The bank was saved from collapse in 2019.
(Photo: imago/Eckhard Stengel)
Hanover The Norddeutsche Landesbank (NordLB) significantly increased its profits last year. Profit before tax rose to 104 million euros, three times as much as in the previous year. At that time, the pre-tax result was just 29 million euros.
The bank attributed the increase in profits to more new business, among other things. Both interest and commission income increased. In the current year, too, NordLB is registering a “dynamic development in new business”.
While many large banks are already benefiting from the turnaround in interest rates, NordLB is suffering significantly from the rise in interest rates in one area. The so-called fair value result was clearly negative at minus 100 million euros. The main reason is valuation effects in connection with pension obligations.
CEO Jörg Frischholz was optimistic about 2023. “I’m confident that we can increase our earnings again and continue our course of cost discipline,” he said on Friday. NordLB particularly wants to expand lending for renewable energies. Frischholz has been at the top of NordLB since the beginning of 2022.
With the increase in profit, NordLB can free itself a little from the problems of the past. The Landesbank was once in trouble because of bad ship loans. After long and controversial debates, it was saved from extinction in 2019 with 3.6 billion euros. The state of Lower Saxony financed the majority of this, equity capital and guarantees amounting to 2.3 billion euros. The Savings Banks Finance Group contributed EUR 1.1 billion.
Savings banks blame NordLB
However, a dispute is now raging between these two groups of owners about the future of NordLB. The focus is currently on the question of whether NordLB can introduce a new bank control system that costs a lot of money. With bank management, institutes monitor their transactions and risks. From the point of view of those involved, a decision on this is closely linked to a decision on planning for the coming years.
The German savings banks, which have held a stake of around 24 percent in NordLB since the support, are critical of the expansion of business in 2022 and the growth plans for the coming years, as several people familiar with the topic told the Handelsblatt. They accuse NordLB of not adhering to the guidelines agreed at the end of 2019 and of taking too many risks in new business.
>> Read here: “It really hit the ground running” – owner dispute blocks NordLB
The state of Lower Saxony, the largest shareholder with 57.5 percent, and the bank itself reject the allegations. According to insiders, they in turn complain that the German savings banks would subsequently question agreements: for example, NordLB’s commitment to the expansion of renewable energies. From their point of view, the bank must grow and develop in order to be able to survive in the long term.
In the course of the rescue, it was also agreed that the balance sheet total should fall to 95 billion euros by 2024. At the end of 2022, however, it was still 109 billion euros.
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