HSH Preparing for Change of Ownership
HSH Nordbank is pushing ahead with the upcoming change of ownership; it is putting on a good performance in the Core Bank supported above all by the real estate and corporate clients businesses and is continuing its systematic cost-cutting course.
In the words of HSH Nordbank's CEO Stefan Ermisch, the Bank is still expecting a profit for the year as a whole despite the unabatedly difficult situation on the shipping markets and is preparing for the impending change of ownership.
"HSH Nordbank is showing an encouraging performance in all business areas of the Core Bank. We are traditionally strong in the commercial real estate business in Germany; we have gained a lot of ground in competition for SME clients and we are benefiting from our further optimised structures. The major charges dating from the times before 2009 are now for the most part pooled in the Non-Core-Bank", said Stefan Ermisch, Chief Executive Officer of HSH Nordbank
Stefan added: "They will undoubtedly remain a problematic legacy for our Bank as no improvement is currently in sight in shipping despite the crisis having lasted several years already. We intend to cut more problem loans from our legacy business by the end of the year. For 2016 we reaffirm our cautious earnings forecast in view of the persistently high loan loss provisioning requirement for shipping, and we aim to close out the year with a profit within the Group."
In the first nine months of the year HSH Nordbank continued to reduce its legacy assets while setting aside substantially higher provisions for its shipping loans. At the same time, it earned EUR 163 (pre-year period: 24) million and improved its capital ratios.
At EUR 102 (109) million, total income in the Shipping segment of the Core Bank was almost at the pre-year level. Net interest income, which declined as the portfolio was deliberately wound down, was offset by positive valuation effects in net trading income.
New business was entered into on a very selective basis in the course of the year and came to EUR 0.2 billion; the third quarter on a standalone basis recorded no new business. The substantial year-on-year rise in net income before taxes to EUR 92 (45) million was furthermore supported materially by loan loss provisions after offsetting the second loss guarantee of EUR 42 million.
The Shipping exposure of the Core Bank decreased further to EUR 7.1 billion as it was both reduced and partly shifted to the Non-Core-Bank. The quality of this portfolio is good: more than 90 percent of its loans are performing.
The legacy shipping exposures from the period pre-2009 are mostly pooled in the Non-Core-Bank and remain problematic. The Bank has taken account of this by setting aside high loan loss provisions for these legacy cases.
The Non-Core-Bank has reported loan loss provisions before guarantee for shipping of EUR -959 million. It is these legacy loans that also primarily tie up the guarantee, which the federal states provided in 2009 to recapitalise the Bank.
