13
The Future
some reduction in costs. Commission and other income fell from NLG 46.1
million to NLG 37.7 million, with lower income from early repayment
penalties, lower income from mortgage arrangement fees and lower
commission income on our securities business all contributing to the
decline.
The results of participating interests totaled NLG 3.7 million; in 1986, this
figure was a loss of NLG 9.9 million due to the losses suffered by Gemeen
schappelijk Eigendom. The results on real estate amounted to NLG 1.5
million compared with a loss of NLG 0.3 million in 1986. Costs and depre
ciation charges were slightly lower than the previous year at NLG 61.2
million. The gross result turned out at NLG 69.0 million, a considerable
improvement on the NLG 28.1 million of 1986. The overall improvement is
mainly due to the higher net interest figure and the elimination of the losses
on real estate. The net result was a profit of NLG 25.1 million, compared
with the loss of NLG 110.3 million suffered in 1986. We propose to add the
entire amount of these earnings to equity.
The amount added to the general contingency reserve, with a view to the
further strengthening of this reserve, was NLG 40 million.
In 1987, we were obliged in 57 cases to proceed to auction properties.
This once again represented a considerable reduction compared with the
previous year, when the number of foreclosures was 131. The number of
properties acquired in connection with auctions following foreclosure was 14
compared with 41 in 1986. Nearly all the auctions were of dwelling houses.
The financial position of FGH was considerably strengthened in the year
under review. A subordinated loan of NLG 123 million granted by AEGON
was converted into shares of cumulative preferred stock. An amount of NLG
10.7 million of the cumulative preferred stock was converted into common
stock. Stockholders’ equity as per year-end 1987 amounted to NLG 406.0
million compared with NLG 257.5 million at the end of the previous year.
Our balance sheet ratios more than satisfied the latest capital adequacy
requirements imposed by De Nederlandsche Bank (the Dutch central bank).
1987 provided a substantial impetus for the healthy growth of FGH in the
years ahead. Our policy is geared to achieving a further improvement in
profitability and equity. Growth of the portfolio is also our objective, but we
shall generally be placing maintenance and improvement of the margin
above expansion of the volume of business. Against this background, we
shall have to be constantly alert to changes in the marketplace and be ready,
for example, to come up with new products.
For 1988, we forecast a slight fall in the number of employees, but the level
of investment will not differ materially from that in 1987.