In the first quarter of 2017, Helaba Landesbank Hessen-Thüringen generated a consolidated net profit before taxes of EUR 75 million, which was EUR 63 million lower than the Q1 2016 result of EUR 138 million.
In the first quarter of 2017, Helaba Landesbank Hessen-Thüringen generated a consolidated net profit before taxes of EUR 75 million, which was EUR 63 million lower than the Q1 2016 result of EUR 138 million. After taxes, the consolidated net profit reached EUR 47 million, after EUR 91 million in the same period last year.
Against a backdrop of ongoing zero and negative interest rates, the net interest income fell by EUR 24 million to EUR 277 million. The positive macroeconomic environment and the good quality of the credit portfolio resulted in a net reversal in loan loss provisions of EUR 5 million in the first quarter of 2017.
On the basis of positive customer business, the net fee and commission income rose by just over 7 percent to EUR 91 million. The most significant contributions to this were made by Helaba Invest’s asset management activities and the segment of cash management. The net trading income increased to EUR 72 million after EUR 26 million in the same period last year. Lower valuation adjustments on derivatives were partly responsible for this rise.
The net income from hedge accounting and derivatives had a noticeable impact on this quarter’s earnings, having declined from EUR 67 million in the first quarter of 2016 to minus EUR 68 million. The fall in this typical IFRS item includes both the absence of the positive base effect in the same period last year as well as the negative impact of taking this year’s liquidity components of foreign currencies (cross-currency basis spread) into account.
The other net operating income grew by EUR 17 million to EUR 59 million, which was largely a result of earnings contributions from the real estate portfolio generated by the GWH Group.
General and administrative expenses rose by 2.8 percent to EUR 362 million. This reflects, in particular, IT and consultancy expenses in connection with the implementation of regulatory and operational requirements. In common with the previous year, this item already includes full provision for the bank levy and security reserves in an amount of EUR 68 million.
The Helaba Group’s balance sheet total climbed by EUR 7.4 billion to EUR 172.6 billion compared to the end of 2016. Business volume increased by EUR 8.1 billion to EUR 203.0 billion, which was related to the bank’s funding strategy. The bank took advantage of the favourable market environment at the beginning of the year to issue a significant volume of debt securities.
Consequently, on the asset side of the balance sheet, loans and advances to banks including a cash reserve deposited at the central bank, rose by EUR 10.0 billion to EUR 28.3 billion. Trading assets fell slightly to EUR 18.9 billion, after a previous amount of EUR 20.5 billion. New medium and long-term customer business, at EUR 4.6 billion, almost reached the same high level achieved in the first quarter of last year. Thanks to the positive trend in the bank’s operating business with customers, loans and advances to customers of EUR 92.4 billion remained on a similar level to that at the end of 2016 (31 December 2016: EUR 93.1 billion)
As of 31 March, the CET1 capital ratio (“phased in”) amounted to 14.3 percent. The CET1 capital ratio (“fully loaded”) improved to 14.1 percent from a level at the end of 2016 of 13.8 percent. Return on equity (before taxes) was 3.9 percent.
Herbert Hans Grüntker, the Chairman of Helaba’s Board of Managing Directors, regards this as a confirmation of his previous forecast: “The political and economic environment in which we are operating continues to be challenging. As expected, the ECB’s deposit rate, which was reduced as early as 2016 to minus 0.4 percent, as well as its Corporate Sector Purchase Programme, are having a negative impact on areas of our retail and cash management activities that are particularly sensitive to changes in interest rates as well as on the bank’s own investment portfolio. We are generally satisfied with the growth in our customer business. With this in mind, we reiterate our original earnings target for 2017, in which we expect a significant decline in the net profit.”