HSH Nordbank Posts ‘Nine-Digit’ Loan Loss

As expected, high loan loss provisions resulting from the difficult situation on the shipping markets as well as substantial expenditure for the guarantee provided by the federal states of Hamburg and Schleswig-Holstein led to a loss in the nine-digit range.

Due to the persistently tense situation in the shipping sector, HSH Nordbank does not expect freight and charter rates and ship prices to start recovering before 2015, and even then at a slower pace than expected.

In the fourth quarter of 2013 the Bank therefore adjusted its plan for loan loss provisions once again, considerably raising its provisions for its legacy assets in shipping.

The hedging effect of the guarantee, net allocation for credit risks amounted to EUR 1,626 million (previous year: EUR 1,223 million), marking a peak in net allocations to loan loss provisions in the Bank’s forecast.

Loan loss provision requirements are expected to decrease again for the first time in 2014. After the hedging effect of the guarantee the Bank posted EUR -882 million in loan loss provisions (previous year: EUR -656 million).

Last year the hedging effect of the guarantee decreased as a result of reversals of impairment losses on securities portfolios in the hedged portfolio of the net trading income and income from financial investments, which had been adjusted in previous periods.

After deducting the basic and additional premiums to be booked in loan loss provisions amounting to EUR -488 million, the hedging effect came to EUR 744 million (previous year: EUR 567 million).

HSH Nordbank plans to return to profit territory in 2014 as a whole and the start to the year looks promising.

(full report)

HSH Nordbank, April 10, 2014