Eurohypo has presented its first nine months results. The highlights are: pretax profits jumped sharply to € 448.6 million, a rise of 46% from the same period last year, net interest and commission income rose 4.3% to more than € 1,047 million, the pretax return on equity improved to 10.8%, and the cost-income ratio stood at 33.2%, below the target figure of 35%.
“We regard the nine-monthly results as proof that we have put the bank on a sound footing”, noted Joachim Plesser, a member of Eurohypo’s executive board when discussing the interim report at a press conference.
The rise in net commission income, which totalled € 40 million, is a major vindication of Eurohypo’s strategy. This 150%-plus increase is a testament to Eurohypo’s successful efforts to strengthen our interest-independent business earnings base both through the sale of products supplementing our classical financing business and through the provision of real estate investment banking consultancy services.
Significant reductions in credit business risk provisions were made to the end of September 2004. Excluding the major shareholders guarantees, these fell 36.4% to € 262 million (€ 413 million), and including the ‘umbrella’ of these guarantees by 14% to € 232 million (€ 270 million).
At the end of September 2004 the core capital ratio was 7.7% (end of 2003: 7.4%) and the overall capital ratio 11.2% (end of 2003: 11.0%). At the end of September, Eurohypo’s equity capital totalled over six billion euros, providing a comfortable foundation for the bank’s future growth.
Eurohypo’s strong position in real estate financing, both domestically and internationally, is clearly apparent from our new business, with new commitments to the end of September totalling € 11 billion, or 13.2% more than the previous year. In Germany, Eurohypo is the market leader, a status highlighted by new business totalling more than three billion euros (+23%), and as expected Eurohypo´s US business has made a major contribution to our growth, with commitments of € 2.5 billion (+46.5%).
In real estate financing and public finance business alike the bank pursues a strict policy of profit before volume. New business to the end of September 2004 totalled € 6.7 billion.
Provided the economic situation further stabilises and gives the real estate market a corresponding boost, financial director Joachim Plesser announced that Eurohypo will be an important step closer to meeting the ambitious target set for the end of 2005, and further noted that Eurohypo, with its business model as an integrated special bank for real estate and state financing, will continue to be well-positioned in the marketplace after the anticipated repeal of the German Mortgage Bank Act (Hypothekenbankgesetz) and the introduction of a general mortgage bond law (Pfandbriefrecht). As regards the current financial year, it is already clear, Plesser continued, “that we will easily surpass our 2003 result.”
At the press conference on 11 November 2004 to present the nine-monthly results, Eurohypo took the opportunity to break with tradition by introducing itself to the region as a whole rather than exclusively in the financial centre of Frankfurt. This enabled head of finance Joachim Plesser and Rupert Hackl, manager of Eurohypo’s Munich office, to highlight the bank’s striking successes in the Bavarian capital. There too the bank has reaffirmed its leading role in real estate financing, registering outstanding results.
Eurohypo increases its market share in Munich
Indeed, despite difficult conditions on the Bavarian real estate market, the Munich office has succeeded in increasing its new business by almost 50% as compared to last year, and Rupert Hackl announced that, based on the figures to 30 September 2004 plus deals approved since then, the volume of new business for the year as a whole can be expected to exceed the billion euro mark. Already by the end of September the Munich office had demonstrated its importance to the bank, accounting for 21.6