German lender Deutsche Hypothekenbank has posted a 9.3% decline in profit in the first half of the year due to a loan loss provision in connection with its exposure to Heta, the so-called bad bank set up to deal with the stricken Austrian lender, Hypo Alpe Adria.
German lender Deutsche Hypothekenbank has posted a 9.3% decline in profit in the first half of the year due to a loan loss provision in connection with its exposure to Heta, the so-called bad bank set up to deal with the stricken Austrian lender, Hypo Alpe Adria.
Deutsche Hypo's profit amounted to €31.3 mln in the first half of 2015, versus €34.5 mln in the same period a year earlier.
'In total we can be satisfied with our result in the first half of 2015. Without the special effect from Heta, we would have greatly exceeded our result from the first half of last year,' explained Andreas Pohl, speaker of the board of managing directors of Deutsche Hypo.
He added: 'We have been particularly encouraged by our profitability in our core business area of commercial real estate finance and the significantly lower risk provisioning, which is a reflection of the improvement in our portfolio quality.'
New commercial real estate financing business amounted to €1,4 bn in the first six months of the year, a slight decline compared to the previous year (€1.5 bn). The core market of Germany accounted for a share of 67%, compared to 85% in 2015. In almost all foreign target markets, the bank said it was able to expand its volume of new business.
'We are not making any compromises with regard to the quality requirements for financing,' Pohl added. This is reflected in the 34.9% improvement in Deutsche Hypo’s risk result to a negative €24.6 mln from a negative €37.8 mln in 2014, he added.
Deutsche Hypo’s issue volume rose to €1,5 bn in the first six months of the year, €615 mln of which consisted of mortgage Pfandbriefe and €903 mln of unsecured bonds.
'Supported by the good performance in the first half of the year, we are sticking to our forecast that we will greatly exceed the result from 2014,' concluded Pohl. 'Our target markets are all in very good shape. However, competition on both the investor and financing side has increased significantly – particularly for core real estate. It is all the more important for us to seamlessly continue our conservative risk policy.'
