HVB Group with a pre-tax profit of over €1.9 billion in the first half of 2011; significant increase in consolidated profit to €1.3 billion

Profit before tax increases by 75.2% to €1,920 million compared with last year
Consolidated profit after tax is up by 83.3% to €1,320 million
All divisions record substantial profits
Cost-income ratio remains under 50%
Excellent capital base continues to improve, leverage ratio again low

Today, UniCredit Bank AG (also referred to as HypoVereinsbank) presents its figures for the first half of 2011. The complete Half-yearly Financial Report at 30 June 2011 will be published on the Investor Relations homepage at www.hvb.de/ir on Friday, 5 August 2011.

Performance in the first half of 2011

HVB Group's results

In a persistently challenging capital market environment, HVB Group achieved a very good profit before tax of €1,920 million in the first half of 2011, exceeding the total for the equivalent period last year by a large €824 million or 75.2%. The Bank generated a consolidated profit of €1,320 million after tax, which is 83.3% higher than the year-ago figure of €720 million.

This sharp rise in profits can be attributed notably to the strong performance of our commercial operations, with operating income increasing by 11.4% to €3,733 million. The increase in earnings was generated primarily in net trading income which, at €787 million, was 72.6% higher than the figure for the same period last year.

Net interest was up €90 million, or 4.4%, on the first half of 2010, while dividends (up €27 million or 36.5%) and net fees and commissions (up €9 million or 1.3%) also performed well.

Net other expenses/income declined by €75 million, to €42 million, in the year under review compared with the year-ago figure of €117 million, primarily on account of the expenses for the bank levy imposed for the first time in Germany in 2011.

Operating costs rose a slight €32 million, or 1.8%, year-on-year to €1,783 million, which is due to the 6.4% rise, to €763 million, in other administrative expenses and includes the Austrian bank levy in 2011 for the first time. At the same time, payroll costs declined by 1.1% to €917 million, and amortisation, depreciation and impairment losses on intangible and tangible assets fell by 3.7% to €103 million.

Thanks to the pleasing earnings performance, the cost-income ratio improved to 47.8% in the first half of 2011 (2010: 52.3%). It is thus at an excellent level by both national and international standards. Net operating profit rose a significant 82.0% to €1,986 million.

Dr Theodor Weimer, Board Spokesman of HypoVereinsbank:

"With a pre-tax profit of over €1.9 billion in the first half of 2011, we again significantly exceeded the result for the same period last year. It's pleasing to note that all the divisions again contributed to this good performance with profits and higher earnings. In the process, we succeeded in maintaining the very satisfactory development of the first three months of 2011 in the second quarter of this year, in spite of deteriorating market conditions. Our well-balanced business model has proven itself to be robust, particularly in this difficult environment, while our growing profitability and consistent discipline on the cost side have paid off."

Performance of the divisions

The Corporate & Investment Banking division (CIB) improved its profit before tax by €691 million to €1,604 million due to a significant increase in the operating profit as well as much lower net write-downs of loans and provisions for guarantees and commitments.

The Family & SME (F&SME) division also increased its profit before tax on the back of higher earnings from its operating activities and lower net write-downs of loans and provisions for guarantees and commitments, recording a sharp rise to €90 million compared to the first half of 2010 (€5 million). The Private Banking division (PB) increased its profit before tax by 9.8% to €56 million due to a rise in its operating profit.

Capital and liquidity

HVB Group continues to have an excellent capital base. The core Tier 1 ratio in accordance with Basel II amounted to 17.1% at 30 June 2011 after 15.9% at year-end 2010, which is still an excellent level by both national and international standards. The shareholders’ equity shown in the balance sheet totalled €23.7 billion at 30 June 2011. With total assets down by 3.5% compared with year-end 2010 to €359.1 billion, the leverage ratio improved from 15.7 at the end of December 2010 to 15.1 at 30 June 2011.

HVB Group enjoyed an adequate liquidity base and a solid financing structure at all times during the first half of 2011. The funding risk remained low on account of the diversification in our products, markets and investor groups, meaning that adequate funding of our lending operations was ensured at all times. The Pfandbriefs of HVB Group continued to represent an important source of funding thanks to their very good credit rating and liquidity.

Dr Theodor Weimer:

"Our Bank has performed extremely well in the first half of 2011. However, we expect the market environment to become even more volatile and growth to slow in the second half of the year, even though Germany with its robust economy will not be as badly affected by this trend as others. For the year as a whole, we continue to assume that HVB Group will exceed last year's very good result."

Disclaimer: The present press release is an English translation of the original German, which takes precedence in all legal respects.