HVB Group achieved a clear earnings improvement in the second quarter of 2004. At € 359 million, its operating profit increased nearly 24% compared to the € 290 million posted in the previous quarter. The figures presented today are, in particular, characterized by clear progress with respect to net interest income and considerably lower loan loss provisions.
Consequently, HVB is able to present a significantly higher profit of € 155 mn on both a quarter-on-quarter and year-onyear basis. Dieter Rampl, Spokesman of the Board of Managing Directors of HVB Group, comments: 'We made significant progress in our operating business in the second quarter. Our revenue-increasing measures are beginning to bear fruit. On the risk front, too, tensions are easing noticeably. This shows that we are on the right track. If we continue our ongoing efforts in HVB Group, I am confident with respect to the achievement of our ambitious targets for fiscal 2004 as a whole.'
Compared to the first quarter (€ 1,285 million), net interest income increased very clearly in the second quarter, by 13.1% to € 1,453 million. The expected positive influences from the capital increase completed at the beginning of the quarter contributed to this result, too. The second quarter also included non-recurrent seasonal and one-off effects totaling € 75 million. Overall, it becomes clear that HVB Group recorded an earnings improvement that will have a sustainable effect. At the mid-year mark, net interest income amounted to € 2,738 million, which is 0.7% above the previous year´s figure (€ 2,720 million).
Net commission income came to € 692 million in the second quarter, which nearly corresponds to the favorable performance recorded in the first three months (€ 701 million). At € 1,393 million, it exceeded the prior-year level (€ 1,267 million) by 9.9% at the end of June 2004. In a more difficult capital market environment, trading profit did no reach the high level recorded in the first quarter (€ 262 million), coming in at € 182 million. The result after the first half of 2004 is thus € 444 million, which is 8.6% below the prior-year level (€ 486 million).
Compared to the result of the first three months, which included the disposal gain for Bankhaus BethmannMaffei of € 53 million, the balance of other operating income and expenses declined to € 22 million in the second quarter. In a year-on-year comparison, the balance stood at € 91 million, which is 85.7% above the prior-year level (€ 49 million). Total operating revenues increased 1.4% to € 2,349 million, in the second quarter, compared to € 2,317 million (including disposal gain of € 53 million) in the previous quarter. On a yearon-year basis, they increased 3.2%, from € 4,522 million to € 4,666 million.
At € 1,571 million, administrative expenses edged up slightly in the second quarter (Q1: € 1,542 million). This increase is virtually exclusively due to one-time integration costs for Vereins- und Westbank, which will burden the income statement of the current fiscal year 2004 with an amount of € 40 million. In a six-month comparison, administrative expenses of € 3,113 million were 1.2% above the prior-year level (€ 3,077 million). The cost-income ratio came to 66.7% at the end of June (previous quarter: 66.6%).
Whereas HVB Group still projected loan loss provisions of € 1,940 million after the first quarter, it was now possible to reduce the risk provisioning budget for full-year 2004 noticeably, to € 1,809 million. Apart from a macroeconomic easing of tensions, this is due to the success of our stringent risk management. Because the full-year projection is posted on a pro-rata basis, the figure for the first six months amounts to € 904 million (-20.9% versus the prior-year level of € 1,143 million) on a stand-alone basis, loan loss provisions in the second quarter thus declined substantially versus the first quarter, from € 485 million to € 419 million.
At € 359 million, the second-quarter operating profit significantly