Münchener Hyp boosts new business by 23%, bolsters capital
Real estate financing bank Münchener Hypothekenbank posted its most-ever new business lending in 2014, up 23% year-on-year to €4.4bn. the big driver was increased lending to the private residential sector, which rose 28% to €3.4bn. Commercial property lending, including the financing of residential investment from housing companies, rose 8% to €1.1bn.
The bank said at its annual results press conference that its refinancing needs were sharply lower in 2014, with less paper maturing during the year. A total of €3.4bn in refinancing funds were raised from the capital markets via covered and uncovered securities, primarily through the issue of two large-volume Pfandbriefe, including its innovative Sustainable Mortgage Pfandbrief, which was a world premiere in its category.
The bank’s total assets rose by €1.4bn to €36.3bn; mortgage loans grew by €2bn to €23.4bn, of which domestic residential property loans made up €1.9bn. Overall, annual net income rose to €16.1bn from €6.7bn the previous year.
As the only German bank to have officially failed the European Central Bank’s more stringent stress tests last year (based on 2013 figures), Münchener Hyp obviously paid particular attention to making sure that its core capital ratio is now seen as beyond blemish. Last year, in anticipation of the harsh judgement by the ECB, the bank raised its core capital ratio from 6.9% to 12.5% by pumping in more than €400m in new capital, well ahead of the minimum recommended 9.8% by the ECB. The money raised came from the bank selling shares in the Cooperative Financial Network (“Finanzgruppe”) – the 13,000 branch offices of the Volksbanken and Raiffeisenbanken network with which the bank is affiliated. Only in respect of its so-called Leverage Ratio – the ratio between its equity capital and its balance sheet – is the bank still below the threshold of 3%, but has until 2018 to rectify this.
The bank also took a hit by writing off 45% of a €50m bond from scandal-ridden Hypo Alpe Adria’s bad bank Heta, and will write off a further 5% in this year’s first quarter to comply with the ECB’s demand of all German banks to write down their Heta holdings by at least half.
As to new business this year, CEO Dr. Louis Hagen said the bank planned to further expand new business with demand for German property remaining so high. He noted, "currently we are primarily concerned about the proliferation of regulatory requirements, and especially their impact on us as a mid-sized financial institution. We plan to offset the related burdens by further increasing MünchenerHyp’s earnings power.”