HVB Group: high level of net trading income ensures a good start to the 2012 financial year, profit before tax of around €1.1 billion in the first quarter, excellent capital base and stable funding continue

Positive results from all divisions
Sharp rise in net trading income to €807 million
Net write-downs of loans reduced to €90 million
Consolidated profit after tax totals €730 million
Core Tier 1 ratio at an excellent 15.7%

Today, UniCredit Bank AG (also referred to as HypoVereinsbank) presents its figures for the first quarter of 2012. To download the complete Interim Report at 31 March 2012, please visit HVB's Investor Relations website at www.hvb.de/ir .

Performance in the period from 1 January to 31 March 2012

Results of HVB Group

In a still challenging yet somewhat friendlier capital market environment in the first quarter of 2012 than in the fourth quarter of 2011, HVB Group generated a good profit before tax of €1.1 billion, thus exceeding the high total recorded last year by €126 million, or 12.7%.

The consolidated profit after tax rose by 7.2% year-on-year to €730 million.

This pleasing development can be attributed to an increase of €105 million, or 10.6%, in net operating profit to €1.1 billion.
Above all the sharp rise of € 57% in net trading income to €807 million and the decline of 29.1% in net write-downs of loans and provisions for guarantees and commitments to €90 million had an impact on the total.

Although operating income rose by 4.0% overall to €2.1 billion, its remaining compo¬nents failed to match the high level reported last year. The cost-in¬come ratio improved to 43.1% (2011: 44.2%) as a result of the good net trading income, with operating costs rising only a slight 1.4% to €900 million, putting it at a very good level by both national and inter¬national standards.

Dr. Theodor Weimer, Board Spokesman of HypoVereinsbank:

"In recording an impressive pre-tax profit of over a billion euros in the first quarter, HypoVereinsbank has laid a solid foundation for 2012. This good result is, however, driven by seasonally strong net trading income. Low interest rates and the generally challenging market environment are making business operations outside of trading activities with our customers anything but easy. This is reflected in the figures for the first quarter.”

Divisions

The Corporate & Investment Banking division (CIB) increased its profit before tax by €143 million to around €1 billion primarily as a result of the sharp rise in net trading income (up €273 million to €782 mil¬lion). The Family & SME (F&SME) and Private Banking (PB) divisions failed to match the good results recorded in 2011 on account of lower operating income notably due to reticence on the part of investors. Profit before tax fell in the Family & SME division, from €40 million in 2011 to €11 million, and in the Private Banking division from €31 million in 2011 to €18 million.

Capital and liquidity

HVB Group continues to have an excellent capital base. The core Tier 1 ratio in accordance with Basel II amounted to 15.7% after the first quarter of 2012, slightly higher than the 15.6% reported at year-end 2011. This re¬mains an excellent level by both national and international standards. The shareholders’ equity shown in the balance sheet rose by €0.8 billion to €24.1 billion compared with year-end 2011, notably on account of the consolidated profit of €0.7 billion generated in the first quarter of 2012. With total assets down by 0.9% compared with year-end 2011 to €382.2 billion, the leverage ratio (ratio of total as¬sets to shareholders’ equity shown in the balance sheet) amounted to 15.9x at 31 March 2012 after 16.5x at year-end 2011.

HVB Group again enjoyed an adequate liquidity base and a solid financing structure at all times during the first quarter of 2012. The funding risk re¬mained 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:

"The rest of the year will probably be shaped by opposing trends. The favourable economic expectations in Germany will be overshadowed by recessionary trends in several eurozone countries. I therefore assume that the earnings momentum in the first quarter will not continue through the rest of the year. With our excellent capital base and stable funding, we are generally very well set up even in a difficult market environment."