Solid share performance
The HVB share again posted a significant increase in 2006, climbing 29.0% over the year as a whole to reach a price of €33.03 per share at December 31, 2006. Thus it has risen a remarkable 65% since the business combination with UniCredit was announced on June 12, 2005, showing that the market has truly appreciated the strategic choice made by management.
Our share also put in a solid performance in 2006 when seen against our benchmark indexes, the MDAX and the Prime Banks, whose rises of 28.6% and 21.8% respectively during 2006 failed to fully match the Bank.
The new three-year plan for both the UniCredit and HVB groups, the first since the business combination became a reality, was presented to the financial community in Munich on July 5, 2006. This was clearly very well received, as the HVB share clearly outperformed both the benchmark indexes in the month following the presentation, rising by 15% as against 2.1% for the MDAX and 1.2% for the Prime Banks index.
The weights of the HVB share in the MDAX index and the Prime Banks index increased accordingly, to 1.58% and 1.67% respectively in 2006 (2005: 1.56% in the MDAX and 1.58% in the Prime Banks).
Improved credit ratings
Two of the three main agencies covering us, S&P and Fitch, improved their views of HVB Group during 2006 to reflect the stronger outlook and financial strength of the Bank. S&P reviewed the outlook from negative to stable (maintaining its A/A-1 rating), whilst Fitch improved the outlook from stable to positive and the financial strength rating from C/D to C.
Shareholder structure virtually unchanged
The shareholder structure remained virtually unchanged during the year, with the main shareholder, UniCredit, owning 93.93% of capital stock. The remaining 6.07% of our shares were free float, held by mainly institutional investors and some private investors.
The average daily trading volume during the year declined significantly from the high level recorded in 2005 (which can be attributed in part to the demand associated with the business combination with UniCredit), but the stock remained relatively liquid despite the limited free float, with the daily trading volume averaging 443,000 shares in 2006.
| Weighting | Ranking | |
|---|---|---|
| MDAX | 1.58% | 27 |
| Prime Banks index | 1.67% | 6 |
| based on average number of shares | ||
|---|---|---|
| in € | 2006 | 2005 |
| Average number of shares (millions) | 750.7 | 750.7 |
| Number of shares at Dec. 31 (millions) | 750.7 | 750.7 |
| Earnings per share (adjusted)1 | 2.88 | 1.55 |
| Earnings per share | 5.89 | 0.86 |
| Dividend per share of common stock | 0.40 | 0.25 |
| Dividend per share of preferred stock | 0.064 | 0.064 |
| Share price at year end | 33.03 | 25.61 |
| High | 36.65 | 26.85 |
| Low | 25.52 | 16.30 |
1 2006 figures adjusted for the defined non-recurring effects
2005 figures adjusted for restructuring costs and additional provisions for losses on loans and advances
| Long-term | Short-term | Outlook | Public Pfandbriefs |
Mortgage Pfandbriefs |
|
|---|---|---|---|---|---|
| Moody’s | A2 | P-1 | stable | Aa1 | Aa1 |
| S & P | A | A-1 | stable | AAA | – |
| Fitch Ratings | A | F1 | positive | AAA | AAA |
Investor relations activities still significant
The Investor Relations team remained active on many fronts in 2006, keeping a communication channel constantly open with equity and fixed-income analysts, investors and the rating agencies. As of December 31, 2006, our share was still being covered by nine analysts from prestigious banks and brokers, despite the limited free float, reflecting its still relatively high liquidity together with interest in the HVB equity story and the German markets. We participated in the main German banking conferences and held meeting in Frankfurt, London, New York and our corporate headquarters in Munich.
At the end of January 2006 and in May/June 2006, HVB AG successfully issued two global Pfandbriefe – the “Global No. 10” with a volume of €1.5 billion and a maturity of 7 years and the “Global No. 11” with the same volume and a maturity of 10 years – with Investor Relations co-organising the associated roadshow through Europe.
Significant efforts were made to co-ordinate the Bank’s investor relations activities with those of UniCredit Group, with a view to explaining the two groups’ new strategy and structure to market participants in the best possible way.
