The increase in the pre-tax profit for 2008 is largely attributable to a further improvement in the interest margin. A significant proportion of Achmea Hypotheekbank’s funding (EUR 4.5 billion) is provided by a covered bond programme. This largely concerns finance raised in 2007 with a relatively low funding cost, helping to keep the interest expense down in 2008. Other factors behind the improved result are tight cost management and higher margins on new production and remortgaging.

 

The Tier 1 capital as at 31 December 2008 amounted to 9.6%, which is almost six percentage points above the statutory minimum of 4%.

 

Although the market for new mortgages in the Netherlands has shrunk by 15.5%, production in 2008 amounted to EUR 1.75 billion, which is almost on a par with 2007. This performance is partly the result of the introduction of modular mortgages under the FBTO label in partnership with Vereniging Eigen Huis. Repayments amounted to EUR 1.3 billion (2007: EUR 1.7 billion), resulting in overall growth in the portfolio of EUR 0.45 billion. The remaining growth reflected a change in the fair value of the lending portfolio. The market share of new production rose to 2% (2007: 1.5%).

 

The crisis which hit the American sub-prime mortgage market in the summer of 2007 led to a deterioration in the macroeconomic climate worldwide. Achmea Hypotheekbank’s lending portfolio is exclusively made up of mortgages on owner-occupied residential property in the Netherlands. Achmea Hypotheekbank does not have any interest in sub-prime mortgage-backed securities or collateralised debt obligations and has not had to resort to government funding programmes or capital injections. To finance its lending, Achmea Hypotheekbank turns mainly to the international capital market.

The credit crisis made it increasingly difficult during the year to raise funds on the open market. In 2008, Achmea Hypotheekbank accordingly executed a securitisation transaction of EUR 0.5 billion, drew down EUR 0.3 billion under the covered bond programme and made use of savings attracted by Achmea Retail Bank totalling EUR 0.4 billion. Two securitisation transactions are planned in the current financial year.Despite the deterioration in the economic climate, write-downs on the loan receivables were roughly the same as in 2007: EUR 6 million.

In light of the uncertainties affecting the financial markets, Achmea Hypotheekbank prefers not to give specific forecasts of results in 2009.

 

Achmea Hypotheekbank is part of the Achmea Group, which is a Achmea Group company. The bank sells its mortgage and other products via the distribution channels of Centraal Beheer Achmea, FBTO, Avéro Achmea and Woonfonds.