In the first three months of the year, HVB Group recorded strong financial performance. Its operating result, pre-tax profit and net profit all significantly exceeded their respective prior-year figures. This is attributable to a pleasing trend in the operating business.
Net interest income increased substantially. Due to the intensified initiatives in the customer business, net commission income recorded a satisfactory increase. In a favorable capital market environment, HVB Group generated an excellent trading result. As expected, administrative expenses increased due to targeted capital expenditure, while loan-loss provisions declined noticeably. Overall, the good performance discernible in the fourth quarter of 2004 was accelerated. HVB Group's return on equity after taxes exceeded the target range envisaged for full-year 2004 after the first three months.
Dieter Rampl, Board Spokesman of HVB Group, comments: "We had a good start into the new fiscal year. All business segments are making substantial earnings contributions. This shows that HVB Group is well positioned as a bank for private and corporate customers in Germany, Austria and Central and Eastern Europe."
Detailed breakdown of the results:
Net interest income - including one-time effects of â¬11 million - amounted to â¬1,404 million in the first quarter of 2005, exceeding the prior-year level of â¬1,286 million by 9.2%. In this context, it should be noted that net interest income after the first three months does not yet include any noteworthy dividend income received by Bank Austria Creditanstalt.
Net commission income stood at â¬757 million â" a significant increase of 8% compared to the level of â¬701 million recorded in the first quarter of 2004. One of the main reasons for this trend was the sale of innovative investment products. At â¬322 million, the trading result recorded a particularly pleasing performance. The already high prior-year level of â¬265 million was exceeded by 21.5%. In particular, this increase is attributable to above-average performance in interest and currency-related transactions.
The balance of other operating income and expenses amounts to â"â¬12 million. At â¬2,471 million in the first quarter of 2005 (previous year: â¬2,321 million), total operating revenues recorded an increase of 6.5%.
Administrative expenses came to â¬1,600 million, exceeding the the first quarter of 2004 (â¬1,542 million) by 3.8%. The cost-income ratio improved to 64.8% at the end of March (previous year: 66.4%). For fiscal 2005 as a whole, we expect loan-loss provisions of approx. â¬1.3 billion, which translates into a pro-rata figure of â¬323 million for the first three months. This corresponds to a pronounced decline of 32.7% compared to the prior-year level (â¬480 million).
At â¬548 million, the operating result nearly doubled (previous year: â¬299 million). This means that the sustained operating improvement recorded in fiscal 2004 continued.
Net income from investments , which includes â¬34 million from the sale of shares held in Premiere AG, amounted to â¬54 million (previous year: â¬17 million). In accordance with the new IFRS, regular amortization of goodwill has been discontinued since January 1, 2005. Non-scheduled impairments were not necessary in the first quarter of 2005. The balance of other income and expenses also includes pro-rata absorbed losses for companies attributable to the Real Estate Restructuring (RER) segment.
The pre-tax profit stood at â¬565 million after the first three months (previous year: â¬206 million) and thus nearly tripled. On the basis of a tax rate of 28.3% anticipated for fiscal 2005 as a whole, net income came to â¬405 million (previous year: â¬116 million). The increase in minority interests in net income to â¬69 million is mainly attributable to the continued strong performance of Bank Austria Creditanstalt. In the first three months, HVB Group generated a net profit of â¬336 million, compared to â¬56 million in the same period of the prev