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Geschäftsbericht 2013, englisch

8 Letter from the Board of Management – münchener Hypothekenbank eg l annual Report 2013 Letter from the Board of Management MünchenerHyp developed favourably during the last business year. This was based on the growth strategy we developed in re- sponse to the changes and challenges caused by the crisis in the financial markets. Our central strategic goal is to sustainably strengthen MünchenerHyp’s earnings power. To achieve this we notably strengthened our market development activities in our core business areas of residential and commercial property financing during the previous years. Growth strategy gains traction Our course of growth is long-term oriented, which is why our achievements develop successively. During 2013 we took an- other important step forward as we substantially improved our business results. Due to unbroken strong demand for residential property, as well as a growing demand for commercial property in Germany, we were able to further expand our market position in the area of new business. The property boom also led to fiercer competition that is being increasingly fought using financing conditions. We successfully affirmed our position in the market thanks to the strong sales power of our partners – above all the Volks- banken and Raiffeisenbanken. We did not, however, take on higher risks to achieve this as our conservative risk policy re- mained unchanged. Our successful new business results posted last year and in the previous years are increasingly reflected in our net interest income figure, which rose by more than 11 percent in 2013. MünchenerHyp’s stable risk situation clearly shows that our growth is taking place at an acceptable level of risk. Provisions made for risks continue to be at a low level as we place more and more distance between us and the turmoil generated by the crisis in the financial markets. Award-winning issuer Our successful new business is also based on obtaining refinanc- ing funds via Pfandbriefe, which enables us to maintain attractive conditions and a high degree of matching maturities. During the past year we again issued numerous Benchmark Mortgage and Public Pfandbriefe. Demand for some of these issues was so strong that we were able to tap them shortly after they were initially placed. We were very pleased to receive very prominent recognition as an issuer. MünchenerHyp received awards for being the “Best Global Issuer” and “Best Euro Issuer” from The Cover, a financial news service held in high regard by the financial sector. These prizes are a great motivation for us as they were awarded based on the votes of investors and other market participants. Supervisory changes Last year we made clear advances towards meeting the require- ments of Basel III. In particular, we substantially strengthened our level of equity capital. At the end of the year we achieved a total capital ratio of over 16 percent thereby providing us with a comfortable level of capital for our business model. The announcement that the European Central Bank (ECB) will assume responsibility for the supervision of 124 banking groups in Europe, including MünchenerHyp, posed new challenges for us. This change is scheduled to take place on November 4, 2014 and will result in significantly stricter regulatory requirements, especially those concerning the structure of equity capital. The new rules will require a common equity Tier 1 capital ratio of at least 8 percent. However, based on the Basel III requirements – which we have based our planning on – the required ratio was only 7 percent and it had to be met by 2019. In addition, our bank will also be required to undergo extensive examinations of its balance sheet as well as stress tests. As a mid-sized bank our efforts to meet the new ECB require- ments in this short period of time will involve high costs for human and material resources. Thus, we will attract addition- al paid up capital to further strengthen our level of common equity Tier 1 capital. To achieve this we will primarily address banks within the Cooperative Financial Network as we are close- ly linked to them due to our legal status as a cooperative bank, as well as through our membership in this network. The Coop- erative Financial Network associations have also assured us of their support. In addition, our members outside of the Network are also welcome to subscribe additional shares. For these rea- sons we are confident that we will be able to attract the required DEAR SHAREHOLDERS AND BUSINESS ASSOCIATES,

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