Private & Business Clients Corporate Division (PBC)

 

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

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

Net revenues:

 

 

 

 

 

 

 

 

Global credit products

873

838

35

4

1,737

1,694

43

3

Deposits

748

757

(8)

(1)

1,506

1,520

(14)

(1)

Payments, cards & account products

247

252

(5)

(2)

494

507

(13)

(3)

Investment & insurance products

308

305

3

1

656

623

33

5

Postal and supplementary Postbank Services

104

108

(5)

(4)

208

216

(8)

(4)

Other products

88

188

(100)

(53)

241

273

(31)

(11)

Total net revenues

2,367

2,448

(81)

(3)

4,843

4,833

10

0

Provision for credit losses

145

194

(49)

(25)

285

305

(20)

(6)

Total noninterest expenses

1,819

1,747

72

4

3,634

3,538

96

3

Thereof: Impairment of intangible assets

0

0

0

N/M

0

0

0

N/M

Noncontrolling interests

0

0

0

N/M

0

0

0

N/M

Income before income taxes

403

507

(104)

(21)

923

990

(67)

(7)

 

 

 

 

 

 

 

 

 

Breakdown of PBC by business

 

 

 

 

 

 

 

 

Private & Commercial Banking:

 

 

 

 

 

 

 

 

Net revenues

925

924

1

0

1,955

1,856

99

5

Provision for credit losses

19

36

(18)

(49)

39

40

(1)

(3)

Noninterest expenses

812

761

50

7

1,618

1,572

46

3

Income before income taxes

95

126

(32)

(25)

298

244

54

22

 

 

 

 

 

 

 

 

 

Advisory Banking International:

 

 

 

 

 

 

 

 

Net revenues

538

528

11

2

1,070

1,035

35

3

Provision for credit losses

63

61

1

2

129

117

13

11

Noninterest expenses

312

262

49

19

648

553

95

17

Income before income taxes

164

204

(40)

(20)

292

365

(73)

(20)

 

 

 

 

 

 

 

 

 

Postbank:1

 

 

 

 

 

 

 

 

Net revenues

904

997

(93)

(9)

1,818

1,942

(124)

(6)

Provision for credit losses

64

96

(32)

(34)

117

148

(31)

(21)

Noninterest expenses

696

723

(28)

(4)

1,368

1,413

(45)

(3)

Noncontrolling interests

0

0

0

N/M

0

0

0

N/M

Income before income taxes

145

177

(33)

(18)

333

381

(48)

(13)

2014 to 2013 Three Months Comparison

PBC performance continues to be affected by the low interest rate environment. In addition several specific items have impacted the results of the second quarters of both 2014 and 2013. In the current period, charges for loan processing fees triggered by a change in German legal practice in May 2014 had a negative impact. In the second quarter last year, several specific items had a material positive effect on income before income taxes. These included a partial release of a provision related to the Hua Xia Bank credit card cooperation as well as a partial release of loan loss allowances and certain positive one-off effects related to Postbank. Apart from this PBC’s result remained fairly stable compared to the prior year period.

Second quarter 2014 net revenues in PBC decreased by € 81 million, or 3 %, to € 2.4 billion, compared to the prior year quarter. The decrease in Other product revenues of € 100 million, or 53 %, was primarily driven by the aforementioned Postbank-related specific one-off items in the second quarter last year. Higher credit revenues of € 35 million, or 4 %, compared to the second quarter 2013 showed good growth momentum, reflecting an increase in loan volumes and improved loan margins. Revenues from investments & insurance products increased slightly by € 3 million, or 1 %, reflecting a continuous increase on a year on year basis. Revenues from Deposit products declined slightly by € 8 million, or 1 %, compared to last year’s second quarter showing the success of PBC’s actions taken to mitigate the continued very challenging interest rate environment in Europe. Net revenues from Postal and supplementary Postbank Services declined by € 5 million, or 4 %, compared to the second quarter 2013, reflecting usual revenue fluctuations. The slight decrease in net revenues from Payments, cards & accounts by € 5 million, or 2 %, compared to the second quarter 2013 was caused by changes in regulatory requirements regarding payment fees.

Provision for credit losses decreased significantly by € 49 million, or 25 %, compared to the second quarter 2013 benefitting from the quality of PBC’s loan book in a benign economic environment in Germany. In the prior year, an additional credit of € 46 million was recorded in other interest income representing a partial release of loan loss allowances in Postbank as well as increases in the credit quality of Postbank loans recorded at fair value on initial consolidation by the Group.

Noninterest expenses increased by € 72 million, or 4 %, to € 1.8 billion, compared to the second quarter 2013. The cost increase is primarily driven by the aforementioned change in German legal practice in 2014 as well as by the above mentioned release of a provision related to the Hua Xia Bank credit card cooperation in second quarter last year. Excluding these specific items noninterest expenses showed a stable trend between current and prior year quarters. Incremental savings from efficiency measures and lower cost-to-achieve, both parts of our OpEx program, were offset by higher infrastructure expenses primarily reflecting increased regulatory requirements.

Income before income taxes decreased by € 104 million, or 21 %, compared to the second quarter 2013, mainly driven by specific items as mentioned above.

Invested assets increased by € 2 billion compared to March 31, 2014, mainly due to market appreciation and inflows primarily in securities.

2014 to 2013 Six Months Comparison

PBC performance continues to be affected by the low interest rate environment. In addition, several specific items impacted the results of the first half years of both 2014 and 2013. The first quarter of 2014 was impacted by a subsequent gain in Private & Commercial Banking related to a business sale closed in a prior period. The second quarter of 2014 included charges for loan processing fees triggered by a change in German legal practice in May 2014. The first half of last year benefitted from a partial release of a provision related to the Hua Xia Bank credit card cooperation and a partial release of loan loss allowances in Postbank.

Net revenues in PBC increased by € 10 million, versus the first six months of 2013. Growth in revenues from Credit products of € 43 million, or 3 %, compared to the first half of 2013 was driven by increase in loan volumes and improved loan margins. Higher revenues from Investment & insurance products of € 33 million, or 5 %, compared to the first six months of prior year reflected an improved contribution of all business units showing good progress versus the first half of 2013. Net revenues from Other products decreased by € 31 million, or 11 %, compared to the first six months of 2013. The first half of 2014 included the above mentioned gain from a business sale closed in a prior period. This was more than offset, however, by decreased revenues related to Postbank nonoperating activities as well as a change in the accounting treatment of certain product-related expenses. Additionally, the first half of 2013 was positively impacted by a partial release of loan loss allowances in Postbank (reflected in Other product revenues as allowances were created prior to consolidation). Net revenues from Deposits decreased by € 14 million, or 1 %, compared to the first half of 2013, as a result of de-leveraging mainly in Postbank. Net revenues from Payments, cards & accounts decreased slightly by € 13 million, or 3 %, compared to the prior year period mainly caused by changes in regulatory requirements regarding payment fees. Net revenues from Postal and supplementary Postbank Services declined by € 8 million, or 4 %, compared to the first six months of 2013, reflecting usual revenue fluctuations.

Provision for credit losses decreased by € 20 million, or 6 %, versus the first half of 2013, benefitting from a favorable environment in Germany. In the prior year, an additional credit of € 60 million was recorded in other interest income representing a partial release of loan loss allowances in Postbank as well as increases in the credit quality of Postbank loans recorded at fair value on initial consolidation by the Group.

Noninterest expenses increased by € 96 million, or 3 %, compared to the first six months of 2013. The prior year period benefited from a release of a provision related to the Hua Xia Bank credit card cooperation whereas the current period had a negative impact related to the aforementioned change in German legal practice. Lower CtA were compensated by higher infrastructure expenses primarily due to increased regulatory requirements.

Income before income taxes decreased by € 67 million, or 7 %, compared to the first half of 2013, mainly driven by specific items as mentioned above.

Invested assets increased by € 4 billion versus December 31, 2013, due to € 2 billion net inflows, mainly in securities and additional market appreciation.