In spite of the still difficult underlying conditions, HSH Nordbank succeeded in closing out the first quarter of 2009 better than expected. This is principally due to the positive development of net interest and stable commission income. At €188 million, the loss before taxes (following a loss of €91 million in the previous year) were substantial, but some €60 million better than called for in the Bank's budget.
The pre-tax result includes restructuring expenses of 28 million and expenses of 20 million for the utilization and provision of the guarantees by the Sonderfonds Finanzmarktstabilisierung (SoFFin). "The result of the first quarter shows that we have embarked the right path. However, it also shows that we must continue to consistently work flat out, but with due consequence, on the realignment of our Bank", says CEO Dirk Jens Nonnenmacher. "Every day counts. Especially we monitor the development of risks in both our credit investment portfolio and the conventional lending business.
Rise in operating income
At 534 million, net interest and commission income in the first quarter 2009 was considerably up on the previous year's figure of 435 million. Over the past months the Bank has succeeded in generating adequate risk premiums in line with the overall economic developments. A further reason for the improved net interest and commission income can be found in the higher income from hedging transactions for clients across all Business Units.
On the other hand, loan loss provisions are much higher, as previously reported. While this figure still stood at 61 million last year, in the first quarter of this year the Bank increased it substantially to 424 million. In doing so, HSH Nordbank continues to allow for the strained macroeconomic situation and the prevailing uncertainties in the market. The provisions set up for individual risks went according to schedule.
Net trading income and net income from financial investments improved by some 170 million to -88 million in the period under report. The charges from the credit investment portfolio digested there come to a total of 341 million, which is higher than budgeted.
Savings program starting to take hold
Administrative expenses in the past quarter decreased by roughly 13% to 214 million (previous year: 246 million). This indicates that the efficiency-enhancement and cost-cutting program approved by the Management Board of HSH Nordbank in September 2008 is having impact. The decrease of 32 million breaks down into 14 million saved in personnel expenses and 18 million in operating expenses. The decrease in personnel costs results principally from the drop in the number of employees of 440 compared to December 2008. 255 employees belong to the Schleswig-Holstein casino group, which is no longer consolidated by HSH Nordbank in fiscal 2009. "The strict limits set on all types of operating costs and as part of the focusing of the business model will continue to reduce administrative expenses in 2009 and the years thereafter on a sustained basis," says Dr. Nonnenmacher.
Capital ratios down slightly
In the first quarter of 2009 the financial market crisis and weak economy also impacted on the performance of key capital ratios of HSH Nordbank. The Tier 1 capital ratio, including the market price position, reached 6.8% (December 31, 2008: 7.5%) and the equity funds ratio decreased to 10.1% (December 31, 2008: 11.6%). The Tier 1 capital ratio and equity funds ratio will rise considerably as a result of the planned capitalization of the Bank by 3 billion and the planned guarantee 10 billion from the federal states.
Stable earnings in the market units
Business operations in the market units of HSH Nordbank performed well in the first quarter of 2009. The aggregate earnings of all market units rose by some 40% to 417 million (previous year: 299 million). This sharp increase is due above all to the gratifying business performance in our Shipping, Transportation, Energy, and Real Estate client un