Press Releases 2008

He will assume his new position in Munich no later than July 1, 2009. Hagen is currently employed as Chief Executive Office of the Association of German Pfandbrief Banks, where he has been for the past nine years. During this time he successfully reoriented the Association’s activities.

As a member of the Board of Management of Münchener Hypothekenbank he will be responsible for the Bank’s transaction management activities. This responsibility recalls his work at the HypoVereinsbank, where he was a director in the property lending-risk management division prior to his position with the Association of German Pfandbrief Banks.

The figure for net interest income less commissions declined slightly from € 74 million noted in the same year-ago period to € 72.2 million. The lower figure was mainly driven by higher commissions paid as our new mortgage business grew organically. Results from operations after making provisions for risks were € 22.3 million, which was also at the previous year’s level. The continuity in the results from operations is supported by the Bank’s conservative risk policy – especially in the new business area. “The development of our earnings demonstrates that we have a robust business model, which gives us stability, even against the background of the current crisis in the financial markets,” said Erich Rödel, Chairman of the Münchener Hypothekenbank’s Board of Management.

MünchenerHyp was also able to expand its new mortgage business in the third quarter. The Bank made € 3.9 billion worth of commitments for new mortgage loans until September 30, 2008 in comparison to € 2.9 billion in the same year-ago period. Gains were noted in both the private residential property and commercial property finance sectors. The favourable development of the new business results led to an increase in the Bank’s total assets and the value of its portfolio of mortgage loans. Since the end of 2007, total assets have risen by € 1.7 billion to  € 34.6 billion, while the Bank’s portfolio of mortgage loans and other loans rose by 9 percent to  € 15.5 billion.

At the end of August 2008 MünchenerHyp very successfully placed a three-year public Jumbo Pfandbrief. The € 1 billion issue was significantly oversubscribed and over 40 percent of the investors were foreign central banks.

Paid up capital increased by 8 percent to € 137.1 million. Many members bought additional shares after the Bank raised the share limit for private persons in the spring of 2008. “This reflects the trust our members have in the Münchener Hypothekenbank’s business policy,” noted Erich Rödel.

Property markets will be unable to avoid the consequences of the economic downturn. Nevertheless, MünchenerHyp is confident that in the course of the expected normalisation of the capital markets its business model will continue to enable it to achieve reasonable performance in its new mortgage business.

More than € 1.5 billion of the issue was already subscribed within 90 minutes after the Bank had opened its order book. Broad demand was noted for the issue at both national and international levels. The Bank received over 130 orders from 20 countries for a total volume of € 1.8 billion.

Klaus Sturm, member of the Münchener Hypothekenbank’s Board of Management, was very pleased with investors’ heavy demand for the issue: “The success of this Pfandbrief issue is a confirmation of our issuing policy, which is especially focused on meeting the needs of investors.”

The issue’s spread was one basis point below Euribor. The euro-denominated Pfandbrief is rated Aaa by Moody’s. Lead Managers for the transaction were BNP Paribas, Commerzbank, DZ Bank and Unicredit.

WKN: MHB02JISIN: DE 000 MHB 02J0

The favourable new business results led to an increase in the volume of mortgages held in the Bank’s portfolio, which – in contrast to the general trend observed in the market – increased by € 500 million to € 14.6 billion. Total assets increased since the end of 2007 from € 32.9 billion to € 33.6 billion. “In an unchanged difficult market environment, we were able to successfully assert our position. Our business results are developing as planned,“ said Erich Rödel, Chairman of the Münchener Hypothekenbank’s Board of Management.

Development of the mortgage businessMünchenerHyp’s commercial property finance business benefited from a renaissance of the classical lending and syndication business. Margins also developed favourably and were better in the Bank’s international area of business than within Germany. These overall conditions led to an increase in new commercial property loans in the first half of 2008 of € 550 million to € 1.1 billion, or almost twice as much as in the same year-ago period. The major portion of lending commitments made was in the Bank’s international area of business, with key emphasis, once again, on the USA, UK and France. “We continued to adhere to the proven principles of our risk policy and focused our activities on the lower-risk, top-tier financing business,” said Erich Rödel.

Reduced demand in the German market was notably evident in the area of private residential property lending. In addition, the already high level of pressure on margins rose further. For these reasons the volume of new business posted by the Bank in the first half of 2008 amounted to € 650 million, or € 115 million less than in the same year-ago period. Loans with terms of ten years and longer, in particular, developed favourably as demand for these loans rose due to the current inverse structure of interest rates.

The collaboration with the Swiss PostFinance began as planned in June 2008. Within the framework of our joint efforts, PostFinance will broker mortgage loans from Switzerland to Münchener Hypothekenbank. The volume of loans brokered developed very favourably in the first month of our new business relationship.

Key resultsDespite the continuing burden of the financial markets crisis on overall conditions, our net interest income was at the previous year’s level and amounted to € 62.3 million.  The same applies for our results from operations after deducting provisions for risks, which totalled € 15.1 million.

OutlookOverall conditions in the property finance markets are not anticipated to improve substantially in the second half of the year because of the continuing crisis in the financial markets and increasingly weaker economic conditions. However, the Board of Management does expect the Bank to record favourable developments in the second half of 2008. The reason for this is that MünchenerHyp has further strengthened its image in the market by actively developing its markets and gaining a reputation for reliability in handling loans. To the extent that economy and interest rates do not change significantly, MünchenerHyp expects that it will be able to achieve its new business targets for the full year 2008. “Based on specially targeted made investments in the Bank’s personnel development program and technical systems, our growth strategy has proven that it is sustainable – even in the current business environment,” noted Erich Rödel.

In his new position on the Board of Management Mr Heinlein will continue to focus on the further expansion of the Bank’s residential property finance business.

The current members of the Board of Management of MünchenerHyp are: Erich Rödel (Chairman), Dr. Bernhard Scholz, Klaus Sturm and Bernhard Heinlein (deputy).

The rating for the Bank’s secured Pfandbriefe remained unchanged at Aaa.

The outlook for all ratings was set at stable.

”Both in residential housing finance and in commercial property finance we have achieved considerable growth – in spite of serious additional challenges, such as the merger negotiations with the DG HYP”, said Erich Rödel, Chairman of the Board of Münchener Hypothekenbank.

The good result in new business also ensured an expansion of the mortgage portfolio. Its current volume amounts to EUR 14.1 bn, i.e. around EUR 2 bn more than in the previous year. This contains a portfolio of residential property loans amounting to EUR 0.7 bn, which was acquired in summer 2007. Total assets rose by EUR 1 bn to EUR 32.9 bn. Cost development continued to be favourable. The cost-income-ratio fell below 50 per cent.

Since 2004, MünchenerHyp has made clear progress both in earnings and costs. Since then, new business has risen by more than 130 per cent, while at the same time administrative expenditure has fallen by EUR 4.6 bn to EUR 49.8 bn in 2007. MünchenerHyp attributes the positive results to the MHB2008 strategy programme, which was successfully implemented in recent years.

In the residential housing finance business sector, Münchener Hypothekenbank, with commitments of EUR 1.62 bn, is for the first time the market leader in the cooperative Financial Services Network (FinanzVerbund). A main contributor to this result was the high demand for forward loans and the joint market approach together with the Volksbanken and Raiffeisenbanken, which was further intensified last year. The commercial property finance sector also developed positively. EUR 1.81 bn of new loans were committed, of which more than half, EUR 1.09 bn, went on business abroad.

The financial market crisis did not affect the business and the results of MünchenerHyp. ”Neither our loan nor our bond business has any involvement in the subprime segment. The crisis therefore has no direct effect on us”, said Erich Rödel. Furthermore, MünchenerHyp is profiting at the moment from the renaissance of the traditional credit business, which began with the decline in the securitisation business. This permitted the bank to exploit its growth chances as an established and attractive partner in commercial property finance.

Risk provision was stable, at a low level. Individual value adjustments fell in the last few years. Operating profit rose over 13 per cent to EUR 31.6 million.

In the current year, MünchenerHyp has set itself the task of organic growth under its own steam. “In the mortgage business, we wish to get close to the figure of EUR 4 bn in loan commitments”, said Erich Rödel on the aims for the current year. In residential housing finance, the bank wishes to strengthen its position as the market leader in the cooperative Financial Services Network. Additional market potential is to be opened up by more intensive collaboration with other sales cooperation partners. Maintaining our conservative risk strategy, the commercial property finance sector will be further expanded in Germany and abroad.