Deutsche Asset & Wealth Management Corporate Division (DeAWM)

 

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

Net revenues:

 

 

 

 

 

 

 

 

Management Fees and other recurring revenues

642

596

46

8

1,255

1,192

63

5

Performance and trans. fees and other non recurring revenues

159

210

(51)

(24)

343

417

(74)

(18)

Net Interest Income

155

125

30

24

308

263

45

17

Other product revenues

98

123

(25)

(20)

165

217

(52)

(24)

Mark-to-market movements on policyholder positions in Abbey Life

80

(13)

93

N/M

130

196

(66)

(34)

Total net revenues

1,134

1,041

93

9

2,201

2,285

(84)

(4)

Provision for credit losses

(6)

0

(7)

N/M

(7)

13

(20)

N/M

Total noninterest expenses

936

961

(25)

(3)

1,836

1,972

(137)

(7)

Thereof:

 

 

 

 

 

 

 

 

Policyholder benefits and claims

80

(7)

87

N/M

132

185

(53)

(29)

Restructuring activities

10

136

(126)

(93)

14

143

(129)

(90)

Impairment of intangible assets

0

0

0

N/M

0

0

0

N/M

Noncontrolling interests

(0)

(1)

0

(55)

(1)

0

(1)

N/M

Income before income taxes

204

80

124

154

374

300

74

25

2014 to 2013 Three Months Comparison

In the second quarter of 2014 DeAWM continued to benefit from higher equity markets as seen by increased management fees and other recurring revenues, driven by higher assets under management in comparison to the second quarter of 2013. DeAWM saw progression in the growth of its credit loan portfolio, with revenues and margins increasing while credit losses remain comparatively low. A fall in performance fees and reduced market volatility during the quarter have made conditions more challenging, with reduced client activity impacting trading revenues. Additionally, the prolonged low interest rate environment continued to challenge deposit revenue margins. DeAWM’s initiative to improve its operating and technology platform continued to deliver cost efficiencies.

In DeAWM, net revenues were € 1.1 billion in the second quarter 2014, an increase of € 93 million, or 9 %, compared to the second quarter 2013 mainly comprising of mark-to-market movements on policy holder positions in Abbey Life, largely offset by higher policyholder benefits and claims within non interest expenses.

Management Fees and other recurring revenues increased by € 46 million, or 8 %, due to an increase in the average assets under management for the quarter following positive flow and market effects. Performance and transaction fees and other non-recurring revenues were down € 51 million, or 24 % driven by lower performance fees in alternatives and active asset management, and lower transaction revenues from capital markets and foreign exchange products for private clients. Net interest income increased by € 30 million, or 24 %, due to increased lending volume and improved lending margins in the second quarter of 2014. Other product revenues decreased compared to the second quarter 2013 by € 25 million, or 20 % mainly due to reduced net gains on fair value changes. Mark-to-market movements on policyholder positions in Abbey Life increased by € 93 million, versus second quarter 2013.

Provision for credit losses decreased by € 7 million compared to the second quarter 2013 mainly resulting from lower specific client lending provisions and recovery of prior losses in the second quarter 2014.

Noninterest expenses of € 936 million in the second quarter 2014 decreased by € 25 million, or 3 %, compared to the second quarter 2013 driven by lower costs-to-achieve related to OpEx offset by higher policyholder benefits and claims and litigation.

Income before income taxes was € 204 million in the second quarter 2014, an increase of € 124 million, or 154 %, compared to the second quarter 2013. This reflects decreased cost-to-achieve related to OpEx and reduced costs following continued progress on integration.

In the second quarter 2014, invested assets were € 955 billion as of June 30¸ 2014, an increase of € 21 billion versus March 31, 2014, mainly driven by market appreciation of € 16 billion and inflows of € 11 billion. Net inflows of € 11 billion were recorded across all products, with strong flows in both retail and institutional business.

2014 to 2013 Six Months Comparison

In the first six months of 2014 DeAWM continued to benefit from higher equity markets whilst seeing progression in the growth of its credit loan portfolio. This has been offset by lower performance fees and reduced client activity which have impacted trading revenue. Costs excluding restructuring activities and insurance policyholder claims in Abbey Life have been positively impacted by ongoing OpEx measures.

In DeAWM net revenues in the first six months of 2014 decreased by € 84 million, or 4 %, compared to the first six months of 2013. Management Fees and other recurring revenues increased by € 63 million, or 5 %, due to an increase of the average assets under management driven by positive flow and market effect. Performance and transaction fees and other non-recurring revenues were down € 74 million, or 18 % driven by lower performance fees in alternatives and lower transaction revenues from capital markets and foreign exchange products for private clients. Net interest income increased by € 45 million, or 17 %, due to increased lending volume and improved lending margins. Other product revenues decreased compared to the first six months of 2013 by € 52 million, or 24 % mainly due to reduced net gains on fair value changes. Mark-to-market movements on policyholder positions in Abbey Life decreased by € 66 million, or 34 % versus first six months of 2013.

Provision for credit losses decreased by € 20 million compared to the first six months of 2013 mainly resulting from lower specific client lending provisions and recovery of prior losses in the second quarter 2014.

Noninterest expenses of € 1.8 billion in the six months of 2014 decreased by € 137 million, or 7 %, compared to the first six months 2013 driven by lower policyholder benefits and lower costs-to-achieve related to OpEx.

Income before income taxes was € 374 million in the first six months of 2014, an increase of € 74 million, or 25 %, compared to the first six months of 2013, mainly due to lower interest expenses.