The group of MDax-listed Hypo Real Estate Holding AG has achieved a successful operating performance in the first nine months of 2004 and has made considerable strategic progress. The performance of operating result is fully in line with the ambitious budget. The managing board has confirmed its previous forecasts for the full year.
Development in earnings (group)
The internationally operating financier of commercial real estate has reported consolidated net income before taxes of € 155 million for the period between January and September. This represents growth of 33% compared with the corresponding prior-year period (€ 117 million). If the figure is adjusted by an exceptional income item ('lucky buy') achieved last year due to the purchase of minority interests in the former WestHyp, the increase would have been 70%. Consolidated net income in the first nine months increased from € 87 million in the corresponding period last year to € 120 million (plus 38%). Return on equity after taxes has increased from 2.8% to 3.9%. After minority interest (€ minus 1 million), consolidated profit is stated as € 119 million (3/4 of 2003: € 86 million). Earnings per share for the period between January and September are stated as € 0.89 (3/4 of 2003: € 0.64).
In the first nine months, total operating revenues in the group rose in line with expectations (€ 601 million). Compared with the corresponding prior-year figure (€ 554 million), the increase is 8 %. The addition to provisions for losses on loans and advances amounts to € 221 million. It is stated as a net figure after the pro-rata risk shelter of € 97.5 million provided by HVB AG to Hypo Real Estate Bank AG (2004: € 130 million), and is thus € 32 million higher than was the case in the corresponding prior-year period (€ 189 million), when a risk shelter of € 345 million was taken into consideration. If the risk shelter is disregarded, the addition to provisions for losses on loans and advances would have been around € 216 million lower. General administrative expenses increased by 17% from € 195 million to € 229 million, primarily as a result of the expansion in international activities.
The Hypo Real Estate Group has reported consolidated net income before taxes of € 41 million separately for the third quarter of 2004 (1/4 of 2003: € 39 million). This figure includes part of the announced exceptional expenses totalling up to € 20 million resulting at Hypo Real Estate Bank AG from the sale of a portfolio of German real estate financing with a volume of € 3.6 billion which was agreed in September. After taxes, the group has reported quarterly net income of € 36 million, representing growth of 24% compared with the corresponding prior-year figure in 2003 (€ 29 million).
Balance sheet movements (group)
The consolidated total assets of the Hypo Real Estate Group amounted to € 151.4 billion as of 30 September 2004, slightly lower than the corresponding figure applicable as of 31 December 2003 (€ 152.9 billion). Municipal loans which do not form part of core activities were reduced by € 4.5 billion during this period, whereas real estate financing increased by € 1.8 billion. Total volume of lending declined by € 7.5 billion (7%) to € 106.2 billion. The portfolio sale of Hypo Real Estate Germany announced in September is not yet reflected in the balance sheet.
The core capital ratio as of 30 September 2004 amounted to 7.8%, compared with 7.6% as of 31 December 2003. The equity funds ratio of 11.3% was slightly lower than the corresponding figure applicable at the end of 2003 (11,5%).
Outlook for the whole of 2004
Despite the exceptional expenses incurred for the portfolio sale in September, the managing board has fully confirmed the existing forecasts for the group for the whole of 2004: Consolidated net income before taxes is expected to be in a range of between € 205 and € 225 million (2003: € 156 million), combined with return on equity after taxes of 3.5 to 4% (2003: 2.8%).