The Bank noted a strong surge in demand for residential property financing especially during the summer months. The number of loan applications received by the Bank during these months was 50 percent higher than normal “The turbulence in the financial markets has increased the demand for residential property among owner-occupants and capital investors. Investments in German residential property have proven their value over the years as being stable and safe,” said Dr. Louis Hagen, Spokesman for the Münchener Hypothekenbank’s Board of Management.

The Bank posted notable year-over-year growth in its volume of business with the Volksbanken and Raiffeisenbanken, broker sales, as well as in the commercial property finance area of business. The total volume of new mortgage business noted as of September 30, 2011 amounted to € 2.4 billion.

Despite the higher volume of new business recorded, net interest income less commissions remained at the previous year’s level and was € 68.0 million. The primary reason for this was the substantial rise in commissions paid. Administrative expenses rose to € 48.6 million from the € 45.3 million recorded for the same year-ago period. The increase was mainly due to the first-time payment of the bank levy in 2011.

Results from operations after making provisions for risk amounted to € 8.5 million. The Bank’s exposure to risk in its mortgage business has further improved due primarily to the successful restructuring its business in the USA. The Bank did, however, write down its entire Greek portfolio by 50 percent. As in the same year-ago period the Bank posted net income of € 8.4 million as of September 30, 2011.

Total assets rose by € 0.8 billion since the end of 2010 to € 36.1 billion. The high volume of new business noted had a favourable effect on the development of the Bank’s mortgage portfolio, which expanded by about € 0.7 billion during the first nine months of this year to € 19.1 billion.

Members’ capital contributions rose by over four percent as numerous members purchased additional shares. “This is a reflection of the great trust our members have in MünchenerHyp’s business policy in today’s difficult times,” stated Dr. Louis Hagen.

The strong growth in new business continued undiminished into the current month. For this reason MünchenerHyp anticipates that it will exceed its new business target for this year.

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“Our goal is to grow sustainably and organically. During the first half we again made significant progress towards this goal,” said Dr. Louis Hagen, the Spokesman of MünchenerHyp’s Management Board, commenting on the bank’s business development.

MünchenerHyp was also able to expand its market position in its Cooperative Financial Network business with the Volksbanken and Raiffeisenbanken, in particular, and further expanded the volume of brokered loans by more than one-third. The bank’s commercial property finance business benefited from strong demand seen in its core markets of Germany, France, and the United Kingdom. Total volume recorded here for the first half was € 370 million, which already equals the amount posted for full year 2010.

Despite the unchanged difficult and volatile environment, MünchenerHyp continued to benefit from unhindered access to the financial and capital markets. “We profited from MünchenerHyp’s high standing in the market, as well as from the quality of the coverage pools backing our Pfandbriefe,” noted Dr. Louis Hagen. The bank acquired € 4.0 billion in refinancing funds from the market during the first half, of which Mortgage and Public Pfandbriefe accounted for € 2.8 billion.

Net interest income remained at the previous year's level of € 61.8 million. Administrative expenses rose by € 1.2 million over the same year-ago figure to € 32 million. MünchenerHyp’s cost/income ratio rose slightly as a result. The risk position in the bank’s mortgage loan business improved due to resolute risk discipline and successful credit restructuring measures that took place in past years. The bank holds modest investments in countries on the periphery of the euro zone. Based on a recommendation made by the Institute of Public Auditors (Institut der Wirtschaftsprüfer – IDW) for the German credit sector, MünchenerHyp wrote down € 8.6 million in the claims it holds against Greece.

Results from operations after making provisions for risk rose by more than 20 percent to € 7.6 million. Net profits attributable for the first six months of the year amounted to € 4.8 million and were slightly higher than the figure noted for the same year-ago period.

Total assets only changed slightly and amounted to € 35.4 billion. Our loan portfolio also developed stably. Liable equity capital declined slightly to € 1,185 million due to repayment of subordinated loans.

MünchenerHyp anticipates that its business will continue to develop favourably over the remainder of the year. This outlook, however, is based on the premise that overall economic conditions do not worsen due to a further exacerbation of the sovereign debt crisis. Against this background, the bank is striving to achieve net profits that will be at the previous year's level.

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Many of the markets that are important for us stabilised again in 2010. Specifically, our core market – the German residential property market – developed dynamically. As a result, we once again encountered numerous attractive business opportunities,” said Dr. Louis Hagen, Spokesman for the Münchener Hypothekenbank’s Board of Management at the property financer’s Annual Results Press Conference today.

The favourable development of new business was also reflected in MünchenerHyp’s mortgage loan portfolio as it rose by about 10 percent to € 18.4 billion. This growth was primarily driven by loans made to finance residential properties. The Bank’s portfolio of commercial property finance loans remained stable.

MünchenerHyp’s refinancing activities benefited from a favourable climate for Pfandbrief issues and the Bank’s strong reputation in the capital markets. “Our Jumbo Pfandbriefe, in particular, met extremely high investor demand, which had a positive effect on our refinancing conditions,” noted Dr. Louis Hagen.

Good new business results, growing portfolios as well as favourable refinancing conditions all contributed towards the Bank’s € 8.0 million increase in net interest income, which amounted to €124.5 million. Administrative expenses fell marginally by € 0.5 million to € 58.9 million. This led to a significant improvement in the cost-income-ratio.

Results from operations after making provisions for risk, which remained relatively stable, rose by € 3.7 million to € 16.7 million Euro. MünchenerHyp continued to benefit from the above-average quality of its loan portfolio. Annual net profit for the year was € 11.0 million, or close to the level posted in the previous year.

At the end of 2010 total assets amounted to € 35.2 billion, or € 0.5 billion below the same year-ago level. Paid up capital rose by € 4.6 million to € 151.5 million. Total liable equity capital consisted of € 1,198.0 million, or € 63.2 million over the same year-ago figure. The core capital ratio stood at 6.4 percent at the end of 2010 while the total capital ratio was 10.0 percent.

MünchenerHyp plans to continue expanding over the long term and sustainably strengthen its earning power. “Last year we further adjusted our business and risk strategy with this goal in mind. In the future we will focus even more strongly on financing residential and commercial properties in Germany. In this context we view our cooperation with the Volksbanken and Raiffeisenbanken, above all else, as having great potential that we want realise together,” said Dr. Louis Hagen.

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The issue was greeted by heavy demand and favourable comments as market players spoke of a positive start to the new covered bond year.

Despite the quiet market situation following the holidays, the planned volume of € 1 billion was reached for the new issue within an hour as the order book was closed after receiving a wide range of orders from domestic and international investors. European investors accounted for about 25 percent of the volume noted.

The issue will mature on January 11, 2016, and has a coupon of 2.5 percent. It was priced at ten basis points over the mid-swap rate. Moody’s has given its highest rating of Aaa to   MünchenerHyp’s mortgage Pfandbriefe. The transaction was managed by Barclays Capital, DZ BANK, LBBW, UniCredit and WGZ BANK.

“Jumbo Pfandbriefe are highly sought after investments in the current environment. For this reason we wish to offer attractive investment opportunities to our investors by continually issuing new securities,” said Dr. Louis Hagen, the Spokesman of MünchenerHyp’s Management Board.

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