2018 preliminary figures (IFRS): Hamburg Commercial Bank shows solid new business and strong capital ratio
Hamburg Commercial Bank AG closed the 2018 financial year with net income before taxes of € 97 (-453) million, according to preliminary figures.
Contributing factors included a good operating performance and new business almost at the previous year’s level, as well as considerable cost-cutting successes. As expected in the context of the Bank’s successful privatisation, its profound transformation and the adjustment of the liabilities side of the balance sheet, the Group net result was significantly impacted by extraordinary effects.
“We achieved all our goals in 2018. The first privatisation of a Landesbank has been successfully completed and we have already set the course for our multi-year transformation. Ahead of us lies a comprehensive repositioning of Hamburg Commercial Bank in both operational and financial terms: we want to create added value for our clients and shareholders. 2018 was marked by extensive financial measures to facilitate this transformation. With a good core Tier 1 capital ratio above 18 %, we have established an excellent basis for the future,” said Stefan Ermisch, CEO of Hamburg Commercial Bank.
The Bank recorded a positive development in its client business: new business including syndications reached a volume of € 8.4 (8.6) billion, driven by Real Estate Clients and the Renewable Energies, Infrastructure and Shipping segments. In the traditional Corporate Clients business, the Bank intentionally restricted its new commitments in light of the competitive pressure on margins. Specifically, new business for Real Estate Clients amounted to € 4.4 (4.7) billion, for Corporate Clients € 2.6 (3.1) billion and for Shipping € 0.9 (0.5) billion, plus around € 400 million in syndications.
Thanks to strict risk and return requirements, gross and net margins on new business have both improved, which is gradually leading to a higher return on equity.
The risk provision of € -367 (-1,276) million reflects the continued conservative approach to risk. The Bank has significantly raised its portfolio provisions in view of the increasingly uncertain economic environment. In 2018, in the course of the privatisation, the Bank was relieved of virtually all legacy assets and the quality of the portfolio was drastically improved: in total, the non-performing exposure ratio is seen at around 2 % (end of 2017: 10.4 %).
The core Tier 1 capital ratio, which is exceptionally strong compared with the overall market, also further improved to 18.4 % (end of 2017: 15.6 %). The leverage ratio stabilised at a high level of 7.5 % (7.7 %). The reduced business volume due to the discontinuation of the Non-Core Bank led to a lower balance sheet total of € 55 (70) billion.
The Bank’s operational progress is particularly apparent on the costs side: administrative expenses fell further to € -402 (-481) million. The restructuring programme is proceeding according to plan and led to non-recurring expenses of € -366 (-66) million in 2018.
Hamburg Commercial Bank reports stable total income of € 1,586 (1,547) million for 2018, with both years marked by substantial extraordinary effects such as revaluations of hybrid financial instruments and sales of securities.
The Bank will publish its full and final Annual Report on March 28, 2019.
| Profit and loss statement (IFRS, € m) – preliminary figures – | Jan – Dec 2018 | Jan – Dec 2017 | Change in % |
|---|---|---|---|
| Total income | 1,586 | 1,547 | 3 |
| Loan loss provisions1 | -367 | -1,276 | >-100 |
| Administrative expenses | -402 | -481 | -16 |
| Net income from restructuring and privatisation | -366 | -66 | >-100 |
| Group net result | 97 | -453 | >100 |
| Additional key figures of Hamburg Commercial Bank Group | 31 Dec 2018 | 31 Dec 2017 |
|---|---|---|
| Total assets (€ bn) | 55 | 70 |
| Common Equity Tier 1 (CET1) capital ratio (in %) | 18.4 | 15.62 |
| Leverage Ratio (in %) | 7.5 | 7.7 |
| Full-time employees (FTE) | 1,716 | 1,926 |
1 Incl. Hedging effect of credit derivative second-loss guarantee
2 Without federal state guarantee
The information contained in this press release does not constitute an offer for the sale of any type of Hamburg Commercial Bank AG securities. Securities of Hamburg Commercial Bank AG may not be sold in the United States without registration pursuant to US securities legislation, unless such a sale takes place on the basis of relevant exceptional provisions.
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