Non-Core Operations Unit Corporate Division (NCOU)

 

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

(44)

279

(322)

N/M

30

719

(689)

(96)

Provision for credit losses

19

174

(155)

(89)

86

261

(175)

(67)

Total noninterest expenses

517

777

(260)

(33)

1,056

1,390

(334)

(24)

Thereof:

 

 

 

 

 

 

 

 

Restructuring activities

1

4

(3)

(84)

3

17

(14)

(83)

Impairment of intangible assets

0

0

0

N/M

0

0

0

N/M

Noncontrolling interests

0

0

1

N/M

0

(1)

1

(86)

Income (loss) before income taxes

(580)

(672)

92

(14)

(1,112)

(931)

(181)

19

During 2014, NCOU has continued to execute its de-risking strategy with specific focus on the sale of operating assets, such as BHF-BANK and The Cosmopolitan of Las Vegas as well as risk reductions across the legacy IAS 39, Credit Correlation portfolios and Commodities’ exposures. Asset de-risking in 2014 has delivered net gains of € 159 million.

2014 to 2013 Three Months Comparison

Net revenues for the NCOU in the reporting period decreased by € 322 million, or 115 %, to negative € 44 million. In early June 2014, the decision was taken to replace current external debt financing of Maher Terminals, with financing from within the Group to take effect at maturity at the beginning of July 2014. In line with the hedge accounting rules of IAS 39, this decision triggered the transfer of € 314 million of accumulated mark-to-market loss on a swap transaction relating to that debt financing from other comprehensive income to the profit and loss statement during the second quarter. The decrease also includes lower portfolio revenues reflecting the significant reduction in assets year-on-year, which was offset by one time recoveries related to settlement payments and lower RMBS repurchase reserves being taken in the quarter. The impact from FVA was a charge of approximately € 11 million in the period while NCOU’s de-risking activity generated revenue gains of € 46 million in the second quarter of 2014.

Provision for credit losses in second quarter 2014 was € 155 million lower versus the same quarter 2013 due to specific gains from asset sales as well as lower provisions for IAS 39 reclassified assets.

Noninterest expenses decreased by € 260 million, or 33 %, compared to second quarter 2013. The decrease versus the previous year was driven by lower litigation-related expenses as well as lower direct costs including expenses related to our investments in operating assets following the sale of BHF-BANK.

The loss before income taxes decreased by € 92 million, versus the same quarter in 2013, primarily driven by the aforementioned movements and impacts.

2014 to 2013 Six Months Comparison

Net revenues in the NCOU were € 689 million, or 96 %, lower in the first half 2014 compared to the first half of 2013 primarily due to lower portfolio revenues reflecting the significant reduction in assets year-on-year. In early June 2014, the decision was taken to replace current external debt financing of Maher Terminals, with financing from within the Group. In line with the hedge accounting rules of IAS 39, this decision triggered the transfer of € 314 million of accumulated mark-to-market loss on a swap transaction relating to that debt financing from other comprehensive income to the profit and loss statement during the second quarter. The impact from FVA was a net release of approximately € 21 million in the period versus no impact in the first six months of 2013.

Provision for credit losses for the first six months of 2014 was down € 175 million, or 67 % compared to the first six months of 2013, predominantly driven by lower credit losses for IAS 39 reclassified assets and a specific gain from asset sales realised in the second quarter.

Noninterest expenses for the first six months of 2014 were € 1.1 billion, a decrease of € 334 million or 24 % when compared to the same period in 2013, mainly driven by lower litigation-related expenses as well as the positive cost impacts from execution of our de-risking strategy, such as lower expenses related to our investments in operating assets following the sale of BHF-BANK. This was partly offset by an impairment of € 57 million taken in the current year.

The loss before income taxes increased by € 181 million versus the first half of the prior year, with each period having been impacted by a number of different factors as described above.