In the first half of 2006, the Hypo Real Estate Group has improved all major parameters. The international financier of large-volume commercial real estate has succeeded in considerably boosting operating revenues and consolidated net income before taxes in line with expectations.
New real estate financing business in the first six months was also fully in line with expectations, with a volume of €11.4 billion and an average return of more than 13% after taxes. The new segment Hypo Public Finance Bank which was established at the beginning of the year (public finance and capital markets) has made a good start. For the full twelve-month period in 2006, the Management Board is confirming the
earnings and return objectives announced at the beginning of the year.
Group development H1 2006
- The group has reported net income before taxes of €270 million for the first six months of 2006, 26% higher than the corresponding previous year period (€215 million).
- Net income after taxes amounted to €201 million compared with €161 million in H1 2005, equivalent to growth of 25%. These figures do not take account of non-cash-effective expenses of €24 million from capitalised losses carried forward in accordance with IFRS regulations.
- Return on equity after taxes (excluding the effects from capitalised losses carried forward) amounted to 9.2% for the first half, and wasthus higher than the target specified for the full year (>9%; full year 2005: 7.4% excl. the effects from capitalised losses carried forward).
- As a result of strong new business and the improvement in average margins in the German portfolio, operating revenues (the sum of net interest income, net commission income, net trading income, net income from investments and the balance of other operating income/expenses) increased in the first six months by 19% from €435 million to €516 million. The improvement was attributable to all major revenue types.
Whereas net interest income in the first half of the previous year declined by 5%, it increased by
15% in the first six months in 2006 from €330 million to €381 million. There has been a positive development in net trading income, which increased by 21% to €17 million thanks to the successful activities of Hypo Public Finance Bank. Net income from investments has doubled to €46 million, reflecting capital gains realised from treasury activities.
- Provisions for losses on loans and advances are stated as €87 million (previous year period: €71 million); this 23% increase reflects the growth in the international real estate financing portfolio, and comprises portfolio-based allowances.
- General administrative expenses increased by €10 million (7%) to €159 million, whereby this growth was lower than the increase in operating revenues. Savings in Germany business were opposed by higher expenses in Hypo Real Estate International and Hypo Public Finance Bank due to expansion activities.
- In consequence, the cost-income ratio, which is the standard used for measuring the internal efficiency of the group, improved further from 34.3% in the first half of 2005 to 30.8%.
New business H1 2006
In the first six months of this year, the group acquired new real estate financing of €11.4 billion compared with €8.3 billion in the previous year period equivalent to growth of 37%. Of this figure, €8.5 billion is attributable to international financing and €2.9 billion is attributable to financing in Germany. With this volume of new business, the Hypo Real Estate Group is making excellent progress towards meeting its announced objective of approx. €22 billion for the full year.
Balance sheet development H1 2006
Total assets of the group are stated as €153.6 billion as of 30 June 2006, €1.1 billion higher compared with the figure at the end of 2005. In line with overall strategy, public sector loans declined, whereas real estate financing increase