In the 2010 financial year, which was dominated by the European Commission's order to sell the bank, Westdeutsche ImmobilienBank AG (WestImmo) increased its pre-tax earnings to 99.2 million, a rise of some 17% on the previous year.
Consolidated net income grew 14% to 94.8 million. It means that WestImmo has maintained the successful run of the last few years, in which it managed to stay in the black despite the extremely harsh environment of the financial and economic crisis.
"In spite of the ongoing sale process we have been able to post a sharp improvement in our earnings and key income ratios and achieve what is a satisfactory volume of new business in light of these difficult conditions," said Peter Knopp, Chairman of the Managing Board of WestImmo.
"WestImmo has yet again demonstrated that it is a profitable bank. Given the background of the difficult market and refinancing conditions in 2010 and the particular challenge presented by the sale process, WestImmo's business model has proved to be both sound and sustainably viable," Knopp continued.
The operative earnings capacity of the bank was highlighted in the net interest income, which climbed 10% from 217.9 million in 2009 to 238.9 million in 2010.
At -68.1 million, the risk provision for credit losses was only slightly above the previous year (2009: -65.4 million). This 4% rise is respectable in view of the continuing difficulties on the property markets across the world and underlines the high quality of WestImmo's loan portfolio. Net fee and commission income came to 11.2 million (2009: 27.8 million). This figure reflects in particular the lower new business volumes recorded by the bank due to the ongoing sale process.
The trading result fell to -5.6 million (2009: 4.3 million) due to valuation effects. By contrast, net income from non-current financial assets was up sharply, at 4.6 million exceeding the -10.2 million for 2009 by some distance.
Despite the expenses associated with the current sale process, general administrative expenses were reduced to 89.5 million (2009: 93.1 million). The balance of other operating income and expenses rose to 7.7 million from 3.7 million in the previous year.
The positive results also impacted on the key income ratios of the bank, allowing the strategic objectives to be achieved. The return on equity employed (RoE) climbed to 10.2% (2009: 9.0%), while the Tier I ratio stood at 8.0% on December 31, 2010 (2009: 8.2%). The ratio of costs to income (CIR) improved to 34.7% (2009: 37.6%) on the back of the bank's strict cost and process management. On December 31, 2010 the bank's balance sheet total came to 25.9 billion (2009: 26.9 billion).
New business volumes hit by the sale process
The sale process imposed by the European Commission and the negative effect this had on WestImmo's refinancing situation had a significant impact on the development of new business, particularly in the second half of 2010. In total, WestImmo pulled in 3.3 billion of new business in 2010 (2009: 6.2 billion). Of this volume, 22% came from Germany, which was once again the most important single market in WestImmo's commercial investor business. Another 52% was distributed among the other European core markets, essentially Great Britain, Poland, France and Benelux. Business in North America accounted for 19%, while another 7% came from the Asian markets.
In Japan WestImmo had loan commitments totaling 1.1 billion on December 31, 2010, of which 0.9 billion was in Tokyo and 0.2 billion for properties in regions in the southwest of the country. The information we have available indicates that the financed properties have not suffered significant damage from the natural disaster. The medium and long-term impact of the earthquake and subsequent tsunami and the knock-on effects directly and indirectly associated with them cannot be either estimated or measured at this stage.
Last year WestImmo arranged syndicated financing to the tune of 1.8 billion, placing more than half of this volume with