Foreword by the management board
Ladies and gentlemen,
2016 was marked by further strengthening of our operational business, the final decision in the EU proceedings and preparations for the planned change of ownership in 2018. At the same time, we have systematically improved our internal processes. This includes readjusting our Risk department and combining market departments to form one potent unit. As a result, our Management Board has become leaner. Furthermore, we have enhanced the transparency and availability of our market and risk data – the keywords are: overall bank management system and ‘transparent bank’.
More than ever we see it as our task to adapt the organisation within our Bank continuously to meet the mounting challenges. This is necessary not only to survive in what is an intense competitive setting, but also to lay the foundations for a positive development of our Bank over the long term.
In 2016, we demonstrated once again that our Core Bank is full of vitality and that it enjoys an excellent position in the market. Our net income for the year impressively underscores this point: at €639 million, our Core Bank’s pre-tax profit – before consolidation effects – was more than three times the 2015 figure, while Group earnings before taxes came to €121 million. New business totalled €8.9 billion and matched the previous year’s strong level. The Corporate Clients business area stood out as it expanded its new business by around 20 per cent. We are among the top three providers of commercial real estate finance in Germany and rank among the top five in Europe when it comes to financing alternative energy sources, specifically wind farms and solar parks. HSH Nordbank has also made further progress in terms of capital and liquidity: our Common Equity Tier 1 (CET1 phased in) ratio totals a solid 14.1 per cent, meeting the market participants’ expectations and contributing to the stability of our rating. Another important point: in 2016, we made further progress in winding down legacy loans dating from 2009. All told, we have wound down ten billion euros (EAD) – five billion euros through the transfer to the institution under public law (AöR) of the federal states and an additional five billion euros as part of our day-to-day business. This wind-down will continue within the narrowly defined limits of the guarantee. We are very aware of how heavily these legacy assets in conjunction with the guarantee will still weigh on our Company going forward.
On termination of the EU proceedings, HSH Nordbank was able once again to make greater use of its operational strength in 2016. The combination of sector knowledge, good processes and excellent contacts with the players in growth industries has created good opportunities for the Bank, despite all the uncertainties that need to be considered. The new shareholders will boldly take advantage of these opportunities after 2018.