Dear ladies and gentlemen, welcome to the webcast Q2 2019 results of the Hypoport AG. At our customers' request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulty hearing the conference, please press the star key followed by zero on your telephone for operator assistance. May I now hand you over to Ronald Slabke, who will lead you through this conference. Please go ahead, sir.
Yeah, welcome to the half-year result conference call for Hypoport AG. As you may know already, we had a great first half-year. We made a big step forward in digitalizing the credit, housing, and insurance industry in Germany. We mean a network of independent companies, highly linked, highly interacting with each other in the four segments, and as usual, later I will go into the details for each of the segments. What I can tell you right now already is that all of the segments contributed to this first half-year growth. We achieved a 29% growth rate, ending up with close to EUR 160 million in revenue. Even with high investments in our future in engineering and sales capacities, we were able to increase our profitability. Our EBIT went up by 7% to EUR 60 million.
Let's say the growth speed of the different segments were slightly different, starting at 40% for private clients and going up to 94% in the insurance platform. I will come back to this later. For now, what you see here is a good start in the year, solid and in line with our expectations for 2019, where we expect a revenue between EUR 310 million and EUR 340 million and an EBIT between EUR 32 million and EUR 40 million. As always, quick update on the market environment. Let's say, not a big change compared to this, what we reported end of 2018 and for the first quarter. We have a solid housing market in Germany, and most of our business models are linked to the housing market as well. That means there's a net migration to Germany from the Eurozone, from Eastern and Southern part of Europe.
We see an increase in life expectations in Germany. We see more and more people living in single apartments, more apartments needed as well. Altogether, we expect right now an exceeding demand of 1.5 to 1.9 million units in especially the metropolitan areas in Germany. Huge demand for housing. On the other side, the local governments and the regulator struggle with this fast increase in demand over the last eight years. They try different kinds of regulations. They try to speed up the development of new areas for housing. Let's say they still fail doing the right things to handle this increasing demand and speeding up the construction site in Germany. In the end, new construction is stable compared to last year. For the first half of the year, expect something around 150,000 units to be finished only in Germany.
Because of this, rents are up and even more prices are up here in Germany. Because of the regulation and uncertainties from local governments, there is a hesitation of investors to sell or buy apartments. Even with this sharp increase in prices, because this increasing uncertainty increases the spread between both sides, so makes transaction more difficult. Because of this, or as a combination of both rising prices and weak number of transactions, we see a more or less stable mortgage volume here in Germany right now, plus 5% reported by Bundesbank for the first half of the year, so slightly above inflation rate. What is important to understand is, when you look on the economic environment for the net migration, especially to Germany, and the extremely low interest rate here in Germany, you could expect a faster-growing housing market and a faster-growing mortgage market.
This is not happening. It's some kind of, let's say, a future promise that we collect here. Every quarter, where our housing production stays low, let's say, this stack in front of us, which needs to be still built and financed, is getting bigger. The good discussion helps us already a little bit. In our metropolitan areas, we have still a renting market. Here in Berlin, where we are situated, 85% of the people still rent apartments. It's getting extremely difficult to rent a new apartment in this environment with empty apartments below 1% right now. More and more people, especially from the middle class, need to consider to own their apartments. Ownership rate is incrementally going up in the metropolitan areas.
There's a big chance that in the next 10 to 20 years, we will see a change in the German residential market, that we will have, let's say, typically for Europe, 60% or even 70% of home ownership rate, not 50% like right now. This is a nice potential for us for the next decades, because all these home owners need to finance their residence, and so the mortgage market will be, let's say, solid for the upcoming decades. Okay. How the different segments of Hypoport performed in this environment. We start with the core of our group, the credit platform, and there is the marketplace, Europace.
As you know already, we have specialized sub-marketplaces for saving banks, FINMAS, and cooperative banks, GENOPACE, and for small intermediaries, our own broker pool, Qualitypool, and joint ventures with Deutsche Bank, Starpool, and Bausparkasse Schwäbisch Hall, Baufinex, the cooperative banking sector. With these units, we serve small intermediaries. With the Europace brand, we serve large intermediaries, sales organizations, and private banks. All these units together delivered a strong growth in the first half year. We went up by 40% to a transaction volume of EUR 31.9 billion, again, exceeding market growth. Quite funny, we exactly made, in the first half of 2019, the number of mortgage volume that we had in 2014 in a whole year. We doubled our volume within five years.
You can see with the CAGR of 60% and the current development of 40%, that our growth rate stays quite stable over a long period. This is because of the, let's say, the credentials or the properties of our business. It's a B2B business. It's an organic growth in partners, in the penetration rate of our partners. Step by step, we gain market share in the 250 billion German mortgage market. Talking about the product details, mortgage was up 16% in the first half year. Linked to this mortgage products typically are this bausparvertrag, this building financing, plus 40%. Strong growth. Where we see some weakness right now is personal loan business, where we saw a strong growth last year. We have a high base we are coming from. First quarter was even a little bit more weak. Second quarter was already getting better.
On average, we are now at -7%. We expect for this year that we will end up neutral in this product segment. Altogether, this growth rate is contributed by all segments. The private banking industry, the independent mortgage advisors, and the regional banks. As you know all, regional banks are very important when you look on the total market volume because they represent roughly 60% of this EUR 250 billion market. We have still a quite low penetration rate in these two sectors of regional banks. While the savings banks, this FINMAS, already for more than two years deliver a high growth rate of something 50%-70% every quarter. GENOPACE increased the pace lately. More about this in a second. Savings banks now are at 57% plus compared to first half year of 2018.
The transaction volume, the adoption rate is increasing, and we can say that we are now roughly at 6% market share within the savings bank sector. We feel a strong sentiment towards FINMAS, more and more banks are actively in projects with us, trying to push the penetration rate within the organization forward. With this 252 savings banks under contract, which we currently have, roughly two out of three savings banks in Germany are contractual partners of FINMAS already. Within this group of 255, there is a huge ongoing project portfolio to increase the usage of FINMAS because of the high competitive advantage of the model and the software, and the solution compared to their traditional way to close mortgages. It's easier for them. It's more convenient. It's faster. They save labor, and they get higher conversion rate in advising their clients.
As well, a positive development in the second quarter here in the savings bank was a closer cooperation with the internal IT service provider of the savings banks, which renewed the interfaces, established better, more intensive interfaces between FINMAS and their core system, and which started to even recommend to savings banks to use FINMAS as a front-end solution. Now coming back to the even more attractive performance of the cooperative banks right now. GENOPACE has a long tradition of double-digit growth until the beginning of last year, below 20%. It was a battle for each cooperative bank and to convince them to go forward. Let's say, for 10 years, we fight it for every additional transaction volume there.
Because of the high speed of the savings banks, the cooperative banking sector realized that they are missing something, that savings banks are digitalizing, private banks are digitalizing their mortgage business. They stay offline. In the summer last year, finally, they decided to team up with us to get initiatives started to digitalize their mortgage business as well. Together with Volksbank Kassel Schwalm-Eder, a leading cooperation within this sector, we established our Phoenix and started initiatives along the value chain to increase transaction value with them. This led in the middle of last year to a 40% growth rate. End of last year, 60% growth rate. The beginning of this year, close to 100%. In the second quarter, we crossed even the 150% growth rate for the cooperative banking sector.
They are now on high speed, trying to catch up with the savings banks in the adoption rate. We are here roughly at 3%-4% right now in the penetration rate of the cooperative banking sector. There is a long way to go still. With this high speed and adoption, we see a good chance that both of these regional banking sectors will contribute a lot to the future growth of Europace. Only in the first half year, they contributed more than half of the volume gain for Europace. As it looks like, it's speeding up, and we are pretty sure that we will stay in high double-digit growth, that both of them, if not GENOPACE, stay even three-digit growth for a certain period now.
Altogether, the segment delivered a strong growth, top and bottom line in the first half year. 32% growth rate on top line based on this gain in transaction volume and additional services rendered by our pooling industry, which we provide to enable partners to use the Europace system. Because of the incremental EBIT margin of 100%, and beside the fact that we heavily invest in sales and engineering resources, we grew our EBIT margin by 25% to a new record high of EUR 42 million. Talking about growth. This is going to continue here. We are pretty sure that we are able to deliver double-digit growth rate out of this existing product portfolio. As you know us, we want more.
At the end of last quarter, we announced the acquisition of REM CAPITAL AG, a highly specialized small company here in Germany, which is servicing the middle and larger corporations in Germany, the back end of the German industry. With roughly 50 employees, they serve a couple of 100 clients in helping them to finance their growth and their projects using subsidies and subsidized loans, government-subsidized loans from specialized agencies. That's a consulting business with a very good relationship to this kind of small and large corporations here in Germany. We acquired it because for the last two years in an, let's say, affiliation project within Dr. Klein Firmenkunden, we looked for a way to enter the corporate financing world here in Germany.
We established a small corporate finance team, started to finance midcaps here in Germany, being an advisor and a broker between banks and these midcaps, and learned a lot about how this market works. Let's say we are still at the starting point, 60 people, EUR 1 billion in advised portfolio right now to be close. What we learned is that there is a need on the midcap side to get help, and there is a huge need in digitalization between the banking industry and the midcaps to make it possible that transaction between them get more efficient. Even I personally am able to have a perspective on this. Hypoport is financing via banks as well.
Most of our acquisition we finance with banks, and there is a lot of inefficiency in this market, how we handle the transaction process, how we handle the information flow, and how we come to the best deal for the mid-cap. Our corporate finance team, let's say, established an efficient offline process now how to deal with them. Together with REM Capital, we are able to scale this kind of business already. We will serve not a couple of dozen companies in the future, but a couple of hundred companies, helping them to finance their growth, their projects by bank loans or with subsidies from government agencies. Both together is a full solution, a full stack for the CFO of every mid-cap company here in Germany.
Based on this market presence and market power we have, we see the chance to establish as well in B2B platform in this market, like we did it 20 years ago with the Europace system. REM Capital is the Dr. Klein, which solves the chicken and the egg problem for this kind of product area for corporate finance, and the platform is under construction. We started to build it end of last year, and we expect the first modules and the first support delivered in the beginning of next year. That we are able to slowly start using it, and with the market power of the joint REM Capital corporate finance team to convince the banks to support this platform and work ourselves into the middle of this industry as well. How big is the potential?
We expect midcaps to lend roughly EUR 50 billion annually in Germany right now, one-fifth of the volume of the mortgage business. Similar volume in transaction fee, we expect. It's an attractive proposition. With our abilities to enter banks and with the power of REM Capital and Capital Finance together, we see that we are able to initiate this marketplace. From the future back to the reality of the first half year and to our next segment, private client division. As you know, it's the Dr. Klein franchise system in the core, with lead generation on the internet and delivering a strong brand. Actually, Dr. Klein just won again an award for the Leading and Fairest Brand in the financial service industry. We offer a platform for consumers and mortgage advisors to operate on.
Dr. Klein, after a long growth path, was again growing in the first half of this year, plus 11% in the transaction volume, up to EUR 3.5 billion. You can see here that the CAGR of Dr. Klein was even higher than Dr. Klein. At the Europace, we are close to the 2015 volume already, so close to double within four years. It took some toll on us. Especially the fast growth last year, we had to invest now in scaling our internal operation. We had to adjust together with our partners in the franchise system, which advisor we are using. Our efficiency still was growing even the first half of the year, plus 9% in advisors compared to this plus 11% in the mortgage volume, shows an efficiency gain, but it was costly to, let's say, adjust the whole operation.
Plus, because of the huge success of FINMAS and GENOPACE, the number of banks operating with Dr. Klein grew fast. Dr. Klein is now, for the consumer, the most attractive way to get quotes and mortgages from more than 500 banks. With all these small banks, you need to negotiate and renegotiate the, let's say, benefits for the Dr. Klein network. While we have attractive contracts long-term and often negotiated with the larger banks, this is close to 500 smaller banks. This is a lot of work to do right now to bring them on an equal, attractive financial level for Dr. Klein and negotiate the bonuses and the commercials again. We have to increase the team of product managers there, and we are in a long queue of a couple of hundred negotiations with banks right now. This costs us profitability.
This increase our labor costs, and together with the adjustments, leads to an decreased profitability of the whole segment right now for the first half year in 2019. We are down roughly EUR 2 million in EBIT right now. This actually includes as well some additional investments in consumer-focused modules and apps for Dr. Klein to be, let's say, different than what the default Europace world is offering. To experiment there and to find ways to attract and for long time link to consumers which may be interested in mortgages as well. Higher costs, a little bit lower revenue, especially on the gross profit level because of this 500-plus banks now change our profitability, but it's a one-time effect.
We are in this process of renegotiating our contracts, and because of this, we expect latest next year to increase our profitability again. Maybe not in 2030, back to the level of 2018, but we will increase it, and let's say from there, it will not be so far anymore to get to the 2018 EBIT level again. Okay. After this, coming to one of our core growth segments, the real estate platform. As you know, we are serving here 2 types of clients. On the one side, the housing industry, where for the last 70 years, we finance and insure them. On the other side, with the acquisition of FIO, we offer them an ERP system to run on us. On the other side, two offerings for the credit industry.
The first is linked to the mortgage process, property valuation, appraisal platform, so that the advice and transaction process of Europace is supported by a smooth, integrated, and digital evaluation process for the bank with every mortgage. This is a little bit special for Germany. With the acquisition of FIO, we gained control of the agent software used by the real estate agents of the banks. We are the core provider of this software solution for the selling process of properties as well. Together with the mortgage process of Europace, we deliver the full solution for every real estate center of a bank in Germany and are the only one in the market able to do so. How these different segments performed in the environment described already. Let's start with the mortgage financing platform for the housing industry.
We had a weak first quarter, a quite good second quarter, even despite the fact that still the construction of social housing lags far behind demand. We have an extremely low interest rate environment, which should initiate a lot of projects, but because of the political uncertainties, still the industry holds back and, let's say, stays calm with the number of projects which they actually do. So far, stable result, but the potential is huge here in this kind of product. Next, the software-as-a-service solutions delivered by FIO. In the real estate agent software, we acquired this. Right now, we renewed. There's a new version put into place for all clients. With this, we established as well a new pricing model for our clients. In a B2B world where you work together with trusted partners and have long-term relationships, it takes some time to implement this.
The 91% gain in revenue here is still most based by the inorganic acquisition of FIO. We set already the base for future revenue growth by price increases and by a better integration with the mortgage solution and additional values for our clients, which they are happy to pay for. It just takes time. Let's say this year, the organic distribution of additional revenue is low from the FIO side. It looks promising for the next couple of years that we will get here into a nice double-digit organic growth from FIO as well. Where we achieved already a double-digit growth organic is the appraisal business. Right now, we need to scale here with a lot of human labor. The demand from Europace partners to get an integrated solution from us is high. To meet this demand, we need to scale fast.
Next to this, we build up our development teams so that we are able to digitalize the appraisal business, which we are right now acquiring and dealing with and getting more efficiency in our workforce so that we will be able to scale more without additional labor in the future. Right now, it's labor-intensive, but a huge chance for us by, let's say, gaining or being the market leader is not even reaching the point where we have a monopoly in the appraisal business for banks in the mortgage world, linked to the core mortgage platform in this industry with Europace. Here, this 111% is still diluted by inorganic growth, but the organic growth is double-digit already. We are on track with a fast speed to grow this business. Altogether, these three product platforms deliver a 40% growth rate top line.
Because of the investments, especially in the appraisal business and because of this, let's say, a little bit weaker housing financing platform business, we saw a decline of roughly EUR 900,000 in the first half year in EBIT contribution. This is just a one-time. We set here the pace. We invest in the future. This is going to be a fast-growing, large business with a high distribution profitability to the Hypoport network soon. Coming to our fourth growth area, the insurance business. Smart Insur is the platform that enables insurance sales organizations to generate leads, to compare prices, to transact insurances, to manage insurance portfolios, to receive commissions, to communicate with 200 insurance companies in case of any default events or whatever. We are the only one who is delivering this kind of technical solution in Germany right now.
Let's say we are the only one to have the genetic footprint to do this long-term, and this, the whole industry agrees on. There is no single insurance company like Allianz or whatever who's able to deliver a core IT solution to a whole sector. There is no single sales organization who's able to do this, and there is no startup which is trustworthy enough to deliver this kind of solution to the industry. For the first half year, we can say that we agreed with major market participants that we are going to be this platform. There are not a lot of voices who deny this or oppose this development. We are on the right way. We agree with our clients, with our target group. What we are lacking still is action. We are in a lot of projects. We are getting forward.
They are using step-by-step more components out of our platform. It's still, let's say, a muddy environment. The steps are difficult to do, and they take time, and they are not fast. We are working with the whole industry in the right direction. When you look on the numbers, we see a 94% growth rate based off inorganic growth by the acquisition of ASC last year, but as well with additional organic growth delivered by Qualitypool and Smart Insur together. We had the first quarter with a slightly positive EBIT. Second quarter was slightly negative. Right now we look on red zero. We expect for the full year to stay in this area of zero, that our huge investment of the last years in the platform with acquisitions, with engineering skills, and with sales pay back slowly.
We hope for the whole German insurance industry that the extreme efficiency gains, which we all may able to achieve when Smart Insur is used by all participants in the market, that the EUR billions we can save in back-office labor will make the whole market more attractive. That this will not take 10 years from now, but that we will achieve huge gains in productivity and efficiency by migrating large partners to the system, to the platform, and that we get the whole industry moving toward Smart Insur in the next couple of quarters. There we are. All four segments distributed. We have the record half year as so often in the past. We see earnings records as well, and this all based on a fast-growing pool of talents of Hypoport employees, which delivered this.
As you can see, for the first half-year already, the number of employees compared to the revenue gain slowed down. We are gaining efficiency again. Yeah, we are investing heavily in people right now, and especially engineering resources and sales resources are under huge demand from our side. All our entities are growing and investing in the future. As you know already, in most of our business models, the current revenue is not linked to the number of employees we have right now. Our sales side and our engineering are doing everything which is necessary to scale the business further and to attract additional transaction volume for the future. This number of people which are acting for the future is growing fast, and we try to accelerate this as much as possible in an organic way. In the long-term perspective, growth rate is in line.
For the last five years, we are scaling our operation and adding via programmatic acquisition, some additional growth speed and expand our network to new areas. You are investing in a company with a double-digit long-term growth rate, top and bottom line. We show that we are able to scale in addition with acquisitions. We made 10 acquisitions in the last two and a half years, actually. We are still light from our balance sheet. We still have some firepower for some additional acquisitions based off our strong profitability, and we are going to scale and grow Hypoport further in the next years. I hand back to Ms. Beyer for a Q&A session if there is, for the first time, some questions in the English call.
Now we will begin our question and answer session. If you have a question for our speakers, please dial 01 on your telephone keypad now to enter the queue. If you're using speaker equipment today, please lift your handset before making your selection. One moment please, for the first question. The question is from Gerhard Orgonas with Berenberg.
Good afternoon. Just a question on your corporate finance platform. Did I understand you correctly that you expect the market of EUR 50 billion and the transaction fee similar to what you're getting at Europace, yeah? Is that the potential market size for you?
Yeah. Hello, Mr. Orgonas. Nice to hear you. Thanks for asking the first question in the English call. Yep, you're absolutely right.
Sorry, I missed the German one. I missed the German one. I'm sorry.
No, it's fine. You're absolutely right. It's market volume EUR 50 billion, and something around 10 basis points as well as a transaction fee for the system. This is what we expect. Yes.
Okay. What you've done is you have started to develop this in-house, and you've bought a big potential user with REM Capital. Is that what you did?
Yes. Let's say in a certain way. Let's say we developed the corporate finance team already in-house. We built a team. It's right now 16 people, and it has a project portfolio of EUR 1 billion. With this, let's say REM Capital will be used to scale this additionally. REM Capital has great client relations in the German mid-cap industry with a couple of hundred clients. With them, we will scale the corporate finance business, and this together is, let's say, the necessary starting point, the chicken or the egg for the FundingPort platform.
Okay. REM basically adds clients. It doesn't necessarily add technology at this point.
Exactly. They don't add technology. They add client portfolio. Right.
All right. Thank you.
You're welcome.
If you would like to ask a question, please press zero one. We have no further questions. I hand back to our host for closing comments.
Okay. Thank you. Yeah. Thanks for your attention. Hope to hear you in three months. I'm delighted already to bring you then closer to our nine-month results, and I expect that we deliver again the growth path, and that you see that Hypoport continues its success story during 2019. Up to then, hope to hear from you offline. See you soon. Bye-bye.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.