Report of the Managing Board
Introduction
Although 1983 got off to a depressed start, in reflection it can be seen
that the economic situation stabilized and has even shown some
signs of recovery. This does not mean that all economic problems,
which arose as the result of developments during the preceding
years, have been solved.
At FGH, the production of mortgage loans made by the division in the
Netherlands improved. However, the number of clients incapable or
increasingly less able to fulfill their interest and principal repayment
obligations was still considerable.
With regard to the company's financial results we would like to report
a net group result of Dfl 1.4 million, after an addition of Dfl 60 million
to the provision for general contingencies. We propose to add this
amount to the open reserves.
The increase of our guarantee capital, implemented on February 1,
1983 by placement of share certificates and subordinated loans with
the Rijkspostspaarbank (RPS, government postal savings bank) as
reported in our Annual Report of 1982, as well as the stabilisation of
the economic situation both contributed greatly to the fact that we
were able to attract adequate funding in 1983.
The cooperation with RPS is proceeding satisfactorily.
A number of areas in which further cooperation could be possible are
under consideration.
Mortgages
In the first place, we would like to devote our attention to a number of
developments in the real estate market, which, being the market for
our financing activities, is of great importance to us.
Although, here too, the improved economic outlook was apparent,
this did not hold for each sub-market to the same degree.
An increased activity for houses in the price range of up
Dfl 150,000-to Dfl 170,000-was noted. Well located, more expensive
homes also generate more interest. This resulted in the amount
entered in new mortgage loans (homes and combined residential/
business properties) going up about 20% in comparison to 1982.
There is, especially in metropolitan areas, a surplus of office buildings
which will probably only be absorbed in the long run; it should,
however, be noted that a recovery, once started, often takes off more
quickly than expected as a result of accelerated demand. The increase
in industrial activity led to greater interest in the warehouse sector.
The prospect of a decrease in turnover, as a result of a decline in
demand, curbes rental and selling prices of shops and stores.
We anticipate that a somewhat lower mortgage interest rate, and
retention of the tax deductibility of interest, combined with product
innovations made by the financiers should offset the more negative
factors such as uncertain income developments and the difficult
situation on the job market.
We are also cautiously optimistic concerning the market for
commercial real estate; this sector too, should profit by the improve
ment in the general economic situation.
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