Norddeutsche Landesbank Girozentrale reported first-half consolidated profit attributable to owners of €152 million, up from the restated €64 million a year ago.
Net interest income fell year over year to €496 million from €618 million, while net commission income rose over the period to €50 million from €28 million.
Disposal loss from financial assets that are not measured at fair value through profit or loss amounted to €10 million, compared to a profit of €30 million a year earlier.
Profit from hedge accounting was €14 million, compared to a loss of €12 million in the first half of 2018.
Risk provisioning amounted to €1 million, compared to €31 million in the previous year. Following the further shielding of the group's ship financing portfolio in 2018, risk provisioning is expected to be considerably lower in 2019 than in the previous year.
Administrative expenses totaled €487 million, down from the year-ago €522 million. For 2019, the group expects administrative expenses to be slightly lower than planned and the previous year's level.
Earnings before restructuring, reorganization and taxes came in at €251 million, up from the year-ago €68 million.
The group noted that a significantly lower total risk exposure amount is expected in 2019, compared to the previous year, primarily as a result of reductions in nonperforming loans and the associated risk reductions in the ship financing portfolio and the redimensioning of further portfolios.
NordLB's total assets amounted to €145.30 billion at June-end, down from €154.01 billion as at the end of 2018. The group said its total assets will also fall in 2019 as planned, in line with the total risk exposure amount, which will be slightly exceeded in the forecast for this year.
The German lender's common equity Tier 1 capital ratio stood at 6.63% at the end of June, unchanged from 2018-end.
In April, NordLB has reached agreement with the previous owners, the Savings Bank Financial Group and the banking supervisory authorities on a €3.6 billion recapitalization package for the state-run lender. The main features of the new business model is currently being examined by the European Commission.
The realignment also involves a substantial reduction in the size of the bank, NordLB said. The derived target for its staff numbers in 2024 is currently 2,800 to 3,000 full-time positions, which is roughly equal to a reduction of around 1,650 to 1,850 full-time positions.
NordLB said the NPL exposure in the ship financing portfolio was wound down from €7.3 billion at the beginning of 2019 to €4.3 billion, gross figure before fair value discount, at the end of June. The lender said it aims to reduce more than one-third of the remaining NPL ship financing exposure in the second half.
The bank aims to reduce the NPL ship financing portfolio as far as possible in the medium term, and decided to do this by means of an internal restructuring unit rather than transferring a further large NPL sub-portfolio of ship financing with an exposure of €3.8 billion to an external asset management company. Consequently, the period planned for the NPL reduction has been extended by up to two years to the end of 2021.
