HSH Nordbank writes €1.1bn of Q1 RE lending

Germany’s HSH Nordbank wrote €1.1 billion of new real estate financing business during Q1 2017, as it continued to bolster its core business ahead of a planned privatisation.

Germany’s HSH Nordbank wrote €1.1 billion of new real estate financing business during Q1 2017, as it continued to bolster its core business ahead of a planned privatisation.

The real estate segment of the bank generated earnings of €34 million, up from €27 million in the same quarter during 2017, and making a significant contribution to the bank’s earnings. Overall, HSH’s core bank made a €262 million pre-tax profit, compared with a €36 million loss in Q1 2016.

“This good result is in line with the bank’s internal planning and is based on an intensive drive for new business, reduced legacy portfolios and successful savings on the cost side,” HSH said in its quarterly update.

The bank said its commercial financing business in metropolitan regions across western Germany performed especially well, as did its business backing international institutional clients investing in Germany.

The total real estate loan portfolio was maintained at the previous year’s level of €12.5 billion.

HSH continues to reduce its legacy non-performing loan pile in its non-core bank as it prepares for privatisation. Under the conditions of European Union state aid approval, HSH must be privatised by the end of February 2018 or be unwound. It is currently owned by the German states of Hamburg and Schleswig-Holstein.

The volume of NPLs is 93 percent concentrated in the non-core bank and was reduced to €14.3 billion, down by €300 million during the quarter, largely through portfolio divestments. As a result, the non-performing exposure ratio in the group fell to 16.5 percent from 17.5 percent at the end of 2016.

“We have made a satisfactory start to the important year of 2017 with these solid quarterly results and positively completed the first phase of the privatisation process at the end of March. Now and in the coming months we must work with our owners to tackle the challenges that naturally accompany such a complex sale process,” said CEO Stefan Ermisch.

“We intend to further strengthen our good operating base. At the same time, we are very much aware that the change of ownership is taking place under tense circumstances – on the one hand, there is our established, forward-looking core bank; on the other, there is the non-core bank characterised by serious legacy assets with the complex guarantee provided by the majority shareholders. We are confident that a complete and viable privatisation solution will be reached and we will continue doing everything in our power to support the federal state owners in this regard,” Ermisch added.

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