Helaba had another very strong year in 2015, matching the €9.8 billion it lent on real estate in 2014 and comfortably exceeding its €8 billion target.
Real estate finance was 51 percent of the German landesbank’s €19.2 billion of new business, and the whole real estate unit, which also includes property management, contributed €380 million to total pre-tax profits. At €596 million, profit before tax almost matched 2014’s €607 million.
However, Helaba was the latest in a string of reporting German banks to warn that profits were unlikely to be as high in 2016. In the last few weeks both pbb Deutsche Pfandbriefbank and Berlin Hyp said they didn’t expect to repeat the results achieved in 2015.
Helaba’s chief executive Herbert Hans Grüntker said the bank: “Does not anticipate being able to repeat the results achieved in recent years. The opposite will likely be the case. The current geopolitical and economic situation is unsettling the markets and is leading to higher volatility. Due to this challenging market environment, higher regulatory costs and rising capital requirements, we must be prepared for group profits to decline markedly.”
Grüntker said banks were “in the middle of a transitional phase” and that “fundamental changes in the banking industry are afoot and business models are under scrutiny.”
However, he added that Helaba’s business model, which is more diverse than some of its competitors, meant the bank “was operating from a position of strength.”
Helaba’s board member responsible for real estate lending, Juergen Fenk, won backing last year to expand the bank’s property loan syndication activities as Helaba looks to manage both its corporate and real estate loan books as profitably as possible.
This year Helaba expects to lend between €7 billion and €8 billion on real estate. It is opening a new office, in Stockholm in Sweden, to win more new business in the Nordics.
In 2015, 43 percent of new property lending was in its domestic German market with the US the largest of its international markets. The bank lent €1.6 billion in the UK.
The €9.8 billion of property lending volume last year puts Helaba in the top three of German real estate banks in the market. In 2015 Aareal lent €9.6 billion while pbb Deutsche Pfandbriefbank lent the largest volume, €10.4 billion. Pbb does not lend in the US.
Helaba reported that its ‘fully-loaded’ CET-1 ratio increased again in 2015, from 11.8 percent to 13.1 percent, but as a German systemically important bank, BaFin requires Helaba to create an additional 1 percent capital buffer between 2017 and 2019.