Non-Core Operations Unit Corporate Division

in € m.

 

 

 

2014 increase (decrease)
from 2013

2013 increase (decrease)
from 2012

(unless stated otherwise)

2014

2013

2012

in € m.

in %

in € m.

in %

N/M – Not meaningful

1

Segment assets represent consolidated view, i.e., the amounts do not include intersegment balances.

2

Risk weighted assets and capital ratios are based upon Basel 2.5 rules through December 31, 2013 and upon CRR/CRD 4 fully-loaded since Jan

3

See Note 4 “Business Segments and Related Information” to the consolidated financial statements for a description of how average active equity is allocated to the divisions.

Net revenues

211

964

1,427

(753)

(78)

(463)

(32)

thereof:

 

 

 

 

 

 

 

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

(573)

245

650

(818)

N/M

(405)

(62)

Provision for credit losses

259

818

634

(559)

(68)

185

29

Total noninterest expenses

2,804

3,550

3,697

(746)

(21)

(147)

(4)

thereof

 

 

 

 

 

 

 

Policyholder benefits and claims

0

0

0

0

N/M

0

N/M

Restructuring activities

4

25

12

(20)

(83)

13

104

Impairment of intangible assets

194

0

421

194

N/M

(421)

N/M

Noncontrolling interests

(2)

(3)

31

1

(24)

(34)

N/M

Income (loss) before income taxes

(2,851)

(3,402)

(2,935)

551

(16)

(467)

16

Cost/income ratio

N/M

N/M

N/M

N/M

N/M

N/M

N/M

Assets1

38,853

63,810

113,247

(24,957)

(39)

(49,437)

(44)

Risk-weighted assets2

58,538

52,443

84,743

N/M

N/M

(32,300)

(38)

Average active equity3

7,649

10,296

12,440

(2,647)

(26)

(2,143)

(17)

Pre-tax return on average active equity

(37) %

(33) %

(24) %

N/M

(4) ppt

N/M

(9) ppt

2014

During 2014, NCOU continued to execute its de-risking strategy with specific focus on the disposal of operating assets previously held in the former Corporate Investments division. Sales completed in 2014 included BHF-BANK and The Cosmopolitan of Las Vegas. These were supplemented by the further winding down of legacy banking assets, such as the early termination of some of the credit derivative protection currently in the monoline portfolio together with the sale of underlying bonds as well as a significant reduction in CRD IV exposure from the credit correlation portfolio. Asset de-risking in 2014 has delivered net gains of € 181 million.

Net revenues for the NCOU in the reporting period decreased by € 753 million, or 78 % to € 211 million. This reflects a lower level of portfolio revenues in line with the asset reductions achieved and lower de-risking gains partially offset by lower valuation adjustments in the period. In 2014 specific items included € 314 million of accumulated mark-to-market loss on a swap transaction relating to the restructuring of the debt financing of Maher Terminals which resulted in a reclassification of the cumulative mark-to-market loss from other comprehensive income to other income and a € 151 million loss related to the Special Commodities Group from our exposure to traded products in the U.S. power sector. Net revenues in 2013 included a € 183 million loss related to the sale of BHF-BANK, € 171 million negative effect from the first-time application of Funding Valuation Adjustment (FVA) and mortgage repurchase costs of € 122 million.

Provisions for credit losses decreased by € 559 million, or 68 %, in comparison to 2013, driven by a decrease in provisions for credit losses in IAS 39 reclassified and commercial real estate assets.

Noninterest expenses decreased by € 746 million, or 21 % in comparison to 2013, predominately due to lower litigation-related expenses. Direct costs have also decreased by € 327 million, or 21 % driven by the sale of BHF-BANK in the year as well as other de-risking measures. This was offset by a specific impairment charge of € 194 million taken against our investment in Maher Terminals in the current period.

The loss before income taxes was € 2.9 billion, a decrease of € 551 million compared to the prior year. Lower revenues and lower credit losses reflect the progress of de-risking, while noninterest expenses were lower but continued to be impacted by the timing and nature of specific items.

2013

Net revenues decreased by € 463 million, or 32 %, compared to 2012 driven by the reduction in portfolio revenues which have fallen in line with asset levels. In 2013 specific items included € 183 million loss related to the expected sale of BHF-BANK, € 171 million negative effect from the first-time application of Funding Valuation Adjustment (FVA), mortgage repurchase costs of € 122 million and the impact from various impairments which were partially offset by an increase in net de-risking gains generated in the period. Net revenues in 2012 included negative effects related to an impairment of € 257 million to our previously held exposure in Actavis Group, refinements of the CVA methodology of € 203 million and mortgage repurchase costs of € 233 million.

Provision for credit losses increased by € 185 million, or 29 % in comparison to 2012, mainly due to specific credit events seen across portfolios including in exposures to European Commercial Real Estate.

Noninterest expenses decreased by € 147 million compared to 2012. The movement includes higher litigation related costs offset by the non-recurrence of the impairment of intangible assets of € 421 million reported in the prior year.

The loss before income taxes was € 3.4 billion, an increase of € 467 million compared to the prior year. Lower net revenues were the main driver, but each period was impacted by the timing and nature of specific items.