(in billions of guilders) Total Bond and Mortgage Bonds Issues Mortgage Bonds Bonds (incl. State Loans) State Loans 1976 6.3 1.4 4.9 3.2 1977 9.8 3.1 6.7 3.6 1978 10.0 3.4 6.6 3.7 1979 10.9 3.2 7.7 4.3 1980 14.6 3.1 11.5 7.6 1981 16.4 1.8 14.6 10.8 In the last months of 1981 there were some signs of a break in the upward trend of interest rates in the money and capital markets. Inflation in the United States began to decline, partly as a result of a steady decline in economic activity. We may expect that the first half of 1982 will show a slight easing in interest rates within the Netherlands' economy. The inflation rate and the government financing deficit will however impede a more substan tial fall in interest rates. To change this would require a more orderly conduct of government finances, which as well having its own effect on interest rate levels —would create greater willingness on the part of foreign investors to buy guilders securities. The dominant position of the government has also persisted on the private placement market. Financial institutions were very willing to make direct loans to the government, since this form of investment was under-represented in many of their portfolios. Despite the difficult situation in the capital markets of the Netherlands which has been outlined, FGH was able to attract long term funds without too many problems. A total of 903 million guilders was raised, of which 291million was through private placement and 612 million through bearer bonds, such as mortgage bank bonds, bond certificates and notes. The issue of bond certificates, a financial instrument with a savings element which only was occasionally used in the past, was restarted. The certificates form for our offices a necessary expansion of our product mix. The sale of our mortgage bank bonds by our branch offices also showed a very satisfactory development. In foreign currency, partly in order to meet our external financial requirements for other than our domestic market, we turned to the Swiss capital market. A 50 million Swiss franc loan was obtained in January 1981 (6Vi per cent notes 1981 payable in 1985 through 1988) and an additional 50 million Swiss francs was raised in notes in December 1981 (7% percent notes payable in 1986). Mortgage business Interest rates in the mortgage market rose once again in 1981. They increased from roughly 12 percent in January to a peak of 13.6 percent at the end of October and than retreated to 13 per cent at the end of the year. The high interest rates and an economicclimate which compelled the use of an extreme policy of selectivity towards acceptance of mort gage applications, resulted in our outstanding mortgage loan balance being reduced by about 45 million guilders. The value of loan applica tions accepted was 390 million guilders, compared to 780 million 18

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Annual Reports FGH Bank | 1981 | | pagina 20