Westimmo sees 19% decrease in H1 pre-tax earnings

German real estate financier Westimmo booked pre-tax earnings of EUR 35.5 mln, down 19.5% on earnings of EU$ 44 mln for the same period last year.

After eliminating taxes, consolidated net income for the year was EUR 24.8 mln, a fall of 19.6% on the previous year (EUR 30.8 mln). The downturn in earnings was due largely to special effects associated with the economic transfer of the private construction financing portfolio to Erste Abwicklungsanstalt (EAA). This was particularly reflected in net fee and commission income, which at EUR 5.1 mln was below the figure for the first half of 2009 (EUR 13.9 mln),

However, Westimmo said the overall results were good during the difficult general economic climate in H1.

At EUR 81.5 mln, the operating result (earnings components less general administrative expenses) exceeded the figure for the first half of 2009 (EUR 76.1 mln) by 7.1%. Net interest income, which at EUR 120.5 mln was some 27% above the result for the same period last year (EUR 95.2 mln), showed a particularly positive trend, the bank said.

Peter Knopp, chairman of the managing board of Westimmo, said: 'I am satisfied with this result. It underlines the operative strength of WestImmo in client business and demonstrates that the bank is a successful business even in these difficult times and under the harsh conditions that still prevail on the capital markets. Nevertheless, WestImmo will continue to apply its very high standards for new business in the future. Quality and security go above quantity.'

Although there are varying indications from the regions that the real economy is recovering from the crisis, the financial and real estate markets remain in a fragile state of health. While the bottom seems to have been reached or is at least in sight in some of the most important commercial real estate markets, the trend is varying by region and segment, which suggests no relaxation in the risk-conscious approach to new business.

In the first half of 2010 Westimmo committed EUR 2.1 bn in commercial real estate financing compared with EUR 3.1 bn in the same period last year. This was a satisfactory volume given the much more intense competition on the markets and the continuing difficulties in refinancing, particularly in uncovered refinancing, the bank said.

Westimmo and DG Hyp were the only German lenders to book an increase in their new commercial real estate business in 2009, according to PropertyEU’s annual survey of the top financiers in Europe. Westimmo showed the strongest growth, with new loan production rising 13% to EUR 6.2 bn from EUR 5.5 bn in 2008. DG Hyp saw its new business grow by 11% to EUR 4.2 bn from EUR 3.8 bn.

Read more about the ranking of top German financiers and the impending sale of Westimmo in the September edition of PropertyEU Magazine. Click on the link below to subscribe to the full PropertyEU package