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Press release, Hanover, 16 March 2009 Deutsche Hypo presents its 2008 annual results Net interest and commission income up by 5.7% Results characterised by distortions on the global financial markets At todays balance sheet meeting, the Supervisory Board of Deutsche Hypo established its annual financial statements for the 2008 financial year; a year which was a particularly challenging one for Deutsche Hypo as well as for the banking sector as a whole. In a market environment, which was characterised during the 2008 reporting year by the most severe distortions on the financial markets for decades and the precursors to a global recession, Deutsche Hypo was unable to escape the turbulences. Reduction in the volume of new business In response to the worsening situation on the financial markets during the second half of the year and its severe impact on the refinancing situation of banks, as a whole, Deutsche Hypo adapted its new business to market conditions. The Bank therefore reduced the volume of new mortgage lending commitments by over a third, to around 1.8 billion (previous year 2.7 billion). Particularly as regards foreign business, above all in the target markets of the US and the UK, the Bank made a conscious decision to be more cautious when taking on new business. Overall, Deutsche Hypo reduced its foreign business by over 50%, to 1 billion. At home, new business grew by 335 million to 736 million. Mortgage lending increased by 550 million to 9094 million, which corresponds to an increase of 6.4%. The volume of new commitments in capital market business, totalling around 2.3 billion, which was equivalent to a 52% decrease, likewise reflects the enormous impact of the turbulences on the capital markets. Given Deutsche Hypos risk-sensitive business strategy, 2008 offered few new business opportunities. A high degree of volatility on the markets and a continual increase in credit premiums for bonds also resulted in Deutsche Hypo adopting a very cautious approach to new business. In 2008, the Pfandbrief market was characterised by the noticeable caution exercised by national and international investors. For Deutsche Hypo, this development meant that it could not return to the issue volumes of previous years, and at 4.2 billion, the issue volume was significantly lower than the previous year (6.5 billion). Irrespective of this, Deutsche Hypo was always in a position to secure the liquidity of the Bank without restrictions. Profitability restricted by distortions on the market Details regarding the profitability of the Bank in the 2008 financial year are set out below: Primarily due to the fact that the Banks core business areas are continuing to make a stable contribution to profit, the Bank achieved net interest and commission income of 118.3 million, equivalent to a 5.7% increase, when compared to the previous year. Interest income increased by 3.0 million to just under 109 million, whilst commission income rose by 3.4 million to 9.4 million. Compared to the same period last year, administrative expenses increased by 10.4%, in line with expectations, and amounted to 39.4 million, including amortization. Personnel expenses increased by 11.6% and other general office expenses increased by 10%. The increase in personnel expenses can be explained by the transfer of 83 employees from NORD/LB, who, up until the end of the third quarter, were employed in the commercial real-estate banking division of NORD/LB and were transferred to Deutsche Hypo as part of the merger of this business area with Deutsche Hypo. The balance of other operating revenues and expenditure increased significantly and posted a surplus of 16.5 million. The high revenues essentially resulted from the difference between book values and sales revenues in respect of properties that were not essential to the Banks business operations. The risk result of 4.8 million fell significantly below the value of 25.4 million achieved for the previous year. The risk provisioning for lending business included in this figure was 22.7 million (previous year 12.4 million). This rise is due to the somewhat tense situation on some property markets, but was nevertheless in line with expectations. In addition, it must be taken into consideration that the value for the previous year was extraordinarily low compared to past values. The risk result with regard to the liquidity reserve was certainly affected by the escalation on the international financial markets. Revenues were generated from one-off effects, which resulted in a positive result for the liquidity reserve and served to reduce the negative impact of the credit risk result. As a result of sustained losses in market value suffered by certain securities held in assets, on balance, the Bank incurred a high level of expenditure associated with the depreciation of these securities, to the tune of 93.6 million (previous year 1.3 million). Due to the cost relating to the depreciation of securities described above, the result from ordinary business activity saw a noticeable decrease, and with a negative balance of 3.0 million, was 52.3 million lower than the value of the previous year. A positive result of 0.6 million was achieved after tax. This was largely based on the correction of the tax provisions and tax claims, which resulted on balance in a return of 3.6 million net. Comfortable capitalisation of Deutsche Hypo On 31 December 2008, Deutsche Hypo had a core capital ratio (tier 1 ratio) of 8.6% (previous year 5.5%) and a total equity ratio of 11.4% (previous year 9.3%). The Bank is therefore exceeding not only the respective legal requirements, but also has comfortable capitalisation, given its comparatively low risk profile. Outlook The current year 2009 will continue to be dominated by the persistence of the financial market crisis and the global recession. Considerable risks and imponderables are associated with this, which make it difficult to provide an outlook for the rest of the 2009 financial year for Deutsche Hypo. At present, the Bank is not assuming that the market conditions will radically improve during the course of 2009. However, despite these uncertainties, Deutsche Hypo continues to believe that it is in a position to be able to deal successfully with the existing challenges. Overall, the Bank deems its business model to be healthy and sustainable both as far as mortgage lending and capital market and refinancing business are concerned. For further information please contact: Markus Nitsche Head of Marketing and Corporate Communications Georgsplatz 8 30159 Hannover Telefon: +49 511 3045-580 Telefax: +49 511 3045-589 E-Mail: Markus.Nitsche@Deutsche-Hypo.de |
