Badenia with fresh impetus Successful year 2008 for the building society

Badenia with fresh impetus
Successful year 2008 for the building society

Karlsruhe-based Deutsche Bausparkasse Badenia AG is looking back at a successful business year 2008 in which its growth was markedly above the average of the building-society industry. Apart from a favourable environment for building-society business, Badenia also benefited from the enhancement and extension of its product range. In addition, the successful transfer of Badenia’s traditional fieldstaff network to Deutsche Vermögensberatung (DVAG) has further reinforced this important strategic partnership.

Karlsruhe, April 8, 2009. In the closed business year, Deutsche Bausparkasse Badenia experienced a substantial stimulation in the new business of building society contracts and financing. The building-society business submitted rose to € 3,609.9 m (previous year: 2,800.3 m; +28.9%). The building-society business issued was € 2,458.7 m (previous year: 2,429.9 m; +1.2%). The lower growth of issued business is attributable to the fact that a large amount of business was submitted towards the end of the year which is issued in the current year.

The biggest part of growth is attributable to Deutsche Vermögensberatung. The production share of Deutsche Vermögensberatung, which is by far the strongest and most important distribution partner of the building society, rose to 71.9% for issued business (previous year: 70.9%, including the production of the former traditional fieldstaff network, see below). In this context Dr. Jochen Petin, Chief Executive of Deutsche Bausparkasse Badenia states: “In 2008 we have become noticeably stronger in the market. Thanks to an overhauled product range and to the close relationship with Deutsche Vermögensberatung we have been in a position to benefit to an optimum extent from the favourable market environment.”

New business in financing activities also rose markedly by 40.3 percent to € 934.6 m (previous year: 666.0 m). This growth was primarily supported by advance loans, which increased to € 409.2 m (previous year: 220.7 m); this equals a substantial growth of 85.4 percent. In terms of the other loan types the company experienced an increase, too: loans under building-society contracts rose by 11.4 percent to € 229.4 m, interim loans grew by 9.9 percent to € 211.7 m and property loans by 80.9 percent to € 84.3 m.

Enhanced and extended product range

In 2008 Badenia made its product range even more attractive by means of two measures: on the one hand, the holders of building-society contracts were given the option of a much more favourable additional interest on their basic interest rate in case they do not take up a loan under their contract. The so-called “InterestPlus” was modified and the addition raised from 100 percent to 300 percent. On the other hand, since November 2008 Badenia has been offering certified Riester products for residential property as a means of providing for old age.

In both cases the building society attached importance to maintaining the established elements of the previous tariff structure in designing its products. “Next to the quality of our products, continuity and simplicity are an important factor for the success of our product quality”, Dr. Petin states.

Cooperation with Deutsche Vermögensberatung

The transfer of Badenia’s traditional fieldstaff organization to Deutsche Vermögensberatung, which had been jointly announced by Badenia and Deutsche Vermögensberatung in the middle of 2008, was successfully completed by the end of the year 2008. In terms of production volume, nearly 90 percent of the agents decided in favour of a changeover to Deutsche Vermögensberatung. The agents of Badenia’s traditional fieldstaff network were offered to join DVAG as financial advisors. Within DVAG the agents have access to a broader product range and to the established DVAG approach in advising. They benefit from the good framework conditions within the biggest autonomous sales organization for financial services worldwide. The target of this transfer, i.e. the increase of the issued new business of DVAG from about € 1.75 bn to a total of approximately € 2 bn can be reached in the medium term.

Net profit of € 3.9 m despite further negative impacts under special financing

The net income from ordinary operations was € 37.0 m (previous year: 44.9 m). In terms of the result of unrealized capital gains and losses the expenditure decreased to € 28.4 m (previous year: 43.2 m). This persistently high expenditure is again due to risk provisions for a portfolio of property financing dating back to the 1990s under which the company has to cope with a high level of credit risks and complex litigation. The balance-sheet profit after tax amounted to € 3.9 m (previous year: 45.6 m).

With a balance-sheet total of € 4,909.5 m (previous year: 4,982.5 m), the company’s equity capital rose from € 264.4 m in the previous year to 268.2 m.

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