German Pfandbrief bank Helaba has seen a 14 percent year-on-year decline in its new medium and long-term real estate lending business, which stood at €4.2 billion in H1 2017.
The performance is in line with domestic rivals Aareal and pbb Deutsche Pfandbriefbank, which saw a dip in new lending and a no growth in volumes, respectively, as German banks continue to face a competitive market.
As reported previously, Aareal posted a 15.78 percent decrease in newly originated loans to €3.8 billion. Pbb, for its part, generated new property lending volumes of €4.5 million, which means that volumes remained stable year-on-year.
Despite the drop in its new medium- and long-term real estate business, Helaba posted net income before taxes of €195 million, which represents a 10 percent increase over H1 2016.
The bank’s total property loan book stood at €35.8 billion in the first half of the year. Germany accounted for 43 percent, followed by North America at 22 percent and UK/France at 18 percent (see charts below).
By asset class, Helaba’s office buildings made up 42 percent of the property loan book, followed by commercial centres at 26 percent and residential properties at 20 percent.
The real estate segment made the largest contribution to the bank’s consolidated net profit, which reached €150 million. Amid a “challenging competitive market”, the result fell short of the previous year’s net profit of €184 million, the bank said.
Amid the persistence of zero and negative interest rates, Helaba’s net interest income fell by €69 million to €542 million in H1 2017.
“As a result of the persistent zero and negative interest rate scenario, we reiterate our forecast for 2017 in which we expect a significant decline in net profits,” said Herbert Hans Grüntker, chairman of Helaba’s board of managing directors.