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Press Releases

MünchenerHyp meets ECB’s equity capital requirements

26.10.2014 - Münchener Hypothekenbank eG is well prepared for the European Central Bank (ECB) to take over supervision of the Bank.

This is based on the results of the Comprehensive Assessment that were announced today by the ECB. MünchenerHyp achieved excellent grades within the scope of the Asset Quality Review. The subsequent stress test that was carried out based on the annual financial statements for 2013 revealed that the Bank did not meet the required minimum common equity Tier 1 capital ratio. However, the Bank vastly exceeded the minimum level following the capital increase that took place during 2014. “We are pleased that the ECB audit has confirmed the solid standing of MünchenerHyp and its business model”, said Dr. Louis Hagen, Spokesman for the Münchener Hypothekenbank’s Board of Management.

MünchenerHyp passed the Asset Quality Review with flying colours. No corrections were needed. In particular, the AQR certified that the Bank had made more than adequate provisions for risk. These results reflect the Bank’s very cautious approach and that it makes sufficient provisions for risks on a timely basis. “We feel that these results underline the value of our very low risk business policy. We will continue our successful growth strategy based on this platform”, noted Dr. Louis Hagen.

MünchenerHyp already knew that it needed to raise its common equity Tier 1 capital ahead of the stress test based on the annual financial statements for 2013. This resulted in the Bank initiating a successful effort to attract additional paid up capital from within the Cooperative Financial Network and among private members of the cooperative. These efforts provided the Bank an additional 415 million euros of common equity Tier 1 capital and also raised its common equity Tier 1 capital ratio to 12.3 percent as of September 30th 2014. This level of capital enabled the Bank to significantly exceed the required minimum ratios set out in the two stress test scenarios for the entire review period (see chart).

Last week MünchenerHyp announced its business results for the period ending September 30, 2014, which showed that the 2014 business year is very successful. The figures revealed that the Bank increased its new property finance business by 22 percent to 3.2 billion euros while net income   for the period amounted to 16.4 million euros, or 75 percent more than in the same year-ago period. Dr. Louis Hagen stated: “Our level of capitalisation and our good business performance allow us to look ahead to the future with great confidence.”

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MünchenerHyp’s new business and earnings rise significantly

22.10.2014 - Münchener Hypothekenbank eG remains on its growth path as it significantly increased its new business results again in the third quarter.
Up until the end of September 2014 the Bank had made new property financing commitments of 3.2 billion euros, or 22 percent more than in the same year-ago period.

The lion’s share of new business was generated by loans for houses and condominiums. In this segment the Bank made lending commitments of about 2.7 billion, which represented a gain of 28 percent over the same year-ago period. MünchenerHyp’s commercial property financing business recorded stable development with results of 535 million euros reaching the previous year’s level. “We are very pleased with the development of our business, especially in the residential property finance segment where we were able to expand our market position further”, said Dr. Louis Hagen, Spokesman for the Münchener Hypothekenbank’s Board of Management. 

Earnings also developed favourably. Net interest income rose by 13 percent to 120.2 million euros. These results made it possible to offset the higher commission expenses incurred due to the strong gains in new business. This meant that net interest income and net commission income improved by 13 percent to 77.5 million euros.

The Bank once again recorded very strong refinancing results. In September MünchenerHyp generated notable commotion in the capital markets when it issued the world’s first sustainable Mortgage Pfandbrief (ESG Pfandbrief). The 5-year issue with a volume of 300 million euros was priced ten basis points below the mid-swap rate. The Pfandbrief is unique because its coverage is based on ecological, social and socio-political sustainability criteria.

The Bank’s portfolio of mortgage loans expanded due to successful new business results. Since the start of the year MünchenerHyp increased the volume of its loan portfolio by 1.3 billion euros to 22.6 billion euros. In addition, this figure also contributed to the increase in the Bank’s total assets, which rose from 34.9 billion euros to 36.2 billion euros during the first nine months of the year. The Bank’s portfolio of securities generated by its capital markets business declined further as planned.

MünchenerHyp remains very satisfied with risk situation in its property financing business. Results from operations after making provisions for risk increased by 10.3 million euros to 25.0 million euros. Net income amounted to 16.4 million euros, or 7 million euros more than recorded in the same year-ago period.

Starting in November 2014 MünchenerHyp will be placed under the direct supervision of the European Central Bank (ECB). In anticipation of the ECB’s capital requirements the Bank significantly strengthened its level of capital during the first half of the year. This was achieved through a major effort to attract additional paid up capital. During the third quarter the Bank was still recording open subscriptions to purchase shares that were generated by these efforts. As a result MünchenerHyp’s common equity Tier 1 capital ratio rose by over one percentage point from the end of the first half of 2014 to its current level of 12.3 percent. The ECB requires banks that it supervises to have a minimum common equity Tier 1 capital ratio of 8 percent. On September 30, 2014 MünchenerHyp had a core capital ratio of 15.6 percent and a total capital ratio of 19.7 percent.

As the Bank enters the final quarter it is confident that it will achieve its goals and will exceed the previous year’s level of new business. “The effectiveness of our growth strategy is tirelessly gaining strength and will continue to have a favourable impact on our earnings power“, noted Dr. Louis Hagen.

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High honours for Rafael Scholz, MünchenerHyp’s Head of Treasury, and the first issue of a sustainable Pfandbrief

30.09.2014 - Rafael Scholz, MünchenerHyp’s head of treasury, has been honoured with the Editor’s Choice Award given by The Cover, a British trade publication.
The Award is presented on an irregular basis for outstanding performance in the covered bond segment.

Rafael Scholz received the prize for the world’s first issue of a sustainable Pfandbrief (ESG Pfandbrief), which was successfully placed this month by MünchenerHyp. The issue generated great attention in the financial community and among investors focused on the concept of sustainability. The publisher of The Cover, Bill Thornhill, praised the ESG Pfandbrief as ground-breaking in the fast growing market for socially acceptable investments and paid tribute to Rafael Scholz as the architect of this issue.

“MünchenerHyp’s Board of management congratulates Mr. Scholz and all of the colleagues involved in the preparation and execution of this premiere issue. Their exceptional shared efforts made it possible to successfully venture into new territory”, said Dr. Louis Hagen, Spokesman for the Münchener Hypothekenbank’s Board of Management.

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Capital market premiere: MünchenerHyp issues the first sustainable Mortgage Pfandbrief

17.09.2014 - Münchener Hypothekenbank eG generated a notable excitement in the capital markets today when it issued the world’s first ESG Mortgage Pfandbrief (Environment, Social, Governance).

Coverage for the issue is based on sustainable ecological, social and political-socio criteria. The € 300 million issue was very successful and was oversubscribed by a factor of 1.6 within a short period of time.

“We are quite pleased by the market’s exceptionally favourable response to our premiere issue. At the same time it also reflects the important role that sustainability already plays today for investors in the capital market”, said Dr. Louis Hagen, Spokesman for the Münchener Hypothekenbank’s Board of Management. 

The sustainable Mortgage Pfandbrief has a term of five years and a coupon of 0.375 percent. Due to heavy demand the issue was priced 10 basis points below the mid-swap rate.

Germany accounted for more than 60 percent of the demand shown for the issue. Orders were received from 7 European countries while on the investors’ side, 47 percent, of the volume was acquired by banks. It was notable that about one third of the volume issued was purchased by sustainability-oriented investors. “The new issue enabled us to generate enthusiasm for the Pfandbrief among new investors and introduce them to MünchenerHyp”, said Rafael Scholz, MünchenerHyp’s Head of Treasury.

The issue was accompanied by Crédit Agricole, LBBW and WGZ BANK.

The rating agency Moody’s has given its highest rating of Aaa to MünchenerHyp’s Pfandbriefe. In addition, MünchenerHyp requested oekom research, a sustainability rating agency, to examine the sustainable merits of the issue. In their second party opinion oekom research stated that the Mortgage Pfandbrief did embody favourable sustainability and confirmed the issue’s social and ecological aspects.

MünchenerHyp will use the proceeds of the Mortgage Pfandbrief issue to refinance loans to cooperative home building associations in Germany that meet specific sustainability criteria. Cooperative home building associations promote the creation of affordable housing for broad segments of the population. The loans granted by MünchenerHyp will be used to purchase, build, or maintain housing that will be used by socially weaker members of society and will also be employed to renovate buildings to make them more energy-efficient. In total, the proceeds of the Pfandbrief will provide support to about 200 cooperative home building associations.

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MünchenerHyp records a strong first six months for 2014

26.08.2014 - Münchener Hypothekenbank eG stated today that it was very satisfied with the development of its business during the first half of 2014 as new business increased by 24 percent.

Up until June 30, 2014 the Bank had made € 2.1 billion in property loans (previous year € 1.7 billion). Earnings also improved substantially. Net interest income and net commission income rose by 13 percent to € 53.5 million. “We were able to further increase last year’s good results and are making good progress towards the planned increase of our earnings power“, said Dr. Louis Hagen, Spokesman for the Münchener Hypothekenbank’s Board of Management, during today’s announcement of the Bank’s first half year results.

MünchenerHyp was able to significantly expand its new business with all of its collaborating partners. The greatest gain was recorded for the Bank’s brokerage business with its partner banks within the Cooperative Financial Network. According to Dr. Louis Hagen, “This area of our business also benefited from the good overall conditions in the German residential property market, but above all from the sales strength and close customer proximity of our partners in the Cooperative Financial Network.”

The Bank’s commercial property finance business was at the previous year’s level with Germany the unchanged primary focus of its lending activities.

MünchenerHyp continued to be able to tap the capital markets for refinancing funds at very good conditions. In the spring the Bank placed a ten-year Mortgage Pfandbrief with a benchmark volume of € 500 million. Demand was very strong for this issue. In addition, MünchenerHyp was voted the best “Covered Bond & Pfandbriefbank 2014” in an international survey of major banking clients conducted by Euromoney, a trade publication.

The Bank’s risk situation in its property finance business remained very satisfactory. As of June 30, 2014 results from operations after making provisions for risk had risen by € 5.6 million over the same year-ago figure to € 16.7 million. After deduction of tax expenses MünchenerHyp recorded a pro rata temporis net income figure for the year of € 11.1 million (previous year € 5.4 million).

Total assets posted at mid-year amounted to € 35.7 billion or € 0.8 billion more than the figure noted at the close of 2013. Due to the favourable development of its new business activities the Bank was once again able to expand its mortgage portfolio, which grew to € 22.2 billion in the first half of the year following € 21.5 billion recorded on December 31, 2013. The Bank’s portfolio of securities generated by its capital markets business declined further as planned and at the mid-year point amounted to € 9.9 billion in contrast to the € 10.3 billion noted at the end of 2013.

As of November 2014 MünchenerHyp will be placed under the direct supervision of the European Central Bank (ECB) as the value of its total assets exceeds €30 billion. MünchenerHyp increased its capital resources substantially during the first half of 2014 as part of its efforts to fulfil the ECB’s supervisory requirements. The Bank achieved this by successfully attracting about € 370 million in additional paid up capital from the Cooperative Financial Network and an additional € 30 million from its private members.

On June 30, 2014 MünchenerHyp had a common equity Tier 1 capital ratio of 11.1 percent following 6.3 percent recorded at the end of 2013. This figure significantly exceeds the 8 percent minimum ratio required by the ECB. During the same period the Bank’s core capital ratio grew from 11.7 percent to 14.4 percent, while the total capital ratio increased from 16.7 percent to 18.6 percent. “In our view, with this level of equity capital we are sufficiently capitalised and well prepared to meet the coming regulatory requirements. We also intend to continue our successful growth strategy based on this foundation“, said Dr. Louis Hagen.

Despite the heavy burdens created by the current ECB review, MünchenerHyp intends to continue the success it has experienced in the first six months of the year and is striving to achieve a higher volume of new business especially in its residential property financing area of business than it recorded in the previous year. “We continue to expect to see high demand for property financing, especially in Germany, as overall conditions in the property market remain favourable”, remarked Dr. Louis Hagen. The Bank also anticipates that it will be able to increase its net income for the year.

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