Deutsche Hypo doubles new real estate business

  • Net interest income up 15 percent in first half-year
  • Result from ordinary business activity amounts to EUR 20.3 million
  • Capital ratios significantly improved

Deutsche Hypothekenbank has registered an operating result from ordinary business activities of EUR 20.3 million for the first half-year 2011 as against the previous year’s EUR 26 million. While net interest income rose significantly in the wake of a more than doubled volume of new real estate business, the first-time deferred bank levy and elevated administrative expenses weighed on the operating result.

“Given the turbulences in the financial markets, Deutsche Hypo has delivered a satisfactory operating result for the first half-year. Our activities in the financing of commercial real estate in Germany and abroad showed particularly positive development”, commented Dr. Jürgen Allerkamp, Chairman of Deutsche Hypo’s Management Board. “In operative terms we have again made good progress.”

Improvement in operative business

Deutsche Hypo increased its net interest income by 15 percent to EUR 97.5 million as against the figure of EUR 84.8 million for the same period last year. The volume of new business in real estate financing as well as the progress in the transfer of the loan portfolio from parent company NORD/LB to Deutsche Hypo had particularly positive effects. Net commission income delivered a figure of EUR 5.5 million (previous year: EUR 8.3 million). In cumulative terms, net interest and commission income grew by 10.6 percent to EUR 103.0 million (previous year: EUR 93.1 million).

New commitments in real estate financing business in the first six months of this year generated a total of EUR 1,432 million, 111 percent up on the previous year’s figure for the same period (EUR 679 million). This growth is the result of new business in both Germany (+81 percent) as well as abroad (+178 percent). As against the same period last year the real estate financing portfolio grew in the first half-year 2011 by 4.2 percent to EUR 11,645 million.

March this year saw the Bank issue a public jumbo pfandbrief with a volume of EUR 1 billion, demand for which was equally strong among German and foreign investors. In all, the issue volume in the first half-year 2011 amounted to around EUR 3.3 billion. “The first six months have demonstrated just how good Deutsche Hypo’s standing is in the capital market. Our issues in their entirety were able to be placed at what were favourable conditions as compared with the competition”, emphasized Dr. Allerkamp.

Bank levy reduces the operating result

Higher staffing figures and increased provisions in human resources led to an increase in administrative expenses in the first half of 2011 to EUR 36.5 million as against EUR 33.7 million for the same period last year. Other operating income fell from EUR 0.2 million to -2.5 million as result of the first-time deferred contributions to the restructuring fund for banks, in other words the bank levy. Though the net-allocations to risk provisioning in credit business remained virtually unchanged, the Bank’s risk result fell from last year’s figure of EUR -30.8 million to EUR -39.8 million. This rise is primarily attributable to changed requirements on the reporting of hedging transactions. Net income from investments dropped to EUR -3.9 million (previous year: EUR -2.8 million), largely due to a depreciation of 40 percent on Greek government bonds:

At 36.3 percent, the cost-income ratio stabilized at a healthy level (previous year: 36.1 percent). The Bank’s capital ratios rose significantly as result of the reduction of risk-weighted assets and the increase in eligible equity capital, with the core capital ratio attaining a level of 8.8 percent (year-end 2010: 7.7 percent).

Outlook marked by uncertainty in the markets

Dr. Allerkamp was cautious as regards to the year as a whole: “At the present time it is not possible to make any forecast as to how the current sovereign debt crisis is likely to develop and how quickly the financial markets will recover from the present turbulences. For our part we are reckoning in the second half of this year to generate further gains in our new business volume in the sphere of real estate financing and a modest trend in capital market business.”