ANNUAL REPORT 2006 - DG Hyp

In the past few years, DG HYP has successfully established direct business with commercial real
estate investors. In addition to its business with the German cooperative banking sector, this is a
key sphere of activity for the bank to ensure a broad presence on the real estate financing market,
thus bolstering strength of earnings. In this regard, in 2006 we were able to further build on the
success that DG HYP has been able to achieve in this division since 2001. We are particularly
pleased with the perceptible growth in new international business that we have been able to
generate, both via our representative offices in New York and London as well as in European crossborder
business.
At DG HYP, active portfolio management is an elementary component of the value chain for stateof-the-art
real estate banking. The structure of both the markets and of the competition has
undergone sustained change over the past few years. The credit and capital markets are converging;
as a result, the lending business is increasingly being driven by demand for credit investments on
the capital market. That is why DG HYP issues covered bonds (mortgage bonds – Pfandbriefe) and
also uses, above all, MBS transactions and portfolio transfers to further grow its real estate lending
business with new products and services – flexibly, innovatively, and geared towards growth.
In its business with loans to local authorities, DG HYP has been able to further expand its leading
position in the German cooperative banking sector by continuous new business growth. At the
same time, the bank has once again proven its benchmark position for mortgage bond business
with the high demand and excellent conditions for its jumbo Pfandbrief issue in October 2006.
Finally, in the 2006 financial year, DG HYP was able to make significant progress in further developing
risk management and credit workflows, which is also documented by the successful Basel II
implementation for entry into FIRB status from 1 January 2007.
All told, we believe that DG HYP enjoys an excellent position to continue to offer attractive services
in the future for our customers in the German cooperative banking sector, the real estate sector,
and amongst the local authorities. We will thus continue to play an active, creative role on the
market as a state-of-the-art real estate bank.
The Management Board of DG HYP
Hamburg, April 2007
Deutsche Genossenschafts-Hypothekenbank AG | Annual Report 2006
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