Deutsche Bank
Annual Report 2013
Deutsche Bank Annual Report 2013
Allowance for Credit Losses

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Allowance for Credit Losses

Development of allowance for credit losses

 

2013

 

Allowance for Loan Losses

Allowance for Off-Balance Sheet Positions

 

N/M – Not meaningful

in € m.

Individually assessed

Collectively assessed

Subtotal

Individually assessed

Collectively assessed

Subtotal

Total

Balance, beginning of year

2,266

2,426

4,692

118

97

215

4,907

Provision for credit losses

1,377

683

2,060

(15)

21

5

2,065

thereof: (Gains)/Losses from disposal of impaired loans

(19)

(2)

(20)

0

0

0

(20)

Net charge-offs:

(701)

(352)

(1,053)

0

0

0

(1,053)

Charge-offs

(730)

(485)

(1,215)

0

0

0

(1,215)

Recoveries

30

132

162

0

0

0

162

Changes in the group of consolidated companies

0

0

0

0

0

0

0

Exchange rate changes/other

(85)

(25)

(110)

0

(3)

(4)

(114)

Balance, end of year

2,857

2,732

5,589

102

114

216

5,805

 

 

 

 

 

 

 

 

Changes compared to prior year

 

 

 

 

 

 

 

Provision for credit losses

 

 

 

 

 

 

 

absolute

262

70

332

(8)

20

12

344

relative

24 %

11 %

19 %

119 %

N/M

(177) %

20 %

Net charge-offs

 

 

 

 

 

 

 

absolute

61

(28)

33

0

0

0

33

relative

(8) %

9 %

(3) %

0 %

0 %

0 %

(3) %

Balance, end of year

 

 

 

 

 

 

 

absolute

591

306

897

(16)

17

1

898

relative

26 %

13 %

19 %

(13) %

18 %

1 %

18 %

Our allowance for credit losses was € 5.8 billion as at December 31, 2013, thereof 96 % or € 5.6 billion related to our loan portfolio and 4 % or € 216 million to off-balance sheet positions (predominantly loan commitments and guarantees). The allowance for loan losses is attributable 51 % to individually assessed and 49 % to collectively assessed loan losses. The net increase in our allowance for loan losses of € 897 million compared with prior year end results from additions of € 2.1 billion partly offset by € 1.1 billion of net charge-offs and € 110 million other changes, such as accretion of interest on impaired loans and foreign exchange effects. Our allowance for off-balance sheet positions slightly increased net by € 1 million compared with prior year end due to additional provisions of € 5 million driven by our collectively assessed portfolio partly offset by € 4 million other changes.

Provision for credit losses recorded in 2013 increased by € 344 million or 20 % to € 2.1 billion compared with 2012. Our overall loan loss provisions increased by € 332 million or 19 % in 2013 compared with 2012. This increase was driven by our individually assessed loan portfolio, where provisioning increased by € 262 million along with an increase of € 70 million in our collectively assessed portfolio. The increase of provisions in our individually assessed loan portfolio is a result of a single client credit event recorded in GTB, increased provisioning for shipping exposure recorded in CB&S and higher charges in NCOU driven by single client items amongst others related to the European commercial real estate sector. The increase in our collectively assessed loan portfolio was driven by NCOU. This increase was partly offset by reductions in our Core business mainly reflecting an improved credit environment in the German retail market compared to prior year. Our overall provisions for off-balance sheet positions increased by € 12 million compared with previous year driven by GTB as a result of increased collectively assessed allowances amongst other driven by volume increase.

Net charge-offs slightly decreased by € 33 million or 3 % in 2013 driven by a reduction of € 61 million in our individually assessed loan portfolio and partly offset by an increase of € 28 million in our collectively assessed loan portfolio.

Our allowance for loan losses for IAS 39 reclassified assets amounted to € 479 million as at year end 2013, representing 9 % of our total allowance for loan losses, slightly down from € 489 million (10 % of total allowance for loan losses) at prior year end. The slight reduction in 2013 was a result of reductions due to € 349 million charge-offs and € 35 million other changes overcompensating increases due to an additional provision for loan losses of € 373 million. Compared to prior year, provision for loan losses for IAS 39 reclassified assets decreased by € 43 million in 2013 (to € 373 million from € 415 million) driven by reductions across portfolios apart from commercial real estate. Net charge-offs related to IAS 39 reclassified assets slightly increased by € 18 million to € 349 million in 2013 from € 331 million in 2012 caused by a small number of charge-offs in the commercial real estate sector (subsequent to the partial charge-off, the respective loans have been consolidated due to the Group obtaining control over the structured entity borrower during the second and third quarters of 2013).

 

2012

 

Allowance for Loan Losses

Allowance for Off-Balance Sheet Positions

 

in € m.

Individually assessed

Collectively assessed

Subtotal

Individually assessed

Collectively assessed

Subtotal

Total

Balance, beginning of year

2,011

2,147

4,158

127

98

225

4,383

Provision for credit losses

1,115

613

1,728

(7)

0

(7)

1,721

thereof: (Gains)/Losses from disposal of impaired loans

79

(55)

24

0

0

0

24

Net charge-offs:

(762)

(324)

(1,086)

0

0

0

(1,086)

Charge-offs

(798)

(483)

(1,281)

0

0

0

(1,281)

Recoveries

36

158

195

0

0

0

195

Changes in the group of consolidated companies

0

0

0

0

0

0

0

Exchange rate changes/other

(98)

(9)

(107)

(2)

(1)

(3)

(111)

Balance, end of year

2,266

2,426

4,692

118

97

215

4,907

 

 

 

 

 

 

 

 

Changes compared to prior year

 

 

 

 

 

 

 

Provision for credit losses

 

 

 

 

 

 

 

absolute

208

(312)

(104)

(26)

12

(14)

(118)

relative

23 %

(34) %

(6) %

(137) %

(103) %

(191) %

(6) %

Net charge-offs

 

 

 

 

 

 

 

absolute

(249)

61

(189)

0

0

0

(189)

relative

49 %

(16) %

21 %

0 %

0 %

0 %

21 %

Balance, end of year

 

 

 

 

 

 

 

absolute

255

275

531

(9)

(1)

(10)

520

relative

13 %

13 %

13 %

(7) %

(1) %

(4) %

12 %

Our allowance for credit losses was € 4.9 billion as of December 31, 2012, thereof 96 % or € 4.7 billion related to our loan portfolio and 4 % or € 215 million to off-balance sheet positions (predominantly loan commitments and guarantees). Our allowance for loan losses as of December 31, 2012 was € 4.7 billion, 52 % of which is related to collectively assessed and 48 % to individually assessed loan losses. The increase in our allowance for loan losses of € 531 million mainly related to € 1.7 billion of additional loan loss provisions partly offset by € 1.1 billion of charge-offs. Our allowance for off-balance sheet positions decreased by € 10 million or 4 % compared with the prior year due to releases of previously established allowances overcompensating new provisions in our portfolio for individually assessed off-balance sheet positions.

Provisions for credit losses recorded in 2012 decreased by € 118 million to € 1.7 billion compared with 2011. The overall loan loss provisions decreased by € 104 million or 6 % in 2012 compared with 2011. This decrease was driven by our collectively assessed loan portfolio, where we saw a reduction of € 312 million or 34 % driven by lower levels of provisioning for non-impaired loans within our NCOU along with lower provisioning in our homogenous Postbank portfolio primarily driven by improvements in the portfolio quality. Further credit was recorded in interest income representing increases in the credit quality of Postbank loans recorded at fair value on initial consolidation in the group accounts.

The increase in provisions for our individually assessed loans of € 208 million or 23 % is related to assets which had been reclassified in accordance with IAS 39 in North America and United Kingdom now held in the NCOU. Provisions for off-balance sheet positions decreased by € 14 million or 191 % driven by our portfolio for individually assessed off-balance sheet positions, where releases of previously established allowances overcompensated new provisions in 2012.

Net charge-offs increased by € 189 million or 21 % in 2012. Net charge-offs for our individually assessed loans were up € 249 million mainly related to assets which had been reclassified in accordance with IAS 39.

Our allowance for loan losses for IAS 39 reclassified assets amounted to € 489 million as at year end 2012, representing 10 % of our total allowance for loan losses, up from € 444 million (11 % of total allowance for loan losses) at prior year end. The increase in 2012 was a result of € 415 million provision for loan losses partly offset by € 331 million charge-offs and € 38 million other changes. Provision for loan losses for IAS 39 reclassified assets recorded in 2012 increased significantly by € 227 million compared to prior year (to € 415 million from € 188 million) driven by, amongst others, higher charges in the real estate sector as well as additional provisions related to our de-risking activities. Net charge-offs related to IAS 39 reclassified assets increased by € 107 million to € 331 million in 2013 from € 224 million in 2012 caused by charge-offs related to disposals.