Helaba achieves stable first-quarter profit in 2018

Helaba Landes­bank Hessen-Thüringen generated a consolidated profit before tax of EUR 79 million in the first quarter of 2018. This represents a rise of EUR 4 million compared to the profit for the comparable period in 2017 of EUR 75 million. After allowing for tax, the consolidated net profit for the quarter amounted to EUR 52 million (previous year: EUR 47 million). This means that, overall, Helaba enjoyed a satis­factory first quarter.

“Conditions remained difficult in the first quarter of the year, which was reflected in modest growth in new business volume as well as declining net interest income. However, there are already indications that business will pick up in the second quarter. Against this backdrop, we are most definitely satisfied with our first-quarter results. The figures back up our forecast for 2018, whereby we anticipate a stable performance for the year as a whole”, commented Herbert Hans Grüntker, the Chairman of Helaba’s Board of Managing Directors.

Net interest income was impacted by the on-going phase of zero and negative rates, declining by EUR 19 million to EUR 256 million. There was a minor increase in provisions for losses on loans and advances of EUR 8 million. Net fee and commission income fell slightly to EUR 86 million (previous year: EUR 91 million). Net trading income declined by EUR 31 million to EUR 41 million. The reason for this was that net trading income in the first quarter of last year was strongly influenced by positive valuation effects. Lower net trading income was offset by a considerably improved net income from hedge accounting and other non-trading financial instruments measured at fair value of EUR 11 million (previous year: minus EUR 68 million).

The other net income grew by EUR 6 million to EUR 74 million. General and admini­strative expenses increased to EUR 387 million (plus EUR 18 million), which particularly reflects IT and consultancy costs in connection with the implementation of regulatory and business-driven requirements. As in the previous year, this item already takes into account the full-year cost of the bank levy and contri­butions to guarantee schemes that amount to a total of EUR 72 million.

Overall, the consolidated profit before tax reached EUR 79 million (previous year: EUR 75 million) and consoli­dated profit after tax amounted to EUR 52 million (previous year: EUR 47 million).

Compared to the end of 2017, the Helaba Group’s balance sheet total had grown by EUR 8.1 billion to EUR 166.3 billion. Business volume increased by EUR 8.2 billion to EUR 199.5 billion. Loans and advances to customers (financial assets measured at amortised cost) of EUR 87.9 billion were almost on the same level as the previous year period (previous year: EUR 88.7 billion). The volume of new medium and long-term business, excluding WIBank’s competitively neutral promotional loan business – reached EUR 2.9 billion and was therefore significantly lower than the EUR 4.6 billion generated in the first quarter of the previous year. In addition to seasonal factors, this can be attributed to a tougher competitive environ­ment. For the second quarter of 2018, Helaba expects to achieve growth in the volume of new business.

The core CET 1 ratio (fully-loaded) amounted to 15.7 percent on 31 March. Return on equity (before tax) reached 4.0 percent.

The 2018 financial year marks the first time that Helaba has applied IFRS 9 rules to its financial reporting. The consequences of the changeover are manageable and, overall, have even had a positive effect of 0.7 percent on the CET 1 ratio.

As from the 2018 financial year, Helaba has also adapted its segment reporting to better reflect the customer and risk structure of its business. The bank now divides its operations into the segments of “Real Estate”, “Corporates & Markets”, “Retail & Asset Management” as well as “WIBank”.

The segment of Real Estate focuses on financing major commercial projects and the existing portfolio of commercial real estate. Net income before tax in this segment declined slightly by EUR 7 million to EUR 65 million. The amount of new medium and long-term business reached EUR 1.1 billion (previous year: EUR 2.2 billion). Provisions for losses on loans and advances in real estate lending activities, at EUR 3 million, were on the same level as the previous year.

Products for all customer groups are provided from within the segment of Corporates & Markets. In addition to credit products, this segment also comprises trading and sales activities as well as trans­action banking services. Net income before tax in this segment declined to EUR 45 million (previous year: EUR 99 million), primarily as a result of a significant reduction in the net trading income. At around EUR 36 million, the business unit of Corporate Finance makes the largest contri­bution to profit in this segment. The volume of new medium and long-term business in the Corporate Finance unit was practically stable at EUR 1.1 billion (previous year: EUR 1.4 billion).

The segment of Retail & Asset Management comprises retail banking, private banking, the Landes­bau­sparkasse Hessen-Thüringen (LBS) as well as asset management activities. Net income before tax in this segment, at EUR 54 million, was on almost the same level as the year before (previous year: EUR 56 million), of which EUR 32.9 million was related to GWH and EUR 16.3 million to Frankfurter Sparkasse.

The business segment of WIBank mainly reflects the business unit of the public develop­ment bank Wirt­schafts- und Infra­struktur­bank Hessen. Net income before tax in this segment was EUR 4 million and thus below that generated in the previous year (EUR 6 million). This decline can largely be attributed to greater invest­ment in IT systems as well as higher personnel costs. Both the net interest income (EUR 12 million) and the net fee and commission income (EUR 9 million) were on the same level as the first quarter of 2017.