Deutsche Hypothekenbank (Deutsche Hypo) increased its new real estate finance business to €1.8 billion during the first half of 2016, as chairman Andreas Pohl (pictured) said the bank was on course to meet its targets for the year.
Deutsche Hypo’s new real estate finance business during the first six months of 2016 was up 28.5 percent increase on the €1.4 billion originated during the same period in 2015.
The majority of new commitments, more than €1.6 million, related to commercial property, with offices accounting for €927 million. Residential property financing accounted for 8.5 percent of business.
The bulk of Deutsche Hypo’s business remained in Germany. Domestic real estate lending stood at almost €1.1 billion, up from €939 million in H1 2015. However, foreign lending was also up, from €464 million last year to €710 million. The bank said that new business in foreign markets was taken on for the purpose of portfolio retention, particularly in the UK.
The real estate loan portfolio reduced in size slightly due to loan repayments. Overall, the portfolio fell slightly year-on-year to €11.68 billion from €11.95 billion. The size of the UK portfolio dropped from €1.6 billion to just under €1.5 billion between the two periods, while the Benelux portfolio grew slightly to €1.3 billion.
Deutsche Hypo’s net interest and net commission income in the first half of 2016 came to €103.6 million, down from €124.2 million in H1 2015. The bank said that the high 2015 figure was due to one-off effects including a high rate of early loan repayments.
Deutsche Hypo said that it made €33.7 million from normal operations in the first half of the year, an 8 percent year-on-year increase. Pre-tax profit stood at €27 million, up marginally from €26.6 million in the same period last year.
“We were able to further increase our earnings and also improve the quality of our real estate finance portfolio”, said Pohl. “Even though the competition has become even more intense, especially domestically, we have been able to increase the volume of our new business without compromising our conservative risk policy.”
Pohl added: “As long as no new external shocks hit, the positive development in our target markets will continue, coupled with continued good opportunities for new business for Deutsche Hypo. Our focus remains exclusively on high-quality real estate. We are headed in the right direction in 2016, and are confident of meeting our targets for new business and earnings. All in all, we therefore expect for the whole of 2016 a result from normal operations that is at the high level of the previous year.”
Deutsche Hypo’s new commercial real estate lending in 2015 was €3.71 billion, while net interest income increased slightly by 1 percent to €224.5 million. Overall, Deutsche Hypo reported a 2015 profit from normal operations of €70.3 million, up from €41.4 million in the previous year.