to customers and assets held for trading have contributed to this development which is to a significant extent due to exchange rate fluctuations. Loans and advances to banks and assets held for trading have been systematically reduced over the past several years already. In preparation for the new prudential liquidity requirements, financial assets have been methodically increased. As before, the balance sheet structure on the assets side remains characterised by loans and advances to customers and the S-Group business (share: 60 per cent). The volume of off-balance sheet obligations is down by 13.4 per cent to EUR 22.5 billion. This is due to the selective reduction of risk positions, in particular at the New York Branch.
The medium- and long-term new business volume, amounting to EUR 6.4 billion, significantly exceeded the previous year’s figure of EU 5.0 billion. The Bank assumes that the target of EUR 12.3 billion planned for the new business volume in 2011 will be slightly exceeded.
In the first half of the year, Helaba raised medium- and long-term funding in a volume of EUR 6.1 billion. Of this total, unsecured issues accounted for EUR 3.9 billion and Public Pfandbriefe and Mortgage Pfandbriefe accounted for EUR 2.2 billion. In the second quarter, the Bank issued a Public Jumbo Pfandbrief in a volume of EUR 1 billion. It was placed, with a highly attractive spread, primarily with international institutional investors. Customer deposits of Frankfurter Sparkasse and of 1822direkt continue to contribute to the broadening and diversification of the Group’s funding basis.
The ratings of Helaba for unsecured long-term liabilities have remained unchanged in the first half of the year. They rank in the top group of German credit institutions. With a Tier-1 Capital Ratio of 11.1 per cent (31 December 2010: 9.6 per cent) und a Total Capital Ratio of 16.8 per cent (31 December 2010: 14.4 per cent), the Helaba Group is sufficiently endowed with liable capital. In the second half of the year 2011, the hardening of the silent participations held by the State of Hesse in the amount of EUR 1.92 billion as “Core Tier-1 Capital”, which was publicly and with legally binding effect announced by the owners of Helaba, will be implemented. Brenner: “Helaba will thus comply with the capital requirements under Basel III early on and without availing itself of transitional periods.”
Outlook: Significantly higher Earnings expected
As regards the business and earnings development in the year 2011, the Helaba CEO remains optimistic: “Even though the early indicators are heralding a distinctly slower expansion of the German economy, the upswing is expected to continue into the coming year. Despite the debt crisis that is persisting in some Euro countries and the market volatilities associated with the downgrading of the USA, which render a forecast for the year difficult, I see Helaba’s performance on a positive course. For the whole of 2011, I expect group profit - as planned - to significantly exceed the previous year’s result.”
Earnings figures, Helaba Group, under IFRS at 30 June 2011 01/01/-30/06/ 01/01/-30/06/ 2011 2010 Change in EUR in EUR in EUR million million million in % Net interest income 488 492 -4 -0.8 Provisions for losses on loans and advances -99 -134 35 26.1 Net interest income after provisions for losses on loans and advances 389 358 31 8.7 Net commission income 131 131 - - Net trading income 173 33 140 >100.0 Result of hedges /derivatives 38 -50 88 >100.0 Net income from non-current financial assets (incl. assets valued using the equity method) -20 -1 -19 >-100.0 Other operating result 101 171 -70 -40.9 General administrative expenses -479 -516 37 7.2 of which: Banking Levy 20 - Group earnings before taxes 333 126 207 >100.0 Taxes on income -62 -31 -31 -100.0 Group net profit 271 95 176 >100.0
Balance Sheet Development, Helaba Group, under IFRS at 30 June 2011 30/06/2011 31/12/2010 Change in EUR in EUR in EUR in % million million million Loans and advances to banks incl. cash reserve 13,331 14,848 -1,517 -10.2 Loans and advances to customers 83,068 87,698 -4,630 -5.3 Impairments on receivables -1,232 -1,253 21 1.7 Assets held for trading 36,289 39,176 -2,887 -7.4 Positive market value of derivatives not held for trading 2,756 3,702 -946 -25.6 Financial assets, incl. companies accounted for using the equity method 19,102 17,750 1,352 7.6 Real property; property, plant and equipment; intangible assets 2,898 2,922 -24 -0.8 Income tax assets 447 452 -5 -1.1 Other assets 1,065 949 116 12.2 Total assets 157,724 166,244 -8,520 -5.1 Liabilities due to banks 30,777 31,679 -902 -2.8 Liabilities due to customers 39,487 40,896 -1,409 -3.4 Securitised liabilities 37,430 40,389 -2,959 -7.3 Liabilities held for trading 35,725 38,529 -2,804 -7.3 Negative market value of derivatives not held for trading 2,428 3,148 -720 -22.9 Provisions 1,221 1,190 31 2.6 Income tax liabilities 220 238 -18 -7.6 Other liabilities 566 484 82 16.9 Subordinate capital 4,386 4,488 -102 -2.3 Shareholders' equity 5,484 5,203 281 5.4 Total liabilities 157,724 166,244 -8,520 -5.1
Financial Ratios in % 1/1/-30/6/2011 1/1/-30/6/2010 Cost Income Ratio 52.6 66.2 Return on equity (before taxes) 12.6 5.2 30/06/2011 31/12/2010 Total capital ratio 16.8 14.4 Tier-1 capital ratio 11.1 9.6
incl. banking levy
Ratings of Helaba Moody's Investors Standard & Poor's Service FitchRatings Corp. Long-term liabilities Aa2 [**] A+[*] A* Short-term liabilities P-1 F1+[*] A-1* Public Pfandbriefe Aaa AAA AAA Mortgage Pfandbriefe - AAA - Financial strength/viability rating C- a+ - (*) Joint group rating of the Sparkassen-Finanzgruppe Hessen-Thüringen (**) Rating watch negative
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Tags: August 18, Frankfurt, Germany, HELABA Landesbank Hessen-Thüringen