Net Interest Income and Net Gains (Losses) on Financial Assets/Liabilities at Fair Value through Profit or Loss

Our trading and risk management businesses include significant activities in interest rate instruments and related derivatives. Under IFRS, interest and similar income earned from trading instruments and financial instruments designated at fair value through profit or loss (i.e., coupon and dividend income) and the costs of funding net trading positions are part of net interest income. Our trading activities can periodically shift income between net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss depending on a variety of factors, including risk management strategies.

In order to provide a more business-focused discussion, the following table presents net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss by corporate division and by product within CB&S.

in € m.

 

 

 

2013 increase (decrease)
from 2012

2012 increase (decrease)
from 2011

(unless stated otherwise)

2013

2012

2011

in € m.

in %

in € m.

in %

N/M – Not meaningful

1

This breakdown reflects net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss only. For a discussion of the corporate divisions’ total revenues by product please refer to Note 4 “Business Segments and Related Information”.

2

Includes the net interest spread on loans as well as the fair value changes of credit default swaps and loans designated at fair value through profit or loss.

3

Includes net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss of origination, advisory and other products.

Net interest income

14,834

15,975

17,445

(1,141)

(7)

(1,470)

(8)

Total net gains (losses) on financial assets/liabilities at fair value through profit or loss

3,817

5,608

2,724

(1,791)

(32)

2,884

106

Total net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss

18,651

21,583

20,169

(2,932)

(14)

1,414

7

 

 

 

 

 

 

 

 

Breakdown by Corporate Division/product:1

 

 

 

 

 

 

 

Sales & Trading (equity)

2,129

1,732

1,504

397

23

228

15

Sales & Trading (debt and other products)

6,230

8,226

8,121

(1,996)

(24)

105

1

Total Sales & Trading

8,359

9,958

9,625

(1,599)

(16)

333

3

Loan products2

599

182

185

418

N/M

(3)

(2)

Remaining products3

72

589

199

(517)

(88)

390

196

Corporate Banking & Securities

9,030

10,729

10,010

(1,699)

(16)

719

7

Global Transaction Banking

1,984

2,016

1,996

(32)

(2)

20

1

Deutsche Asset & Wealth Management

1,568

1,974

991

(406)

(21)

983

99

Private & Business Clients

5,966

6,220

6,625

(254)

(4)

(405)

(6)

Non-Core Operations Unit

83

275

588

(191)

(70)

(313)

(53)

Consolidation & Adjustments

19

369

(42)

(350)

(95)

411

N/M

Total net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss

18,651

21,583

20,169

(2,932)

(14)

1,414

7

Corporate Banking & Securities (CB&S)

2013

Combined net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss were € 9.0 billion in 2013, a decrease of € 1.7 billion, or 16 %, compared to 2012. This decrease was partly driven by products outside of Sales & Trading. For Remaining products, the decrease was mainly related to the non-recurrence of a refinement in the calculation methodology of the Debt Valuation Adjustment (DVA) on certain derivative liabilities in 2012. In Sales & Trading (debt and other products), the main drivers for the decrease were lower revenues in RMBS due to de-risking activity undertaken this year, weaker liquidity and market uncertainty, lower revenues in Foreign Exchange due to lower volatility and margin compression and weaker trading revenues in Commodities and Rates. Partly offsetting these were an increase in Loan products due to favorable movements in credit spreads, a lower proportion of lending activity measured at fair value and lower overall hedge costs. The increase in Sales & Trading (equity) in 2013 was primarily driven by non-recurrence of higher dividend payout in 2012 in Equity Derivatives, increased client activity and an improved market environment in Equity Trading business.

2012

Combined net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss were € 10.7 billion in 2012, an increase of € 719 million, or 7 %, compared to 2011. The increase in Sales & Trading (equity) in 2012 was primarily driven by Equity Derivatives revenues impacted by volatile market conditions. Another contributor to the increase in Sales & Trading (equity) was Equity Trading with higher net interest income due to market share gains resulting in higher volumes offsetting more difficult market conditions. In Sales & Trading (debt and other products) the main drivers for the increase of net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss were higher Flow Credit revenues reflecting improved credit market conditions and higher Rates revenues driven by strong client activity. This was partially offset by lower revenues in Money Markets due to lower volatility. The increase of net gains in the remaining products held at fair value in CB&S arose relating to the aforementioned refinement in calculation methodology of the DVA on certain derivative liabilities.

Global Transaction Banking (GTB)

2013

Combined net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss were € 2.0 billion in 2013, a decrease of € 32 million, or 2 %, compared to 2012. Net interest income declined compared to the prior year driven by low interest rate in core markets, and competitive pressure on margins. Furthermore, foreign exchange-movements compared to 2012 adversely impacted the income reported in Euro.

2012

Combined net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss were € 2.0 billion in 2012, an increase of € 20 million, or 1 %, compared to 2011. Net interest income increased compared to the prior year driven by strong performance across the GTB product spectrum and regions benefiting from strong volumes. The gain was offset by a decrease in the interest income of the commercial banking activities in the Netherlands, primarily due to the depressed interest rate environment.

Deutsche Asset & Wealth Management (DeAWM)

2013

Combined net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss were € 1.6 billion in 2013, a decrease of € 406 million, or 21 %, compared to 2012. The decrease in net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss was mainly attributable to the deconsolidation of funds in 2013 and was offset by increases in other revenues categories.

2012

Combined net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss were € 2.0 billion in 2012, an increase of € 983 million, or 99 %, compared to 2011. The increase in net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss was mainly attributable to a net gain in Abbey Life offset in noninterest expenses.

Private & Business Clients (PBC)

2013

Combined net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss were € 6.0 billion in 2013, a decrease of € 254 million, or 4 %, compared to 2012. This decrease was primarily due to the ongoing low interest rate environment affecting revenues on deposits and higher negative impact from purchase price allocation on Postbank.

2012

Combined net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss were € 6.2 billion in 2012, a decrease of € 405 million, or 6 %, compared to 2011. The combined net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss decreased primarily due to the lower purchase price allocation effects as well as lower interest income at Postbank.

Non-Core Operations Unit (NCOU)

2013

Combined net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss were € 83 million in 2013, a decrease of € 191 million, or 70 %, compared to 2012. The main driver for the decrease was lower portfolio revenues due to asset reductions across all products in the NCOU. This was a result of an accelerated de-risking strategy, leading overall to a reduction in fair value losses.

2012

Combined net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss were € 275 million in 2012, a decrease of € 313 million, or 53 %, compared to 2011. The main driver for the decrease was the smaller asset base across all products in the NCOU as a result of de-risking activity and a reduction in fair value losses predominantly due to credit spread movements.

Consolidation & Adjustments (C&A)

2013

Combined net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss were € 19 million in 2013, compared with € 369 million in 2012. This decrease primarily reflected lower positive effects resulting from timing differences from different accounting methods used for management reporting and IFRS. The remaining decline was mainly due to net interest income which was not allocated to the business segments and items outside the management responsibility of the business segments, for example funding expenses on non-divisionalized assets/liabilities.

2012

Combined net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss were € 369 million in 2012, compared with a negative € 42 million in 2011. The increase was mainly a result of positive effects related to timing differences from different accounting methods used for management reporting and IFRS.

Provision for Credit Losses

2013

Provision for credit losses in 2013 were € 2.1 billion, up by € 344 million or 20 % versus 2012. In NCOU, provision for credit losses increased reflecting a number of single client items, including an item related to the European Commercial Real Estate sector. Provision for credit losses also increased in GTB, related to a single client credit event, and in CB&S, from higher charges relating to shipping companies. These increases were partly offset by lower provisions in PBC reflecting the improved credit environment in Germany.

2012

Provision for credit losses recorded in 2012 decreased by € 118 million to € 1.7 billion. This reduction was primarily driven by improvements in the quality of the PBC Germany portfolio, partly offset by higher provisions for IAS 39 reclassified assets held by NCOU.