In the first half of 2019, Helaba generated a consolidated net profit before tax under IFRS of EUR 325 million, which is considerably higher than the prior-year figure of EUR 200 million. This jump in earnings is largely due to the acquisition of the former DKD - Dexia Kommunalbank Deutschland (today known as KOFIBA Kommunalfinanzierungsbank GmbH) and its associated first-time consolidation. The consolidated net profit after tax amounted to EUR 255 million (H1 2018: EUR 140 million).
"Our earnings in the first six months of 2019 reflect the positive economic impact of the consolidation of the former DKD. In addition, given the challenging environment we face, we can be satisfied with the performance of our operating activities in the first half of the year. We were able to expand our volume of new business and increase both net interest income and net fee and commission income. On the other hand, rising IT and consulting expenses incurred as a result of regulatory requirements and new business-driven requirements continue to weigh on the result," explained Herbert Hans Grüntker, Chairman of Helaba's Board of Managing Directors. "Overall, we anticipate that the integration of KOFIBA will result in a pre-tax profit for 2019 exceeding the previous year's level," said Grüntker.
Excluding the integration of KOFIBA, the half-year result would have been approximately equal to the same period last year.
Net interest income amounted to EUR 557 million and was thus above the previous year's level (H1 2018: EUR 521 million). Provisions for losses on loans and advances rose to EUR -34 million (H1 2018: EUR 13 million), but remained at a low level. Net fee and commission income climbed by EUR 14 million to EUR 186 million. This increase was primarily a consequence of the positive trend in commission income from lending and guarantee activities, payment transactions and the Helaba Invest's own asset management business.
Net income from fair value measurement, which comprises net trading income and net in-come from hedge accounting and other financial instruments measured at fair value, in-creased by EUR 48 million to EUR 78 million.
Other net income grew by EUR 128 million to EUR 307 million, mainly due to special effects from the first-time consolidation of KOFIBA.
General and administrative expenses rose to EUR 772 million (H1 2018: EUR 720 million). This was chiefly attributable to higher IT and consulting expenses in connection with the implementation of regulatory and business-driven requirements as well as to higher costs from allocations to institutional protection schemes and the bank levy.
The Helaba Group's balance sheet total saw a sharp rise in the first half of 2019 from EUR 163.0 billion to EUR 213.0 billion. This increase was primarily driven by the consolidation of KOFIBA. The business volume grew to EUR 252.1 billion (31 December 2018: EUR 200.9 bil-lion). Loans and advances to customers and affiliated savings banks also increased by EUR 16.3 billion to EUR 118.2 billion (31 December 2018: EUR 101.9 billion) owing in part to the first-time inclusion of KOFIBA and the acquisition of DVB's Land Transport Finance portfolio, thereby reflecting the fact that the bank's business continues to be closely intertwined with the real economy. The volume of new medium and long-term business - excluding WIBank's competitively neutral promotional business - amounted to EUR 9.6 billion in the first half of the year (H1 2018: EUR 7.8 billion).
The CET1 ratio stood at 14.6 percent as of 30 June 2019 (31 December 2018: 14.9 percent). Return on equity (before tax) reached 7.7 per cent (H1 2018: 5.0 per cent) and the cost/income ratio 68.3 per cent (H1 2018: 79.4 per cent).
The Real Estate segment focuses on larger-scale commercial portfolio and project financing for real estate. Pre-tax earnings in this segment rose by EUR 9 million to EUR 131 million. The volume of new medium and long-term business increased to EUR 4.0 billion (H1 2018: EUR 3.7 billion). There was once again a low level of additions to provisions for losses on loans and advances. Risk provisioning generated a net income of EUR 12 million (H1 2018: EUR 2 million).
In addition to credit products, the Corporates & Markets segment also comprises trading and sales activities as well as payment transactions. Pre-tax earnings in this segment fell to EUR -53 million (H1 2018: EUR 55 million). This was due to a decline in the result from fair value measurement, which was driven by lower interest rates. At EUR 31 million, Corporate Finance made the largest contribution to earnings in this segment. The volume of new medium and long-term business in this segment increased to EUR 4.8 billion (H1 2018: EUR 3.5 billion), with the acquisition of the Land Transport Finance portfolio from DVB Bank SE having a positive impact. At EUR -47 million, provisions for losses on loans and advances were significantly higher than the previous year's figure of EUR -6 million.
The Retail & Asset Management segment includes Retail Banking, Private Banking and Asset Management (via the subsidiaries of Frankfurter Sparkasse, Frankfurter Bankgesellschaft and Helaba Invest), Landesbausparkasse Hessen-Thüringen and GWH. At EUR 115 million, pre-tax earnings in the segment were below the previous year's figure (H1 2018: EUR 133 million) and were mainly attributable to GWH (EUR 60 million; H1 2018: EUR 56 million) and Frankfurter Sparkasse (EUR 53 million; H1 2018: EUR 53 million). The absence of a special effect in the previous year had a negative impact. Risk provisioning in the Retail and Asset Management segment remained virtually unchanged from the previous year at EUR -1 million (H1 2018: EUR 0 million).
At EUR 13 million, pre-tax earnings in the WIBank segment were above those of the previous year (H1 2018: EUR 9 million). Net interest income rose by EUR 5 million to EUR 29 million on the back of a noticeable expansion in promotional lending activities. As in the previous year, net fee and commission income amounted to EUR 19 million.