Eurohypo annual results: creating value, profit-oriented stance (DE)

Eurohypo announced outstanding results for 2004, with the pre-tax profit 92.1% higher than in 2003 at €611 million, making Eurohypo one of Germany’s most profitable banks last year.

“I am delighted that we have been able to vindicate the trust placed in us through the excellent results achieved this financial year”, said Chief Executive Officer Bernd Knobloch yesterday during the annual results press conference. “Many of the goals we set ourselves have been achieved ahead of schedule or exceeded. Eurohypo has thus reinforced its position as the leading European specialist bank for real estate and public sector finance, and further important milestones on the road to capital market readiness have been reached.”

In 2005 Eurohypo will be striving for sustained growth in an ever-more intensive competitive environment. The aim is to increase new business and increase the proportion of foreign business, and we will also continuously upgrade our portfolio and further improve our risk structure. Eurohypo expects the 2005 pre-tax results to be slightly better than those for 2004.
Eurohypo’s annual report, which has been prepared for the first time in accordance with IFRS, places on record the business success of 2004: with an after-tax return on equity of 8.1 per cent (previous year: 5.0 per cent), the bank has covered its capital costs, a target we had not envisaged reaching before 2005. In the medium term Eurohypo is aiming for an after-tax return on equity of 10 per cent.

In 2004 the bank’s net commission income rose to 79 million euros from 34 million euros the year before, while the net interest income of 1.3 billion euros was once again above the already high level of the previous year. The operating result of 631 million euros exceeded the 2003 figure by no less than 43.4 per cent. The bank’s after-tax profit was 431 million euros, 78.1 per cent up on the previous year.

Meanwhile Eurohypo has also made further improvements to its risk structure. Our risk provisions for credit business before the effect of the risk guarantees fell to 325 million euros from 392 million euros in 2003.

In light of the excellent results, the Board of Managing Directors and Supervisory Board will be recommending to the Eurohypo Annual General Meeting on 25 May the distribution to all shareholders of an increased dividend of 0.55 euros per share.

As regards our real estate business, new commitments of 17.3 billion euros (+ 20.9 per cent) highlight Eurohypo’s position as market leader, while the proportion of foreign business once again rose markedly. In 2004, 73 per cent of new business was concluded outside Germany, as against 64 per cent in 2003.

In pursuit of our buy and sell strategy, last year Eurohypo syndicated a total volume of 4.1 billion euros, making the bank one of the leading arrangers of real estate financing on the European and US markets. Through our London platform Opera, Eurohypo has securitised major credits totalling 1.3 billion euros, thus attaining third place in the European securitisation rankings.

In retail banking Eurohypo has managed to achieve turnaround after a series of restructuring measures and streamlining of our portfolios, and the reorganised sales model is showing the first signs of success.

The public sector finance division has also been reorganised, and from mid-2005 onwards this sector is set to attain trading book status. Thereafter trade in public finance assets should become more active.

“All in all Eurohypo’s success shows that a German bank which pursues a rigorous policy of creating value and acting in a profit-oriented way can make its mark at the highest level on the international banking stage”, said Knobloch.

Source: Eurohypo

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