Münchener Hyp raises new lending thanks to Pfandbrief strength

Co-operative German mortgage bank Münchener Hypothekenbank increased its new lending last year by about 7% to €3.6bn, largely thanks to having to pay effectively the lowest risk premiums in its history on its Pfandbrief-issuing programme.

The bank is a leading residential mortgage provider, with residential financing alone making up nearly €3bn of the €3.6bn in new loans. Its biggest gains came from its business with its partner bank in its cooperative network, mainly the Volksbanken and the Raiffeisenbanken, which rose by 25%. Newly-approved loans for commercial property rose by 14% to €0.7bn, of which about two-thirds were for loans within Germany.

While the bank’s total assets declined slightly to €36.6bn, the mortgage loan portfolio rose by some 8% to about €21bn, with the vast majority of these loans being for domestic financing transactions, while the portfolio of public sector and bank loans shrunk further from €13.3bn to €12.1bn.

“Our net income figure for the year improved substantially, and in addition, the bank was able to obtain very good conditions from the capital markets”, said Dr. Louis Hagen, the bank’s chairman, at the recent results press conference.

As an example, earlier this month Münchner Hyp launched an eight-year mortgage Pfandbrief with a volume of €750 million.  The bond was well received, with 66 orders from 9 different countries, with more than half being taken up outside Germany. The bond has a coupon of 1.375%, with the price fixed at mid-swap plus 3bps. Despite the miniscule yield, lead managers BayernLB, DZ Bank, HSBC, LBBW, UniCredit and WGZ Bank all had little difficulty in stepping up to accompany the issue.

Just last week Münchener Hyp issued its first sterling denominated benchmark bond, a Stg₤200m three-year mortgage Pfandbrief, issued as a floating rate note with a coupon of 3 months GBP-Libor plus 20bps.  Barclays, Goldman Sachs and Nomura lead-managed the bond, which saw UK investors take up nearly 60% of the issue, followed by Germany, Switzerland, and Asia. Buyers of the bonds were banks and funds with nearly 40%, along with sovereign funds and central banks.