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Nord/LB expects more loan loss provisions as Q1 profit falls 83% YOY

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Nord/LB expects more loan loss provisions as Q1 profit falls 83% YOY

Norddeutsche Landesbank Girozentrale reported first-quarter consolidated profit after tax of €43 million under IFRS 9, down from an adjusted €248 million under IAS 39 in the same period in 2017.

Net interest income declined year over year to €352 million from €406 million, while net commission income fell over the same period to €18 million from €43 million. Profit from financial instruments at fair value decreased to €3 million in the first quarter from €114 million a year earlier.

The German lender posted a risk result of €25 million, compared to minus €101 million in the first quarter of 2017, mainly due to reversals of loan loss provisions. The bank said it expects to set aside new loan loss provisions as 2018 progresses due to the ongoing crisis in the shipping sector.

Nord/LB's shipping finance portfolio amounted to €11.6 billion at the end of March, compared to €12.1 billion at 2017-end, with €7.9 billion accounting for nonperforming loans. The lender has already disclosed its intention to bring its NPL portfolio down to less than €5 billion by no later than the end of 2019.

At the end of March, the bank's common equity Tier 1 ratio stood at 12.8%, compared to 12.4% at the end of 2017. The total regulatory capital ratio was 18.9% as of March 31, up from 18.1% at Dec. 31, 2017.

"Further strengthening our capital ratios continues to be the top priority," said Thomas Bürkle, chairman of Nord/LB's management board. "We will present a viable plan for this in conjunction with our owners in the course of this year."

Bürkle added the bank continues to aim for a full-year 2018 profit despite "current framework conditions."