German lender Westdeutsche ImmobilienBank (Westimmo) saw its new lending business volume plunge 78% in the first half of 2011 due to the ongoing sale process.
In a statement on Monday, Westimmo said it had adopted a 'very conservative approach as regards new business' as a result of the ongoing sale process and the therefore restricted refinancing situation. The bank concluded EUR 456 mln worth of commercial real estate financing transactions in H1, compared to some EUR 2.1 bn in the same period a year before. Around 87.5% of the financings related to renewals of existing facilities.
Westimmo's owner, financial group WestLB is currently in exclusive talks to sell its real estate finance unit Westimmo to private equity investor Apollo Global Management. The disposal was ordered by the European Commission as a condition for receiving state aid.
Westimmo's profit rose by 80% to EUR 44.6 mln in the first six months of 2011, from EUR 24.8 mln in the first six months of 2010. Net interest income after allowance for losses on loans and advances developed positively, amounting to EUR 107.4 mln, up 23% on the prior year result's of EUR 87.5 mln. The result was driven by the considerable reduction in provisions for losses on loans and advances, which amounted to a negative EUR 7.9 mln at end-June 2011, compared to a negative EUR 33 mln in the same period a year before.
'Despite the ongoing sale process and the challenges thrown up by the uncertainties in the finance and capital markets, in the first six months we achieved a satisfying and sound result. In this way WestImmo has once again proven the worth of its profitability and the core of its business model,' said Peter Knopp, chairman of Westimmo's managing board.
Due to the lower new business volume, interest income amounted to EUR 115.3 mln compared with EUR 120.5 mln in the previous year. The net fee and commission income fell to EUR 2.9 mln, almost half the amount reported a year before.
Westimmo still expects a positive result for 2011 as a whole, it said, provided no additional charges are generated as a result of a worsening financial crisis. 'In its target markets WestImmo has a good, well-established market position. The bank is confident that it will continue its successful development of recent years.'
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