HSH Nordbank: good earnings posted by the Real Estate division

  • Earnings after risk provisioning up 5.5% to EUR 193 million
  • New business worth EUR 12 billion after nine months

Hamburg/Kiel, November 7, 2007 - HSH Nordbank’s Real Estate division improved its operating earnings after risk provisioning by 5.5 per cent to EUR 193 million (previous year: EUR 182.5 million) in the first nine months of 2007. This positive result was also attributable to lower risk provisioning, which went down significantly on the previous year, from EUR 67 million to EUR 43.6 million. Net interest income rose by just under 4 per cent to EUR 267 million (previous year: EUR 258 million). Commission income dropped from the previous year's high level of EUR 111 million to just under EUR 100 million. Return on equity decreased slightly from 18.8 to 18.6 per cent compared to the same period of last year.

Following a subdued start to the year, finance business picked up in the second and third quarter mainly as a result of the sustained strong demand for real estate investments. New business worth EUR 11.8 billion outstripped the already high level of EUR 11.3 billion in the same period of the previous year. “Finance transactions with top international investors were the principal feature of new real estate business”, explained Peter Rieck, Deputy Chief Executive Officer and the Bank's Board member responsible for Real Estate. “Here we were increasingly successful in doing business with new customers. So the reorganization of the Real Estate division at the beginning of the year is now bearing its first fruits.” According to Rieck, cross-selling with other divisions had proved extremely gratifying in terms of in commission business, above all with Private Banking, Transaction Services and in derivative transactions with the financial market division.

Once again, the Real Estate division did most of its new business outside Germany. The list was headed by U.S. business worth EUR 2.9 billion, followed by finance business in the United Kingdom amounting to EUR 2.5 billion, with EUR 1.8 billion being generated in the Nordic region and EUR 900 million in the Netherlands. New business in Germany also went well, generating more than EUR 1.8 billion. The Bank’s real estate subsidiary HSH Real Estate further increased private-equity business in July by purchasing 50 per cent of shares in US Treuhand. This means that HGA Capital and US Treuhand together are now the new number two in terms of placed equity for closed-end real estate funds.

Global Head of Real Estate, Claudio Lagemann, commented on the future prospects for real estate business: “In spite of the difficult situation on the financial markets, we continue to expect strong competition for financing commercial real estate. At the moment it is possible to offset increased liquidity costs by raising margins." According to Mr. Lagemann, it should be possible in the future to realize margins that are more in line with risks due to the higher risk sensitivity. He expects the international investment boom to slow down in 2008 although he believes that the demand for real estate will remain at a high level.

Further information as well as photographs of the members of the Management Board are available at www.hsh-nordbank.de

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