Press Releases 2010

Mortgage commitments made reflected MünchenerHyp’s business strategy as the vast majority were made for financing private property. According to Dr. Louis Hagen, the Speaker of MünchenerHyp’s Management Board, “Demand for residential property in Germany remained high due to the favourable development of the economy and exceptionally attractive interest rates. We were even able to significantly expand our new business activities during the traditionally weaker summer months.”

MünchenerHyp successfully issued a Public Jumbo Pfandbrief during the third quarter as part of its refinancing activities. The Jumbo Pfandbrief issue had a volume of € 1 billion and a term of three years. The issue was priced at one basis point over the mid-swap rate. The order book containing a total of 110 orders from 14 countries was closed after a short time as the issue was more than two times oversubscribed.

Driven by the good new business results, net interest less commission income rose by € 18.2 million over the same year-ago period to € 88.9 million Euro. Administrative expenses rose by € 2.1 million to € 45.3 million. The cost-income ratio improved by almost 10 percentage points to 53.8 percent. Results from operations after making provisions for risk increased by € 10.3 million to € 30.4 million. On a pro rata basis annual net profits gained by € 0.6 million to € 8.4 million.

Total assets amounted to € 35.6 billion and remained at the level recorded at the end of 2009. Total mortgages outstanding noted for the year to date rose by more than € 0.9 billion to € 17.3 billion. During the same period the aggregate market volume of mortgage loans made by all banks in Germany stagnated. The total volume of MünchenerHyp’s portfolio of loans to the public sector and banks remained unchanged at € 14.1 billion. Total liable equity capital increased to € 1.2 billion. The total capital ratio as of September 30, 2010 was 10 percent.

Demand for MünchenerHyp’s property financing services is also expected to remain strong in the current quarter. For this reason the Bank anticipates that it will meet its new business goals as planned. Based on the improved net interest income figures, MünchenerHyp currently anticipates that its results for 2010 will achieve the previous year’s performance.

Just the Bank’s announcement that it was going to issue a 3-year Public Jumbo Pfandbrief had met with great investor interest. The issue’s target volume of EUR 1 billion was already reached within minutes after the order book was opened. The order book remained open for just a short time as the issue was more than two times oversubscribed. International investors represented about 40 percent of the subscribed volume with more than 10 percent placed in Asia alone.

The issue has a coupon rate of 1.5 percent and a term until October 4, 2013. The issue was priced at one basis point over the mid-swap rate. Moody’s has given MünchenerHyp’s Public Pfandbriefe its highest rating of Aaa. The transaction was co-managed by Barclays Capital, DZ BANK, LBBW, WGZ BANK and WestLB.

“The favourable response, broad regional placement and the very good price we achieved, impressively reflect the trust our investors have in us,” stated Klaus Sturm, member of the Münchener Hypothekenbank’s Board of Management.

The majority of the new mortgages were generated by the Bank’s Financial Services Network business with the Volksbanken and Raiffeisenbanken in the private property finance area. Following the severe winter, the Bank was able to substantially expand its volume of financing transactions in this area of business, above all in the second quarter. MünchenerHyp was also able to increase its volume of new business in the area of commercial property finance. “At the same time our strict risk standards remained unchanged. Based on our business strategy we concentrated on top tier mortgages with moderate loan-to-value ratios”, said Dr. Louis Hagen, Spokesman of MünchenerHyp’s Board of Management.

Despite the turbulent market environment, MünchenerHyp benefited from favourable refinancing conditions and issued a €1.25 billion, five-year Jumbo Mortgage Pfandbrief at a very attractive level in June.

The Bank’s earnings were favourably affected by the improved overall conditions in the property finance and capital markets. Net interest income less commissions rose by € 13.8 million over the same year-ago figure to € 62.3 million. Administrative costs increased slightly allowing the cost-income ratio to improve from the 63 percent noted at mid-2009 to 53 percent as of June 30, 2010. Results from operations after deducting provisions for risks improved by € 5.7 million to € 18.4 million.

Total assets amounted to € 36.0 billion, and were marginally higher than the comparable figure noted at the end of 2009 (€ 35.7 billion). In contrast to the stagnant situation noted for overall market volume, the Bank was once again able to increase its portfolio of mortgage loans in the first half of 2010 by € 0.8 billion to € 17.5 billion. Total liable equity capital rose to € 1.2 billion (€ 1.1 billion as of December 31, 2009).

MünchenerHyp anticipates that the second half of the year will see a continuation of the favourable development noted in the first six months. “We plan to gradually increase our property finance business. This does, however, require that the stabilisation tendencies seen in the markets strengthen and that the capital markets do not experience any new upheavals,” noted Dr. Louis Hagen. MünchenerHyp is striving to close out the year by posting results that are at the previous year’s level.

The € 1.25 billion five-year issue has a coupon of two percent. The order book was closed after just 50 minutes as the issue was oversubscribed with an order volume of € 1.5 billion. The new Jumbo Pfandbrief carries Moody’s highest rating of Aaa. The lead managers for the issue were BayernLB, Commerzbank, DZ Bank, LBBW, Unicredit and WGZ Bank.

“The successful placement confirms our investor oriented issuing policy and reflects the high level of confidence investors have in the quality of the Pfandbrief,” said Klaus Sturm, member of MünchenerHyp’s Board of Management.

WKN: MHB03J
ISIN: DE 000 MHB 03J8

Dr. Folz joined the Supervisory Board in 1990 and became its Chairman in 1998. Prior to this Dr. Folz had been a member of MünchenerHyp’s Board of Management between 1979 and 1989 and served as Spokesman of the Board of Management as of 1985. He also served as the President and Chairman of the Board of Management of the Bavarian Cooperative Association (Genossenschaftsverband Bayern) for ten years.

The Supervisory Board elected Konrad Irtel, who is the Spokesman of the Board of Management of the VR Bank Rosenheim-Chiemsee eG, as its new Chairman. Konrad Irtel joined the MünchenerHyp’s Supervisory Board in 2006. He became a member of the Board of Management of VR Bank Rosenheim-Chiemsee eG in 1988 and was elected Spokesman of its Board of Management in 2000. Moreover, Irtel has served as the honorary President of the Bavarian Cooperative Association since 2008.

Konrad Irtel thanked Dr. Folz for the major contributions he made towards the success of the MünchenerHyp during the many years he held senior positions of responsibility at the Bank: “In more than three decades, Dr. Folz fully committed himself to ensuring the success and further development of MünchenerHyp. We will continue to benefit from the results of his work in the future.”

Wolfhard Binder, Chairman of the Board of Management of the Raiffeisen-Volksbank Ebersberg eG was elected as a new member of the Supervisory Board. Hans Pfeifer, Chairman of the Board of Management of the Rheinisch-Westfälischer Genossenschaftsverband e.V., and Hans-Joachim Tonnellier, Chairman of the Board of Management of the Frankfurter Volksbank eG, were re-elected as members of the Supervisory Board.

Erich Rödel stepped down as Chairman of the Board of Management of MünchenerHyp due to age reasons as of the end of the delegates meeting on April 17, 2010. The delegates meeting elected Rödel as a member of the Bank’s Supervisory Board.

Erich Rödel became a member of the Board of Management of MünchenerHyp in 2001 and was appointed its Spokesman January 1, 2003. He has served as Chairman of the Management Board since 2007.

“We thank Erich Rödel for the success he achieved over the nine years he served as a member of the Board of Management. He led MünchenerHyp with enormous dedication and foresight as he launched important strategic measures that strengthened the Bank to meet the challenges of the future,” said the Chairman of the Supervisory Board, Konrad Irtel.

The Supervisory Board appointed Dr. Louis Hagen as new Spokesman of the Board of Management. Hagen has been member of the MünchenerHyp’s Board of Management since July 1, 2009. The current members of the Board of Management are Dr. Louis Hagen, Bernhard Heinlein and Klaus Sturm.

The Bank’s earnings continued their stable growth despite the fact that the MünchenerHyp was also impacted by effects of the economic and financial market crisis – especially in the first half of 2009 – and faced notable challenges. “Our business model, which is built on a combination of private and commercial property financing, has a stabilising effect on our results, especially during times of difficult economic conditions,” said Erich Rödel, Chairman of the Münchener Hypothekenbank’s Board of Management, during the annual results press conference.

MünchenerHyp’s net interest income rose by € 4.1 million to € 132.7 million. Market-driven burdens on net interest income were offset by favourable capital market results. Results from operations after making provisions for risk amounted to € 29.2 million, or € 3.7 million more than the same year-ago figure. The net result of the valuation appropriately reflected the risks in the current market environment. Net income for the year increased by € 0.8 million to € 11.0 million.

MünchenerHyp’s mortgage business activities were adjusted to meet the changed market conditions that were particularly influenced by the economic and financial market crisis. As a result, the total volume of new business recorded in 2009 was lower than in the previous year. However, the Bank’s volume of new business in the area of private property lending was at last year’s level and totalled € 1.8 billion. MünchenerHyp responded cautiously to the challenging economic and market situation in the commercial property financing area in 2009 and focused on serving existing customers. New financing deals were signed in this sector in the second half of the year as the situation in the capital markets was once again almost normal.

Despite the Bank’s strategic adjustments to its business activities, MünchenerHyp’s portfolio of mortgage loans grew by € 0.7 billion to € 16.6 billion. Total assets contracted from € 36.1 billion to € 35.7 billion at the end of 2009 due to reduced lending to the public sector and banks. Administrative expenses rose because of expenditures for personnel and material related to the Bank’s originally foreseen expansion plans. In response, the Bank introduced a comprehensive project to cut costs and increase efficiency in order to permanently reduce administrative costs.

MünchenerHyp encountered no problems in acquiring its refinancing requirements, despite the challenging market conditions seen in 2009. The Bank benefited, above all, from its good standing in the capital markets as an issuer and its solid position within the cooperative Financial Services Network (FinanzVerbund).Paid up capital rose by € 4.2 million to € 146.9 million. Equity capital strengthened, in particular, by the successful issue of a € 100 million Tier 1 bond. Total liable equity capital consists of € 1,134.7 million (previous year € 1,015.7 million).

The outlook for the current business year tended to improve as the situation in the capital markets has calmed. The situation in the property markets is, however, different and requires that business policy be acutely aware of potential risks. “We will return to selectively intensifying our acquisition activities in the property financing area in 2010. In doing so we will focus on both private property financing and business potential within the cooperative Financial Services Network, as well as selected segments of the commercial property financing market,” noted Erich Rödel. MünchenerHyp aims to post net income for 2010 that is at the previous year’s level.

For the first time in the history of covered bonds, The Cover/Euroweek initiated a survey among market participants to determine the most significant transaction in the 2000-2009 period.

“The fact that we were selected over almost 700 covered bond deals completed around the world during the past ten years reflects the great trust our partners have in us, and, above all, the trust our investors have in MünchenerHyp,” said Rafael Galuszkiewicz, Head of Treasury at MünchenerHyp.

The “Deal of the Decade“ issue had previously won the coveted “Covered Bond of the Year 2008” from IFR, a renowned financial industry trade magazine. MünchenerHyp has gained an outstanding reputation over the years in both the German and international markets thanks to its transparent refinancing strategy and the support it provides to investors. The Bank’s regular issues of Pfandbriefe are very well received by investors.