Eurohypo sees losses narrow in H1

German real estate lender Eurohypo saw its pre-tax loss narrow to EUR 215 mln in the first half of 2010, largely reflecting revenue growth and reduced costs. The figure compares to a pre-tax loss of EUR 515 mln for the same period in 2009.

'Against the backdrop of the turbulence on the public finance markets during the first half of the year, we have continued to pave the way for a stable business model in the future,' said Chief Executive Frank Poerschke. 'However, we still have some way to go to achieve our goal of returning to profit in the near future.' Eurohypo is aiming to return to profitability by the end of 2011.

Eurohypo said its commercial real estate division was particularly profitable over the past six months, with net interest income rising 21.5% to EUR 696 mln, despite the planned reduction in assets.

The real estate financing segment saw losses narrow significantly to EUR 53 mln from EUR 226 mln a year ago. The bank approved new loans totalling EUR 2.4 bn during the first six months of 2010, compared to just EUR 699 mln in 1H 2009. Together with extensions of almost EUR 5 bn during the same period, the bank made a total of EUR 7.3 bn available to the real estate industry as a lender in the first half.

Pörschke: 'We could also envisage even greater volumes. However, we are no longer prepared to set margins that do not adequately reflect the associated risk.' Outside Germany, Eurohypo primarily increased its new business in the UK and France. Overall, real estate in many markets is now being valued more realistically meaning there are good financing opportunities, the lender said. All in all, the bank forecasts new real estate business for 2010 totalling a mid single-digit billion euro amount.

In addition to its home market of Germany, Eurohypo is now active in nine other countries: France, UK, Italy, Poland, Portugal, Russia, Spain, Turkey and the US. Elsewhere, Eurohypo is withdrawing from a total of 20 markets: it has closed 13 offices in the past 18 months.

Eurohypo's outstanding commercial real estate financing portfolio amounted to EUR 75.6 bn at end-June and the lender plans to reduce it to EUR 60 bn by the end of 2012, the company said. Eurohypo is the property and public finance lending arm of CommerzBank.