Part of the Consolidated Financial Statements as of 31 December 2007, which were audited by KPMG Deutsche Treuhand AG.

skip to main navigation-menu | skip to metanavigation | skip to search form and cross links | skip to toolbox (compare to last year, printing and others)

Content

Net Interest Income

You should read the following discussion and analysis in conjunction with the consolidated financial statements.

The following table sets forth data related to our net interest income.

 

 

 

2007 increase
(decrease) from 2006

in € m. (except percentages)

2007

2006

in € 

in %

ppt – Percentage points

1

Average balances for each year are calculated in general based upon month-end balances.

2

Gross interest yield is the average interest rate earned on our average interest-earning assets.

3

Gross interest rate paid is the average interest rate paid on our average interest-bearing liabilities.

4

Net interest spread is the difference between the average interest rate earned on average interest-earning assets and the average interest rate paid on average interest-bearing liabilities.

5

Net interest margin is net interest income expressed as a percentage of average interest-earning assets.

Total interest and similar income

67,706

58,275

9,431

16

Total interest expenses

58,857

51,267

7,590

15

Net interest income

8,849

7,008

1,841

26

Average interest-earning assets1

1,226,191

1,071,617

154,574

14

Average interest-bearing liabilities1

1,150,051

1,005,133

144,918

14

Gross interest yield2

5.52 %

5.44 %

0.08 ppt

1

Gross interest rate paid3

5.12 %

5.10 %

0.02 ppt

–

Net interest spread4

0.40 %

0.34 %

0.06 ppt

18

Net interest margin5

0.72 %

0.65 %

0.07 ppt

11

Net interest income in 2007 was € 8.8 billion, an increase of € 1.8 billion, or 26%, from 2006. Average interest-bearing volumes of assets and liabilities increased by € 154.6 billion and € 144.9 billion respectively, the overall net interest spread widened by 6 basis points and our net interest margin rose by 7 basis points. Much of the increase in net interest income was related to Sales & Trading (debt) activity and was largely offset by decreased net gains (losses) on financial assets/liabilities at (Glossary)fair value through profit or loss from related activity. Interest income from loans increased year-on-year along with higher rates and volumes of our average loans outstanding, partly resulting from the acquisition of Berliner Bank and norisbank. Our overall funding costs rose slightly by 2 basis points, mainly reflecting increased rates on customer deposits and longer-term funding.

The development of our net interest income is also impacted by the accounting treatment of some of our hedging-related (Glossary)derivative transactions. We enter into nontrading derivative transactions primarily as economic hedges of the interest rate risks of our nontrading interest-earning assets and interest-bearing liabilities. Some of these derivatives qualify as hedges for accounting purposes while others do not. When (Glossary)derivative transactions qualify as hedges of interest rate risks for accounting purposes, the interest arising from the derivatives is reported in interest income and expense, where it offsets interest flows from the hedged items. When derivatives do not qualify for (Glossary)hedge accounting treatment, the interest flows that arise from those derivatives will appear in trading income.