policy we have laid the basis for a further expansion of our business activities, which will enable us to maintain for FGH the image of growth stock - strengthening of the capital structure combined with growing dividends Our real estate business has contributed to this to a not incon siderable extent. We have aimed at a regular replacement of our holdings by acquiring new, well-selected real estate projects. This brought some pressure to bear on the direct yield, but quality, nature and location justified the expectation of a growing yield with a rise in value as a result. The results obtained by our real estate business will show con siderable fluctuations from year to year, because they are made up of operating result and sales result. If one is not forced to sell, one can await the best market situation. Direct sale generally takes place when the sales price exceeds the anticipated capitalized future yield. If real estate is disposed of through investment companies, a well- balanced real estate package is put on the market at an earlier stage. Although the investor gets an initial yield below the level of interest rates on capital, he may, contrary to the investor in fixed interest- bearing securities, expect growth in yield and capital. The FGH develops and acquires real estate, not in order to retain it for yield's sake, but in order to follow the demand in the market. The result of this philosophy is a holding of real estate of a limited size, although this may be subject to certain fluctuations from year to year due to market conditions. Only in this way can a real estate business live under one roof with a finance business. For attracting funds for our finance business we have to look almost exclusively to the capital market. In doing so, we fulfil the function of transmitters of capital on behalf of those who have no direct access to the capital market for their finance. Attuning passive financing to active financing is of the utmost importance here. From the points of view of liquidity and solvency the average term of the total of funds attracted must not be shorter than that of investments. In these times of strongly fluctuating interest rates considerations of profitability force us to synchronize terms in passive and active financing. The possibility of accelerated redemption which is frequently offered in active financing further tends to make us more reluctant to aim at a maximum extension of our mortgage portfolio when interest rates in the capital market are relatively high than we are when interest rates are relatively low, without, however, our losing sight of our servicing function in this sector. Over the longer term it may be more profitable at a time when interest rates on capital are relatively

Rabobank Bronnenarchief

Annual Reports FGH Bank | 1976 | | pagina 13