UPDATE 1-Hudson City Bancorp to enter commercial real estate market
July 24 (Reuters) - Hudson City Bancorp Inc said it will enter the lucrative commercial real estate market as low interest rates pressure profits and force the lender to look at other growth opportunities.
Regional banks have struggled to grow profits over the last two years as the U.S. Federal Reserve continues to keep interest rates low and fewer Americans want to take on additional debt.
"The extraordinarily low market interest rates combined with the GSEs participation in the mortgage market persist and make it difficult for us to profitably grow our business in the same manner as we have in the past," acting Chief Executive Officer Denis Salamone said in a statement.
The Paramus, New Jersey-based company will initially participate in syndicated commercial real estate and multi-family mortgage loan deals. Hudson City said its mortgage loans will be eligible for sale in the secondary market.
Multi-family loans - mortgages backed by apartment buildings - are considered a bright spot in the mortgage lending market.
As the foreclosure crisis drives more Americans to rent, rather than buy homes, apartment buildings are becoming a booming business and are attracting more investments.
Multi-family loans drove profits at peer New York Community Bancorp Inc, which on Wednesday reported a five-fold growth in mortgage banking income.
Hudson City Bancorp, the holding company for Hudson City Savings Bank, reported a drop of almost 25 percent in its quarterly net income.
Net interest income fell almost 18 percent to $224.3 million.
Hudson City Bancorp's shares were down marginally at $5.71 on Wednesday morning on the Nasdaq. New York Community's shares were up about 1 percent at $12.48 on the New York Stock Exchange.
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