31. August 2009     Print Print 

Deutsche Hypo presents its half-yearly figures: New business remains steady

During the first six months of the current financial year, the global recession and the ongoing crisis on the financial markets have continued to place a strain upon the commercial real estate market. Deutsche Hypo therefore had to make further adjustments to its approach with regard to new business, in order to reflect ongoing market conditions.

As far as commercial real estate finance business is concerned, the Bank has approved new business to the value of €431 million, which represents a reduction of 59% when compared to the same period in the previous year. Deutsche Hypo intentionally implemented a substantial reduction, especially in its foreign business and above all in relation to business involving lending relating to real estate in the USA and the United Kingdom. The Bank’s real estate finance portfolio increased by €542 million (+6.1%) to €9.410 million.

Deutsche Hypo also recorded new public lending business worth approximately €1.7 billion, which is equivalent to a rise in excess of 75%. This new business fulfilled all of the Bank’s requirements in terms of quality and profitability. The Bank’s refinancing business continued to operate without any problems. During the first six months of 2009, the Bank’s issues totalled approximately €2.5 billion, of which Pfandbrief products accounted for around €1.9 billion.

This volume confirms that even during a period of crisis, the Bank was always in a position to procure the requisite level of liquidity via the capital market, even if the refinancing conditions were difficult for the Bank, as well as for the sector as a whole.

As far as its income situation was concerned, the Bank did however feel the effects of the unfavourable market conditions. The reduction in new real estate lending business and the increase in refinancing costs had an effect upon the Bank’s net interest and commission income, whilst the Bank regarded the ongoing weakness of the real estate lending market as an indication that increasing its risk provisioning was an essential step. A detailed breakdown of the income situation of Deutsche Hypo during the reporting period is as follows:

Net interest and commission income decreased by 20% from €59.2 million to €47.5 million.

General administrative expenses rose by just under €8 million to €25.6 million. As a result, the cost/income ratio deteriorated from 30.0% to 54.0%.

The provisioning charge in relation to lending activities increased by €19.0 million to €23.3 million (€4.3 million in the same period last year). At €0.2 million, the result earned from securities held in the liquidity reserve represented an improvement on the previous year (-€10.3 million). Provisions of €14.0 million were reversed in accordance with Section 340f of the German Commercial Code (HGB) and this duly had an effect on the result. Overall, the risk result therefore improved by €5.3 million to -€9.2 million (-€14.5 million during the same period in 2008).

In terms of its investment result, the Bank recorded a negative balance of €8.9 million (€5.2 million in the same period in 2008). The write-downs included in this figure predominantly relate to securities held as fixed assets.

The result from ordinary business activity, at €608,000, was approximately €21.5 million down when compared to the result as at 30 June 2008.

Net income for the year, at €696,000, was slightly higher than the result from ordinary business activity and can be attributed to tax refunds totalling €88,000.