HSH Nordbank demonstrates operating strength
Subprime risks absorbed with full impact on earnings Substantial net income despite conservative risk policy
Download key data on preliminary 2007 results
Hamburg/Kiel, March 10, 2008 - HSH Nordbank has used the operating strength it demonstrated last year to adjust the risks resulting from the current financial market crisis systematically, by means of very extensive provisioning.
In particular, current changes in the market value of the securities portfolio have been fully absorbed in the 2007 income statement. Despite these extensive measures with an impact on earnings, HSH Nordbank generated substantial net income of EUR 250 million for the year (previous year: EUR 460 million) pursuant to German GAAP. This is what the key data for the preliminary 2007 financial statements show.
“We are creating transparency for our investors and show that HSH Nordbank is adjusting its risks systematically,” commented Hans Berger, the Bank’s CEO in Hamburg. Berger stressed the fact that the business model had once again proven its value over the past year and had shown itself to be robust and crisis-proof. As a result, the Bank was able to completely absorb all currently discernible subprime risks in its 2007 income statement in full.
According to the preliminary annual financial statements pursuant to German GAAP, HSH Nordbank has expanded its business substantially. Operating income was up 13% to EUR 2.456 billion (previous year: EUR 2.172 billion), operating profit before risk provisioning rose by as much as 15% to EUR 1.444 billion (previous year: EUR 1.254 billion). The Bank’s risk provisioning/evaluation came to EUR 891 million. Of this figure, EUR 563 million is accounted for subprime risks. Another EUR 202 million relate to the North Street investment. On February 25, HSH Nordbank brought a lawsuit against UBS as manager of this portfolio to Supreme Court in New York for breach of agreement and fraud.
As a result of this extensive risk provisioning, operating profit was down to EUR 553 million (previous year: EUR 945 million). Net income fell to EUR 250 million (previous year: EUR 460 million).
No IPO in 2008
Last Friday (March 7), the owners of HSH Nordbank decided to postpone the IPO that was planned for the fall of 2008. This is due to the situation throughout the market generally having changed for the worse and to the high valuation discounts on bank shares on international stock markets. The conditions for financial stocks can be expected to remain uncertain in 2008. Berger made it quite clear that, “Our goal of carrying an IPO remains unchanged.”
Sustainable and crisis-proof business model
HSH Nordbank granted approx. EUR 40 billion in new loans last year. It has thus consolidated its strong market position as the world’s no. 1 in ship finance and its leading positions in financing real estate, aircraft and renewable energies. This shows clearly that HSH Nordbank is a financial institution aimed at profitable growth, commented Berger.
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