HSH Nordbank growing in the Global Transportation segment
- Shipping increases its earnings from EUR 239 million to EUR 334 million
- Transportation up 11 percent
Hamburg/Kiel, April 9, 2008 - In the Global Transportation Markets segment which comprises the Shipping and Transportation Business Units, HSH Nordbank increased its operating earnings to EUR 415 million (previous year: EUR 309 million).
Market leadership in ship finance defended
Thanks to the good state of the market and a very good positioning in global terms, business in the Shipping unit continued its growth. Earnings rose by nearly 40 percent to EUR 334 million (2006: EUR 239 million).
Despite the pressure on margins that was felt by all market participants, net interest income once again made the main contribution to earnings growth, rising by more than 12 percent to EUR 291 million (previous year: EUR 258 million).
The increased sale of services beyond the finance business led to higher commission income. As planned, the Business Unit expanded its activities of assistance with sophisticated transactions in a leading role and defended its position as a leading provider of ship finance. Net commission income rose by 12 percent to EUR 70 million (2006: EUR 62 million). The good net trading income of EUR 37 million (2006: EUR 20 million) resulted mainly from more sales of capital-market products.
This strong growth was achieved despite the fact that the Bank limited its exposure to the ship finance business in the fourth quarter. As a result of the credit crisis, outplacement of risks via the capital market was greatly limited. The start to the year 2008 was, however, very promising. By the end of the year loans of at least USD 12 billion are scheduled to be extended. Provided that the syndication markets return to normal, the total might increase up to USD 20 billion.
Transportation – broad-based growth
As a result of the Bank stepping up its exposure on the globally growing transportation markets, earnings in the Transportation unit increased from EUR 70 million in 2006 to roundabout EUR 81 million – a rise of nearly 15 percent. Numerous transactions in all subsegments (Aviation, Railroad, Intermodal and Infrastructure) contributed to this increase.
Client demand for individual and complex financing solutions increased further, benefiting both net interest income and net commission income: net interest income rose to EUR 103.4 million (2006: EUR 91.8 million). Net trading income almost doubled from EUR 8 million to EUR 15 million. Earnings increased to EUR 162 million in total (2006: EUR 133 million).
The aviation market was buoyant in 2007, both in the passenger and freight segments. This performance was driven by strong growth on the emerging markets in Asia and the Middle East, by increasing deregulation and the need for replacement spending felt by the operators of many aircraft fleets. The European railroad industry benefited, among other factors, from the need to replace obsolete rolling stock, especially in Eastern Europe and Russia. The market for transportation-related infrastructure also reported rising capital spending – the rail transportation, aviation and seaport segments showed a strong need for financing. This trend is likely to persist in the years ahead.
The Bank sees further opportunities in the area of public-private partnerships (PPPs) for infrastructure projects, against the backdrop of the limited financing options for public-sector budgets. The new business volume of the Transportation unit in 2008 is projected at EUR 8 billion. Peter Rieck, Deputy Chief Executive Officer of HSH Nordbank, sees the Asian region as the strongest growth driver for the Global Transportation Markets segment. “It is for this reason that we have stepped up our presence at our branches and subsidiaries in Singapore, Hong Kong, Shanghai and Mumbai. We followed the growth trends at an early stage.” Rieck expects the U.S. market to suffer a setback this year, but he thinks that this will be “more than offset” by the expected upbeat performance in the Asian business.”
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