A number of German financing banks have had a somewhat muted start to the year despite the withdrawal of a number of key players, although most are issuing bullish statements about what they expect to write in new business over the second half. Along with Aareal Bank, two further lenders to anticipate boosting their new financing business between now and the end of the year are the resurgent Corealcredit Bank and Münchner Hypothekenbank.
Corealcredit, which has been nursed back to health from its previous incarnation as the nearly-defunct AHBR by distressed specialist Lone Star, and is now purely focused on the German market, wrote a total of €550bn in new business during the first half, down 20% on the corresponding period’s €704m last year.
However, the company said it expects new business to increase sharply in the second half, exceeding the first-half figure as well as the previous year when roughly €390m of new business was recorded in H2. In a statement, the bank said “Demand for financing continues to be high. At present, a host of attractive financing enquiries are nearing approval, which means that an increase in the new business volume can be expected in the second half of the year.”
Profitability improved considerably, with average margins markedly higher than the already fairly profitable margin for the previous year. Corealcredit, which focuses on financing commercial real estate and residential portfolios, had some €9.3bn of assets at end-June 2012, including €3.9bn of property debt.
In the first part of 2012, Corealcredit refinanced €1.15bn in the capital markets, including €590m through the issue of a mortgage Pfandbrief.
Meanwhile, Münchner Hypothekenbank raised its new mortgage business in the first six months of 2012 by 25% year-on-year to €2.0 billion. Of this, €640m was new business for commercial property lending. The new business was underpinned by strong demand by German and foreign investors for the traditionally conservative bank’s mortgage Pfandbriefe.
At the end of May the Bank issued a ten-year Jumbo Pfandbrief with a nominal value of €1 billion, which was followed a few weeks later by a three-year benchmark issue of over US$500 million. During the first half of 2012 the bank tapped the capital markets for a total of €4.4 billion in refinancing funds, three quarters of which were mortgage and public Pfandbriefe.
Presenting its half-year figures in Munich recently, the bank showed total asset rising since end-2011 by €2bn to €39.3bn, while it was able to further increase its portfolio of mortgage loans by €0.8bn in the first half to €20.3bn. The core capital ratio – based on the bank’s own internal ratings-based approach introduced last year, was 8.7% at end-June, while the total capital ratio was 12.9%.
According to chairman Dr. Louis Hagen, “We anticipate that demand for property financing will remain very high not least due to the unchanged critical situation in the eurozone and the low level of interest rates. We therefore believe that we will exceed our new business targets for the full year.”