HSH Nordbank AG returned to profit in the first nine months as the world’s biggest shipping bank cut net provisions for loans and saw a 43 percent increase in new lending in areas such as real estate and energy.
Net income was 333 million euros ($414 million), compared with a loss of 66 million euros a year-earlier, the Hamburg-based company said in a statement today. Expenses for net loan-loss provisions fell to 256 million euros from 815 million euros.
HSH, along with competing shipping lenders Commerzbank AG (CBK) and Norddeutsche Landesbank, passed the stress test by the European Central Bank in October as a 10 billion-euro guarantee by its state owners Hamburg and Schleswig-Holstein bolstered its capital ratio. HSH plans to cut about 500, or a fifth of its jobs by the end of 2017.
The company at the end of September had a capital adequacy ratio of 12.5 percent under the full implementation of Basel III regulatory rules. This includes a buffer of 2.5 percentage points resulting from the state guarantee, it said.
The European Union approved the state guarantee on a preliminary basis in June last year. A final EU decision, which the bank sees in the first half of 2015, is conditional on the company demonstrating that it has viable business model.
New lending climbed 43 percent to 7 billion euros in the first nine months, as demand in its real estate and energy business overcompensated for slow growth in the corporate loan and a decline in capital market products segments.
HSH’s shipping loan book increased to 21 billion euros from 20 billion euros at the end of June mainly as the dollar, the maritime industry’s main currency, strengthened in the third quarter, the bank said. The volume of non-performing loans also rose to 9.2 billion euros from 9 billion euros at the end of 2013, it said.
HSH, bailed out by its state owners in 2009, forecasts a full-year profit, the first since 2010, helped by relief in bad loans. Last year, HSH posted a loss of 814 million euros, its biggest since 2008, as it set aside more funds to cover risky debts.