HSH Nordbank maintained the positive trend of the first quarter, reporting a solid profit as well as strong capital ratios at the half-year mark. This encouraging performance is based to a major extent on rising income from new business with clients on steady margins, decreasing administrative expenses as well as the expected considerably lower loan loss provisioning than in the previous year. Against the backdrop of this good performance in its operating business, HSH Nordbank reaffirmed its forecast and still projects a profit before and after taxes for the year as a whole.
The result for the first half of 2014 also benefited considerably from the effect of the capital protection clause, which after heavy charges due to guarantee premiums in the preceding years resulted, as expected, in the partial reversal of guarantee premiums that was also recognised in the income statement for the half-year period. Net income before taxes came to 432 million (previous year: 137 million). This figure includes payments of -259 million for the guarantee provided by the federal states of Hamburg and Schleswig-Holstein (pre-year period: -143 million). After taking -131 million in income tax (pre-year period: -7 million) into account there remains Group net income of 301 million (pre-year period: 130 million).
The Core Bank continued to show its profitability by posting net income before taxes of 185 million (previous year: 131 million). The Core Bank's earnings were reduced by a non-recurring factor in the first quarter due to a conversion effect pertaining to hybrid financial instruments, which will be fully offset again by 2017. Whereas this factor still came to a negative amount of -102 million in the first quarter of 2014, it was already down to -96 million by the end of the June 2014.The Core Bank has thus been profitable in operating terms for two years, with this series of positive results interrupted only in the fourth quarter of 2013 due to a deliberately large amount of loan loss provisioning to cover restructuring exposures in the shipping business.