Landesbank Hessen-Thüringen (Helaba) has noticeably revised down its profit expectations for the 2026 financial year. The institution now anticipates a pre-tax result of around EUR 400 million. The bank had previously expected a pre-tax profit of around EUR 500 million.
Alongside recent interest rate developments, the main drivers of the revision are strains in the property lending segment and commercial property development. According to chief executive Thomas Groß, solid performance across the remaining business divisions is not sufficient to fully offset higher loan loss provisioning. The reason for the increased reserves is the prolonged delay in the recovery of the property markets.
Strategic realignment of the real estate business
In response to the changed operating environment and the prolonged period of weakness, Helaba is initiating a realignment of its real estate activities. Christian Schmid, the management board member whose responsibilities include this division, stated that the bank is currently reviewing its presence in individual regions and sub-markets in detail. The overarching aim is to significantly reduce existing dependence on the property sector in future.
At the same time, Thomas Groß emphasised that property operations will remain a vital pillar of the diversified business model going forward. To safeguard the Landesbank's earning power over the long term, the institution is also focusing on curbing cost growth.
Helaba had already previously announced plans to keep cost increases below the rate of inflation through targeted savings. This approach is intended to run alongside an accelerated rollout of growth initiatives in other business divisions.
Five-year target of one billion euros remains in place
Despite the current setback, Helaba's management board is adhering to its medium-term financial targets. Within the next five years, the credit institution continues to target a pre-tax result of one billion euros. This increase in earnings is expected to be driven primarily by positive growth trends in the bank's other divisions, alongside contributions from its subsidiaries.
