The BHW Group is reporting buoyant new business and an earnings position characterised by stable net interest income for the first six months of 2003. Both the half-yearly result and the result for the second quarter of 2003 were therefore within the target range forecast for the year as a whole. The positive results in new business and earnings were attributable to successes in Private Home Finance, the Group’s core segment.

With an increase in private home finance sales of almost 20 per cent to over € 11 billion, BHW won additional market share. The Bauspar contract amount of new Bauspar contracts rose in the first six months by 24 per cent to € 7.3 billion, while at around 402,000, the number of contracts was 21.2 per cent up on the same period in the previous year. Contrary to the general trend in the construction industry, the volume of non-Bauspar home finance contracts concluded also increased by 12.5 per cent to € 3.7 billion.

The strategic significance of BHW’s Private Asset Accumulation division, which focuses on life insurance and fund products, has also continued to grow. New business in this division, which has been defined as a real growth market in the context of the Group’s provisioning strategy, was up 13.8 per cent to over € 1.6 billion in the first half of 2003. This was primarily attributable to traditional insurance products such as the Group’s life insurance products and pension plans, which saw a sales increase of 18.5 per cent. In the wake of more favourable stock market developments, BHW also increased investment fund business by more than 60 per cent.

Results for the second quarter confirm BHW’s growth course
With consolidated retained earnings of € 26.6 million for the second quarter of 2003, the BHW Group is well within the target range for the year as a whole. In light of the excellent levels of new business and the associated commission payments, which will initially impair earnings but in coming years will result in sustained earnings thanks to the terms agreed, commission income covers costs. There are very positive developments regarding administrative expenditure, which were reduced by € 9.3 million.

Group net income for the quarter amounts to € 60.8 million. This figure includes an income tax refund of € 11.6 million as a result of optimised tax reporting.

Segment review highlights the significance of the provisioning divisions
In a segment comparison, the result of the core segment, Private Home Finance, stands out in particular, with stable earnings which form the basis for the Group’s success. Compared to the first quarter, the post-tax result of this division rose from € 27.3 million to € 46.6 million in the second quarter. In the Private Asset Accumulation division, net income from life insurance business increased by 28.6 per cent to € 8.1 million. The operating result of € 6.9 million (previous year € 9.3 million) reflects the considerable investment in the growth market of occupational pensions – for example, the establishment of a BHW company pension fund and BHW’s commitment to the so-called “metal pensions” and other pension funds – and is on budget. Due to its strong market position, a clear increase in earnings is expected in this segment in the medium term.

Results in the Public Sector Loans and Commercial Home Finance divisions managed by AHBR reflected the ongoing restructuring measures. In public sector loans business, the strategic reduction in volume resulted in noticeably lower interest income. Although net interest income rose from € 3.3 million in the first quarter to € 9.9 million in the second quarter, the figure for the first six months of 2002 was € 52.9 million. Results in the Commercial Home Finance division were significantly better compared to the same period in 2002 thanks to its focus on high-margin new business. Although the division closed the second quarter with a slight deficit of € - 0.7 million, the previous year’s figure stood at € - 10.3 million.

On the right track with good half-yearly results

On the basis of stable net interest income of € 371.5 million, earnings for the first six months of 2003 show that all four business divisions have achieved a pleasing operating result, which increased collectively by 26.6 per cent to € 77.2 million. Compared with the previous year, the balance of risk provisions was reduced considerably by € 35.7 million to reach its current level of € 53.1 million. A Group operating result of € 54.2 million, Group net income of € 43.4 million and Group retained earnings of € 53.2 million all confirm that BHW is on the right track in terms of growth. Due to the significant impact on earnings caused in connection with AHBR in 2002 and the associated restructuring measures, these figures cannot, however, be compared to the corresponding figures for the previous year (2002: Group operating result € 84 million, Group net income € -9.3 million, Group retained earnings € 62.4 million).

Outlook

Despite the current adverse economic environment and unfavourable capital market conditions, BHW is confident of achieving a Group post-tax result of at least € 100 million for 2003 as a whole. Thanks to its very strong position in the home finance market and its investment in private and occupational pension provisioning, BHW anticipates continuous sales success in 2003. The company will also be driving forward sales cooperation agreements, of which the latest example is the extensive cooperation agreement with leading suppliers of prefabricated housing.