German lender Deutsche Hypo reported a jump of 27% in new business during the 2010 financial year, which also saw interest income soar by 47%.

The Hannover-based lender generated EUR1.8bn in new business last year - EUR 400 mln more than the previous year - and aims to do ‘at least as much again’ this year, a Deutsche Hypo spokesman told PropertyEU. Renewals accounted for another EUR 400 mln. Around 60% of new business this year is expected to be originated in Germany, with around 15% coming from the UK, the spokesman added. In addition, markets such as France, Belgium, the Netherlands and Luxembourg all remain ‘very important’ to the lender, he said.

The overall net interest income of over EUR 172 mln, coupled with the rise in new business, should be taken as ‘evidence that our business model is sustainable for our investors and clients, even in a difficult environment,’ Deutsche Hypo CEO Jürgen Allerkamp said in a statement.

The bank’s loan portfolio rose by EUR 1.7bn, or 17%, to EUR11.5bn last year. Net interest and commission income came in at just below EUR 186.1mln, up almost 39% on the previous year. The rise was largely due to increased real estate lending as well as the improved income in real estate finance and capital market transactions.

In addition, Deutsche Hypo has also responded to the higher equity requirements in line with Basel III and started to take steps last year to boost its equity capital base. As such, the total capital ratio in accordance with the solvency regulation and the core capital ratio on 31 December 2010 stood at 10.6% (9.1% in 2009) and 7.7%, (6.8% in 2009) respectively. Both ratios are above current statutory requirements.

However, administrative expenses were up EUR 12.8 mln last year, taking the total to EUR 69.4 mln, due to one-off costs as well as new hirings. The cost-income ratio shrank to 39%, down from 43.9% in 2009.

Deutsche Hypo was acquired by Germany’s NordLB in 2008. The banks are in the process of transferring assets to Deutsche Hypo, a process that is expected to be completed by the end of 2013, a Deutsche Hypo spokesman told PropertyEU. NordLB had EUR 228.7bn of assets under management as of end-2010.