·         Real estate bank posts positive annual results
·         Profit up again year-on-year
·         No change in high quality loan Portfolio
·         Acquisition by Aareal Bank AG expected to close in mid-2015  

Mainz, 21 April 2015 – Westdeutsche ImmobilienBank AG (WestImmo) again posted very good results in financial year 2014. Profit after tax amounted to €64.1 million (previous year: €50.3 million). The result from ordinary activities improved significantly from €57.4 million in the previous year to €70.9 million.  

The very good results were lifted not least by the continuing high quality of the loan portfolio and the associated low allowance for losses on loans and advances. In addition, the results include the partial reversal of the fund for general banking risks.  

WestImmo was required to cease new business activities more than two years ago due to restrictions imposed by the European Commission in connection with government measures to stabilise the former WestLB Group. WestImmo has since focused exclusively on actively managing its cover pools and on renewing existing loan commitments. The Bank is profitable despite its limited business activities and the associated decline in its interest-bearing portfolios.  

WestImmo and Erste Abwicklungsanstalt (EAA), which currently holds 100 percent of its shares, implemented further restructuring measures in the past financial year to improve the Bank’s marketability. All assets that were inconsistent with its strategy as a traditional Pfandbrief bank were transferred to EAA via a carve-out transaction, reducing the Bank’s equity by approximately €450 million. The Bank nevertheless continues to have adequate capital resources, which is illustrated by its total capital ratio of 17.3%.

“We are very pleased with our results”, said Claus-Jürgen Cohausz, Chairman of the Managing Board of WestImmo. “The Bank has emerged as a focused Pfandbrief bank with a low risk profile.”  

The good results were rooted in considerable cost savings achieved through further alignments of the organisational processes and structures to reflect the changed business situation, in addition to the decline in risk expenses.  

Net interest income, including current income, amounted to €108.2 million at the end of the financial year, down on the prior-year figure of €136.6 million due to the €28.4 million decrease in the loan portfolio.  

The primary allowance for losses on loans and advances amounted to €19.5 million (previous year: €33.3 million). Risk provisions were positive, amounting to €9.8 million due to income from financial assets and investments and the partial reversal of the fund for general banking risks in accordance with section 340g of the Handelsgesetzbuch (HGB – German Commercial Code).  

Net fee and commission income decreased to €1.4 million (previous year: €5.5 million). This was also due to the lack of new business and the reduction in the loan portfolios.  

Administrative expenses declined by around 15.7% year-on-year to €55.1 million (previous year: €65.4 million), which made a significant contribution to earnings performance. The cost/income ratio (CIR) amounted to 47.5% (previous year: 43.7%).  

“We could not have achieved these very good results in 2014 without our customers’ continued trust in the Bank and the commitment, dedication and loyalty demonstrated by our employees”, said Cohausz.  

Commercial real estate loans in the amount of €0.8 billion (previous year: €1.2 billion) were extended in the past financial year. The Bank’s total assets declined by €3.7 billion year-on-year to €10.1 billion as at 31 December 2014 (previous year: €13.8 billion). Receivables from customers declined due to the reduction in the portfolios, the lack of new business and the carve-out. There was also a significant decrease in the securities portfolio.  

Reported equity declined to €451.9 million (previous year: €876.6 million) due to the carve-out. The capital reserves were increased by €24.0 million in connection with the carve-out and to strengthen the Bank’s equity. The Bank’s total capital ratio in accordance with the Capital Requirement Regulation (CRR) amounted to 17.3% as at the reporting date (previous year: overall capital ratio of 17.0% in accordance with the old version of the Solvabilitatsverordnung (SolvV – German Solvency Regulation)). The Tier 1 capital ratio was 16.8% (previous year: core capital ratio of 15.9% in accordance with the old version of the SolvV).   

Outlook

In February this year, EAA agreed to sell its WestImmo shares to a subsidiary of Aareal Bank AG. The Managing Board of WestImmo expects the transaction to close by mid-2015, depending on the necessary regulatory approval and other conditions agreed with regard to the sale. In this case, statements concerning WestImmo’s development and strategy will change and will be aligned with the new owner’s strategic approach.  

“The sale of WestImmo means that its ultimate resolution will be avoided, and that a good solution has been found for the Bank, its customers and its employees”, said Cohausz.  

As a wholly owned subsidiary of EAA, WestImmo will continue to concentrate on its existing customers until the sale is completed. In the course of servicing and processing existing loan exposures, the Bank assists its customers by acting as a specialist for commercial real estate financing and as a Pfandbrief bank for renewals and – where this is required to preserve the collateral – for limited increases in existing exposures. In addition, it actively manages its cover assets for issued Pfandbriefe and complies with all regulatory requirements.  

The plan is to establish a short financial year for the first half of 2015 and to transfer other portfolios inconsistent with the strategy, in the approximate amount of €400 million, to EAA. The Managing Board expects that the Bank will break even in the planned short financial year 2015. 

Key figures for Westdeutsche ImmobilienBank AG (income statement):  

The full financial report is now available to download from WestImmo’s website at www.westimmo.com.  

Please direct any queries to: Frank Heid, phone +49 6131 9280-7386  

Westdeutsche ImmobilienBank AG

Westdeutsche Immobilien Bank AG (WestImmo) specialises in commercial real estate financing. The properties financed by WestImmo include offices, retail outlets and shopping centres, hotels, logistics facilities, public institutions and housing properties. WestImmo is a wholly owned subsidiary of Erste Abwicklungsanstalt AöR (EAA), based in Düsseldorf. The latter acquired the shares of WestImmo from Portigon AG (WestLB AG until July 2012) in August 2012.