Corporate Banking & Securities Corporate Division (CB&S)

 

Three months ended

 

 

Six months ended

 

 

in € m.
(unless stated otherwise)

Jun 30, 2014

Jun 30, 2013

Absolute Change

Change in %

Jun 30, 2014

Jun 30, 2013

Absolute Change

Change in %

N/M – Not meaningful

1

Based on Net Income (loss) after income taxes attributable to Deutsche Bank shareholders, as adjusted for litigation, CtA, impairment of goodwill and intangible assets, other severances and CVA / DVA / FVA. For further information, please refer to “Other Information: Non-GAAP Financial Measures” of this report.

Net revenues:

 

 

 

 

 

 

 

 

Sales & Trading (debt and other products)

1,826

1,823

3

0

4,259

4,540

(282)

(6)

Sales & Trading (equity)

698

787

(88)

(11)

1,471

1,553

(82)

(5)

Origination (debt)

416

417

0

0

774

870

(96)

(11)

Origination (equity)

265

204

61

30

425

356

69

19

Advisory

130

116

15

13

237

185

52

28

Loan products

255

296

(42)

(14)

509

546

(37)

(7)

Other products

(58)

(64)

6

(9)

(67)

75

(142)

N/M

Total net revenues

3,532

3,579

(46)

(1)

7,608

8,126

(518)

(6)

Provision for credit losses

44

26

18

70

60

77

(17)

(22)

Total noninterest expenses

2,603

2,794

(191)

(7)

5,150

5,372

(221)

(4)

Thereof:

 

 

 

 

 

 

 

 

Restructuring activities

37

40

(3)

(8)

81

81

0

(1)

Impairment of intangible assets

0

0

0

N/M

0

0

0

N/M

Noncontrolling interests

1

1

(1)

(55)

22

11

11

100

Income before income taxes

885

758

127

17

2,376

2,666

(290)

(11)

Post-tax return on average active equity (adjusted)1

15 %

17 %

 

 

17 %

22 %

 

 

2014 to 2013 Three Months Comparison

CB&S reported solid revenues in the current quarter despite continued low volatility, client activity and a challenging market environment.

The second quarter 2014 net revenues were € 3.5 billion, a decrease of € 46 million or 1 % from the € 3.6 billion in the second quarter 2013. Net revenues included valuation adjustments relating to CVA, DVA and FVA totalling a loss of € 114 million (second quarter 2013: a loss of € 88 million).

Sales & Trading (debt and other products) net revenues were € 1.8 billion in the second quarter 2014, in line with the second quarter 2013. Revenues in Foreign Exchange were significantly lower than the prior year quarter due to lower volatility and reduced client activity. Revenues in Rates were lower than the prior year quarter driven by lower client activity. Revenues in RMBS and Flow Credit were significantly higher than the prior year quarter due to a challenging market environment in the prior year quarter. Revenues in Distressed Products were higher than the prior year quarter notably in the Europe region. Revenues in Credit Solutions were higher than the prior year quarter primarily driven by stronger market conditions. Revenues in Global Liquidity Management and Emerging Markets were both in line with the prior year quarter. Sales & Trading (debt and other products) net revenues included a mark-to-market loss of € 43 million (second quarter 2013: a loss of € 31 million) related to mitigating hedges for CRR/CRD 4 risk-weighted assets (RWA) arising on CVA.

Sales & Trading (equity) generated net revenues of € 698 million in the second quarter 2014, a decrease of € 88 million, or 11 %, compared to the second quarter 2013. Equity Trading revenues were lower than the prior year quarter driven by weaker market volumes. Equity Derivatives revenues were lower than the prior year quarter due to challenging market conditions. Prime Finance revenues were in line with the prior year quarter.

Origination and Advisory generated net revenues of € 811 million in the second quarter 2014, an increase of € 75 million, or 10 %, compared to the second quarter 2013. Revenues in Equity Origination were significantly higher than the prior year quarter driven by strong deal flow notably in the Europe region. Revenues in Advisory were higher than the prior year quarter reflecting increased market share. Debt Origination revenues were in line with the prior year quarter.

Loan products net revenues were € 255 million in the second quarter 2014, a decrease of € 42 million, or 14 %, compared to the second quarter 2013 reflecting lower revenues from lending related activity.

Net revenues from Other products were a loss of € 58 million in the second quarter 2014, in line with the second quarter 2013. Net revenues from other products included a loss of € 64 million (second quarter 2013: a loss of € 58 million) related to the impact of a DVA on certain derivative liabilities.

In provision for credit losses, CB&S recorded a net charge of € 44 million in the second quarter 2014, compared to a net charge of € 26 million in the second quarter 2013, due to increased provision taken in the Shipping portfolio.

Noninterest expenses decreased by € 191 million, or 7 % compared to the second quarter of 2013. The decrease is mainly due to lower performance based compensation and litigation charges, partly offset by the ongoing implementation of the Operational Excellence (OpEx) program and regulatory driven costs.

Second quarter 2014 income before income taxes was € 885 million, up € 127 million compared to the prior year quarter, mainly driven by a decrease in noninterest expenses. Adjusted post-tax return on average active equity of 15 % was lower versus 17 % in the prior year quarter, mainly due to higher average active equity in 2014 which offset an increase in adjusted income before income taxes.

2014 to 2013 Six Months Comparison

CB&S reported solid revenues in the first half 2014 despite low volatility, client activity and a challenging market environment

The first half 2014 net revenues were € 7.6 billion, a decrease of € 518 million or 6 % from the € 8.1 billion in the first half 2013. Net revenues included valuation adjustments relating to CVA, DVA and FVA totalling a loss of € 106 million (first half 2013: a gain of € 49 million).

Sales & Trading (debt and other products) net revenues were € 4.3 billion in the first six months of 2014, a decrease of € 282 million from the first six months of 2013. Revenues in Foreign Exchange were significantly lower than the first six months of 2013 due to lower volatility and reduced client activity reflecting a challenging trading environment. Revenues in Global Liquidity Management were lower than the first six months of 2013 driven by a smaller portfolio and a one-off gain in the first six months of 2013. Revenues in Distressed Products were significantly higher than the first six months of 2013 notably in the Europe region. Revenues in RMBS were significantly higher than the first six months of 2013, as a challenging market environment in the first six months of the prior year was not repeated. Revenues were in line with the first six months of 2013 in Rates, Flow Credit, Credit Solutions and Emerging Markets. Sales & Trading (debt and other products) net revenues included a mark-to-market loss of € 15 million (first six months of 2013: a loss of € 16 million) related to mitigating hedges for CRR/ CRD 4 risk-weighted assets (RWA) arising on CVA and an FVA gain of € 17 million (first six months of 2013: nil).

Sales & Trading (equity) generated net revenues of € 1.5 billion in the first six months of 2014, a decrease of € 82 million from the first six months of 2013. Equity Trading revenues were lower than the first six months of 2013 driven by weaker market volumes. Equity Derivatives revenues were lower than the first six months of 2013 due to challenging market conditions. Prime Finance revenues were in line with the first six months of 2013.

Origination and Advisory generated net revenues of € 1.4 billion in the first six months of 2014, in line with the first six months of 2013. Revenues in Equity Origination were higher than the first six months of 2013 driven by strong deal flow notably in Europe region. Revenues in Advisory were higher than the first six months of 2013 reflecting increased market share. Debt Origination revenues were lower than first six months of 2013 driven by reduced issuance levels.

Loan products net revenues were € 509 million in the first six months of 2014, in line with the first six months of 2013 reflecting stable revenues from lending related activity.

Net revenues from Other products were € 67 million loss in the first six months of 2014, a decrease of € 142 million from the first six months of 2013. Net revenues from Other products included a loss of € 108 million (first six months of 2013: a gain of € 65 million) related to the impact of a DVA on certain derivative liabilities.

In provision for credit losses, CB&S recorded a net charge of € 60 million in the first six months of 2014, compared to a net charge of € 77 million in the first six months of 2013, due to decreased provisions taken in the Leveraged Finance portfolios.

Noninterest expenses decreased by € 221 million, or 4 % compared to the first six months of 2013. The decrease is mainly due to lower performance based compensation and litigation charges, partly offset by the ongoing implementation of the OpEx program and regulatory driven costs.

Income before income taxes was € 2.4 billion in the first half 2014, which was down € 290 million compared to first half 2013 result, as lower revenues were partially offset by a decrease in noninterest expenses. Adjusted post-tax return on average active equity was 17 % which is lower compared to 22 % in the same period in 2013, due to higher average active equity and a decrease in adjusted income before income taxes in the second quarter 2014.