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Berlin, February 23, 2010
Landesbank Berlin Holding AG strengthened its position in relation to its competitors in the challenging financial year 2009. The Bank made progress in key performance ratios. According to the provisional figures published today, the Group concluded the financial year with a clearly positive result. Operating earnings before taxes reached €339 million (2008: €9 million), thus returning to the level reached before the financial crisis. Provisional earnings after taxes came to €272 million. The Board of Management will propose paying a dividend of €140 million. The CEO of Landesbank Berlin, Dr. Johannes Evers, said: “For the financial sector, 2009 was the third year of the financial crisis. LBB held its ground in this difficult market environment. We achieved particular success with our local customers and in our cooperation with the savings banks.” But the financial crisis has still not been overcome. LBB will therefore continue to be extremely prudent and cautious in its dealings. In the light of this, the positive earnings will be used to strengthen the capital base, and resumption of payment of a dividend is regarded as appropriate. In 2009, LBB also benefited from the combination of its success in retail banking, a conservative risk policy and stringent control of costs. The Group’s business model has again proved to be balanced, viable and profitable. Fluctuations in individual segments caused by the crisis were offset. Reversals of impairment losses also contributed to the positive result. Evers emphasised the Bank’s retail business, which has been systematically strengthened in recent years. “Our business base is healthy, sustainable and capable of expansion.” With the aim of focusing intensively on its customers, the Bank initiated key measures in 2009. It acquired almost 27,000 new customers (in net terms) in the highly competitive Berlin retail banking market. For 2010, Evers announced further improvements in customer support: “Customers’ demands are changing and we are responding to this – in our advice, products and also structures. We have already taken important measures to deal with this strategic challenge in 2009.” There was encouraging development in Regional Corporate Banking in the year under review. Despite intensive competition and pressure on margins and diligent financial examination of each individual loan, the Bank consolidated its position in the region with some 1,400 new customers (in net terms). Evers expects that 2010 will still be affected by the economic downturn. In addition, further setbacks on the capital markets cannot be ruled out. Under its proven, cautious risk policy, the Bank will continue – as it did in 2009 – in its duty to provide the regional economy with credit offerings even under these challenging conditions. The Real Estate Financing division had to adjust to falling sales in the market in the first half of the year.However, in the second half of the year, new business benefited from revival in the market and the improvement in refinancing conditions. This led to a substantial increase in contracted new business while maintaining the same stringent risk standards. Even so, because of the weak first half-year, new business remained below the excellent level of the previous year. The Group has taken account of the continued economic uncertainty with a corresponding increase in the allowance for losses on loans and advances. In Capital Markets, the Bank has exploited the positive refinancing situation and expanded its client-oriented business further. The range of products and services was adapted to the changes in customer requirements. National cooperation with the savings banks is becoming increasingly important for the Group. Here, the Bank is concentrating its strengths on products and services that can be of benefit both to the cooperating savings banks and their customers. “All in all, we can be satisfied with the Group’s performance and the provisional results for 2009. The Bank has used its expertise, deployed its strengths in a targeted manner and worked successfully. This is true of all four divisions.” According to the provisional Group IFRS figures published today, the Bank concluded financial year 2009 as follows (figures for the previous year adjusted): Positive growth in net interest income in the Regional Corporate Banking, Real Estate Financing and Capital Markets segments. Even so, at €862 million, the total figure was still well below the previous year’s figure (2008: €1,247 million). However, this decrease was offset by the significant positive interest effects in income from financial instruments recognised at fair value through profit or loss. Allowances for losses on loans and advances increased significantly as a consequence of the economic downturn over the course of 2009. Following expenses of €346 million for new allowances and income of €161 million from reversals, net expenses totalled €185 million (2008: €63 million). Net commission income was down on the previous year at €262 million (2008: €302 million). Income in both securities and issue business as well as in lending business fell as a consequence of the financial and economic crisis and this could not be compensated even by sharply increased income in card business. Net gain from financial instruments recognised at fair value through profit or loss improved substantially at €478 million (previous year: €-344 million). Net income from financial instruments recognised at fair value through profit or loss corresponds largely to the opposing effects in net interest income. The adverse affects of impairment on net income from financial assets declined considerably and amounted to €-97 million (2008: €-308 million). Other operating income reached €41 million and was consequently down on the previous year's result (2008: €139 million). This item primarily consists of income from third-party transactions. The comparatively high figure for the previous year had included extraordinary effects. Administrative expenses, at €985 million, were slightly up on the previous year (2008: €940 million). Thus, the Group generated provisional operating earnings before taxes in financial year 2009 of €339 million (2008: €9 million). Provisional earnings after taxes amount to €272 million (2008: €44 million). Outlook for 2010 Uncertainties on the global financial markets and the currently unforeseeable consequences of the economic downturn make forecasting difficult. However, Landesbank Berlin is assuming that it will be able to continue its positive performance in operating business in 2010.
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