Helaba reports earnings of EUR 512 million, exceeding previous year's result

Frankfurt am Main (ots) -

- Crossreference: company figures are available for download at:
http://www.presseportal.de/pm/55060?keygroup=dokument -

- Very stable development in customer business
- Distribution to capital providers increases to 11 per cent
- Successful start to S-Group business in North Rhine-Westphalia

With group earnings before taxes of EUR 512 million, Helaba once
again surpassed its previous best-ever result of the year before (EUR
492 million). Hans-Dieter Brenner, CEO of Helaba: "This means that we
have been on a stable and increasing earnings trajectory for years".
Operating business, which is reflected in particular in net interest
and net commission income, was stable and on an upward trend. Net
trading income increased significantly compared to the previous year.

Brenner is very satisfied with this result in a number of
respects:

- For Helaba, the 2012 financial year was an extremely significant
one from a strategic perspective and, from an operational
standpoint, a very successful one. With a growth in pre-tax
earnings of around 5 per cent, the bank has reached new
heights.
- On top of servicing all subordinated funds, profit-sharing
rights and the silent participation, the good annual result
allows us to increase the distribution to capital providers from
8 to almost 11 per cent. This also represents a new record high
in the history of our company. On a group-wide basis, last
year's result will strengthen core capital by EUR 230 million.
- Helaba has a solid capitalisation structure. Thanks to a cash
contribution by the four new owners in an amount of EUR 1
billion, EUR 112 million was added to equity and EUR 888 million
to capital reserves in the middle of 2012. Upon approval of the
annual financial statements, the Tier-1capital ratio at the end
of 2012 was 11.6 per cent and the total capital ratio was 16.3
per cent. On this basis, Helaba also fulfils the new equity
requirements according to Basel III and CRD IV.

Balance Sheet

With the inclusion of the S-Group Bank NRW on 1 July 2012, the
earnings, financial and asset situation of Helaba changed. For this
reason, the extent to which the figures can be compared to the 2011
financial year is limited. Helaba took over an asset portfolio from
the former WestLB in an amount of EUR 43 billion, which decreased to
around EUR 38 billion in the course of the second half of the year
due to redemptions and final maturities. As a result of this
transaction in particular, Helaba's consolidated balance sheet total
increased by 21.5 per cent to EUR 199 billion. Business volume grew
by 19.2 per cent to EUR 223 billion.

In lending activities with customers, EUR 15 billion of medium and
long-term new business was achieved (2011: EUR 14 billion). Loans and
advances to customers in the Helaba Group grew by EUR 7 billion, or 8
per cent, to approximately EUR 91 billion, also as a consequence of
taking over the S-Group Bank NRW in the middle of the year.

Of the medium and long-term new business volume, EUR 7 billion was
allocated to real estate finance. The German market accounted for
significantly more than half of this. This reflects the fact that
Helaba is one of the leading German real estate banks. The corporate
finance business contributed EUR 4 billion to new business. Corporate
lending remains one of the bank's core business segments and, in this
area, Helaba substantially expanded its good customer base in 2012.
EUR 3 billion is attributed to public sector and S- Group business.
Business with the public sector was characterised by a strong rise in
demand for long-term loans. Helaba remains committed to its role as a
public-sector bank and is now the central clearing bank for around 40
per cent of all German savings banks. Customer-related capital market
business achieved very good results. The bank arranged and placed
Schuldscheine (promissory notes) for domestic and foreign customers
in a volume of nearly EUR 4 billion and was able to maintain its
position as market leader in this segment. In asset management, the
strategic development of Helaba Invest towards being a Full Service
KAG led to further growth in assets under management amounting to EUR
112 billion. In cash management, Helaba became the second-largest
payments processor in the domestic market, having taken over the
S-Group Bank NRW. Parallel to a growth in its customer business of
around EUR 1 billion, Frankfurter Sparkasse managed to improve its
pre-tax earnings once again and continued the positive trend seen
since 2009.

Profit and Loss Statement

Dr Detlef Hosemann, Helaba's CFO, primarily attributes the
earnings position, having improved again compared to the previous
financial year, to the good earnings situation for operating business
and to the stabilisation of financial markets and the associated,
substantially higher net trading income.

Net interest income, slightly over EUR 1 billion, was EUR 78
million higher than last year. Profitable new business and lower
refinancing costs contributed to this.

Provisions for loans and advances were EUR -238 million (2011: EUR
-273 million). Net additions of EUR -241 million (2011: EUR -179
million) were made in relation to individual allowances and global
individual allowances.

At the end of the year there was a loan loss provision buffer in
the form of a portfolio allowance of EUR 304 million to cover loans
not exposed to an acute risk of default. After provision for losses
on loans and advances, the net interest income rose from EUR 794
million to EUR 907 million.

Net commission income improved slightly to EUR 263 million (2011:
EUR 254 million). Of this increase, approximately EUR 9 million can
be attributed to payment transactions and, therefore, principally to
an expansion of business of the S-Group Bank NRW. Commission income
from Helaba Invest's asset management activities also showed a
positive development.

Net trading income amounted to EUR 411 million (2011: EUR -44
million). This very good result mainly resulted from the growth in
interest-related business to EUR 375 million (2011: EUR -4 million)
thanks to the European sovereign debt crisis having calmed down in
the second half of the year.

The result from hedges/derivatives and derivatives not held for
trading was EUR -111 million, after having amounted to EUR 292
million in the year before. One major reason for this negative result
was the reversal effect of taking the liquidity components of foreign
currencies into account in the scope of valuing derivatives (cross
currency basis spread).

At EUR -13 million, the result from financial investments (incl.
result from companies accounted for using the equity method) showed a
marginal improvement compared to the previous year. Write-downs on
financial investments mainly relate to shares held by Frankfurter
Sparkasse in Landesbank Berlin.

The other operating result improved from EUR 209 million to EUR
236 million. This is predominantly attributable to proceeds from
disposal of a property that was used by the bank.

General administration costs rose by EUR 184 million to almost EUR
1.2 billion. The rise in personnel expenses relates in part to costs
for staff transferred into the S-Group Bank as well as to the salary
adjustments in 2012. An average of 6,075 members of staff were
employed over the course of the year in the group company, compared
with 5,888 in the previous year. There was a considerable increase in
material expenditure, from EUR 449 million in the year before to EUR
531 million. Apart from current and one-off expenses in the S- Group
Bank NRW, an increase in the costs for deposit guarantee facilities
is particularly noticeable in operational banking activities.

General administration costs compare with operating revenues in an
amount of EUR 1,931 million (2011: EUR 1,762 million), which equates
to a cost-income ratio of 61.2 per cent (2011: 56.6 %). Return on
equity before taxes dropped from 9.2 per cent to 8.4 per cent.

Group earnings after tax, at EUR 318 million, were EUR 79 million
lower than the previous year due to a significant increase in the
income tax charge. The increased tax burden, also relative to pre-
tax earnings, is primarily attributable to lower tax-exempt income
and to a special effect in the previous year resulting from the
capitalisation of deferred taxes. Full-year earnings after taxes,
which include results for the period of EUR 56 million without an
effect on income, increased by EUR 16 million to EUR 374 million.

Hosemann is satisfied with the level as well as the quality of the
result: "Overall earnings are very much sustainable. Structurally,
they are characterised by the result from customer business. Due to
the costs of integration, the takeover of WestLB's S-Group Bank is
not reflected very positively in these results as yet. However, the
structure of our income sources has been further strengthened by its
customer and S-Group orientation."

Takeover of S-Group NRW - an essential strategic step

With retroactive effect from 1 July 2012, Helaba took over an S-
Group portfolio from the former WestLB with a balance sheet total of
around EUR 43 billion, risk-weighted assets (RWA) in an amount of
almost EUR 9 billion as well as 415 members of staff. At the same
time, the bank was entrusted with assuming the function of central
clearing bank for the savings banks in North Rhine-Westphalia and
Brandenburg. Since then, it has been supporting approximately 40 per
cent of all German savings banks as an S-Group bank.

The transaction was linked to a cash capital increase and the
incorporation of new owners into the bank. Since then, a savings bank
share of around 88 per cent has characterised the ownership structure
of Helaba. Brenner: "This decision is an important step for the
further strategic development of Helaba. No other Landesbank can
boast similarly close ties to the savings bank organisation. Our
mutual challenge is now to continue breathing life into the S-Group
cooperation and, as a team, to achieve our ambitious goals. For S-
Group political reasons and economic reasons, our aim in the medium
term is to achieve a proportion of S-Group business of 60 to 80 per
cent."

Together with the savings banks, Helaba's aim is to provide a
comprehensive range of products and services on a cross-regional
basis in collaboration with savings banks. Aside from performing the
function as a central clearing bank for the savings banks, Helaba is
also active as a corporate bank in North Rhine-Westphalia.

Regulation with a sense of proportion

With an eye on the numerous regulatory measures, among others the
EU- wide implementation of Basel III, the European Banking Authority,
restructuring and winding up of banks and draft German legislation to
separate commercial and investment banks, Brenner said: "I have a lot
of sympathy for the opinion that any future bank bailouts should not
occur to the detriment of the taxpayer. The financial industry has to
accept this. The banking sector must make its contribution to
stabilising financial markets and to winning back trust in our
sector. A sensible and, above all, co-ordinated expansion of
regulatory requirements for banks is certainly an appropriate
instrument in order to achieve this. However, this is on condition
that those responsible keep a holistic view of all regulatory
measures and their effects in mind. In addition to that, care must be
taken to prevent individual countries, in the course of introducing
new regulatory measures, from pushing ahead with their own action. At
the end of the day this would have a distorting effect on
competition. Furthermore, it is also important to ensure that banking
groups and organisations of affiliated banks, such as the savings
banks and co-operative banks with their associated lead institutions,
are treated equally. This is required by the principle of the
supervisory authorities guaranteeing a level playing field.

The bank is reacting to growing costs due to increasing regulation
- capital and liquidity costs, the bank levy as well as higher
structural banking costs - as well as the accelerating pressure of
competition with a programme of process and resource optimisation
(Helaba PRO). Brenner: "Helaba has a stable and future-oriented
business model. At the same time, however, we do not live blissfully
on a desert island either. More than ever, we will have to fight to
remain a sought-after partner for our customers in the future. The
aim of this programme is to make comprehensive improvements to bank-
wide business processes and, as a result, we envisage noticeable
savings in administration costs for the company as a whole.

Outlook

From a business perspective, Helaba's CEO sees the emphasis in
2013 very much on renewal. Internally, it will be a year of
integration and investment. The expansion of the core region and the
tapping of further market potential in customer and S-Group business
represent huge opportunities which Helaba will take advantage of. The
integration of the S-Group Bank as well as process and cost
optimisation measures that have been initiated will, however, require
significant capital expenditure.

Brenner: "With a view to new business and the development of
earnings, the first quarter of 2013 began successfully. But it would
be presumptuous to extrapolate this trend onto the whole year. The
economic outlook is too uncertain for that and, more importantly, it
is impossible to calculate the precise effects of regulation on the
structural costs for banks. Should the current low interest rate
phase continue, we anticipate that earnings from operating business
will remain on the same level as previous years. Overall, we are thus
cautiously optimistic for 2013 as a whole.

Press Contact:
Press and Communication
MAIN TOWER · Neue Mainzer Straße 52-58
60311 Frankfurt am Main ·www.helaba.de
Tel.: +49 (0) 69 / 9132 ? 2192

Wolfgang Kuß
E-Mail: wolfgang.kuss@helaba.de

Ursula-Brita Krück
E-Mail: ursula-brita.krueck@helaba.de