Low interest rates hit helaba – landesbank with a drop in profits

Low interest rates hit Helaba - Landesbank with a drop in profits

The low interest rate is squeezing the profits of landesbank hessen-thuringen (helaba). After the first six months of 2017, both pre-tax profit and net income were below the comparatively strong figures of the same period last year, germany’s fourth-largest landesbank announced in frankfurt.

Before taxes, helaba posted a result of eur 238 million in the first half of the year (previous year: eur 279 million); after taxes, the books showed a profit of eur 150 million (previous year: eur 184 million).

The interest surplus shrank by a good eleven percent. On the other hand, a significant improvement in net trading income and lower risk provisioning had a positive effect.

"In view of the continuing challenges facing our industry, we are satisfied with the results for the first half of 2017. We are particularly pleased with the development of new business," says chief executive officer herbert hans gruntker. "Due to the ongoing zero and negative interest rate scenario, we are sticking to our earnings forecast, according to which we expect a noticeable drop in earnings in 2017."

However, the management board is a tad more confident than at the beginning of the year. Chief financial officer detlef hosemann said in a telephone conference: "it is becoming apparent that the decline will perhaps be somewhat weaker than we had originally expected."Hosemann did not want to name an exact target, but it is conceivable that "a similar ratio to the half-yearly comparison will also be seen in the annual comparison.

In the full year 2016, the institute, which serves savings banks in hesse, thuringia, north rhine-westphalia and brandenburg, earned 549 million euros before taxes.