Speech at the Balance Sheet Press Conference, 21 March 2019, with statements on Helaba's strategic agenda and the initiatives launched by the bank.
The 2018 financial year was an eventful one for Helaba and one in which we made a lot of progress.
The competitive environment within the banking sector is marked by the on-going phase of zero and negative interest rates. Historically low base rates and the ECB’s asset purchase programmes are keeping market liquidity at a persistently high level, which is exerting corresponding pressure on margins. Spending and capital expenditure to meet regulatory requirements, modernise technical infrastructure, digitise processes and customer systems and enter new market segments will also remain high.
We must accept these conditions and look ahead in order to find the right answers today for the future. That is why we have launched measures and initiatives to shape Helaba’s future and improve its long-term competitiveness.
In doing so, we have set ourselves a clear objective: to maintain and expand our strong position in the market as well as to noticeably boost our earnings over the next few years.
All these aspects are part and parcel of this bank's DNA.
The key will be to preserve and further strengthen this sustainable basis. Against this backdrop, we have launched a number of projects and initiatives and we are concentrating on three tasks in this respect:
1. Refining our business model and implementing growth initiatives.
2. Modernising our infrastructure under the headings of IT, organisation and digitalisation.
3. Developing our responsible corporate culture and values.
We view this as a three-pronged approach consisting of associated tasks and objectives which stand for the successful evolution of our bank into a future-proof entity.
A sustainable basis has therefore been created for the focused development of the business model which builds on findings from this portfolio review; at the same time, various growth initiatives have been agreed.
For instance, the bank will use its strong market position in the real estate segment to further expand its syndication business in Germany and Europe.
Furthermore, in Corporate Finance we have created the necessary conditions in order to be able to offer customers our know-how in asset and liability management in connection with additional products as well, for example in the off-balance sheet financing of receivables portfolios.
In international trade finance, the objective we are pursuing in cooperation with the Sparkassen-Finanzgruppe is to provide export-oriented corporate customers with products and services that support their activities abroad. Together with the savings banks, other Landesbanks and affiliated companies, we want to pool our strengths within the organisation in this business field that is crucial for our corporate clients.
The Scandinavian business in Stockholm has proven so successful we decided to convert our representative office, which opened as recently as 2016, into a branch office last year.
However, we do not want to rely solely on internal growth initiatives, but also take advantage of opportunities for inorganic growth - but only where it is appropriate. With the acquisition of the "Land Transport" portfolio from Deutsche Verkehrsbank (DVB), we have selectively expanded our own portfolio in order to strengthen our market position in this segment and lay the foundation for further growth. Our very comfortable CET1 ratio of 14.9 percent puts us in a position to seize business opportunities of this kind.
We see the opportunities that digitalisation offers us as an important lever for more growth. In 2018, we already successfully took advantage of the possibilities of digitalisation to enhance the ways in which we interact with our customers.
Additionally, client portals for Helaba’s wholesale customers and in the business units of Corporate Finance and Real Estate Lending have reached an important milestone with the completion of the first releases. Beyond that, we intend to boost the efficiency of internal processes with additional digitalisation projects.
With METAPlus Digital, we transformed the syndicated loan process for savings banks into a digital application and integrated it into the savings banks' IT system, OSPlus. The savings banks can now make easier, faster and more transparent use of Helaba's services in their lending activities with corporate customers without any system discontinuity.
With the establishment of Helaba Digital, the investment company for digital start-ups, we have also responded to this rapidly developing market. The aim of Helaba Digital is to make strategic investments in innovative companies whose digital solutions actively complement and enhance our business model and optimise the bank's core processes.
These endeavours have already yielded the first results: "komuno", a digital platform for municipal loans, which acts as an intermediary between local authorities and banks in the procurement of municipal finance and greatly simplifies the tendering process. After successful initial transactions, we initially made the platform available to savings banks before extending it to all banks, as our objective is to become the leading marketplace in this segment.
However, developing software solutions in-house is not always the best way to achieve your goals. For the digital processing of Schuldschein loans, for example, we opted for the independent platform vc trade, in which more than 280 investors and eight arranging banks now participate.
The future viability of a bank requires a sustainable infrastructure. This is why we initiated the Alpha programme back in 2017. The aim is to fundamentally modernise the IT systems and organisational structures in order to lay the foundation for the bank's long-term performance and, at the same time, satisfy regulatory requirements. This is not only associated with increased costs, but also ties up a large chunk of the bank's capacities.
The third focus of our strategic agenda in 2018 was the continued development of our corporate culture. We updated our mission statement by involving a broad cross-section of our employees. Our value-based approach has been accentuated even more strongly as a feature that distinguishes us from the competition. The core values of "reliability", "focusing on the customer" and "enthusiasm" that we formulated stand for the way in which we want to achieve our goals and work together with our customers.
Our customers also appreciate this approach to conducting business by following clear principles and this was emphatically confirmed in a customer survey. Over 90 percent of our business partners are highly satisfied with the service we provide. We achieved particular approval ratings for the factors of trustworthiness, reliability, security and partnership.
As a logical consequence to this, our values-based approach is also expressed by our new claim "Values with impact", which we have placed at the centre of the new brand campaign as a key promise of performance.
Helaba's solid capital base and stability resulted in the bank successfully passing the EBA's stress test in 2018. Our good equity ratio is not only the basis of our position of strength, but also made it possible to for us to achieve inorganic growth. Last year, for example, we impressively underscored the fact that Helaba is able to do deals.
2018 was an action-packed year in which Helaba made good progress with its strategic agenda. After initial muted activity, customer business developed positively and the risk situation remains positive. This testifies to the bank's outstanding portfolio quality. Last year, we were also able to selectively expand our business portfolio through acquisitions.
Overall, we generated a profit on a par with the previous year despite the challenging structural challenges. With the initiatives we have launched, we have laid the foundations for future growth.
I would now like to turn my attention to 2019 at Helaba. This year, too, we will continue to work on implementing our strategic agenda. I previously outlined the most important features of this, which are our growth initiatives, our digitalisation initiatives as well as the modernisation of our technical infrastructure and the ongoing development of our corporate cultureWe want to consistently push ahead with addressing all of these issues. In 2019 we intend to expand these initiatives by a fourth point.
We assume that the new reality of the banking business, consisting of the ECB's zero or low interest rate policy, the regulation of business models and ongoing digitalisation, will remain the norm. This means that there will continue to be intense competition. Spending and capital expenditure to meet regulatory requirements, modernise technical infrastructure, digitise processes and customer systems and enter new market segments will also remain high. In this environment, we want to continue to grow, because stagnating earnings on the one hand and rapidly mounting expenses on the other do not constitute a recipe for long-term success. In addition to implementing our targeted growth initiatives, we will expand our strategic agenda by an additional fourth point, namely "Growth through efficiency". By increasing efficiency, we want to slow the rise in costs while at the same time exploiting the resulting room for manoeuvre to systematically implement our growth initiatives. We have these opportunities for growth because our customers trust us and appreciate our advice, as our customer survey has unequivocally shown.
I am confident that the addition of "Growth through efficiency" will effectively complement our strategic agenda of growth initiatives, digitalisation and corporate culture. Implementing it will make Helaba even stronger and will ensure that we can continue to expand our strong market position in the future and take advantage of market opportunities.
In light of the initiatives that we have already launched, we expect to achieve an overall result comparable to that of the previous year, despite the ongoing impact of the interest rate environment and regulatory requirements.
“The addition of 'Growth through efficiency' will make Helaba even stronger and will ensure that we can continue to expand our strong market position in the future and take advantage of market opportunities.”
Herbert Hans Grüntker
Chairman of the Board of Managing Directors