Winding-up institution generates another strong half-year result of EUR 298 million
Result affected by extraordinary factors
Further measures for accelerated wind-up of DEPFA in preparation
FMS Wertmanagement (FMS-WM), the German federal government’s winding-up institution, generated another excellent result from ordinary activities of EUR 298 million in the first half of 2017 (H1 2016: EUR 200 million). After tax, the profit for the first half year was EUR 267 million (H1 2016: EUR 165 million).
Total assets of FMS-WM amounted to EUR 165.9 billion at the end of the first half-year, down from EUR 177.2 billion at the close of 2016.
The nominal volume of the portfolio was reduced by EUR 7.1 billion, or 8.0 percent, to EUR 81.7 billion since the beginning of the year (H1 2016: reduction by 8.1 percent).
The result for the first half-year was affected considerably by a capital repayment and profit distribution by a US-based special-purpose entity to which FMS-WM had contributed non-performing receivables after taking over individual loans from the HRE Group. FMS-WM successfully restructured these loans, which have since been either refinanced or sold. The profits from these and the proportionate equity that is no longer required were withdrawn at the beginning of 2017.
Another significant extraordinary factor was the financial compensation for contract adjustments of credit support annexes for derivatives, which had a positive effect on net interest income as in the previous year and helped to keep net interest income virtually unchanged at EUR 295 million in the first half of the year despite the smaller portfolio (previous year: EUR 294 million).
Net commission income amounted to EUR 8 million (H1 2016: EUR 24 million).
General and administrative expenses fell by 13.5 percent to EUR 77 million in the first half of 2017 (H1 2016: EUR 89 million).
“In the first half of 2017, FMS-WM advanced its successful wind-up of the transferred portfolio in ways that maximise its value, generating a very gratifying result even without taking the extraordinary factors into account,” said Executive Board Spokesman Stephan Winkelmeier.
On FMS-WM’s funding side, the total new issuance volume across all capital market instruments in the first half of 2017 amounted to EUR 14.1 billion (H1 2016: EUR 10.5 billion). FMS-WM already managed to place a funding volume of EUR 15.4 billion with the capital market by the end July 2017. Given the favourable conditions, the original volume of around EUR 12 billion planned for the full 2017 fiscal year has been raised to a target of EUR 19 billion.
The loss before taxes at the DEPFA Group, which was transferred from the HRE Group to FMS-WM in December 2014 and is not consolidated in FMS-WM’s financial statements, was reduced significantly year-on-year from EUR 54 million to EUR 2 million in the first half of 2017. “The strategy we implemented is increasingly paying off at DEPFA and will enable us to accelerate the wind-up,” said Stephan Winkelmeier, Spokesman of FMS-WM’s Executive Board, who was appointed as Chairman of DEPFA’s Board of Directors last spring.
Overall, FMS-WM had DEPFA loans with a nominal value of EUR 2.0 billion in its portfolio at 30 June 2017. Additional measures are planned for the second half of 2017 to further reduce DEPFA’s total assets and press ahead with the wind-up of the Irish banking group.
Based on the successful first half of 2017, the Executive Board of FMS-WM again expects a positive result from ordinary activities for the year as a whole.
FMS-WM was established in July 2010 as the Federal government’s winding-up institution for the purpose of taking over and unwinding the HRE Group’s risk positions and non-strategic operations in ways aimed at minimising losses. Favourable funding conditions in the capital markets are key to this endeavour. The Federal Republic of Germany is the sole owner of FMS-WM via the Financial Market Stabilisation Fund – FMS.