Green Value Chain Annual Report 2017 Your success is : our benchmark DEUTSCHE HYPO AT A GLANCE 01.01.- 01.01.- Change in € millions 31.12.2017 31.12.2016 (in %) New business figures Commercial real estate finance business 3,798.3 4,540.7 – 16.3 Domestic finance 2,180.9 2,832.1 – 23.0 Foreign finance 1,617.4 1,708.6 – 5.3 Funding volume 3,526.3 3,938.2 – 10.5 Mortgage Pfandbriefe 1,328.0 1,800.0 – 26.2 Unsecured 2,198.3 2,138.2 2.8 ANNUAL REPORT 2017 Change in € millions 31.12.2017 31.12.2016 (in %) Portfolio figures Commercial real estate finance business 12,077.1 11,977.0 0.8 Domestic finance 7,079.6 7,156.0 – 1.1 Foreign finance 4,997.5 4,821.0 3.7 Loans to local authorities 3,892.5 4,815.5 – 19.2 Securities 5,489.9 6,720.3 – 18.3 Funding capital 22,254.0 23,493.4 – 5.3 Mortgage Pfandbriefe 8,414.1 8,286.9 1.5 Public Pfandbriefe 4,490.4 5,378.5 – 16.5 Unsecured 2,677.4 2,740.5 – 2.3 Other liabilities 6,672.1 7,087.5 – 5.9 Equity *) 1,252.1 1,382.6 – 9.4 Balance sheet total 23,698.3 25,202.6 – 6.0 01.01.- 01.01.- Change in € millions 31.12.2017 31.12.2016 (in %) Income figures Net interest income 193.4 202.1 – 4.3 Net commission income 0.3 3.7 – 91.9 Administrative expenses **) 83.8 76.4 9.7 Risk result – 41.3 – 66.6 38.0 Income from securities and participatory interest – 10.2 55.7 <– 100.0 Result from normal operations 62.7 115.0 – 45.5 Extraordinary result 0.7 – 1.6 > 100.0 Interest on investments by silent partners 3.5 8.4 – 58.3 Profit before taxes and profit and loss transfer agreement 59.9 104.9 – 42.9 in % 31.12.2017 31.12.2016 Other information Cost-Income-Ratio 42.3 37.8 *) including funds for general banking risks, jouissance right capital and subordinated liabilities **) including write-downs and value adjustments of intangible assets and tangible fixed assets The annual report of Deutsche Hypo is also available in German. In the event of any descrepancy, the German version shall prevail. ANNUAL REPORT 2017 ENGLISH TRANSLATION WE HAVE A CENTRE OF COMPETENCE: Benedikt von Abendroth, Carolin Albers, Ingo Albert, Alois Algermissen, Antje Amelsberg, Anne- Kathrin Apel, Elena Argun, Daniela Assing, Jens Assmann, Hans-Hermann Baltz, Angela Bank, Philipp Bank, Nicole Barnert, Sabine Barthauer, Susie Bassett, Isabel Bauke, Jürgen Becksvoort, Bernd Behling, Michaela Behnsen, Ulrike Behnsen, Andrea Behre, Dana Beitz, Lara Bengsch, Nadja Bengsch, Alica Bergmann, Andreas Bergmeier, Marco Bertram, Olaf Beuleke, Wouter de Bever, Sebastian Biel, Heike Bien, Kathrin Biering, Petra Biering, Carsten Bläck, Markus Block, Martina Blum, Cornelia Bock, Dirk Böhm, Sven Böhmer, Marianne Böx, Stefanie Bojahr, Ines Bornemann, Oliver Boser, Lisa Bosetzky, Jasmin Bothe, Michael Brämer, Kirsten Brandt, Alexander Braun, Jens Breithecker, Brigitte Bren- ning, Jeremy Bretherton, Alexandra Bronstein, Florian Brückner, Iris Brünau, Marc Brune, Volker Brunner, Jochen Bucek, Carsten Bühring, Jessica Burgdorf, Holger Busch, Lars Busch, José Luis Calderón Martínez, Anne-Isabelle Carbonnières, Juan Manuel Casas Guillen, Detlev Coenen, Yvonne Coppel-Tamms, Hendrik Cornelius, Claus-Halvard Cors, Bettina Cramer, Ursula Czech, Dennis Dasselaar, Sandra Debbrecht, Katrin-Genevieve Deitermann, Ulrich Deppe, Carsten Dickhut, Andrea Dietsch, Frank Dittmann, Malte Dittrich, Beate Droste, Anika Eberhardt, Jürgen Eckert, Nicole Edle von Wölfel, Michael Eich, Ernst-August End- rulat, Carina Engelbrecht, Tobias Faust, Matthias Feifer, Alexander Firsching, Christian Fischer, Kai Fischer, Ara- bell Foth, Eric Mark Fowell, Jörg Franz, Michael Frech, Christine Frenzen, Oliver Frerking, Andreas Froebus, Björn Fuhr, Britta Gabriel, Christian Gail, Nikola Gaulke, Michael Gehrig, Melanie Geldmacher, Christoph Genn- rich, Maria Germann, Annett Gierschner, Larissa Gie- selmann, Michael Glatzer, Malgorzata Glazek, Melanie Glende, Kristoffer Globig, Rüdiger Göricke, Sabine Gößmann, Silvia Golbeck, Lennart Graf, Sylvia Grahn, Claudia Grau, Georg Greive, William Groen, Elke Großer, Detlev Grote, Christian Gudat, Cristina Guilherme, Pe- tra-Ingeborg Haake, Christina Haendel, Lars Haftmann, Ralf Hagendorff, James Hall, Thomas Hansen, Kevin Harmer, Axel Harms, Jan Hartmann, Tina Hartmann, Iris Hauser, Marc Hegeler, Albrecht Heinecke, Stefan Heinitz, Markus Heinzel, Christian Hellwinkel, Birger Helm, Heini Katariina Hemminki, Janina Herrmann, Janos Hielscher, Dr. Peter Hinze, René Hodko, Achim von Hoegen, Anne- Kathrin Hoepfner, Raimo Höpfner, Christoph Hötzel, Nils Hoffmann, Monika Hofschulte, Marcel Holk, Jule Hoppe, Karin Hornbostel, Simone Huch, Klaudia Hüskes, Thomas Hundertmark, Dirk Hunger, Tanja Hußmann, Sandra Idel, Malte Ilginnis, Axel Intemann, Peter Jabs, Anna-Dorothea Jäger, Amely Jessop, Thorsteinn Jonsson, Ute Jürges, Frank Junge, Kerstin Kahle, Georg Kaisler, Dirk Kallikat, Christina Kanning, Gudrun Karges, Moafak Kata, Brit Kaufmann, Melanie Kau- tzner, Maureen Keenan, Kristina Kirchner, Andreas Kirschner, Til Kittkowske, Jürgen Klebe, Peter Kleinhütten, Lutz Klink- mann, Florian Knaul, Tobias Knoche, Detlef Koch, Dieter Koch, Gerald Kölle, Georg Richard König, Gordon Kolbinger, Heiko Kollmann, Jörg Kopp, Jutta Carola Kopp, Renate Koppitz, Gabriele Kornweih, Stefanie Kortmann, Carmen Kost, Anna Carina Kostrzewa, Janina Krapp, Stefan Kriegs, Ulrich Krogmeier, Hartmut Krüger, Sarah Krüger, Regina Kubina, Elke Kücken, Frank Kühne, Silke Kues, Marcel Kujawski, Larissa Kurz, Andrea Kuschel, Ralph Kutschki, Eike Oliver Laase, Bernd Lademann, Roswitha Laidorf, Thomas Lang, Cornelia Lange, Sascha Langeheine, 2 OUR STAFF Katrin Langer, Beata Latoszek, Annemarie Leeuwen, Dr. Pia Leipertz, Stefan Leise, Claudia Leu, Maria Teresa Linares Fernández, Antje Loof, Veit Look, Walter Love, Alexander Ludwig, Dennis Magerkorth, Dörte Mamber, Ingo Martin, Gianluca Martinelli, Desiree McKay, Andreas Meiser, Uwe Menninger, Kevin-York Merchel, José Ignacio Merinero Muñoz, Michael Mesenbrink, Dirk Metzner, Björn Meyer, Jens Meyer, Andreas Michel, Stefan Mikus, Christina Möllendorf, Ulrike Möller, Irina Monsler, Heiko Muchall, Marlis Mügge, Claudia Müller, Frank Müller, Brigitte Müller-Bühren, Thomas Müser, Jürgen Munke, Marion Muth, Claudia Nacke, Andreas Nagel, Dirk Neuge- bauer, Evelin Neuhäuser, Sebastian Neumann, Uwe Nie- mann, Michael Niemeyer, Rebecca Nienhaus, Markus Nit- sche, Matthias Nittscher, Rico Noack, Harald Nolterieke, Ralf Obst, Jennifer Oehlmann, Jana Oliver, Dr. Eduardo Ortiz Tánchez, Maria Belén Ozcariz Salazar, Jan Christoph Paape, Christopher Peel, Sina Penkalla, Kornelia Penker, Andreas Peter, Meike Peter, Anja Philipps, Sandra Piehl, Liane Pilz, Andreas Pohl, Nina Poletschny, Arne Preuß, Torben Pschunder, Miriam Puentes Puertas, Timothy Py- gott, Claudia Radack, Uwe Radloff, Horst Reffke, Andreas Rehfus, Julia Reich, Andrea Reinecke, Frank Rekowski, Leonie Ridinger, Tanja Riesenbeck, Fabian Ritter, Ju- lian Röbbert, Stefan Röhrich, Stefan Roggelin, Malte Rosenboom, Anja Rosenhagen, Gabriele Rotzien, Vera Ruck-Beke- dorf, Christin Rudolph, Sebastian Rudolph, Jens-Oliver Ruff, Petra Ruff, Katja Runge, Stefan Ryll, Amir Saleem, Hauke Sander, Renate Sasse, Sebastian Schab, Anja Schad, Katharina Schauer-Stach, Jan Schaumburg, Frank Scherr, Alexandra Schild, Rebecca Schipp, Annemarie Schleef, Adrian Schleffler, Christian Schlenker, Uwe Schliephacke, Andreas Schlüter, Hans-Jörg Schmallenberg, Melanie Schmidt, Peter Schmidt, Stefanie Schmidt, Christof Schönefeld, Dirk Schönfeld, Erik Schramm, Wiebke Schramm, Karsten Schröter, Stefan Schröter, Matthias Schroff, Heike Schünemann, Heike Schütte, Ma- nuela Schult, Frank Schulte, Viola Carolin Schultz, Larissa Mareike Schultze, Tabea Schultze, Karsten Schulz-Porth, Ralph Schumann, Sabine Schwarz-Möbius, Hans-Werner Seidel, Fredrik Serck, Phil Shackleton, Kristof Sidorowicz, Anke Sieber, Cnut Siebert, Irina Siebert, Britta Siedentopf, Marc Simon, Sandra Simon, Petra Söfker, Christian Sommer, Mirko Sommer, Kerstin Sonntag, Sascha Sonntag, Dennis Spilker, Thomas Staats, Dr. Carsten Steinhoff, Jana Stephani, Thomas Stoklas, Mathias Stolte, Axel Stoppel, Bianca Ströhla, Paul Sutcliffe, Tobias Talke, Marc Techtmann, Maren Tegtmeier, Leyla Tekkal, Martina Teutloff, Lisa Theune, Bettina Thiedtke, André Thürmer, Alexander Timm, Dirk Töteberg, Stefan Treptow, Stefan Ullmann, Clemens Unger, Manja Unger, Martin Vila Kues, Manja Vogel-Mangold, Ralf Vogel, Carsten Vogt, Nicole Voigt, Jürgen Volkers, Ina Volkmann, Prof. Dr. Günter Vornholz, Dr. Wulfgar Wagener, Sabine Watermann, Marion Weber, Hans-Georg Wehrhahn, Julia Weiß, Renate Wellhausen, Renate Wels, Aenne Wendeling, Anika Wermter, Ansgar Werner, Ralf Westermann, Torsten Wickert, Inge Wieg- grebe, Simone Wilhelms, Dirk Wilke, Ulrich Wilkens, Holger Wille, Bärbel Willert, Immo Willner, Tanja Willruth, Thomas Winkler, Bernd Wißmach, Tobias Wißmach, Ul- rike Witte, Markus Wittenberg, Dirk Wömpner, Annika Wolff, Johannes Wolff, Christopher J. Woodard, Michael Woodgate, Stefanie Wünsch, Martina Wulschläger, Heike Wuttke, Özlem Yüksel-Kaban, Nadine Zapf, Olivier Zapf, Sebastian Ziegler, Nicole Zimmermann. 3 ENGLISH TRANSLATION CONTENT FOREWORD BY THE CHAIRMAN OF THE SUPERVISORY BOARD 6 INTERVIEW WITH THE BOARD OF MANAGING DIRECTORS 8 2017 AT A GLANCE 10 SUSTAINABILITY 12 GREEN BONDS 16 REFERENCES 22 MANAGEMENT REPORT 27 Fundamentals of the Bank 27 Deutsche Hypo’s business model 27 Group affiliation 28 Controlling system 28 Non-financial statement 29 Corporate Governance statement 29 Economic report 30 Macroeconomic and sector environment 30 Course of business at a glance 33 Net assets,