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BayernLB FY'19 profit falls as restructuring costs bite

Bayerische Landesbank AöR's full-year 2019 profit fell 43.7% year over year, driven in part by restructuring expenses.

The German lender booked a consolidated profit of €463 million for the year, down from €822 million in 2018.

Pretax profit came in at €653 million, which the bank said is in the upper end of forecasts. For 2018, pretax profit reached €869 million.

Net interest income reached €1.73 billion, compared to €1.74 billion a year earlier. Net commission income rose on a yearly basis to €287 million from €270 million.

The bank booked reversals from risk provisions in the credit business of €251 million, an increase from the year-ago €135 million. The result included a significant gain resulting from a settlement to end all legal disputes with Austrian bad bank Heta Asset Resolution AG.

BayernLB booked losses on fair value measurement of €2 million, compared to year-ago gains of €151 million. Losses on hedge accounting narrowed year over year to €19 million from €50 million, while gains on financial investments amounted to €40 million, compared to the year-ago €10 million.

Restructuring losses came in at €217 million, compared to gains of €2 million a year earlier. CEO Stephan Winkelmeier said the new structure of the bank's corporates and capital markets business will allow it to leverage growth in certain sectors and offer tailored products amid tougher competition.

Unit Deutsche Kreditbank AG and the commercial real estate business, meanwhile, will play an even larger role in the group in the future, Winkelmeier added.

The bank's fully loaded common equity Tier 1 ratio was 15.6% at the end of 2019, compared to 14.7% at 2018-end.

BayernLB had planned to pay dividends to its owners, the state of Bavaria and the Bavarian savings banks, but following calls from the ECB to freeze dividend payments until at least Oct. 1, it postponed a decision on the appropriation of its profits "for the time being."