Berlin Hyp loan volumes rise despite ‘fierce competition’

German mortgage bank Berlin Hyp reported a new lending volume of €3.1 billion in the first half of 2017, which represents a 6.89 percent increase year-on-year.

“The commercial real estate market is particularly challenging, with fierce competition, a limited core segment and real estate financers’ margins under pressure,” the bank said.

However, the ongoing low-interest environment is boosting transaction volumes, the bank said, while a lack of viable alternative investment options is pushing German investors and, increasingly, international investors into the German market.

In H1 2017, Berlin Hyp has increased its earnings before taxes by 41.4 percent to €44.4 million, year-on-year. This result includes the addition to the fund for general bank risks of €20 million.

Net interest income rose by €4.7 million to €136.7 million, on the back of a decrease in refinancing expenses and a slight increase in the average mortgage portfolio, the bank said. At €17.9 million, net commission income was 7.25 percent down from the previous year.

As part of its strategy, Berlin Hyp is seeking to increase the percentage of green building financing in its loan portfolio to 20 percent by 2020. The green finance portfolio comprised loans for green buildings worth €2.4 billion by the end of June this year.

In June, the bank issued its second green Pfandbrief, representing the bank’s third green bond issue since 2015. The issue had a record level of investment from foreign investors at 47 percent.

Central banks and public-sector institutions formed the largest investor group, accounting for 43 percent, while 5 percent went to German savings banks. Some 45 percent of investors were from the socially responsible segment, meaning they generally only invest in socially responsible capital assets, the bank said.

Berlin Hyp placed another bond issue in the first half of the year, which was completed in February. In this issue, banks accounted for half of the investment volume – 20 percent of which went to German savings banks.

Combined, these benchmark mortgage Pfandbriefe totalled a volume of €1 billion.