Helaba Profit Falls on WestLB Costs and Shipping Writedowns

Helaba, the government-controlled lender based in the German state of Hesse, posted a 20 percent profit drop as it wrote down shipping loans and incurred costs to integrate staff from businesses acquired from WestLB AG.

Net income fell to 318 million euros ($416 million) last year, while expenses rose 19 percent to 1.2 billion euros, the Frankfurt-based bank said in an e-mailed statement today. Operating income rose 4 percent to a record 512 million euros.

“The integration of assets from WestLB increased staff and administration costs from July 2012 onwards,” Chief Financial Officer Detlef Hosemann said at a press conference in Frankfurt.

The lender wrote down shipping assets by 60 million euros, Hosemann said. Helaba, which unlike some rival Landesbanks was not bailed out by the German government, took over a corporate lending business with 415 employees and assets of 43 billion euros from WestLB last year. WestLB was wound down after incurring losses from the U.S. subprime mortgage crisis.

Helaba boosted its dividend to a record 11 percent of earnings from 8 percent. The lender, Germany’s third-largest Landesbank by assets, is owned by the states of Hesse and Thuringia and a group of savings banks that are in turn owned by the regions’ counties and municipalities.

The bank increased its core Tier 1 capital ratio, a measure of financial strength, to 11.6 percent from 10.3 percent at the end of 2011. Costs rose to 61.2 percent of income from 56.6 percent last year, compared with the 92.6 percent ratio posted last year by Deutsche Bank AG (DBK), the nation’s largest lender.

To contact the reporter on this story: Annette Weisbach in Frankfurt at aweisbach1@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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