hsh nordbank: setting the focus€¦ · 27 february 2007 page 2 agenda 1. results for 2006 2....
TRANSCRIPT
HSH Nordbank:Leading the way
Preliminary Results 2006
Peter RieckDeputy CEO
London, 28 February 2007
page 128 February 2007
Jochen Friedrich (43)
responsible for:
Global Markets
Treasury
Securities S.A.
London Branch
New board member
page 227 February 2007
Agenda
1. Results for 2006
2. Segment reporting 2006
3. Outlook
4. Annex
page 328 February 2007
Overview of business development in 2006
Operating income € 2,172 mn
Loan loss provisions € 212 mn
Net income € 460 mn
Return on equity* 15.0 %
Cost/income ratio 42.3 %
+ 2.5%
-3%
+ 0.9 ppt
+ 1.1 ppt
+15%
Further increase
At previous year’s level
Improved result
2006 target achieved
Slight increase
* Pre-tax RoE
page 428 February 2007
Further increase in operating income
Net interest income€ mn
2005 2006
Net commission income€ mn
Net trading income€ mn
- 5%424
315
2005 2006
+ 35%141
136
2005 2006
+ 3%
1,608
1,535
page 528 February 2007
450465
2005 2006
Focus on costs
Operating expenses€ mn
919873
2005 2006
+ 5%
Other operating expenses€ mn
Personnel expenses€ mn 469
408
2005 2006
+ 15%
- 3%
page 628 February 2007
Loan loss provisions at previous year’s level
€ mn 2005 2006
220 212
-29
-75
200
309
-43
38
418
633
Loan loss provisions
Risk provisions in securities business
Risk provisions for equity holdings
Reserves (§ 340 f+g German GAAP)
Total
page 728 February 2007
Another increase in profits
Operating profit€ mn
Operating profit after risk provisions€ mn
Net income€ mn
2005 2006
+ 0.6%
+ 15%
945
613
2005 2006
+ 54%1,246
1,254
460400
2005 2006
page 828 February 2007
6.77.0
2005 2006
41.242.3
2005 2006
Further improvement in pre-tax ROE
Return on equityPre-tax RoE in %
Cost/income ratioin %
Tier 1 capital ratio(KWG) in %
15.0
14.1
2005 2006
+0.9 ppt +0.3 ppt
+1.1 ppt
page 927 February 2007
Agenda
1. Results for 2006
2. Segment reporting 2006
3. Outlook
4. Annex
page 1028 February 2007
17.520.1
2005 2006
Operating profit after risk provisions€ mn
Highlights: Shipping Clients
Strong growth in new business
Keen competition puts pressure on margins
Demonstrated structuring know-how and placing power in the offshore segment
Return on equity pre-tax RoE in %
248261
2005 2006
-5%-2.6 ppt
page 1128 February 2007
19.621.3
2005 2006
Highlights: Real Estate Clients
Operating profit after riskprovisions€ mn
232
260
2005 2006
Return on equityRoE before taxes in %
+ 12%
-1.7 ppt
Substantial increase in new business volume
Realised increasing number of complex financingstructures
Structured the financing of student residences in UK
page 1228 February 2007
Highlights: Corporate Clients
Operating profit after riskprovisions€ mn
261
399
2005 2006
24.4
32.5
2005 2006
Return on equityRoE before taxes in %
+ 53% +8.1 ppt
Strong demand for structured financing
Structured Corporate Finance an independent division sinceOctober 2006
Mezzanine capital for SMEs
page 1328 February 2007
234237
2005 2006
Highlights: Special Corporate and Institutional Clients
Operating profitafter risk provisions€ mn
22.1
24.5
2005 2006
Return on equityRoE before taxes in %
-2.4 ppt- 1%
Transport: joint venture structured for Cargolux
Leasing: securitization of leasing receivables for UTA
Savings banks/FI: debt management for municipal authorities
page 1428 February 2007
Highlights: Private Clients
Operating profitafter risk provisions€ mn
38
47
2005 2006
Return on equityRoE before taxes in %
+ 25% 20.3
25.5
2005 2006
+5.2%-P.
Structured investment products well received by the market
Innovative asset management successful
Luxembourg based PB grew nicely
page 1528 February 2007
457296
2005 2006
Highlights: Financial Markets
Operating profit after risk provisions€ mn
Return on equity RoE before taxes in %
26.9
16.5
2005 2006
- 35%-10.4 ppt
Increased focus on sale of innovative products
First benchmark 2 bn USD 13mth FRN issued in USA after loss of state gtees (extendible note)
First public sector Jumbo Pfandbrief (covered bond) issued
1.75 bn EUR LT2 successfully placed in Europe
page 1628 February 2007
Agenda
1. Results for 2006
2. Segment reporting 2006
3. Outlook
4. Annex
page 1728 February 2007
HSH Nordbank has clear goals
Leading commercial bank in Northern Europe with strongroots in the region
International capital markets expert and risk manager with first-class product and structuring competence
International sector specialistwith leading position in transport and real estate
page 1828 February 2007
Avg. 17.9 commercial banksAvg. 11.8 LandesbanksAvg. 12.6 commercial banksΑvg. 9.1 Landesbanks
Landesbanks: business models have stabilized,…but ROE gap has widened
Operating RoE* in %
12,8
16,117,2
18,6191919,2
21,222,222,4
24,225,3
10,410,610,710,810,8
13,4
8,88,8
4,4
8,89,29,4
18,622,222,423,3
27,9
6,57,57,67,78,3
10,711,912,112,4
0,1-0,1
ING BankSan PaoloNordeaBarclaysDeutsche BankSEBBNP ParibasDZ BankBanca IntesaIKBHSH NordbankLBLBLBDresdner BankHVBCommerzbankRabobankLBLB
San PaoloSEBNordeaBarclaysBNP ParibasLBBanca IntesaHSH NordbankING BankLBDeutsche BankLBIKBCommerzbankLBHVBRabobankLBDZ BankDresdner Bank
*Definition for purposes of comparability operating RoE = (total income – administrative expenses – risk provisions)/balance sheet equity, *100. Source: McKinsey
20052000
∆6.1∆3.5
page 1928 February 2007
Business models geared to the future
HSH Nordbank
Nationalbanks
Regional banks
Sectorspecialist
Global universal banks
MNCs
Large inter-national com-panies
Companies focus-ing on domesticbusiness
SMEs
ShippingTransportationInfrastructure/LogisticsReal estate
Regional Bank
page 2028 February 2007
Well positioned along the global trade flows
Branches and officesof HSH Nordbank
60 % of ourearningsgenerated fromcross-borderbusiness of ourclients
page 2128 February 2007
Goals 2007
Become eligible for stock market listing
Expand position as one of the leading Northern European banks
Convert silent participations amounting to € 750 mn
Strengthen capital base
Achieve RoE before taxes of 15.5 percent
page 2228 February 2007
Upcoming dates
Our next analyst and investor meeting to present the2007 interim results will take place on:
Friday, 24 August 2007at 12.00 a.m.
in London
Bild
page 2328 February 2007
HSH Nordbank blue race
Tackling challenges.Relishing competition.
Northern route- Start: Newport (R.I.) / New York- 3,500 miles across the Atlantic- Finish: Hamburg
First start 16 June 2007
page 2427 February 2007
Agenda
1. Results for 2006
2. Segment reporting 2006
3. Outlook
4. Annex
page 2527 February 2007
Overview of business segments
Overview
2006Operating Profit(% of Total)¹FY 2005
Undisputed No. 1 financier worldwide
17%
Leading domestic market positionExpanding international business
17%
Leading franchise in northern GermanyExpanding presence in the Nordic region
27%
Tailored services to high net worth individuals / professional clients
3%
Active risk managerInnovative capital markets partner
20%
Note: HSH Nordbank’s pre-tax RoE on group level does not correspond to the weighted average of the respective segment RoE, since the “Other/Reconciliation” segment is not included1) Excluding “Other/Reconciliation” segment.
Avg. RWA (% of Total)¹FY 2005
20% 19% 18% 3%
Transport financeLeasing company financingSavings banks / public sector / financial institutions
16%
15% 26%
Shipping Real Estate Corporates Private Clients Financial Markets
Special Cor-porate / Insti-
tutional Clients
18% 16% 18% 16% 3% 31%
21% 17% 17% 3%15% 27%
page 2628 February 2007
Shipping Clients
(€ m) 2005 2006
Net interest income 289.5
97.5
0.0
387.0
58.4
65.1
263.5
2.1
296.4
261.4
+
+ Net trading income 0.0
= Total income 393.9
-
-
=
-
Personnel expenses 65.1
Other operating expenses 58.2
Risk provisions/ evaluations 22,4
Net commission income 97.5
=
270.6
248.2
Operating profit before risk provisions
Operating profit after risk provisions
New business volume up 37% to 10 bn Euro in spite of strong competition
Net interest income reached all-time high in light of continuing margin pressure
Net commission income at par with previous year´s good level
Lead-managed our biggest transaction so far for an offshore client – SiemOffshore Inc.
Total income rose to 394 mn up from 387
Risk provisions markedly up, but still at a comparatively low level
(€ m) 2005 2006
Ø risk positions 20,703
1,303
20.1
31.9
Ø equity allocated
22,705
1,418
17.5RoE
CostIncome ratio (%)
31.3
577167 6771 6566
46
Operating profit after risk provisions€ m
Q1 Q2 Q3 Q4
2005
Q1 Q2
2006
Q3 Q4
page 2728 February 2007
Real Estate Clients
(€ m) 2005 2006
Net interest income 336.9
133.4
0.0
470.3
68.4
92.0
309.9
77.7
339.5
232.2
+
+ Net trading income 0.0
= Total income 477.9
-
-
=
-
Personnel expenses 87,3
Other operating expenses 93.2
Risk provisions/ evaluations 37.7
Net commission income 138.4
=
297.4
259.7
Operating profit before risk provisions
Operating profit after risk provisions
Total income rose 2% to 478 m Euro, due to strong new business of 16.1 bn Euro
In spite of strong competition we managed to stabilize margins in new business
International markets contributed more than 66 percent to new business
Risk provisions/ evaluations fell to 38 mn due to profits from the sale of an equity holding (86 mn Euro)
Operating profit after risk up to 260 mn
As sole arranger, underwriter and facility agent, we provided a credit line of GBP 300 million to finance student residences in major British cities
(€ m) 2005 2006
Ø risk positions 17,326
1,091
21.3
34.1
Ø equity allocated
21,256
1,328
19.6RoE
Cost income ratio (%) 37.8
25
6256 5135
67
116
80
Operating profit after risk provisions€ m
Q1 Q2 Q3 Q4
2005
Q1 Q2
2006
Q3 Q4
page 2828 February 2007
Corporate Clients / Structured Finance
(€ m) 2005 2006
Net interest income 356.8
127.2
0.0
484.0
68.4
88.3
327.3
66.0
364.6
261.3
+
+ Net trading income 0.0
= Total income 545.3
-
-
=
-
Personnel expenses 82.6
Other operating expenses 84.5
Risk provisions/ evaluations -20.7
Net commission income 180.7
=
378.2
398.9
Operating profit before risk provisions
Operating profit after risk provisions
Interest income benefited from strong credit demand and rose to 365 mn Euro
Net commission income improved 42% to 181 mn Euro based on a large number of arranger mandates
Positive result of risk provisions/ evaluation (20.7m) due to stable economic environment and the sale of an equity holding
Operating profit after risk strongly up to 399 mn from 261 mn Euro
Together with partner banks, we provided our small and medium-sized corporate clients with profit participation capital within the framework of the SmartMezzanine programme
(€ m) 2005 2006
Ø risk positions 17,036
1,072
24.4
32.4
Ø equity allocated
19,644
1,227
32.5RoE
Cost income ratio (%) 30.6
54
9469
93
47
165
91
47
Operating profit after risk provisions€ m
Q1 Q2 Q3 Q4
2005
Q1 Q2
2006
Q3 Q4
page 2928 February 2007
Special Corporate and Institutional Clients
(€ m) 2005 2006
Net interest income 246.9
140.3
0.0
387.2
54.9
81.9
250.4
13.4
265.2
237.0
+
+ Net trading income 0.0
= Total income 396,3
-
-
=
-
Personnel expenses 63.3
Other operating expenses 78.3
Risk provisions/ evaluations 21.0
Net commission income 131.1
=
254.7
233.7
Operating profit before risk provisions
Operating profit after risk provisions
68
4853 54
33
56
8376
Operating profit after risk provisions€ m
Q1 Q2 Q3 Q4
2005
Q1 Q2
2006
Segment comprises Transportation, Leasing and Savings Banks/FI business units
Operating profit after risk almost unchanged 234 mn Euro (237 mn)
Transportation realized good new business of 4.6 bn Euro (3.5 bn), mainly in the aircraft finance business
New business in Leasing up 24% to 3.6 bn Euro;
Savings Banks/FI established a new consulting product aimed at enabling municipalities to optimise interest payments on their debts
(€ m) 2005 2006
Ø risk positions 15,342
966
24.5
35.3
Ø equity allocated
16,937
1,058
22.1RoE
Cost income ratio (%) 35.7
Q3 Q4
page 3028 February 2007
Private Clients
(€ m) 2005 2006
Net interest income 64.0
30.3
0.0
94.3
23.8
30.9
39.6
1.8
68.4
37.8
+
+ Net trading income 0.0
= Total income 105.7
-
-
=
-
Personnel expenses 24.5
Other operating expenses 28.8
Risk provisions/ evaluations 5.1
Net commission income 37.3
=
52.4
47.3
Operating profit before risk provisions
Operating profit after risk provisions
Operating profit after risk up 25% to 47 mn Euro
Net interest income rose to 68 mn Euro (64 mn Euro) due to higher deposits
Net commission income up 23% to 37 mn Euro - succesful placement of structured products as well as the overall favourable market development
Rising profit contribution from international business via HSH Nordbank Private Banking Luxemburg
Risk provisions up 3.3 mn Euro, still at a low level
(€ m) 2005 2006
Ø risk positions 2.962
186
20.3
58.0
Ø equity allocated
2.972
186
25.5RoE
Cost income ratio (%) 50.4
9
15
7109
1313
9
Operating profit after risk provisions€ m
Q1 Q2 Q3 Q4
2005
Q1 Q2
2006
Q3 Q4
page 3128 February 2007
Financial Markets
(€ m) 2005 2006
Net interest income 476.3
-134.2
280.0
622.1
115.9
93.0
413.2
-43.7
360.9
456.9
+
+ Net trading income 286.4
= Total income 509.7
-
-
=
-
Personnel expenses 130.2
Other operating expenses 98.3
Risk provisions/ evaluations -15.2
Net commission income -137.6
=
281.2
296.4
Operating profit before risk provisions
Operating profit after risk provisions
Net interest income down 24% to 361 mn Euro;
Last year´s result boosted by one-time valuation gains on funding raised prior to loss of state guarantees
Net commission income up 3%; newly developed hedging products
Net trading income up 2% to 286 mn Euro
Successfully launched Carrera Capital Finance Ltd (Structured Investment Vehicle (SIV)
(€ m) 2005 2006
Ø risk positions 27.000
1.670
26.9
33.6
Ø equity allocated
28.712
1.793
16.5RoE
Cost income ratio (%) 44.8
86136
95
42
198
10078
18
Operating profit after risk provisions€ m
Q1 Q2 Q3 Q4
2005
Q1 Q2
2006
Q3 Q4
page 3228 February 2007
Günter FemersHead of Debt-IR and Intl. Funding
[email protected]: +49 431 900 14601Fax:+49 431 900 614601
Catherine PassasDebt Investor Relations
[email protected]: +49 431 900 10820 Fax:+49 431 900 610820