German lender HSH Nordbank has released €81m ($95m) of loan loss provisions in the first half as it successfully restructured problem shipping loans.
The figure compares to provisions of €241m in the same period of 2017.
Releases of €157m came from the encouraging trend in shipping markets and successfully restructured loans in this segment, exerting a positive effect, it said.
In the shipping division of the core bank, new business of €300m matched last year's six-month total.
A one-off payment of €100m was made in the first quarter for the early termination of the state loan guarantee.
Risk-weighted-assets (RWAs) post-guarantee dropped to €24.8bn from €26.2bn.
The bank signed a €1bn privatisation deal with a consortium of funds led by Cerberus and JC Flowers in February.
Once this is closed in the fourth quarter, the non-core bank's portfolio of non-performing exposures will be sold to investors, leaving the group almost entirely free of legacy assets.
"At that time, the good asset quality, even by international standards, will be reflected in an NPE (non-performing exposure) ratio of about 2%," it said.
Restructuring nearing the end
“Following the signing at the end of February, privatisation is on the home straight and everyone involved is working hard towards its formal completion," said CEO Stefan Ermisch.
"We have established key conditions for this in the past few months and I’m convinced that we will be a successfully privatised bank in the fourth quarter.
"We continue to forge ahead with our realignment towards being an efficient commercial bank with a profitable, client-oriented approach."
HSH called the interim result "satisfactory".
"The operating performance, considerable cost savings and released loan loss provisions due to successfully restructured shipping loans almost entirely offset the expected heavy burdens associated with privatisation," it said.
Net interest income rose to €286m from €259m.
The net loss was €77m, compared to a profit of €158m in 2017.
The bank’s capital and liquidity ratios remain at a high level, it added.
Total assets were further reduced as planned, to €64.5bn, from €70.4bn at year-end.
Looking ahead, HSH said: "Disproportionately heavy privatisation and restructuring costs will be incurred in the second half of 2018, meaning that the bank still anticipates a full-year loss before taxes of about €100m.
"The outlook could change later in the year once the sale is closed and the switch to new ownership is completed."
