Deutsche Asset & Wealth Management

Preserving and increasing wealth

In brief

  • Financial performance confirms DeAWM’s strategy
  • Efficiency and innovation for sustainable growth
  • All product and business capabilities combined

Operating results doubled to

 € 1.2 billion

Deutsche Asset & Wealth Management (DeAWM) integrates all of Deutsche Bank’s asset management and wealth management businesses with its passive investment and third-party alternative asset management businesses. Following restructuring in 2012, DeAWM took on a new name in 2013.

DeAWM helps individuals and institutions worldwide to preserve and increase their wealth, offering traditional and alternative investments across all major asset classes. It also provides tailored wealth management solutions and private banking services to high net worth clients and family offices.

Excerpt from segment reporting (Asset & Wealth Management1)

Deutsche Asset & Wealth Management recorded income before income taxes of € 782 million in 2013 (2012: € 154 million). Net revenues were up by 6 % versus 2012, benefitting from the increase in equity and bond markets. Noninterest expenses were € 3.9 billion, an improvement of € 368 million compared to 2012, mainly due to headcount reductions related to OpEx in 2013 as well as Scudder and IT related impairments in 2012. Invested assets were € 923 billion as of December 31, 2013, an increase of € 3 billion versus 2012, mainly driven by market appreciation, partly offset by foreign currency effects, outflows and other movements.

 

 

 

in € m.

2013

2012

Net revenues

4,735

4,470

Total provision for credit losses

23

18

Noninterest expenses

3,929

4,297

Income before income taxes

782

154

Return on equity (pre-tax) in %

13

3

Risk-weighted assets

12,553

12,429

Assets

72,613

78,103

1 Excerpt from segment reporting. For notes and other detailed information, see Financial Report 2013 (Management Report).

Regional split of invested assets

Regional split of invested assets (pie chart)

DeAWM operates in a highly competitive environment and faces continued volatility in financial markets and a weakening of industry margins. Despite the challenging environment, DeAWM’s adjusted income before income taxes (IBIT) came to € 1.2 billion in 2013, or double the € 0.6 billion figure in 2012. IBIT increased even more strongly and reached € 0.8 billion in 2013. This robust performance was attributable to both higher revenues, driven by the Alternatives and Active Investment businesses, and reduced costs as a result of the continued execution of the OpEx program. It also reflects the solid foundation for sustainable growth DeAWM has put in place. Globally, DeAWM had net asset outflows of € 11.8 billion. This is a result of DeAWM’s aim of reducing low revenue margin products. Overall, this led to an increase in gross margin from 44 bps to 45 bps and overall net revenue growth. The number of Wealth Management clients decreased to 65,700 in 2013 (2012: 71,300) as DeAWM refocused its business activities on the higher Wealth Management segment.

Assets under management in 4 and 5-star (Morningstar) rated funds increased by 12 % to € 68.4 billion in 2013. In addition, DeAWM earned numerous awards, for example, an “AAA” rating for the third year in a row from Scope Analysis as the Best Asset Management Company in Germany for Real Estate Funds. Deutsche Bank was the only company to receive an “AAA” rating in 2013.

Foundation for sustainable growth

Product mix by invested assets

Product mix by invested assets (pie chart)

DeAWM’s strategy concentrates on harnessing the power of the integrated platform to deliver client focus, efficiency, innovation and performance. The division’s strategic initiatives aim to deliver solid results as the basis for reaching its IBIT target for its operating business of approximately € 1.7 billion in 2015, and to set the foundation for sustainable growth. In 2013, DeAWM made substantial progress in implementing its strategy.

To better serve DeAWM’s clients, the division integrated the coverage teams to provide a single point of access to the global capabilities of DeAWM and the other divisions of Deutsche Bank. The Global Client Group delivers DeAWM’s full range of investment products and solutions to institutional clients and retail distribution partners, while the regional Wealth Management teams provide customized advice and investment solutions to a high net worth and ultra high net worth clientele.

In 2013, DeAWM organized its investment capabilities along six business lines: Loans & Deposits, Wealth Management Products, Active Investments, Passive Investments, Alternative Real Assets and Alternative Fund Solutions. Together with DeAWM’s investment experts, the global Chief Investment Office develops a house view for investment strategies that allows DeAWM to build on the division’s combined expertise in all six business lines on behalf of its clients. DeAWM leverages global capabilities across a wide investment spectrum, ranging from equities, fixed income, multi-asset and alternatives (including real estate, infrastructure, private equity and hedge funds) to products and solutions across mutual and private funds, exchange-traded products and separately managed accounts.

Deutsche Asset & Wealth Management

Deutsche Asset & Wealth Management (organigram)


Efficiency and innovation

DeAWM made substantial investments in its IT platform in 2013 and is in the process of implementing a comprehensive technology solution for its asset management investment platform. This will provide DeAWM with a state-of-the-art IT infrastructure ideally suited to its investment processes, and also reduce costs and complexity.

In 2013, DeAWM brought to market the first exchange-traded fund (ETF) to give U.S. investors direct access to China’s domestic A-share market trading in renminbi. The division also expanded its offering of “physical replication” ETFs (i.e. using direct index replication instead of derivatives). In December, DeAWM announced plans to switch another 18 ETFs to physical replication, which will position the division as Europe’s second-largest provider of direct replication ETFs, with total assets under management of some € 9.5 billion.

DeAWM also established a Solutions and Trading Group that coordinates the cooperation between product development and distribution teams. This facilitates the creation of high quality products and solutions aligned to client needs. The group is also responsible for a disciplined product selection process for the Wealth Management business.

To broaden DeAWM’s range of sustainable investment products, the unit established a centralized team that focuses on the environmental, social and governance (ESG) aspects of investing. DeAWM expects client demand for ESG investments to rise in the future. In 2013, the division expanded its range of solutions by integrating the Cash Return on Capital Invested (CROCI) approach, a value-based investment process from CB&S.

Cooperation across corporate divisions

As part of its Wealth Management offering, DeAWM established Deutsche Oppenheim Family Office in mid-2013 by combining two previously separate family offices. The merger of Oppenheim Vermögenstreuhand GmbH and Wilhelm von Finck Deutsche Family Office AG, both part of Deutsche Bank Group, created the largest family office in Germany and a new leader in the family wealth sector. Deutsche Oppenheim Family Office provides a comprehensive service for diversified international portfolios, spanning wealth planning, asset management, real estate consultancy as well as reporting and controlling.

For ultra high net worth clients, DeAWM set up Key Client Partners advisory centers around the globe. They give professional investors seamless access to cross-asset class and cross-border investment opportunities and financing solutions – delivered by DeAWM, the bank’s Corporate Banking & Securities, Global Transaction Banking and Private & Business Clients divisions or third-party providers. Cross-divisional collaboration to ensure that clients receive the best possible service is a top priority of the DeAWM strategy.

Global presence and capabilities for clients

In 2013, DeAWM reviewed its geographical presence around the globe with the aim of focusing on core activities and reducing complexity and costs. DeAWM continued to focus on its home market, Germany, and on European markets. Furthermore, the division concentrated on ultra high net worth and institutional clients in North America and on select emerging markets in Asia, the Middle East, Africa and Latin America, where the unit’s investment and advisory capabilities are well suited to meeting local client needs. DeAWM will be discontinuing its asset management activities in Russia.

Outlook

€ 923 billion

in assets under management in DeAWM 2013

Looking ahead, DeAWM will build on its global capabilities to deliver first-class asset and wealth management products and services to clients. In the asset management market, DeAWM plans to expand its range of high quality investment products and customized solutions, including passive, liquid alternative asset and real asset investment strategies. In the wealth management market, the division plans to strengthen its leading position in the German home market. Furthermore, DeAWM will continue to offer differentiated regional products and global expertise to clients in the Asia Pacific region and the Americas, as well as in the emerging markets of Europe, the Middle East and Africa. Through cooperation with CB&S, the division will further expand its services to ultra high net worth clients worldwide.

Awards 2013

Reactions
Best Insurance Asset Manager globally for the sixth year in a row

Risk Management
Hedge Fund Derivatives House of the Year for the fifth consecutive year

Risk Management
Best New Emerging Market ETF Provider and Best ETF Structuring and Distribution House

Euromoney
Best Private Bank in Germany

Scope Analysis
Best Asset Management Company for real estate funds