Geschäftsbericht 2015, englisch

münchener Hypothekenbank eg | annual report 2015 management report 36 Total portfolio of mortgage and other loans (including open commitments) Sovereign state 31 Dec. 2015 31 Dec. 2014 € relative € relative Austria 83,712,117.34 0.3 % 86,468,268.87 0.3 % France 253,680,546.05 0.9 % 328,108,652.83 1.3 % Great Britain 427,226,244.83 1.5 % 543,292,444.74 2.1 % Spain 173,868,358.99 0.6 % 180,231,516.48 0.7 % Luxembourg 48,626,000.00 0.2 % 33,500,000.00 0.1 % Sweden 0.00 0.0 % 4,863,941.23 0.0 % Switzerland 4,040,513,104.46 14.6 % 3,379,571,177.72 13.3 % The Netherlands 281,486,842.93 1.0 % 159,888,888.82 0.6 % Belgium 22,079,844.29 0.1 % 6,439,938.24 0.0 % USA 435,308,214.54 1.6 % 566,795,915.50 2.2 % Total foreign 5,766,501,273.43 20.8 % 5,289,160,744.43 20.8 % Total domestic and foreign 27,718,316,794.88 100.0 % 25,442,059,496.10 100.0 % The management of lending risks begins with the selection of the target business when drafting the terms of the loan, using risk-cost functions that are regularly reviewed. A variety of rating or scor- ing procedures are used depending on the type and risk content of the transaction. In addition, a computer-based early warning system is used to identify risks on a timely basis. A widely diversified property finance portfolio with an emphasis on residential property financing, combined with our credit approval procedures, which have proven their value over many years, ensures a portfolio with a low level of credit risk. Our lending business with public sector borrowers and banks is primarily focused on central and regional governments, regional and local authorities, and west European banks. Regional emphasis is on Germany or Western Europe respectively. Our objective is to achieve further substantial reductions in this portfolio for reasons including the introduction of the Leverage Ratio. Highly liquid sovereign bonds and other very creditworthy securities will, however, continue to be needed in order to meet the new liquidity requirements mandated within the framework of Basel III. Depending on their ratings, mortgage loans are examined to deter- mine any non-performance or other negative factors which could trigger an individual adjustment to value. Furthermore, an addi- tional system to monitor individual adjustment to value is used by the Bank’s work-out management group, especially for the non- retail market business. The Bank has created a general adjustment-to-value reserve as a precautionary measure to cover latent lending risks. This general adjustment to value is calculated per the terms contained in a Federal Ministry of Finance notice dated January 10, 1994. The key default rate mentioned in this notice is calculated using 60 percent of the average volume of defaults that took place over the last five years compared to the average volume of loans-at- risk made over this period. The general adjustment to value is the result of multiplying the default rate by the volume of loans-at- risk on the balance sheet date. Individual adjustments to value taken remained at a low level for our residential property financing business due to the great stability of the residential property market. This also generally applies for 31 Dec. 201531 Dec. 2014 Austria 83,712,117.340.3 % 86,468,268.870.3 % France 253,680,546.050.9 % 328,108,652.831.3 % Great Britain 427,226,244.831.5 % 543,292,444.742.1 % Spain 173,868,358.990.6 % 180,231,516.480.7 % Luxembourg 48,626,000.000.2 % 33,500,000.000.1 % Sweden 0.000.0 % 4,863,941.230.0 % Switzerland 4,040,513,104.4614.6 % 3,379,571,177.7213.3 % The Netherlands 281,486,842.931.0 % 159,888,888.820.6 % Belgium 22,079,844.290.1 % 6,439,938.240.0 % USA 435,308,214.541.6 % 566,795,915.502.2 % Total foreign 5,766,501,273.4320.8 % 5,289,160,744.4320.8 % Total domestic and foreign 27,718,316,794.88100.0 % 25,442,059,496.10100.0 %

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