Annual Report 2019 Our Responsibility Our Annual Report 2019 Annual Report Values with impact. Values Helaba in Brief: One of the leading banks in the German financial capital of Frankfurt am Main, the Helaba Group employs approxi- mately 6,300 people and has total assets of € 207 bn. We offer a complete range of financial services from a single source for compa- nies, banks and institutional investors. We provide innovative, high-quality financial products and services for the Sparkassen. Helaba serves as the Sparkasse central bank for Hesse, Thuringia, North Rhine-Westphalia and Brandenburg, making it a strong part- ner for some 40 percent of Germany’s Sparkassen. We are the re- gional market leader in retail banking through our subsidiary Frank- furter Sparkasse and also have a presence in direct banking through 1822direkt. Landesbausparkasse Hessen-Thüringen, Helaba’s independent home loans and savings division, uses the Sparkassen as sales partners and is the market leader in both Hesse and Thuringia. WIBank, which comes under Helaba’s Public Development and Infrastructure Business unit, supports development pro- grammes for the State of Hesse. We also engage in many areas of public life by sponsoring ground-breaking cultural, educational, environmental, sports and social projects. 2 Helaba Preface “Helaba enjoys financial stability, a high level of customer satisfaction and a vigorous corporate culture, qualities that together create precisely the type of robust foun- dation we will need to master the challenges of 2020.” Herbert Hans Grüntker, Chairman of the Board of Managing Directors Ordinarily we would describe 2019 as a challenging year, but the challenges with which it presented us were all essentially familiar. It is already clear that 2020, unfortunately, will be challenging in a very different way. The new coronavirus has precipitated a slowdown the likes of which the world has not seen before, and the economic consequences will be signifi cant. It is impossible at the moment to assess the likely impact and there consequently exists no reliable basis on which to forecast perfor- mance in 2020. The purpose of the Annual Report is to review the year ended. The dominant infl uences on operations in 2019 were persistently low or negative interest rates, regulation and digitalisation, with issues surrounding sustainability also becoming very prominent. Helaba’s biggest internal organisational change in 25 years, the Scope effi ciency programme, was in full swing too as we approached the changeover to the new organisational structure on 16 March 2020. Helaba generated consolidated profi t before taxes in accordance with IFRS of € 533 m in fi nancial year 2019, a year-on-year increase of € 90 m. Group net profi t after taxes rose by € 202 m to € 480 m. Helaba Preface 2 The Board of Managing Directors 4 Corporate Strategy 6 Staff 8 Sustainability 10 Group Management Report Basic Information About the Group 16 Economic Report 20 Financial Position and Financial Performance 24 Risk Report 33 Non-Financial Statement 58 Outlook and Opportunities 65 Consolidated Financial Statements Consolidated Income Statement 72 Consolidated Statement of Comprehensive Income 73 Consolidated Statement of Financial Position 74 Consolidated Statement of Changes in Equity 76 Consolidated Cash Flow Statement 77 Notes 80 Responsibility Statement 269 Further Information and Auditors Country by Country Reporting Pursuant to Section 26a KWG 272 Independent Auditor’s Report 276 Independent Auditor’s Limited Assurance Report 281 Corporate Bodies Supervisory Board 284 Board of Public Owners 289 Advisory Board on Public Companies / Institutions, Municipalities and Sparkassen 290 Report of the Supervisory Board 292 Report of the Board of Public Owners 296 Helaba Addresses 300 Helaba had an eventful and ultimately satisfactory year in 2019. We demon­ strated our ability to deliver projects effectively while also making continued successful progress in operating business. Contents At a Glance Helaba ratings (As at: February 2020) Moody’s Fitch Standard & Poor’s Outlook Stable Outlook Stable Outlook Stable Long-term Long-term Issuer Long-term Issuer Credit Issuer Rating Aa3 Default Rating 1) A+ Rating 1) A Counterparty Risk Short-term Issuer Credit Assessment3) Aa3(cr) Public Sector Pfandbriefe AAA Rating 1), 2) A-1 Long-term Long-term Senior Deposit Rating3) Aa3 Mortgage Pfandbriefe AAA Unsecured 1), 3) A Public-Sector Short-term Issuer Default Long-term Senior Covered Bonds Aaa Rating 1), 2) F1+ Subordinated 1), 4) A– Short-term Derivative Counterparty Standalone Credit Profile 1) a Deposit Rating 2) P-1 Rating 1) AA–(dcr) Long-term Long-term Deposit Senior Unsecured3) Aa3 Rating 1), 3) AA– Long-term Junior Senior Unsecured 4) A2 Senior Preferred 1), 3) AA– Subordinate Rating 5) Baa2 Senior Unsecured 1), 4) A+ At a Glance At a Glance Subordinated debt 1), 5) A Baseline Credit Assessment baa2 Viability-Rating 1) a+ Ratings for Helaba liabilities that are covered by statutory guarantee6) Moody’s Fitch Ratings Standard & Poor’s Long-term ratings Aaa AAA AA– 1) Joint S-Group rating for the Sparkassen-Finanzgruppe Hessen-Thüringen, respectively based on the group rating. 2) Corresponds to short-term liabilities. 3) Corresponds in principle to long-term senior unsecured debt according to § 46f (5 u. 7) KWG (“with preferential right to payment”). 4) Corresponds in principle to long-term senior unsecured debt according to § 46f (6) KWG (“without preferential right to payment”). 5) Corresponds to subordinated liabilities. 6) The statutory guarantee applies to all liabilities in place prior to 18 July 2001 (no time limit). Stakes in Helaba’s share capital Public owners in % Sparkassen- und Giroverband Hessen-Thüringen 68.85 State of Hesse 8.10 State of Thuringia 4.05 Sparkassenverband Westfalen-Lippe 4.75 Rheinischer Sparkassen- und Giroverband 4.75 FIDES Alpha GmbH1) 4.75 FIDES Beta GmbH1) 4.75 1) represented by DSGV e. V. as the trustee. The Helaba Group in figures 2019 2018 Change Performance Figures in € m in € m in € m in % Net interest income before allowances for losses on loans and advances 1,191 1,072 119 11.1 Net fee and commission income 395 349 46 13.2 General and administrative expenses – 1,521 – 1,451 – 70 – 66.4 Profit before taxes 533 443 90 20.3 Consolidated net profit 480 278 202 72.7 Return on equity before taxes in % 6.3 5.4 Cost-income ratio in % 71.1 78.5 31.12.2019 31.12.2018 Change Balance Sheet Figures in € m in € m in € m in % Measured at amortised cost Loans and advances to banks 16,650 11,222 5,427 48.4 Loans and advances to customers 113,676 95,529 18,148 19.0 Trading assets 19,304 16,989 2,315 13.6 Financial assets measured at fair value (not held for trading) 37,316 27,390 9,926 36.2 Measured at amortised cost: Deposits and loans from banks 35,561 32,143 3,416 10.6 Deposits and loans from customers 59,829 47,415 12,434 26.2 Securitised liabilities 59,715 45,455 14,260 31.4 Trading liabilities 18,473 12,763 5,710 44.7 Financial liabilities measured at fair value (not held for trading) 21,465 13,761 7,704 56.0 Equity 8,710 8,462 248 2.9 Total assets 207,028 162,968 44,060 27.0 31.12.2019 31.12.2018 Key indicators for regulatory purposes in % in % CET1 capital ratio 14.2 14.9 Tier 1 capital ratio 15.3 16.4 Total capital ratio 19.0 20.6 2 Helaba Preface Ordinarily we would describe 2019 as a challenging year, but the challenges with which it presented us were all essentially familiar. It is already clear that 2020, unfortunately, will be challenging in a very different way. The new coronavirus has precipitated a slowdown the likes of which the world has not seen before, and the economic consequences will be significant. It is impossible at the moment to assess the likely impact and there consequently exists no reliable basis on which to forecast perfor- mance in 2020. The purpose of the Annual Report is to review the year ended. The dominant influences on operations in 2019 were persistently low or negative interest rates, regulation and digitalisation, with issues surrounding sustainability also becoming very prominent. Helaba’s biggest internal organisational change in 25 years, the Scope efficiency programme, was in full swing too as we approached the changeover to the new organisational structure on 16 March 2020. Helaba generated consolidated profit before taxes in accordance with IFRS of € 533 m in financial year 2019, a year-on-year increase of € 90 m. Group net profit after taxes rose by € 202 m to € 480 m. 3 We are satisfied with our overall progress in the financial year ended given that competition re- mained intense and the underlying conditions as challenging as ever. While the purchase of KOFIBA, formerly Dexia Kommunalbank Deutschland, has enhanced the statement of financial position notice- ably, there have also been significant negative impacts, in particular the year’s share of the costs relating to Scope. The progress made in customer business was particularly good to see: we increased the volume of new business once again and achieved meaningful growth in both interest income and net fee and commission income in 2019. As these figures suggest, our results in operating customer business were very good, with the final quarter proving especially rewarding. We successfully implemented and finalised a number of important strategic projects during the year too, including the integration of the former KOFIBA and the acquisition of the land transport finance customer credit portfolio of DVB Bank SE. We held our own in the market very well in 2019 despite intensive competition and challenging underlying conditions.