Result for the first half of 2017 rises to € 35.2 million
Stable income and eased risk situation
Further strengthening of precautionary reserves
In the first half of 2017, Deutsche Hypothekenbank generated a result from normal operations of € 35.2 million (previous year: € 33.7 million). The 4.5 % rise was mainly due to the stable earnings situation and the continuing positive risk situation in the core area of commercial real estate finance. Return on equity increased to 7.6 % (previous year: 6.4 %).
“Deutsche Hypo’s positive business performance of recent years continued seamlessly in 2017, thereby also further strengthening its precautionary reserves. The very high quality of our finance portfolio underscores our consistent risk policy”, said Andreas Pohl, Chairman of the Board of Managing Directors of Deutsche Hypo.
The volume of new business in the core area of commercial real estate finance rose by 17.4 % to € 2,116 million in the first half of 2017 (previous year: € 1,802 million). For further details on the new business volume, please refer to Deutsche Hypo’s press release dated 9 August 2017.
Improvement in the risk result despite further strengthening of precautionary reserves
Net interest and commission income declined slightly to € 98.8 million (previous year: € 103.6 million) in the first half of 2017, mainly due to the planned reduction of the capital market portfolio. The risk result of € -19.5 million (previous year: € -25.5 million) saw a considerable improvement; a major portion accounted for a significant allocation to the HGB precautionary reserves pursuant to Section 340f German Commercial Code (HGB), which was again strengthened. The risk result of commercial real estate finance amounted to € -2.3 million (previous year: € 1.5 million) and is proof of the high quality of Deutsche Hypo’s real estate financing portfolio as well as the stability of its target markets.
Administrative expenses rose as planned to € 46.0 million (previous year: € 42.6 million) as a result of investments made to further strengthen the Bank’s market presence and its technical infrastructure. This figure already includes all bank levy contributions due in full-year 2017 of € 10.0 million. As a result, the cost-income-ratio amounted to 46.0 % (previous year: 41.9 %).
Issue volume totals almost € 2,250 million
Deutsche Hypo’s funding activities progressed according to schedule in the first half of 2017, with the Bank issuing securities with a volume of € 2,248 million (previous year: € 2,681 million), including mortgage Pfandbriefe of € 628 million (previous year: € 1,250 million) and uncovered bonds of € 1,620 million (previous year: € 1,431 million). The issue of a benchmark mortgage Pfandbrief with a volume of € 500 million, which was successfully placed with investors, received the greatest attention.
Outlook for full-year 2017: Pohl is confident
“Our positive business development in the first half of the year have laid the groundwork for us to achieve our ambitious targets in full-year 2017 as well”, said Pohl. “The European commercial real estate markets in which we are active remain robust. Even though the competitive situation remains challenging, we are confident that we can continue to acquire an appropriate volume of new business that satisfies our high quality and return requirements.”