The year 2005 has been a successful one for Eurohypo, with profits surpassing the record levels achieved in 2004. According to the preliminary figures, operating result was up 8.1% to €682 million, with profit before tax rising 2.9% to €629 million. With €61.9 billion, new business in real estate and public finance more than doubled. Eurohypo was able to further strengthen its dominant position. At the Annual General Meeting on May 29, 2006, the supervisory and management board will propose a dividend of €0.65 per share, up 10 Cents.
In real estate finance, the Bank achieved new commitments totalling €31.2 billion, an increase of 80% on the previous year. International business accounted for 72% of these new commitments.
In public finance, new commitments tripled to €30.7 billion and here, international business contributed 55%.
As specialist for real estate and public finance we will continue to consistently strive to be the international market leader in our core businesses. To reach this end we will utilise all opportunities arising from our relationship with Commerzbank, said the Eurohypo Chairman of the Board of Managing Directors, Bernd Knobloch, when presenting the figures to the press today. With our business model in which traditional credit business is combined with innovative investment banking, we are probably one of the most modern credit institutions in Europe.
Interest income rose by 6% to 1.378 billion. Commission income was 83.5% up on last years level to 145 million, with advisory services becoming an increasingly important source of revenues for the Bank.
Administrative expenses rose a moderate 4.7% to 513 million and this is partly attributable to the increased business activities in the USA and the entry into new markets.
Return on Equity (excluding restructuring expenses), an important capital market ratio, was up to 12.1% before tax (previous year: 11.7%) and 8.3% after tax (previous year: 8.2%). The Bank maintains its 2007 RoE-target of 10% after tax.
The cost-income ratio was 32.7% (previous year: 35.5%), which was well below the target of 35%. Risk provisions for lending business fell to 301 million, down from the previous years figure of 325 million (excluding guarantees). This fall reflects the systematic improvement of the risk structure of the lending portfolio over the preceding years.
For 2006, Eurohypo is aiming for further growth in all its existing markets. US business remains the most important growth market for the Bank and here, it has risen to become one of the top players within the shortest possible time, a position which Eurohypo intends to develop even further.
The Bank is also aiming to increase its business in new markets. Particularly important is Japan, where Eurohypo will be cooperating closely with Commerzbank. It will also be making use of the competitive advantage given by its position as part of the Commerzbank Group to open up major Asian markets.
In Public Finance, the Bank is intensifying its activities in the field of Public Private Partnerships.
Overall, Eurohypo Chairman of the Board of Managing Directors, Bernd Knobloch, sees further growth in interest and commission income and a continued fall in risk provisioning for 2006 compared with last year. Knobloch said: In 2006 we will be able to strongly increase our profits within a range of 15 20%.