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BayernLB H1 pretax profit falls 30.3% YOY

Bayerische Landesbank AöR reported a 30.3% year-over-year fall in first-half pretax profit, but CEO Stephan Winkelmeier said the bank's results for the period are in line with expectations amid a "still hugely challenging" market environment.

Pretax profit for the half was €315 million, down from €452 million in the same period in 2018, with the German lender attributing the result to activities at unit Deutsche Kreditbank AG and the real estate business. It also noted that the year-ago results were boosted by nonrecurring items.

First-half consolidated net profit was €294 million, down from €342 million a year ago.

Net interest income fell year over year to €870 million from €879 million, while net commission income climbed to €141 million from €132 million.

Losses on fair value measurement totaled €23 million in the half, compared to gains of €35 million a year ago. Losses on hedge accounting narrowed year over year to €7 million from €44 million.

BayernLB also booked risk provisions in the credit business of €10 million, compared to reversals of €103 million a year ago.

Expenses for the bank levy and deposit guarantee scheme widened to €119 million in the half from the year-ago €90 million.

Return on equity was 6.5% in the half, down from 10.0% a year earlier.

As of June 30, the group's fully loaded common equity Tier 1 ratio was 14.1%, down from 15.2% at the end of 2018.

BayernLB still expects to post a 2019 pretax profit in the mid-triple-digit-million-euro range. The bank said it will focus more closely on systematic cost management in view of the persistent negative interest rate environment and economic slowdown.