Private & Business Clients

For Private & Business Clients (PBC) the overall macroeconomic outlook for the countries in which we operate is expected to remain on its moderate growth path in 2015. Nevertheless, the entire market environment is likely to continue to be challenging. The ongoing expansionary monetary policy in the Eurozone is not expected to realize relief from the low interest rate environment in the near term.

As a result of the low interest rate environment our deposit business may continue to face significant pressure. The development of investment product revenues is particularly dependent on movements in the European macroeconomic environment and the recovery of customer confidence in Germany. Further revisions in regulatory requirements may further affect our overall revenue-generation capacity. A failure to integrate Postbank’s operations and to execute our OpEx program on a timely and efficient basis could have a material adverse effect on targeted efficiency gains.

We seek to realise opportunities by further strengthen our leadership in the German home market whilst extending our well-positioned advisory franchises in selected international markets. With regard to credit products, our aim is to grow our core German business by further expanding margins and volume growth, whilst maintaining strict risk discipline and carefully optimizing capital use. In terms of investment products, we aim to continue our growth path across all our businesses. Additionally, we will invest in selected digital offerings to expand our multi-channel offering. This digitization program is being rolled out in all our businesses. With our program to integrate PBC’s operations, we are consolidating and advancing our joint services and IT platform to improve PBC’s efficiency.

In Private & Commercial Banking, we will strengthen our market position by leveraging our integrated commercial banking coverage model for small and mid-sized corporate clients, a joint venture between PBC and GTB. We will continue to focus on low-risk mortgage business, developing our investment and insurance product business and will uphold our strict cost discipline.

In Advisory Banking International we are capitalizing on our advisory strength in Europe, and continue to make efficient use from our growth investments in key Asian countries.

Postbank will pursue its growth path in Germany whilst continuing to align business practices and will seek cost savings through organizational measures. The progress of integrating Postbank should enable PBC to achieve the targeted synergies. A new contract with Deutsche Post DHL will lead to notably reduced revenues in 2015 and a year over year decrease of Postbank’s net revenues, this will partly be compensated by lower costs.

Our cost-to-achieve (CtA) for Postbank integration and other measures of our OpEx program are expected to be largely in line with our initial targets, however, they are still dependent on the milestones and progress of individual projects. While we expect decreasing spending for CtA in 2015 compared to 2014, our related cost reduction progress continues into 2015 and beyond.

In 2014, despite headwinds including significant, non-recurring charges regarding loan processing fees, PBC reported income before income taxes of € 1.3 billion. We continue to aim to achieve our ambitious aspiration of generating income before income taxes of about € 2.5 billion to € 3 billion in 2015. However, our performance is reliant on various factors including strategic initiatives such as realising synergies from the Postbank integration, ongoing market conditions and uncertainties in the regulatory environment.