Today (18 March 2009), HypoVereinsbank is presenting its results for 2008.
2008 has been a year characterized by the most severe financial-market crisis in decades. This crisis was already significant at the start of the year, but proliferated as of mid-September 2008, with repercussions on many key industries in the real economy. Although it has weathered the crisis relatively well, even HypoVereinsbank has not escaped the consequences of the dramatic events and the resulting difficult economic conditions of the past few months. For the 2008 financial year, HVB Group posted a loss before tax of 595 million, after a loss before tax of 665 million in the fourth quarter of 2008. Operating profit was 453 million. At 3,948 million, operating revenues were significantly below the previous year's level. Negative net trading income was strongly burdened. Operating costs decreased by 2.3%. Net write-downs of loans were increased considerably in response to the market environment.
Despite the difficult underlying conditions in the market, the Retail and Wealth Management divisions recorded satisfactory overall performances. The performance of the Corporates & Commercial Real Estate Financing division was especially pleasing with a noticeable increase in operating revenues. The results of the Markets & Investment Banking division however, reflected the effects of the pronounced market distortions. The resultant burdens on net trading income, marked increases in net write-downs of loans and provisions and negative net income from investments together were the main reasons for the loss before tax of 2,031 million sustained in the Markets & Investment Banking division. For 2008, HVB Group posted a net loss after tax and minorities of 671 million. In a considerably more favorable market environment in the previous year, HVB Group had generated a profit of approximately 2 billion. However, despite market conditions HVB will make payments on its participating certificates and hybrid capital instruments.
"Although we are, on the whole, not satisfied with the result for the 2008 financial year, our bank nevertheless performed solidly and stood its ground comparatively well last year in the face of the global financial-market and economic crisis", says Dr Theodor Weimer, Board Spokesman of HypoVereinsbank.
"This bears testimony to the fact that we have a viable, well-diversified business model standing for security, stability and reliability even in times of crisis. A further supportive factor is HypoVereinsbank's tier 1 ratio, which came to 14.3% at the end of 2008 and is thus excellent, even by international standards. At the same time, our integration into the strong European UniCredit Group is an optimum basis allowing us to rapidly and effectively seize market opportunities and cushion risks.
"We expect the difficult economic environment to persist in the coming months and thus continue to create great challenges for our customers and the banking sector", says Dr Weimer.
"Against this background, we are in the process of adjusting the business model of the Markets & Investment Banking division to the changes in the market situation. The division's new positioning will also enable our Investment Banking sub-division to benefit from a market recovery. In addition, our claim to be a leading bank for corporate customers in Germany cannot be realized without customer-oriented investment banking granting direct access to the capital markets. I am convinced that we are well prepared to successfully master the difficult year that lies ahead of us."
Detailed breakdown of key changes in results:
In 2008, net interest income rose by 130 million (+3.1%) to 4,259 million. Among other things, this increase was due to trading-induced interest, which was higher than in the previous year, and lower expenses for the funding of the trading assets of the investment-banking operations of UniCredit Banca Mobiliare S.p.A.(1) (UBM), which were transferred to HVB AG in April 2007. The increase in interest income