Report of the Managing Board
Mortgages
General
The general economic situation improved during the year under review.
The Dutch real estate market, however, showed only a limited recovery.
Despite a large number of changes in the office building sector, vacancy
rates, on balance, remained high. In contrast, there was a marked decline
in the number of vacancies in the warehouse sector.
As a result of the uncertain situation regarding income and salary
developments both purchase and sales of homes were very slow; the
decline in interest rates on the capital market had no effect on this
situation.
As a result of the improved economic situation the industrial sector found
itself in a very liquid position. The effect of this, however, combined with
the low propensity to invest, was that the demand for industrial
mortgages remained low. Likewise, there was little demand for house
mortgages, for reasons already mentioned above. The upshot of this was
that nationally our activities on the mortgage market declined in
comparison with 1983. With this development in mind we are not
dissatisfied with a domestic mortgage business production of Dfl 666
million compared with Dfl 605 million in 1983.
In our opinion, the renewed confidence in our economy, apparent in most
of the prognoses for 1985 will ultimately lead to a healthy revival of the
Dutch real estate market. We also expect a general improvement in real
estate prices, especially in the sectors in which currently the market value
is lower than the present total costs of construction.
Our cooperation with the Rijkspostspaarbank (RPS, government postal
savings bank) is proceeding satisfactorily. In the meantime, the necessary
change in the law to expand RPS' 5% interest to 33V3% has been approved
by the Second Chamber of the Parliament.
Our gross profit remained well up to par (1984: Dfl 67.6 million; 1983:
Dfl 63.4 million). Despite the fact that there was a clearly noticeable
improvement in our clients' fulfillment of their interest and principal
repayment commitments, we consider it necessary to further strengthen
our risk buffer by adding an amount of Dfl 60 million to the provision for
general contingencies. Net profits amounted to Dfl 5.1 million. We aim to
propose to our shareholders to add the whole of this amount to the open
reserves.
As we mentioned above, we were able to satisfactorily maintain our
position in the market. This has strengthened our belief that our policy of
concentrating on loans demanding a high degree of specialization, is
correct.
The FGH Deposit Mortgage is doing well, in 1984 around 10% of the
mortgages accepted were deposit mortgages.
During the coming year we will once again devote a great deal of time and
attention to the improvement of our special products. High priority will be
given to financing via special types of leases. Another important point to
receive attention will be the intensification of our contact with the market
through the use of intermediaries. It was therefore decided that all
activities related to quotations would be concentrated at the head office,
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