Forecast for the second half of 2008
Hypo Group Alpe Adria expects that the crisis in the international financial markets will continue in the second half of the fiscal year of 2008.
Therefore, in our forecast we assume that the refinancing expenses for the Group will continue to be high. We will counter this by intensifying our retail activities to obtain customer deposits, by issuing collateral bonds and by adjusting the external conditions for new business. However, the net interest result will be negatively affected by the long-term issues of TIER 2 capital in 2008 as a consequence of the very big widening of the credit spread in the capital market for subordinated issues.
In connection with the prolonged financial market crisis, we do not expect any speedy recovery of the price of the securities investments held by the Group. Therefore, the value of the available for sale-reserve will still be negative at the end of the year. With respect to the development of our own subprime related securities, we expect that further impairments will be required during the second half of the year. As the carrying amount as of 30 June 2008 has dropped to a very low EUR 15 million and as the corresponding negative available for sale-reserve stands at a low EUR –10 million, the potential negative impact on the Group’s result will remain within limits.
In the coming months, we shall continue to treat the credit risk management as a priority, we shall apply close-to-real-time monitoring to individual loans and where required we shall initiate the required measures promptly. For the end of the year, we still expect high credit risk costs, although they will depend in particular on the achievement of the defined restructuring objectives of individual loans.
Notwithstanding the difficult boundary conditions the Group is currently facing, we expect on the basis of the information available today and the assumptions that were made that we will be able to achieve a slightly positive consolidated net result for the entire year of 2008.
For the end of the year 2008, we forecast a balance sheet total of just over EUR 44 billion, representing an increase of approximately 16 % over the previous year.
In addition to customer deposits, which are a very important source for the financing of the future growth of Hypo Group Alpe Adria, the Group’s growth to a major part will also be financed by the principal shareholder, BayernLB, so that the Group will remain mostly unaffected by the currently tense liquidity situation in the capital market also during the second half of 2008.
As regards the 49 % stake in Alpe Adria Privatbank AG, Liechtenstein the executive board will take further steps in the second half of the year in order to sell this remaining shares.
Therefore, in our forecast we assume that the refinancing expenses for the Group will continue to be high. We will counter this by intensifying our retail activities to obtain customer deposits, by issuing collateral bonds and by adjusting the external conditions for new business. However, the net interest result will be negatively affected by the long-term issues of TIER 2 capital in 2008 as a consequence of the very big widening of the credit spread in the capital market for subordinated issues.
In connection with the prolonged financial market crisis, we do not expect any speedy recovery of the price of the securities investments held by the Group. Therefore, the value of the available for sale-reserve will still be negative at the end of the year. With respect to the development of our own subprime related securities, we expect that further impairments will be required during the second half of the year. As the carrying amount as of 30 June 2008 has dropped to a very low EUR 15 million and as the corresponding negative available for sale-reserve stands at a low EUR –10 million, the potential negative impact on the Group’s result will remain within limits.
In the coming months, we shall continue to treat the credit risk management as a priority, we shall apply close-to-real-time monitoring to individual loans and where required we shall initiate the required measures promptly. For the end of the year, we still expect high credit risk costs, although they will depend in particular on the achievement of the defined restructuring objectives of individual loans.
Notwithstanding the difficult boundary conditions the Group is currently facing, we expect on the basis of the information available today and the assumptions that were made that we will be able to achieve a slightly positive consolidated net result for the entire year of 2008.
For the end of the year 2008, we forecast a balance sheet total of just over EUR 44 billion, representing an increase of approximately 16 % over the previous year.
In addition to customer deposits, which are a very important source for the financing of the future growth of Hypo Group Alpe Adria, the Group’s growth to a major part will also be financed by the principal shareholder, BayernLB, so that the Group will remain mostly unaffected by the currently tense liquidity situation in the capital market also during the second half of 2008.
As regards the 49 % stake in Alpe Adria Privatbank AG, Liechtenstein the executive board will take further steps in the second half of the year in order to sell this remaining shares.
