Westdeutsche ImmobilienBank AG (WestImmo) increased its consolidated profit by 80% to 44.6 million in the first six months of 2011 (24.8 million in the first six months of 2010).
Net interest income after allowance for losses on loans and advances developed in a particularly positive way, which at 107.4 million was around 23% higher than the prior year result (87.5 million). The reason behind this was the considerable reduction in the allowance for losses on loans and advances, which amounted to - 7.9 million as at June 30, 2011, compared with - 33.0 million in the prior year (-76 %). This is an expression of Westimmo's conservative risks policy.
Peter Knopp, Chairman of WestImmo's Managing Board: "Despite the ongoing sale process and the challenges thrown up by the uncertainties in the finance and capital markets, in the first six months we achieved a satisfying and sound result. In this way WestImmo has once again proven the worth of its profitability and the core of its business model."
The obligatory sale of the bank required by the European Commission, which WestLB also continued in the first half of the year, was still the major factor shaping the development of WestImmo's business. This had a considerable impact on the bank's new business activities, as had already been the case in 2010, and impacted on the components of revenue.
Due to the lower new business volume, interest income amounted to 115.3 million compared with 120.5 in the previous year. The net fee and commission income fell to 2.9 million (5.1 million in the previous year). Owing to the decrease in trading in financial derivatives net trading income fell to 4.5 million (4.9 million in the previous year).
The decisions by the head of state and government of July 21, 2011 requiring impairments in value to be recorded with respect to Greek government bonds as at June 21, 2011 so as to affect the result for the year, also considerably affected WestImmo's balance sheet. The impairments in value to be undertaken at mid-year amounted to 29.1 million. As a result, the net income from non-current financial assets decreased to -28.3 million (-1.3 million in the previous year). The profit before tax decreased to 30.0 million compared with 35.5 million in the period of the previous year (-15.5%).
Despite expenditure stemming from the ongoing sale process, it was possible to lower administrative expenses by 11 % to 43.7 million (49.0 million in the previous year). The cost-income-ratio, CIR rose to 39.8% (34.7% for 2010 as a whole) and thus still fell within WestImmo's target range.
Impairments in value with respect to Greek government bonds also impacted on the bank's return on equity (RoE). The return on equity was 6.0% at mid-year (the result for 2010 as a whole was: 10.2 %).
Volume of new business considerably reduced due to the sale process
Due to the ongoing selling process and the refinancing situation which had been considerably restricted as a result of this, in the first half of 2011 WestImmo adopted a very conservative approach as regards new business. The bank concluded commercial real estate financing transactions in the amount of 456 million (2.1 billion in the period of the previous year). Of this 87.5% pertained to renewals.
Syndication, arrangement and syndicate management
In the first six months WestImmo continued to successfully conduct its syndicated finance business, in which it played the role of arranger and agent. In total it arranged a volume of loans amounting to 383 million in the first half of the year. Of this sum, WestImmo placed 217 million in the banking and savings bank market.
WestImmo still anticipates a positive result for 2011 as a whole. This is contingent on the European as well as the US debt crisis not getting worse, and thus meaning no additional charges would be generated as a result. In its target markets WestImmo has a good, well-established market position.
The bank is confident that it will continue its successful d