Deutsche Hypo with significantly improved results in the first half

  • Result from ordinary business activity increases to EUR 28.6 million
  • Core capital ratio rises to 8.8 percent
  • New real estate finance business continues to be a high level

Deutsche Hypothekenbank accomplished to increase its result from ordinary business activity in the first half year 2012 from EUR 20.3 to EUR 28.6 million in comparison to the period from the previous year. Contributing factors in the improvement of the result were in particular the risen operative earnings as well as a lower risk provisions.

“We had a solid start to the year. Most of all in our core business area, commercial real estate financing business, we managed to improve the earnings and could thereby strengthen our good market position. The good half-year result provides us with a boost for the second half of the year”, said Thomas Stephan Bürkle, Chairman of the Board of Managing Directors of Deutsche Hypo.

Net interest income in commercial real estate financing business rises by 20 percent

The operative earnings have risen in the first six months of this year: The net interest income amounted EUR 103.9 million (97.5) as of 30 June 2012 and thus recorded a plus of 6.6 percent. These two business areas of Deutsche Hypo showed differences in the course of their development: While a lower net interest income was earned as expected in the capital market business in the course of the planned reduction of existing engagements, the result from net interest income in commercial real estate financing business was 20.0 percent above the previous year’s value.

The net commission income for the entire bank amounted EUR 4.1 million (5.5). For net interest and commission income this results in a cumulated growth of 4.9 percent. With a volume of EUR 1.271 million (1.417), the new commitments in commercial real estate financing business continued to stay at a high level. 71.6 percent of the new business was conducted in Germany and 28.4 percent in Great Britain, France and the Benelux countries. Compared to year’s end 2011, the commercial real estate financing portfolio increased from EUR 12.1 to 12.5 billion.

The risk provision at the end of the first half year amounted EUR 35.4 million (39.8) and thus moved within the expected range. The administrative expenses rose slightly to € 37.8 million

(36.5). The other operating income and net income from financial assets amounted respectively EUR -3.4 million (-2.5) and EUR -2.9 million (-3.9).

Stable funding basis

Regarding its capital resources, Deutsche Hypo was able to continue the positive trend of the previous years: After 7.7 percent at year’s end 2010 and 8.4 percent at year’s end 2011, the core capital ratio was 8.8 percent at the end of the first half year in 2012. The cost/income ratio at 36.1 percent confirmed its good value at year’s end 2011 (35.8).

Deutsche Hypo issued a volume of EUR 1,817.4 million within the first six months of this year. In the process, the issue of a mortgage Pfandbrief with a benchmark volume of EUR 500 million stood out in June, and was even tapped by EUR 250 million in early August – with a remarkably favourable spread of four base points to mid-swap. Both the original issue as well as the tap generated high demand among German and international investors and emphasised the stable refinancing base available to the bank.

Outlook for the entire year 2012

“On the condition that the European sovereign debt crisis will not spread decisively yet and that the real estate markets continue to prove robust, we can look ahead with careful optimism”, explained Bürkle. “Our deal pipeline in commercial real estate financing business continues to be well filled. All in all, we therefore expect a result from ordinary business activity at year’s end 2012 that is above the value of the previous year.”