- Half-year result totals € 33.0 million
- Contingency reserves further strengthened
- Slight increase in new business volume
Deutsche Hypo generated a result from normal operations of € 33.0 million in the first half of 2019. This result is roughly on a par with last year’s level (2018: € 33.9 million) and testifies to the Bank’s consistently strong earnings performance over many years.
“We’re happy with our business performance in the first half-year,” explained Sabine Barthauer, Member of the Board of Managing Directors of Deutsche Hypo. “We find ourselves in a challenging market environment that is being shaped not only by intensive competition, but also political and economic uncertainty. We have generated an excellent result in the face of these prevailing conditions, especially when we consider that we were also able to further strengthen our contingency reserves.”
Slight increase in real estate finance portfolio
In the first six months of this year Deutsche Hypo slightly increased its volume of new business to € 1,495.7 million (2018: € 1,402.9 million). The Bank was able to confirm its good portfolio quality through its conservative and quality-oriented lending policy. While the largest volume of new business at € 815.2 million (2018: € 1,049.4 million) was again generated in Germany, the volume of new business in other countries totaled € 680.5 million in the first half of 2019 (2018: € 353.5 million). In terms of the asset classes, office properties (€ 822.5 million (2018: € 565.0 million)) and residential properties (€ 280.5 million (2018: € 275.2 million) accounted for a large part of the new business volume. New business in this asset class fell significantly to € 107.0 million (2018: € 341.0 million) due to structural changes in retail. The real estate finance portfolio rose slightly year on year to € 12,391.2 million (previous year: € 12,264.0 million).
Stable earnings performance in the core business area
A significant factor in Deutsche Hypo’s half-yearly result was the stable earnings performance in the commercial real estate finance business, which yielded € 59.7 million (2018: € 68.1 million). The previous year’s result was still impacted by higher-than-average releases of loan-loss provisions. Due to the lower bank levy of € 9.8 million (2018: € 11.1 million) in particular, administrative expenses fell to € 49.3 million (2018: € 50.3 million). The cost-income ratio thus improved to 54.0 % (2018: 57.8%). At 7.7 %, the return on equity was roughly equivalent to the previous year’s level (previous year: 8.0 %).
Deutsche Hypo launches green loans
Having successfully issued the second green Pfandbrief at the end of last year, the green loan is a logical addition to Deutsche Hypo’s green value chain. The focal point of the green loan is the financing of contemporary, future-proof and energy-efficient properties. At the same time, it also incentivises the sparing use of resources and sustainable and environmentally sound construction methods. The ability to access green loans for financing purposes is assessed using a scoring model developed in-house. If the finance is ultimately deemed eligible for a green loan, corresponding incentivisation is performed via the margin structure.
Continued good standing on the capital market
In the first half of 2019, Deutsche Hypo issued a volume of its own securities of € 1,279.4 million (2018: € 1,626.8 million), including mortgage Pfandbriefe of € 1,045.0 million (2018: € 1,203.0 million). Following a new issue with a volume of € 625 million, which was topped up by € 125 million after a week, the mortgage Pfandbrief issued in June 2018 was topped up by a further
€ 250 million. The constantly high demand for securities of Deutsche Hypo illustrated investors’ confidence in the Bank’s excellent standing on the capital market.
Real estate markets remain robust
“The trend over the first half-year is satisfactory and provides a good foundation for the whole of 2019,” Barthauer concluded. In terms of the general economic situation, however, a slight downturn in the economy is anticipated. “The real estate sector is highly dependent on economic performance. To date, however, the low rate of growth has not really made itself felt. The real estate markets still appear robust, which is why we assume that the new business volume in the 2019 financial year will be slightly higher than the previous year’s level. We will continue to abide by our conservative risk policy and only enter into transactions that meet our high quality and yield standards,” said Barthauer.