Deutsche Hypo, part of Norddeutsche Landesbank, increased its new lending on commercial real estate by 36% in 2014, to €3.6bn. However, profits were 36% down , to €41.4m, because of €42m of provisions against Heta, the ‘bad bank’ of Austria’s Hypo Alpe Adria.
“We can be very satisfied with business development, particularly, in our core business area of commercial real estate financing,” said board member Andreas Pohl. “We were able to generate significant increases in both our new business volume as well as our income. Moreover, our risk result in this area was far below the level of the previous year. Without the exceptional charge in the capital market business we would have exceeded the record result reported in 2013 appreciably .”
Deutsche Hypo’s new lending grew significantly outside Germany, more than doubling to €1.5bn from €563m the previous year. This was “due to enhanced new business opportunities in the target markets of the UK, France, Benelux and Poland”, the bank said. Recent deals include a €122m refinancing of TH Real Estate’s Roermond designer outlet in the Netherlands.
Thanks to the new business, the bank’s real estate loanbook has grown to €12.4bn from €11.9bn; domestic lending remained strong at €2.1bn.
“The low interest rate environment is keeping investor demand for commercial real estate at high levels and the situation in the most important real estate markets, above all in our core German market, remains good to very good. Even though the competition has become tougher, we still have good opportunities for generating new business in our target markets,” Pohl said.
“Therefore, for 2015, we expect both income and administrative expenses to remain stable and the negative impact on results from capital market effects to be smaller. Thus, on balance, we expect an improvement in results.”