Private & Business Clients 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 January 1, 2014.

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.

4

Contains the major core business activities of Postbank AG as well as BHW and norisbank.

Net revenues:

 

 

 

 

 

 

 

Global credit products

3,463

3,408

3,331

55

2

76

2

Deposits

2,977

3,012

3,175

(34)

(1)

(163)

(5)

Payments, cards & account products

983

1,019

1,027

(36)

(3)

(8)

(1)

Investment & insurance products

1,308

1,220

1,146

88

7

74

6

Postal and supplementary Postbank Services

416

434

454

(17)

(4)

(20)

(4)

Other products

491

457

407

33

7

51

12

Total net revenues

9,639

9,550

9,540

89

1

10

0

Provision for credit losses

622

719

781

(97)

(13)

(62)

(8)

Total noninterest expenses

7,682

7,276

7,224

406

6

52

1

thereof:

 

 

 

 

 

 

 

Impairment of intangible assets

0

7

15

(7)

N/M

(8)

(54)

Noncontrolling interests

1

0

16

0

46

(15)

(97)

Income (loss) before income taxes

1,335

1,555

1,519

(220)

(14)

35

2

Cost/income ratio

80 %

76 %

76 %

N/M

4 ppt

N/M

0 ppt

Assets1

258,381

265,360

282,428

(6,978)

(3)

(17,068)

(6)

Risk-weighted assets2

79,571

73,001

72,695

N/M

N/M

306

0

Average active equity3

14,420

13,976

12,177

444

3

1,799

15

Pre-tax return on average active equity

9 %

11 %

12 %

N/M

(2) ppt

N/M

(1) ppt

 

 

 

 

 

 

 

 

Breakdown of PBC by business

 

 

 

 

 

 

 

Private & Commercial Banking:

 

 

 

 

 

 

 

Net revenues

3,855

3,704

3,741

150

4

(36)

(1)

Provision for credit losses

79

128

174

(49)

(38)

(46)

(26)

Noninterest expenses

3,533

3,237

3,098

296

9

139

4

Income before income taxes

243

339

468

(96)

(28)

(129)

(28)

 

 

 

 

 

 

 

 

Advisory Banking International:

 

 

 

 

 

 

 

Net revenues

2,134

2,052

1,971

82

4

81

4

Provision for credit losses

272

248

211

24

10

37

17

Noninterest expenses

1,179

1,139

1,217

41

4

(78)

(6)

Income before income taxes

683

666

543

17

3

122

22

 

 

 

 

 

 

 

 

Postbank:4

 

 

 

 

 

 

 

Net revenues

3,651

3,794

3,828

(143)

(4)

(34)

(1)

Provision for credit losses

271

343

395

(71)

(21)

(52)

(13)

Noninterest expenses

2,970

2,900

2,910

70

2

(9)

0

Noncontrolling interests

1

0

15

0

69

(15)

(97)

Income before income taxes

409

550

508

(141)

(26)

43

8

Additional information

in € bn.

 

 

 

2014 increase (decrease)
from 2013

2013 increase (decrease)
from 2012

(unless stated otherwise)

2014

2013

2012

in € bn.

in %

in € bn.

in %

N/M – Not meaningful

1

We define invested assets as (a) assets we hold on behalf of customers for investment purposes and/or (b) client assets that are managed by us. We manage invested assets on a discretionary or advisory basis, or these assets are deposited with us.

Invested assets1

291

282

293

9

3

(11)

(4)

Net new money

6

(15)

(10)

21

N/M

(6)

58

2014

PBC’s business environment remained challenging during 2014 with headwinds including further declines in interest rates, tighter regulation and significant non-recurring charges regarding loan processing fees triggered by two rulings in May and October 2014 of the German Federal Court of Justice (Bundesgerichtshof). Despite the challenging environment, PBC’s revenues grew on a year-on-year basis reflecting an upturn in client activity in respect of Investment & Insurance Products and growth in certain Credit products, primarily in Germany. Provision for credit losses also improved in the period reflecting the quality of the loan portfolio.

PBC’s reported full year result declined compared with 2013 due to the above-mentioned impact of € 400 million for the reimbursement of loan processing fees. Appropriate provisions for loan processing fees were booked in 2014 and on this basis we expect no further impact in 2015 and beyond.

Net revenues in PBC increased by € 89 million, or 1 %, compared to 2013. Growth in revenues from Investment & Insurance products of € 88 million, or 7 %, reflected net asset inflows and higher transaction levels, mainly in securities. Net revenues from Credit products increased by € 55 million, or 2 %, primarily driven by increased loan volumes, especially in German Mortgages. Net revenues from Other products increased by € 33 million, or 7 %, mainly reflecting the impacts of a subsequent gain in Private & Commercial Banking related to a business sale closed in a prior period, gains from securities sales in DB Bauspar, as well as growth in the performance of the Hua Xia Bank equity investment. This was partly offset by decreased revenues related to Postbank nonoperating activities. Additionally, 2013 was positively impacted by a partial release of loan loss allowances in Postbank, which were reported in Other product revenues as the allowances were recognized prior to consolidation. Net revenues from Payments, Cards & Accounts decreased by € 36 million, or 3 %, mainly triggered by changes in regulatory requirements with regard to payment and card fees. Net revenues from Deposits decreased by € 34 million, or 1 %, due to the continued challenging interest rate environment in Europe as well as a result of de-leveraging mainly in Postbank. Net revenues from Postal and supplementary Postbank Services declined by € 17 million, or 4 %, due to a change in the reporting classification of certain product-related expenses previously reported in other revenues.

Provision for credit losses decreased by € 97 million, or 13 %, versus prior year period, benefiting from a favorable environment in Germany. In the prior year, an additional credit of € 86 million was recorded in other interest income, representing a partial release of loan loss allowances in Postbank as well as improved credit quality of Postbank loans recorded at fair value on initial consolidation by the Group.

Noninterest expenses increased by € 406 million, or 6 %, compared to 2013. 2014 was significantly impacted by € 400 million of charges relating to loan processing fees following the above-mentioned changes triggered by recent German legal decisions. Additionally, higher infrastructure expenses, mainly caused by regulatory requirements, resulted in cost increases. Offsetting these expense increases in 2014 was the gain from the disposition of real estate in Europe. Noninterest expenses in 2013 also included an item of comparable size which was related to a release of a provision in respect of the Hua Xia Bank credit card cooperation. Expenditures for our OpEx and Postbank integration programs decreased by € 42 million, or 8 %, in line with the progress of these programs. Additionally, PBC continued to realize incremental savings from efficiency measures implemented under the OpEx program.

Income before income taxes decreased by € 220 million, or 14 %, compared to 2013, mainly driven by charges for loan processing fees as mentioned above.

Invested assets increased by € 9 billion versus December 31, 2013, due to € 6 billion in net inflows, mainly in securities, and additional market appreciation.

2013

PBC delivered a stable operating performance, in an environment of low interest rates and the muted client investment activity in Germany. The lending environment in 2013 was benign, with provision for credit losses below the prior years. The European markets in which we operate besides Germany were marked by a reduced credit activity that was compensated with increased business in Investment Products. The turmoil in the Chinese and Indian financial markets, observed in the last months of 2013, did not materially impact our operations in these countries.

Net revenues increased slightly by € 10 million as compared to 2012. Higher revenues from credit products, investment & insurance products and other products were compensated by lower revenues from deposits, related to the ongoing low interest rate environment and higher negative impact from purchase price allocation on Postbank. Revenues from credit products increased by € 76 million, or 2 %, mainly reflecting mortgage volume growth in Private & Commercial Banking and higher consumer finance margins in Advisory Banking International. Revenues from investment & insurance products increased by € 74 million, or 6 %, driven by higher transaction volumes in Advisory Banking International and higher revenues from discretionary portfolio management in Private & Commercial Banking. Revenues from other products increased by € 51 million, or 12 %, benefitting from the performance of Hua Xia Bank, partly offset by several, mainly Postbank related, one-off items. Net revenues from Postal and supplementary Postbank Services declined by € 20 million, or 4 %, reflecting usual revenue fluctuations. Net revenues from payments, cards and accounts remained stable.

Provision for credit losses was € 719 million, down 8 % from € 781 million for 2012, driven by Private & Commercial Banking and Postbank, reflecting an improved portfolio quality and credit environment in Germany. Additionally, a credit of € 86 million (2012: € 94 million) was recorded in other interest income representing increases in the credit quality of Postbank loans recorded at fair value on initial consolidation by the Group. Advisory Banking International had an increase in provisions for credit losses, mainly caused by a difficult credit environment in Italy.

Noninterest expenses increased by € 52 million, or 1 %, compared to 2012 due to higher costs-to-achieve of € 112 million, related to Postbank integration and to OpEx, as well as higher cost allocations from infrastructure functions, which were mostly counterbalanced by savings, mainly driven by realization of synergies from Postbank.

Income before income taxes increased by € 35 million, or 2 %, versus 2012, despite higher costs-to-achieve of € 112 million.

Invested assets were down by € 11 billion mainly driven by € 15 billion net outflows, mostly in deposits, partly offset by € 4 billion market appreciation.