FRANKFURT, Germany: Real-estate financing company Hypo Real Estate AG said Wednesday that its net profit for the second quarter was down 28 percent because of "unfavorable market conditions" related to the private real estate crisis in the U.S., and subsequent financial market turmoil.
The news, including more write-downs, sent Hypo shares down 4 percent at €17.90 (US$26.67) in Frankfurt morning trading.
The Munich-based company said net profit for the April-June period came in at €29 million (US$41.72 million), down from €40 million a year earlier. Revenues were down nearly 55 percent to €236 million (US$352 million) from €520 million.
Pretax profit fell nearly 90 percent to €40 million (US$60 million) compared with €320 million last year, the result of second-quarter write-downs of €145 million (US$216 million) in its collateralized debt obligation portfolio.
CDOs are a type of asset-backed security that were hit by the sub-prime crisis, contributing to the subsequent financial market turmoil. The company had first-quarter CDO related write downs of €175 million.
The news, including more write-downs, sent Hypo shares down 4 percent at €17.90 (US$26.67) in Frankfurt morning trading.
The Munich-based company said net profit for the April-June period came in at €29 million (US$41.72 million), down from €40 million a year earlier. Revenues were down nearly 55 percent to €236 million (US$352 million) from €520 million.
Pretax profit fell nearly 90 percent to €40 million (US$60 million) compared with €320 million last year, the result of second-quarter write-downs of €145 million (US$216 million) in its collateralized debt obligation portfolio.
CDOs are a type of asset-backed security that were hit by the sub-prime crisis, contributing to the subsequent financial market turmoil. The company had first-quarter CDO related write downs of €175 million.
Hypo Real Estate finances real estate, public sector infrastructure projects and operates capital markets business related to commercial real estate financing. It acquired DEPFA First Albany, a New York-based real estate broker dealer in September 2007, which offers public institutions such as municipalities capital market products geared to their needs.
"We have presented a respectable result in view of the difficult conditions," chief executive Georg Funke said in a statement.
"The next months will continue to be challenging for the entire financial sector," he added. "The fact that market prospects are still uncertain means that it is almost impossible to make reliable forecasts."
The group's reported new business, however, indicated that there will be less on the table at the end of 2008.
Hypo said new business in commercial real estate financing amounted to €5.7 billion (US$8.5 billion) in the first half of 2008, down from €9.4 billion a year ago.
New public sector finance was reported at €26.4 billion (US$39.34 billion) in the first half of 2008, compared with €30 billion in the first half of 2007. Infrastructure financing business was €2 billion, (US$3 billion) in the first half, down from €5 billion in the first half a year ago.
Still, Funke said the company's two main pillars of commercial real estate and public finance are "strong and viable" because of strict management and shrewd lending, and said that should be reflected in the financial results of the group for the year, "unless external shocks dash all the hopes of market participants."
The company said all operating business segments, commercial real estate financing, public sector and infrastructure finance as well as capital markets and asset management have reported positive pretax results for the quarter. Hypo said there had been an especially positive development in net interest income in public sector finance.
Hypo said total assets of the Hypo Real Estate Group amounted to €395.4 billion (US$589.2 billion) as of 30 June 2008, compared with €400.2 billion as of 31 December 2007.
As of 30 June 2008, the volume of lending amounted to €257.3 billion, (US$383.4 billion) compared with €256.2 billion at the end of 2007. The company said at the end of June 2008, the group reported financial investments of €98.8 billion, (US$147.21 billion) representing growth of around €9.9 billion compared with the end of 2007 when the group's investments stood at €88.9 billion.
"We have presented a respectable result in view of the difficult conditions," chief executive Georg Funke said in a statement.
"The next months will continue to be challenging for the entire financial sector," he added. "The fact that market prospects are still uncertain means that it is almost impossible to make reliable forecasts."
The group's reported new business, however, indicated that there will be less on the table at the end of 2008.
Hypo said new business in commercial real estate financing amounted to €5.7 billion (US$8.5 billion) in the first half of 2008, down from €9.4 billion a year ago.
New public sector finance was reported at €26.4 billion (US$39.34 billion) in the first half of 2008, compared with €30 billion in the first half of 2007. Infrastructure financing business was €2 billion, (US$3 billion) in the first half, down from €5 billion in the first half a year ago.
Still, Funke said the company's two main pillars of commercial real estate and public finance are "strong and viable" because of strict management and shrewd lending, and said that should be reflected in the financial results of the group for the year, "unless external shocks dash all the hopes of market participants."
The company said all operating business segments, commercial real estate financing, public sector and infrastructure finance as well as capital markets and asset management have reported positive pretax results for the quarter. Hypo said there had been an especially positive development in net interest income in public sector finance.
Hypo said total assets of the Hypo Real Estate Group amounted to €395.4 billion (US$589.2 billion) as of 30 June 2008, compared with €400.2 billion as of 31 December 2007.
As of 30 June 2008, the volume of lending amounted to €257.3 billion, (US$383.4 billion) compared with €256.2 billion at the end of 2007. The company said at the end of June 2008, the group reported financial investments of €98.8 billion, (US$147.21 billion) representing growth of around €9.9 billion compared with the end of 2007 when the group's investments stood at €88.9 billion.
No comments:
Post a Comment