HSH Nordbank reports positive result for Q1 2008

Operating profit in line with expectations Writedowns of EUR 189 million because of financial market crisis

Hamburg/Kiel, June 20, 2008 - As expected, HSH Nordbank reported a positive result for the first three months of 2008. The Bank generated a consolidated net profit of EUR 81 million (Q1 2007: EUR 389 million). The operating profit declined to EUR 39 million (Q1 2007: EUR 426 million).

The decline was attributable to several factors. In the first quarter of 2007 before the start of the financial market crisis an unusually good result had been achieved due to the release of loan loss provisions and the sale of equity investments. In the first three months of 2008, however, HSH Nordbank made writedowns on the credit investment portfolio in an amount of EUR 189 million in the context of its conservative accounting policy. Moreover, comprehensive provisions were established for all credit risks. As a result, loan loss provisions totalled EUR 49 million.

Net interest income before loan loss provisions was up by an impressive EUR 95 million or 29 percent on the previous year to EUR 425 million. After loan loss provisions, net interest income was down by just under 9 percent on the previous year to EUR 376 million. Adjusted for the reversal of impairments in the previous year, net interest income after loan loss provisions in Q1 2008 clearly exceeded the level of Q1 2007.

The increase in funding costs resulting from the financial market crisis has put lending margins under strong pressure. HSH Nordbank has been unable to fully isolate itself from this trend and has expanded its business selectively.

Net commission income amounted to EUR 48 million in the first quarter of 2008 (Q1 2007: EUR 83 million). It includes increased commission expenses for portfolio transactions.

Net trading income and net income from financial investments were clearly affected by the financial market crisis in Q1 2008. Net trading income amounted to EUR -179 million (Q1 2007: EUR 31 million), while net income from financial investments totalled EUR 1 million (Q1 2007: EUR 142 million). The declines are primarily attributable to writedowns on the credit investment portfolio in an amount of EUR 189 million. At approx. EUR 42 million, cross-selling between our client units reached a good level.

Administrative expenses rose by just under EUR 15 million or 6 percent to EUR 246 million in the first three months of 2008 (Q1 2007: EUR 231 million). This amount includes a EUR 6 million increase in personnel expenses and a EUR 7 million rise in operating expenses. The increased personnel expenses were due to higher pension expenses and a rise in the headcount by 77 to 4,833 as compared to year-end 2007. The increased operating expenses are primarily attributable to additional investments in the Bank’s IT infrastructure.

As at March 31, 2008 total assets stood at EUR 203.9 billion, thus remaining almost unchanged from year-end 2007 (EUR 204.9 billion). The return on equity after taxes climbed to 7.4 percent (full year 2007: 6.4 percent). The tier 1 capital ratio* improved to 6.4 percent as at March 31, 2007 (December 31, 2007: 6.2 percent).

HSH Nordbank AG is a strong commercial bank in Northern Europe with total assets of € 205 billion. Some 4,800 of the bank’s employees provide corporate and high net-worth clients around the globe with premium bank products and services. In its core region of Hamburg and Schleswig-Holstein, it is the market leader in the corporate customer segment. HSH Nordbank is an acknowledged partner of the capital markets and international sector specialist. Its main focus is on transportation and real estate. In fact, HSH Nordbank is the world’s largest provider of ship finance and covers the entire value chain in the transportation segment. In the area of real estate, HSH Nordbank is one of the strongest banks in Germany, acting as a provider of services relating to all aspects of real estate.

* incl. Market price items; since January 1, 2008, HSH Nordbank has calculated prices in accordance with the requirements of Basel II. Prices as of December 31, 2007 were reported on the basis of Basel I

HSH Nordbank AG is a strong commercial bank in Northern Europe with total assets of € 205 billion. Some 4,800 of the bank’s employees provide corporate and high net-worth clients around the globe with premium bank products and services. In its core region of Hamburg and Schleswig-Holstein, it is the market leader in the corporate customer segment. HSH Nordbank is an acknowledged partner of the capital markets and international sector specialist. Its main focus is on transportation and real estate. In fact, HSH Nordbank is the world’s largest provider of ship finance and covers the entire value chain in the transportation segment. In the area of real estate, HSH Nordbank is one of the strongest banks in Germany, acting as a provider of services relating to all aspects of real estate.