Annual Report 2004 > >
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Annual Report 2004 >> Living space . > > Contents Letter from the Board of Management >> 4 Private Customer Business Sector >> 6 Contents Commercial Lending Business >> 8 > Management Report >> 12 Balance Sheet >> 26 Income Statement >> 30 General Information on Accounting Policies >> 34 Report of the Supervisory Board >> 47 Members of the Delegates Meeting >> 50 Contact >> 52 Imprint >> 54 Dear shareholders and business associates, 4 > > Friedrich Munsberg, Erich Rödel, Dr. Bernhard Scholz (from left) The situation in the banking sector improved The Münchener Hypothekenbank was also slightly during the past year. Although provisions affected by these developments – albeit to a made for risks continued to put pressure on lesser extent than seen among its peers. In results, unrelenting cuts in personnel levels comparison to the previous year’s figures, the began to have an effect on costs. The banks’ Bank’s provisions for risks have already passed performance reflected a weak willingness to their high point. invest and the overall sluggish economic con- ditions in Germany. It would be more than naive to solely ascribe these developments to the unfavourable economic These developments also impacted on the environment and then stake our hopes for the MünchenerHyp in 2004. Our new commitments future on a business upswing that could lead for mortgages declined by about seven percent to improved earnings in the near future: Letter from the Board of Management to barely EUR 1.5 billion. However, in comparison with the entire mortgage banking industry, this >> The highly intensive competitive situation, > decline was relatively small. Nevertheless, our and ongoing efforts to further automate 4 performance remained unsatisfactory as our the standard processes in the lending results from operations contracted to EUR 16.8 business, will not permit a sustainable 200 million and net income fell to EUR 8.3 million. improvement in margins to take place in Problems surfaced in mortgage banks’ loan the lending business. Thus, there are clear portfolios in 2004 causing them to increase limits placed on any attempts to increase their provisions for non-performing loans. earnings by raising prices. Annual Report > > >> The situation in the German real estate We will only be able to progress further towards markets will surely improve in the mid-term. increasing the volume and quality of our business However, before this can take place the if we vigorously trim our costs and sustainably debilitating effects of the uncertain labour increase our earnings by forcefully exploiting market, hesitancy among investors, and market opportunities in Germany and abroad. consumers who prefer saving to shopping For this reason it is absolutely vital that we have to be resolved. A boom in new busi- energetically eliminate weaknesses within the ness will not diminish the structural problems MünchenerHyp and further develop its undeni- or the cost problems in the short term. In able strengths whilst applying them even more view of the tough competitive situation, effectively. endeavours to increase earnings by raising business volume can only be successful if Our goal is to further expand our position of they are driven by a highly motivated and de- quality leadership in the area of mortgage dicated sales team, and are fully aligned with finance within the cooperative FinanzVerbund. market requirements and customer needs. We are particularly confident that we can achieve >> Following our success in streamlining our this goal because the MünchenerHyp has a for- business processes and shrinking costs, the ward-looking business model that includes the growth of expenses in the areas of personnel, following characteristics: materials and depreciation has already evened out. However, following the investments >> solidly anchored within the cooperative we made in previous years (for example, our FinanzVerbund conversion to an SAP IT system,) expenses have reached a high level. >> above-average quality of its loan portfolio, supported by a resolute risk strategy and a For these reasons MünchenerHyp must continue broadly diversified structure of regions and its efforts to cut costs and increase earnings if loan amounts within the portfolio it is to outperform its rivals on a permanent basis and sustainably raise its earnings potential. >> good standing within the capital markets and a favourable basis for refinancing Measures we initiated in previous years – our cost reduction programme and relocating certain >> solid amounts of capital and reserves business functions back to our main office from regional offices – have already led to measurable >> qualified and flexible team of employees benefits. In addition, last year we also initiated further cost-cutting measures that could be >> future-oriented IT capabilities implemented on a short-term basis. These steps enabled us to stabilise the sharp decline in In a 2004 study conducted by the FinanzVerbund operating results experienced during the first the Volksbanken and Raiffeisenbanken gave top half of the year and get MünchenerHyp back scores to the MünchenerHyp for its level of co- on track for future growth. operation. We view this achievement as both praise and an obligation. Praise for our work, The heavy burdens placed on the Münchener and an obligation to further reinforce the trust Hypothekenbank’s earnings have spurred the others have placed in us. Bank to initiate a comprehensive package of measures aimed at reducing costs and raising Sincerely yours, earnings in order to meet future challenges. As these measures are implemented, the Münchener Hypothekenbank’s strategy and perspectives will remain forward-looking as the Bank pursues its goal of sustainably strengthening its earnings. Erich Rödel Friedrich Munsberg Dr. Bernhard Scholz Letter from the Board of Management > The Münchener Hypothekenbank eG in the private customer business sector For many years the wish to own their own four operating on an SAP platform and an intelligent walls has topped the wish list of many Germans. process management system. Münchener “My home is my castle” reflects a popular Hypothekenbank has twelve regional offices to German sentiment. In their own homes owners provide expert advice and support services to can arrange their personal sphere as they wish the local banks, especially in the optimisation and, very importantly, they don´t have to pay of relevant processes, the use of “Hypoline” rent after retirement. (our front-end IT system), and in the event of more complex financing transactions. Münchener Hypothekenbank eG converts this wish into reality within their traditional and future core business area, Private Customer Property Lending. This area includes all aspects of private Information, market property lending such as new construction, build- support and innovative ing expansion, modernisation and the purchase of existing housing. products 6 . are the three pillars of our central support > for our partner banks. We provide information > Partner of the about property financing to the loan officers in Volksbanken and the banks, which is then passed on by them to the end-customers. This is a continuous support Raiffeisenbanken programme to assist our partner banks in the market. Within this area of business the Münchener Hypothekenbank works closely at the local level Innovative and flexible products are additional with the Volksbanken and Raiffeisenbanken success factors, and their importance has risen within the cooperative FinanzVerbund. This significantly in recent years – we are certain banking network has 14,500 locations across they will continue to gain importance. This is Germany where customers can receive professional because individually tailored financial solutions financing advice. This constellation has proven are the best way for the Volksbanken and its worth because private customers rarely finance Raiffeisenbanken to respond to their customers’ anything more expensive or important in their individual needs for financial solutions; this lives than their own home. For this reason 90% personalised added value makes the difference of private customers prefer personal counselling. in the market and distinguishes our partner banks from the competition. For this reason we Within this successful constellation the Münchener are dedicated – now and in the future – to Private Customer Business Private Sector Customer Business Hypothekenbank provides ideal support to the continually providing our partner banks with Volksbanken and Raiffeisenbanken. Two factors the latest market and product development > are of key importance here: attractive conditions, information to help them permanently hold 4 which our first-class refinancing operations their number one position with end-customers. make possible, and professional handling of the 200 lending process with fast decisions and great Thanks to our strong performance in this area flexibility. Our efficient business relationships the Münchener Hypothekenbank has achieved with the banks at the local level are supported a solid market position in its core business area to a great extent by IT-based processes of Private Customer Property Lending as a Annual Report > > The headquarters of the Münchener Hypothekenbank. The Bank has two core areas of business: providing property financing for private customers within the cooperative FinanzVerbund, and commercial property finance. specialist provider of private property loans Partnering with the in the B2B business sector.