Christopher Brody Chief Investment Officer
Marc Ziegner Chief Financial Officer
Ulrik Lackschewitz Chief Risk Officer and Deputy CEO
Ian Banwell Chief Executive Officer
Recurring profitability
“A record pre-tax profit, a cost-income ratio of 39% and a CET1 ratio of 19.5% characterize us as a very efficient and conservative bank.”
Ian Banwell, CEO
Ladies and Gentlemen, Hamburg Commercial Bank can look back on a very successful year in which we continued our success story and demonstrated a high degree of continuity in a challenging macroeconomic and geopolitical environment. The bank showed that it is capable of operating profitably on a regular basis and under difficult market conditions. Key elements for this success were our further increase in total income, very solid new business and the consistent diversification of our portfolio, which will continue in the future through the establishment of our new Aviation Finance division. Our diversified and stable funding structure combined with our high level of efficiency are important elements of our success. A focus on strict cost control remains particularly important to the Management Board in an environment characterized by persistent inflation.
In 2023, Hamburg Commercial Bank generated consolidated profit before taxes of €427 million, an 18 percent increase on the previous year’s good result. Profit after taxes amounted to €271 million. In the previous year, significant positive tax effects had contributed to the after-tax result of €425 million being higher than the pre-tax result. The further improvement in the cost-income ratio to an outstanding level of 39 percent (2022: 44 percent) clearly demonstrates the bank’s continuous progress in terms of both income and cost efficiency. Our CIR continued to improve despite ongoing investments in our go-to-cloud strategy.
Total income also increased in 2023 and amounted to €762 million, which corresponds to an increase of 13 percent. One particularly pleasing development was that the bank succeeded in widening its net interest margin again, by 36 basis points to 204 basis points. Despite inflation, administrative expenses remained stable at €332 million – proof of our consistent cost control.
The bank’s capital position remains very robust, reflecting a fortress balance sheet. The CET1 ratio was 19.5 percent at the end of 2023, slightly below the previous year’s level (20.5 percent) but well above the regulatory requirements. The group’s total assets decreased slightly year-on-year to €31.5 billion in 2023 (2022: €31.8 billion). The slight decline is partly due to early repayments in our Shipping business, but is also an expression of our deliberately cautious business approach in these uncertain times.
“The decline in the real estate market anticipated by the bank took place in 2023. It was fortunate that the bank had significantly reduced its real estate portfolio beforehand.”
Ulrik Lackschewitz, CRO
“Particularly in an environment characterized by inflation, it was important to consistently control costs and continue to work on increasing efficiency – and we have success-fully done both”
Marc Ziegner, CFO
Hamburg Commercial Bank focuses on central business areas in which it has extensive expertise, specifically: Commercial Real Estate, Shipping, Corporate Business and Project Finance. In addition, the Aviation Finance division, which was established in 2023, has contributed to the further diversification of our portfolio. The aviation business is managed by our branch in London, which we opened in May 2023 and which has strengthened our international positioning.
Overall, the bank concluded a gross new business volume of €6.2 billion in 2023 (2022: €5.6 billion). Of this, €1.6 billion was attributable to the Commercial Real Estate segment. The volume of new business in Shipping amounted to €1.3 billion, the bank generated gross new business of €2.3 billion in the national and international Corporates business and €1 billion in the Project Finance segment.
After the portfolio quality had steadily improved in recent years as measured in terms of potential loan defaults, the market decline anticipated by the bank took place in 2023, including in commercial real estate financing. After the boom years, participants in the real estate sector suffered in 2023 from the increase in inflation following Russia’s invasion of Ukraine and the rapid and considerable rise in key interest rates. In view of the significant downturn in the market, it was fortunate that the bank had actively reduced its real estate portfolio at an early stage in the previous years.