- 27% increase in new business in its core business, commercial real-estate finance
- Strong rise of around 39% in the bank’s net interest and commission income
- Consolidation of the equity capital base
- Cost-income ratio improved to 39% (PY: 44%)
During the 2010 financial year, Deutsche Hypo exceeded its previous year’s figures in the key results components and successfully contended with the conditions on the capital and real-estate markets which were once again challenging in the year under review. Income from the bank’s two core fields of business, commercial real estate finance and capital market business, also progressed better than had been the case in the 2009 financial year.
“The overall net interest income of over € 172 million, which represented a rise of around 47%, as well as new business which has been expanded cautiously are evidence that our business model is sustainable for our investors and clients, even in a difficult environment,” stressed Dr. Jürgen Allerkamp, the bank’s CEO.
Developments in the business areas, as well as in the bank’s income were as follows in the 2010 financial year:
The bank managed to generate almost € 400 million more new business (excluding renewals) in real estate finance than it had done in the previous year, achieving a figure of € 1.8 billion. Domestic business alone accounted for € 279 million of this growth and € 1.1 billion of the total volume. In conjunction with the recovery on key real estate markets, improved opportunities for new business arose again. Deutsche Hypo availed of these opportunities selectively, taking into account its stringent standards for customer credit rating and the quality of the properties concerned.
The portfolio of loans rose by € 1.7 billion (17%) to € 11.5 billion.
Deutsche Hypo’s conscious decision to pursue a cautious strategy against the background of the state financial crisis in the Eurozone led to the volume of loans pledged in new business on the capital market coming down to € 2.4 billion (from the previous year’s figure of € 2.8 billion).
The income situation in the year under review was as follows:
• Net interest and commission income was just below € 186.1 million, up on the previous year’s figure by 38.5%. Key factors in this positive development were, in particular, the rise in the volume of real estate finance business and the improved income in real estate finance and capital market transactions.
• Administrative expenses were up € 12.8 million on the previous year, standing at a total of € 69.4 million due to one-off costs, in particular in compliance with requirements under supervisory law as well as increased staffing.
• Nevertheless, the positive trend in income boosted the cost-income ratio to 39.0% (PY: 43.9%).
• The risk result amounted to a total of € 78.8 million, up € 9.2 million on the previous year. That said, the rise was within the expected and planned magnitude.
• The result from ordinary business activity was € 45.0 million, a clear improvement on the previous year’s result of -€ 29.3 million.
The bank responded promptly to the higher equity requirements that were expected in line with Basel III and had already started to take steps in the 2010 financial year to bolster its equity capital base. The total capital ratio in accordance with the Solvency Regulation (SolvV) and the core capital ratio on 31 December 2010 were 10.6% (PY: 9.1%) and 7.7%, (PY: 6.8%) respectively. Thus, both the total capital ratio and the core capital ratio are well above current statutory requirements.
Looking ahead to the 2011 financial year, Dr. Allerkamp pointed out that “we expect the recovery on the most important real estate markets to continue as the economy starts to pick up, although risks cannot be ruled out completely due to prevailing market conditions. For 2011, Deutsche Hypo is aiming to achieve a result at the same level as the previous year”.