Foresight Annual Report 2018 Values with impact. Helaba in Brief: One of the leading banks in the German financial capital of Frankfurt am Main, the Helaba Group employs approxi- mately 6,100 people and has total assets of € 163 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 groundbreaking cultural, educational, environmental, sports and social projects. 2 Helaba Preface “Throughout 2018, we implemented a large number of projects to propel Helaba forwards and ready it for the future. We are pursuing a strategic, customer-focused agenda that comprises growth initiatives, digitalisation and corporate culture – thus building on Helaba’s already strong market position.” Financial year 2018 was a lively and highly constructive year for Helaba. We demonstrated once again that we occupy a strong position in the market in our core business areas. Our Group net profi t fi gures under IFRS were largely unchanged year on year at € 443 m before tax and € 278 m after tax. Its stability and its robust capital resources ensured that Helaba successfully passed the EBA stress Herbert Hans Grüntker, test again in 2018. The Bank’s good equity ratio not only underpins our position of strength, but also enables us to pursue inorganic growth measures, which in fi nancial year 2018 included the acqui- Chairman of the Board of Managing Directors sition of Dexia Kommunalbank Deutschland and the land transport portfolio of DVB Bank. Numerous projects and initiatives in 2018 kept Helaba moving forwards and building for the future. We are making good progress with our digitalisation initiatives too: our customer portals for our corporate and real estate customers have been well received and komuno, our digital platform for municipal loans, has enjoyed a successful start. Given the persistently challenging competitive environment and the many initiatives launched to strengthen our business model, we are satisfi ed overall with the results achieved. Helaba Preface 2 The Board of Managing Directors 4 Corporate Strategy 6 Staff 8 Sustainability 9 Group Management Report Basic Information About the Group 14 Economic Report 18 Financial Position and Financial Performance 22 Risk Report 32 Non-Financial Statement 58 Outlook and Opportunities 64 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 298 Country by Country Reporting Pursuant to Section 26a KWG 299 Independent Auditor’s Report 303 Independent Auditor’s Limited Assurance Report 309 Corporate Bodies Supervisory Board 312 Board of Public Owners 318 Advisory Board on Public Companies / Institutions, Municipalities and Sparkassen 319 Report of the Supervisory Board 321 Report of the Board of Public Owners 325 Helaba Addresses 327 We have a firm belief in our long-term success. We consistently strive to find the best solutions and maintain close and lasting partnerships. We also have a long-term public duty to perform, in close coop- eration and solidarity with the Sparkassen. All this can help us achieve our aspiration of simply being a good bank. Contents At a Glance Helaba ratings (As at: February 2019) Moody’s Fitch Standard & Poor’s Outlook Stable Outlook Stable Outlook Positive 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 Deposit Rating 2) P-1 Rating 1) AA–(dcr) Standalone Credit Profile 1) a Long-term Long-term Deposit Senior Unsecured3) Aa3 Rating 1), 3) AA– Long-term Junior Senior Unsecured 4) A2 Senior Unsecured 1), 4) A+ 5) 1), 5) At a Glance At a Glance Subordinate Rating Baa2 Subordinated Debt 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 2018 2017 Change Performance Figures in € m in € m in € m in % Net interest income before allowances for losses on loans and advances 1,072 1,069 3 0.3 Net fee and commission income 349 354 – 5 – 1.4 General and administrative expenses – 1,440 – 1,348 – 92 – 6.8 Profit before taxes 443 447 – 4 – 0.9 Consolidated net profit 278 256 22 8.6 Return on equity before taxes in % 5.4 5.7 Cost-income ratio in % 78.3 77.5 31.12.2018 31.12.2017 Change Balance Sheet Figures in € m in € m in € m in % Measured at amortised cost: Loans and advances to banks 11,222 10,678 544 5.1 Loans and advances to customers 95,529 88,750 6,779 7.6 Trading assets 16,989 16,100 889 5.5 Financial assets measured at fair value (not held for trading) 27,390 27,985 – 595 – 2.1 Measured at amortised cost: Deposits and loans from banks 32,144 31,249 895 2.9 Deposits and loans from customers 47,396 47,621 – 225 – 0.5 Securitised liabilities 45,455 43,514 1,941 4.5 Trading liabilities 12,763 12,277 486 4.0 Financial liabilities measured at fair value (not held for trading) 13,761 12,592 1,169 9.3 Equity 8,462 7,998 464 5.8 Total assets 162,968 158,201 4,767 3.0 31.12.2018 31.12.2017 Key indicators for regulatory purposes in % in % CET1 capital ratio 14.9 15.4 Tier 1 capital ratio 16.4 16.4 Total capital ratio 20.6 21.8 2 Helaba Preface Financial year 2018 was a lively and highly constructive year for Helaba. We demonstrated once again that we occupy a strong position in the market in our core business areas. Our Group net profit figures under IFRS were largely unchanged year on year at € 443 m before tax and € 278 m after tax. Its stability and its robust capital resources ensured that Helaba successfully passed the EBA stress test again in 2018. The Bank’s good equity ratio not only underpins our position of strength, but also enables us to pursue inorganic growth measures, which in financial year 2018 included the acqui- sition of Dexia Kommunalbank Deutschland and the land transport portfolio of DVB Bank. Numerous projects and initiatives in 2018 kept Helaba moving forwards and building for the future. We are making good progress with our digitalisation initiatives too: our customer portals for our corporate and real estate customers have been well received and komuno, our digital platform for municipal loans, has enjoyed a successful start. Given the persistently challenging competitive environment and the many initiatives launched to strengthen our business model, we are satisfied overall with the results achieved. 3 The good position we enjoy in our various core business areas is our greatest and most vital asset for the future. Our company has a sustainable and well-diversified business model. We are firmly anchored in the real economy and occupy a strong position in the market in our core business areas. We serve our public owners with a wide range of attractive and effective products and services. And we have been a reliable partner for decades. We embrace our responsibilities to society and the environment and have made many formal commitments in this area, including signing up to the Ten Principles of the UN Global Compact. All of these attributes form an integral part of Helaba’s DNA. The core values of Reliability, Customer Focus and Enthusiasm describe how we want and intend to cooperate with our customers and realise our objectives. Our customers too have learned to appreci- ate the way we consistently apply our values in our business activities; indeed they made this point very clearly in our customer survey.