Dutch bank SNS Reaal reported further hefty writedowns on its Dutch property portfolio in the first half of 2012. The bank booked a net loss of EUR 131 mln at its property finance unit following a EUR 140 mln writedown on the loan portfolio. In the same period a year ago, SNS Property Finance suffered a loss of EUR 118 mln.
Dutch bank SNS Reaal reported further hefty writedowns on its Dutch property portfolio in the first half of 2012. The bank booked a net loss of EUR 131 mln at its property finance unit following a EUR 140 mln writedown on the loan portfolio. In the same period a year ago, SNS Property Finance suffered a loss of EUR 118 mln.
The bulk of the writedowns reflected impairment charges relating to the Dutch portfolio, which more than doubled to EUR 110 mln from EUR 48 mln in the year-earlier period. SNS Reaal attributed the writedowns to deteriorating conditions in the Dutch real estate market where rental prices are coming under pressure due to high vacancy levels in the retail and office sectors.
The bank saw writedowns on its international property portfolio narrow to EUR 30 mln from EUR 90 mln in the first half of 2011.
Net profit at SNS SME, the unit comprising the most viable portion of the property loan portfolio, narrowed to EUR 3 mln from EUR 34 mln in the second half of 2011 due to the high exceptional impairment charges.
Despite the poor performance at its property financing unit, at group level SNS Reaal booked a profit of EUR 115 mln thanks largely to gains on derivatives and bonds at other units. However, financial director Ference Lamp warned that the writedowns on the property loan portfolio would remain high for the coming period. 'We don't foresee any improvement.'
The value of SNS Property Finance's total portfolio has fallen by 10% or EUR 548 mln to EUR 4.7 bn, with the international exposure declining by EUR 352 mln to EUR 2 bn. In total, the property loan portfolio at SNS Property Finance and SNS SME fell by 10% over the first six months by EUR 1.1 bn.
The average loan-to-value (LTV) of the total loan portfolio increased to 105.4% from 103.3% at end 2011. The average LTV of the international portfolio eased to 94% from 94.4% due to the sale of loans with a higher LTV. By contrast, the average LTV of the Dutch portfolio rose to 113.2% from 110% due to worsened market conditions in the Netherlands.
Last week, Dutch banking and insurance giant ING announced it had set aside significantly higher provisions in the second quarter of 2012 against expected losses on the financing of (commercial) real estate, particularly in the Netherlands. The provisions against property loans more than doubled to EUR 120 mln from an average level of between EUR 40-48 mln in the previous four quarters.
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