Eurohypo has announced outstanding results for the first half of the year 2005. Compared to last year, pre-tax profit climbed 33% to â¬382 million. âOverall, our investments in new markets and new products are producing tangible resultsâ, states Bernd Knobloch, Chairman of the Board of Managing Directors, in the Interim Report published earlier this week.
Return on Equity (RoE), an important key indicator for the capital market, climbed to 9.1% after tax and is touching on the target figure of 10% for 2007. The bank had covered its capital costs in 2004 with a RoE of 8.1% after tax.
The cost/income ratio of 32% was again clearly below the medium-term objective of 35%. Eurohypo has its cost firmly under control. Administrative expenses fell slightly to â¬235 million compared to last yearâs period, even though the bank systematically invested into its strategic development. The risk provisioning in the lending business was reduced as planned from â¬144 million to â¬123 million.
At â¬684 million the net interest income was 3% higher compared to last yearâs period. Commission income rose by 70% to â¬51 million which is mainly due to offering further products in addition to the classic financing business as well as to more securitisation and advisory mandates.
Eurohypo was exceptionally successful in new commercial real estate business in the first half of the year. Nearly â¬15 billion was generated in new commitments which is an increase of more than 135% compared to last yearâs period. The bank produced nearly 90% of its last yearâs result within six months, thus, securing future revenues and emphasising its position as market leader.
This is also reflected in the increase of new business in Corporate Banking within the domestic market Germany. With â¬3.5 billion it expanded by nearly 52% despite the ongoing difficult conditions in this market.
A decisive growth driver for Eurohypo is its foreign business. Over 70% of new business was generated outside Germany. âWe have made significant progress in our efforts to further diversify the regional distribution of our portfoliosâ, comments Mr. Knobloch in the interim report. The Corporate Banking Continental Europe business achieved an increase of 79% in new commitments. In Great Britain and the U.S. the bank also accomplished high growth rates.
Currently, Eurohypo holds a credit portfolio of â¬103 billion. More than â¬30 billion account for foreign countries which is 32% of the assets compared to 28% at the end of 2004.
Eurohypo has continually strengthened its position as the leading real estate bank. In the securitization business the bank is Europeâs market leader. Through its Opera securitization platform the bank structured and placed five commercial mortgage backed securities (CMBS) issues amounting to â¬3.9 billion in the first half of the year alone. The bundling of activities in the securitization and syndication business in one of its own division proved positive on the business development.
In Public Finance the bank also increased its revenue notably. The strategic new direction has already resulted in a clear rise in profit before tax of 50% to â¬108 million in the reporting period. New commitments were increased to â¬21.1 (5.0) billion. Eurohypo continued to progress the international diversification of its new business volumes in the expanded EU, in North America and Japan.
On the basis of the half-year results, the Chairman of the Board of Managing Directors is confident about the second half of the year. âThe bank will continue to grow dynamically and will strengthen its market leadership in seminal business divisions.â