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34 Management Report – münchener Hypothekenbank eg l annual Report 2011 Earnings, financial and asset situation balance sheet structure As of December 31, 2011 total assets amounted to € 37.3 billion, following € 35.2 billion recorded in the previous year. The in- crease in assets was due to the higher volume of outstanding mortgage loans and a temporary rise in liquidity in anticipation of a maturing Jumbo Pfandbrief for over € 1.8 billion maturing in January 2012. We were able to significantly expand our portfolio of mortgages and other property financing loans thanks to our good new business results, especially in the area of residential property financing. As of December 31, 2011 our total lending portfolio amounted to € 19.4 billion, or € 1.0 billion more than in the pre- vious year. Loans made outside of Germany represented approx- imately one-third of the portfolio, or € 6.0 billion (previous year € 5.9 billion). Of this total 50 percent were for loans made in Switzerland, 34 percent in the USA and 16 percent in countries within the European Union; € 15.6 billion of the mortgage loan portfolio serves as cover for the Pfandbriefe we issued. Loans and securities arising from our business with the public- sector and banks declined in accordance with our business and risk strategy from € 13.6 billion to € 13.3 billion. This figure con- tains € 6.2 billion in securities and promissory notes of which almost all are carried as fixed assets in our accounts. At the end of 2011 our portfolio of mortgage backed securities had declined to € 69 million (previous year € 125 million). As we are no longer investing in mortgage backed securities the portfolio will shrink further commensurate to the maturity profile of the securities. At the end of 2011 our portfolio of securities had unrealised losses of € 406 million (previous year € 331 million). We wrote down the value of bonds issued by Greece, and Greek corporate bonds guaranteed by the Greek government with total nominal value of € 108 million by € 65.3 million. Following a detailed examination of all the remaining securities we came to the conclusion that the loss in value is not perma- nent in these cases. MünchenerHyp is carrying these bonds in their books with the intention of holding them as long-term investments. Therefore, additional write-downs to the lower of cost or market value were not necessary. Our unrealised losses increased as the sovereign debt crisis in the European Union led to a widening of credit spreads in almost all market segments. We are also of the opinion that policymakers will take all mea- sures to hinder a renewed escalation of the debt crisis. For this reason we do not see any particular risk – with the exception of bonds issued by, or guaranteed by, the Greek government, for which we have taken corresponding write-downs – for bonds issued by the public sector or sub-sovereign borrowers. This also applies to covered bank bonds – due to the cover- age provided by the underlying assts. Our portfolio of long-term refinancing funds rose by € 0.3 billion to € 31.5 billion. Total refinancing funds – including money market – increased from € 33.6 billion in the previ- ous year to € 35.6 billion as of December 31, 2011. Residential housing Germany Residential housing Switzerland Commercial property Germany / other property finance loans Commercial property abroad / other property finance loans Portfolio development MünchenerHyp 2006 – 2011 in Mio. € 20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 2006 2007 2008 2009 2010 2011 12,117 14,150 16,004 16,684 18,455 19,410