Hypo Real Estate Holding AG, the international commercial real estate financier, recorded a positive development of business during the first six months of 2004 and achieved a substantial increase in earnings.
The new business of the MDax listed company accelerated noticeably during the second quarter, as expected. The income statement indicators for the Group as a whole developed according to or slightly above plan. The forecast for the entire year 2004 is being confirmed in full.
Group performance
For the first half of 2004, Hypo Real Estate Group reports consolidated net income before taxes of EUR 114 million, representing an increase of 46 % over the pro-rata prior year figure of EUR 78 million. Adjusted by the exceptional income item (“lucky buy”) generated in the prior year from the purchase of minority interests in the former WestHyp, net income before taxes even grew 90 %. During the first six months of 2004, consolidated net income increased by 45 % from EUR 58 million for the pro-rate prior year to EUR 84 million, corresponding to earnings per share of EUR 0.62 (prorata 2003: EUR 0.43).
From January to June, the Group´s operating revenues developed according to plan to reach EUR 399 million (+ 8 % over the pro-rata prior year figure). Higher earnings contributions from the US real estate financing portfolio, which has been included since the beginning of the year, and from new international business were thereby offset by a decline in operating revenues caused by the scheduled downsizing of the domestic portfolio. The addition to provisions for losses on loans and advances was EUR 146 million, compared to EUR 126 million in the pro-rata prior year (+ 16 %). This figure already includes the pro-rata risk shelter in the amount of EUR 65 million (pro-rata prior year: EUR 230 million) provided by HVB AG to the benefit of Hypo Real Estate Bank AG. Excluding the risk shelter, the addition to provisions for losses on loans and advances fell by EUR 145 million in prioryear comparison.
For the second quarter of 2004, the Hypo Real Estate Group reports consolidated net income before taxes in the amount of EUR 59 million, representing an increase of 51 % over the pro-rata prior year figure (EUR 39 million). Consolidated net income for the second quarter stood at EUR 43 million, an increase of 48 % over the pro-rata prior year figure (EUR 29 million).
Group balance sheet
The consolidated total assets of Hypo Real Estate Group as of June 30, 2004, of EUR 148.5 billion were EUR 4.4 billion or just under 3% lower than at year-end 2003. The municipal loans which do not form part of the core business were reduced by EUR 3.8 billion, while the real estate financings grew by EUR 0.8 billion. Total lending volume declined by 7.2 % to EUR 105.5 billion. Core capital remained unchanged at EUR 4.1 billion, raising the core capital ratio (compliant with BIS rules) from 7.6 to 7.9 % in reporting date comparison. The equity funds ratio (compliant with BIS rules) rose slightly from 11.5 to 11.6 %.
Outlook for the full year 2004
On the basis of the successful performance during the first half-year, the Board of Management has confirmed in full its previous forecasts for 2004. Consolidated net income before taxes is to move in a corridor between EUR 205 million and EUR 225 million (2003: EUR 156 million), with a return on equity after taxes of 3.5 to 4% (2003: 2.8 %).
Georg Funke, Chairman of the Management Board of Hypo Real Estate Holding AG: “After the first six months of 2004, the Group is fully on course. We have achieved and even slightly exceeded our ambitious plans. That our new business gained dynamism during the second quarter is especially positive. During the second half of the year, we will continue to accelerate the expansion of our international business. As regards the restructuring of our German business, we retain our expectation that this process may already be completed by the end of 2004 instead of during 2005.”
Source: Hypo Real Estate
