In addition to a solid operating customer business, valuation gains of around EUR 200 million in the investment portfolios due to a narrowing of spreads on the capital markets and non-recurring effects from the sale of equity holdings contributed to the favorable results trend. LBBW has remained resolutely on track in the reduction of its riskweighted assets. Compared to the start of the year they decreased from EUR 121 billion to EUR 116 billion. In the first three months of this year the Credit Investment Portfolio was reduced by a further EUR 9 billion to the current level of EUR 45 billion. This is almost exclusively attributable to the reduction of highly volatile credit default swaps (CDS). The Credit Investment Portfolio was thus cut by more than half in comparison with the reading at the end of 2008 (approx. EUR 95 billion). The Tier 1 capital ratio improved further. At 31 March 2011 it was 11.7 percent.
Due to the reduction in risk-weighted assets, net interest income decreased slightly year-on-year, falling by EUR 22 million to EUR 533 million.
Due to the traditionally low level of allowances for losses on loans and advances in Q1 due to the recognition of all potential risks and losses, LBBW, in order to show a more realistic picture of its business performance, estimated a quarter of the expected allowances for losses on loans and advances for the whole year in its preliminary quarterly report, i.e. EUR 167 million. The actual amount of allowance for losses on loans and advances in Q1 was substantially less.
Net fee and commission income was up slightly year-onyear, i.e. by EUR 6 million, to EUR 148 million.
Net trading income came to EUR 331 million and thus recorded a significant increase in comparison with the first quarter of the previous year (EUR 59 million). The good performance is attributable mainly to the reversal of valuation losses as a result of tighter spreads on the capital markets.
Other operating income decreased slightly to EUR 38 million (previous year: EUR 44 million).
Administrative expenses fell to EUR 423 million and were thus EUR 19 million below the previous year’s figure. In the context of its restructuring, the Bank realized cuts in both other administrative expenses and staff costs.
Net income from investment securities more than doubled in comparison with the previous year's quarter (EUR 35 million). Due to, among other things, income from the sale of equity holdings, it came to EUR 86 million.
Operating income totaled EUR 546 million and has thus more than doubled in comparison with last year's figure of EUR 258 million. After deducting EUR 74 million in commission costs for the risk shield provided by the state of Baden-Württemberg and other expenses of EUR 17 million, consolidated profit before tax came to EUR 455 million (previous year: EUR 156 million). The tax expense in the first quarter of 2011 was EUR -103 million. LBBW is reporting a preliminary consolidated profit after tax of EUR 352 million for the first quarter of 2011.