FMS Wertmanagement reports profit from winding-up activities in first half of 2023
Profit from ordinary activities of EUR 49 million for the first half-year
Nominal volume of the portfolio reduced to EUR 47.3 billion
Net interest income increased further in first half of 2023
FMS Wertmanagement (FMS-WM), the German federal government’s winding-up institution, today announced that it generated a result from operating activities of EUR 49 million in the first half of 2023 (H1 2022: EUR 47 million).
The nominal volume of the portfolio was reduced by EUR 2.4 billion, or 4.8 percent, since the beginning of the year. Taking into account foreign currency effects that increased the portfolio by EUR 0.1 billion, the portfolio’s nominal volume came to EUR 47.3 billion as at 30 June 2023. "In what has been a challenging market environment, we succeeded in reducing complex and high-maintenance risk positions, strengthening the general allowance for credit losses for the remaining portfolio, and achieving a profit," said Christoph Müller, Spokesman of the Executive Board.
Total assets of FMS-WM as at 30 June 2023 decreased by EUR 7.5 billion to EUR 91.5 billion compared to 31 December 2022. In addition to the portfolio wind-up, this was due in particular to the reduction of the liquidity reserve.
Net interest income in the first half of 2023 continued to increase to EUR 245 million (H1 2022: EUR 185 million). This increase is mainly attributable to the higher level of interest seen in all relevant currencies. "In addition to the general rise in interest rates, FMS-WM's net interest income in the first half of 2023 also benefited from the improved funding conditions resulting from substituting capital market funding with borrowing via the Financial Market Stabilisation Fund," explained Carola Falkner, the Executive Board member in charge of Treasury & Asset Management.
Earnings in the first six months of 2023 were again reduced by the balance of the items dominated by valuation and wind-up measures – risk provisions and net income from investments – which came to EUR -139 million (H1 2022: EUR -64 million).
General and administrative expenses in the first half of 2023 amounted to EUR 51 million (H1 2022: EUR 62 million) The year-on-year decrease resulted firstly from one-off effects in connection with the IT transition completed in fiscal year 2022 and secondly from a decline in servicing costs, mainly due to the closure of the New York branch of FMS Wertmanagement Service GmbH.
The result from ordinary activities is mainly dependent on risk provisions and net income from investments – volatile items which are heavily influenced by valuation decisions and sales results. Subject to further geopolitical developments, particularly in connection with the war in Ukraine and its effects and other unforeseen events, FMS-WM expects to at least break even in its ordinary activities in fiscal year 2023.
FMS-WM was founded in 2010 with the aim of winding up the risk positions and operations that were transferred to the company from the Hypo Real Estate Group (HRE Group) effective 1 October 2010. FMS-WM is supervised by the Federal Agency for Financial Market Stabilisation. The Financial Market Stabilisation Fund is obligated without limitation to provide additional funds under Section 8a of the German Law Establishing a Financial Market and Economy Stabilisation Fund (Gesetz zur Errichtung eines Finanzmarkt- und Witschaftsstabilisierungsfonds - Stabilisierungsfondsgesetz) for losses incurred in winding up the portfolio.
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