HSH Nordbank AG, which is preparing for privatization, posted a year-over-year decline in its full-year 2016 profit despite a strong increase in profits by its core bank.
Full-year 2016 group net result attributable to shareholders fell to €67 million from €99 million in 2015. Pretax profit amounted to €121 million in 2016, compared to the year-ago €450 million. At the core bank, pretax profit more than tripled year over year to €639 million from €204 million.
"The core bank has growth potential. However, the legacy assets dating from before 2009 and the complex guarantee from that year remain a considerable burden on the path towards the change of ownership in 2018," CEO Stefan Ermisch said, adding that the firm's privatization faces a "difficult road" ahead.
Net interest income fell on a yearly basis to €607 million from €1.03 billion. Net trading income ticked up to €88 million from €84 million a year earlier, while net income from financial investments also increased, to €140 million from €54 million in 2015.
Loan-loss provisions in the lending business, including hedging effect of the credit derivative and second-loss guarantee, amounted to €631 million, compared to reversals of €354 million a year earlier. The company said that given the ongoing challenging environment in the shipping market, further special loan-loss provisions amounting to €2 billion were made for its legacy shipping assets alone.
Result from restructuring and privatization amounted to €110 million, up from €31 million in 2015. Expenditure for public sector guarantees declined, to €214 million from €473 million a year earlier.
Total assets fell to €84.4 billion from €97.0 billion in 2015. The bank's phased-in common equity Tier 1 capital ratio stood at 14.1% at the end of 2016, compared to 12.3% at 2015-end. Its leverage ratio was 7% at 2016-end, compared to 6.3% at the end of 2015.