Corporate Banking & Securities Corporate Division (CB&S)

 

Three months ended

 

 

Nine months ended

 

 

in € m.
(unless stated otherwise)

Sep 30, 2014

Sep 30, 2013

Absolute Change

Change
in %

Sep 30, 2014

Sep 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.

2

Calculation is based on an adjusted tax rate of 35 % for three and nine months ended Sep 30, 2014 and 32.7 % for three and nine months ended Sep 30, 2013.

Net revenues:

 

 

 

 

 

 

 

 

Sales & Trading (debt and other products)

1,435

1,248

186

15

5,693

5,788

(95)

(2)

Sales & Trading (equity)

729

643

86

13

2,200

2,196

4

0

Origination (debt)

361

367

(6)

(2)

1,135

1,237

(102)

(8)

Origination (equity)

175

135

40

30

600

491

109

22

Advisory

155

155

1

1

393

340

53

16

Loan products

340

331

9

3

849

876

(27)

(3)

Other products

(48)

21

(70)

N/M

(115)

97

(212)

N/M

Total net revenues

3,147

2,900

247

9

10,755

11,026

(271)

(2)

Provision for credit losses

33

43

(9)

(22)

93

120

(27)

(22)

Total noninterest expenses

2,737

2,487

250

10

7,887

7,859

28

0

Thereof:

 

 

 

 

 

 

 

 

Restructuring activities

6

7

(1)

(21)

86

88

(2)

(2)

Impairment of intangible assets

0

0

0

N/M

0

0

0

N/M

Noncontrolling interests

2

9

(7)

(79)

24

20

3

17

Income before income taxes

374

361

13

4

2,750

3,027

(276)

(9)

Post-tax return on average active equity (adjusted)1,2

10 %

11 %

 

 

14 %

19 %

 

 

2014 to 2013 Three Months Comparison

CB&S reported solid revenues in the third quarter 2014 reflecting improvements in the challenging market environment compared to a difficult third quarter 2013.

Third quarter 2014 net revenues were € 3.1 billion, an increase of € 247 million or 9 % from € 2.9 billion in the third quarter 2013. Net revenues included valuation adjustments relating to CVA RWA mitigation efforts, DVA, FVA and refinements in the calculation of IFRS CVA and FVA totalling a loss of € 173 million (third quarter 2013: a loss of € 75 million).

Sales & Trading (debt and other products) net revenues were € 1.4 billion in the third quarter 2014, an increase of € 186 million, or 15 %, compared to the third quarter 2013. Revenues in RMBS were significantly higher compared to a difficult quarter in the prior year. Revenues in Foreign Exchange were also significantly higher driven by an improved market environment and an increase in client activity reflecting increased volatility. Revenues in Rates were significantly lower than the prior year quarter primarily driven by FVA losses due to market movements and a calculation refinement. Flow Credit revenues were significantly lower than in the prior year quarter due to lower client activity. Revenues were in line with the prior year quarter in Global Liquidity Management, Distressed Products, Credit Solutions and Emerging Markets. Sales & Trading (debt and other products) net revenues included three valuation adjustment items totalling a loss of € 145 million. First, a mark-to-market gain of € 38 million (third quarter 2013: a loss of € 88 million) relating to RWA mitigation efforts arising on CVA. Second, a loss of € 58 million (third quarter 2013: nil) relating to a refinement in the calculation of IFRS CVA. Third, a FVA loss of € 126 million (third quarter 2013: nil) including a negative impact of € 51 million due to a calculation refinement.

Sales & Trading (equity) generated net revenues of € 729 million in the third quarter 2014, an increase of € 86 million, or 13 %, compared to the third quarter 2013. Prime Finance revenues were higher than the prior year quarter driven by increased client balances. Equity Trading and Equity Derivatives revenues were both in line with the prior year quarter.

Origination and Advisory generated net revenues of € 691 million in the third quarter 2014, in line with the prior year quarter. Revenues in Equity Origination were significantly higher than the prior year quarter driven by strong deal flow across regions. Revenues in Debt Origination and Advisory were both in line with the prior year quarter.

Loan products net revenues were € 340 million in the third quarter 2014, compared to € 331 million in the third quarter 2013.

Net revenues from Other products were a loss of € 48 million in the third quarter 2014 versus positive revenues of € 21 million in the prior year quarter. Net revenues from Other products included a DVA loss of € 28 million (third quarter 2013: a gain of € 24 million), including a gain of € 37 million related to a refinement in the calculation of IFRS CVA.

In provision for credit losses, CB&S recorded a net charge of € 33 million in the third quarter 2014, compared to a net charge of € 43 million in the third quarter 2013, due to decreased provisions taken in the Emerging Markets and Shipping portfolios.

Noninterest expenses increased by € 250 million, or 10 %, compared to the third quarter 2013. The increase was mainly due to fixed salary increases to comply with regulatory requirements, higher legal fees and higher collateralised loan obligation premiums due to rebates received in the third quarter 2013. This was partly offset by lower litigation settlement provisions.

Third quarter 2014 income before income taxes was € 374 million, up € 13 million compared to the prior year quarter. Higher revenues and lower litigation settlement provisions were offset by elevated noninterest expenses. Post-tax return on average active equity (adjusted) of 10 % was lower versus 11 % in the prior year quarter, mainly due to higher average active equity in 2014.

2014 to 2013 Nine Months Comparison

CB&S reported solid revenues in the first nine months of 2014 despite lower market volatility, lower client activity and a challenging market environment.

Net revenues in the first nine months of 2014 were € 10.8 billion, a slight decrease of € 271 million, or 2 %, from € 11.0 billion in the first nine months of 2013. Net revenues included valuation adjustments relating to CVA RWA mitigation efforts, DVA, FVA and refinements in the calculation of IFRS CVA and FVA totalling a loss of € 280 million (first nine months of 2013: a loss of € 26 million).

Sales & Trading (debt and other products) net revenues were € 5.7 billion in the first nine months of 2014, in line with the first nine months of 2013. Revenues in Foreign Exchange were lower than the first nine months of 2013 due to lower volatility and reduced client activity reflecting a challenging trading environment notably in the first six months of 2014. Core Rates revenues were lower than the first nine months of 2013 primarily driven by FVA losses due to market movements and a calculation refinement. Revenues in Flow Credit were significantly lower than the first nine months of 2013, driven by lower client activity. RMBS revenues were significantly higher than the first nine months of 2013 as market uncertainty in the prior year was not repeated. Revenues in Distressed Products were significantly higher than the first nine months of 2013 in both the U.S. and Europe. Global Liquidity Management, Credit Solutions and Emerging Markets revenues were in line with the prior year. Sales & Trading (debt and other products) net revenues included three valuation adjustment items totalling a loss of € 143 million. First, a mark-to-market gain of € 23 million (first nine months of 2013: a loss of € 104 million) relating to RWA mitigation efforts arising on CVA. Second, a loss of € 58 million (first nine months of 2013: nil) relating to a refinement in the calculation of IFRS CVA. Third, a FVA loss of € 108 million (first nine months of 2013: nil) including a negative impact of € 51 million due to a calculation refinement.

Sales & Trading (equity) generated net revenues of € 2.2 billion in the first nine months of 2014, in line with the first nine months of 2013. Prime Finance revenues were higher than the first nine months of 2013, driven by increased client balances. Equity Trading and Equity Derivatives revenues were both in line with the first nine months of 2013.

Origination and Advisory generated net revenues of € 2.1 billion in the first nine months of 2014, in line with the first nine months of 2013. Equity Origination revenues were higher than the first nine months of 2013 driven by strong deal flow. Revenues in Advisory were higher than the first nine months of 2013 reflecting increased market share. Debt Origination revenues slightly decreased versus the prior year period driven by a lower fee pool.

Loan products net revenues were € 849 million in the third quarter 2014, in line with the first nine months of 2013.

Net revenues from Other products were a loss of € 115 million in the first nine months of 2014, a decrease of € 212 million from the first nine months of 2013. Net revenues from Other products included a DVA loss of € 133 million (first nine months of 2013: a gain of € 89 million), including a gain of € 37 million related to a refinement in the calculation of IFRS CVA.

In provision for credit losses, CB&S recorded a net charge of € 93 million in the first nine months of 2014, compared to a net charge of € 120 million in the first nine months of 2013, due to decreased provisions taken in the Leveraged Finance portfolio.

Noninterest expenses increased by € 28 million. This increase was largely due to fixed salary increases to comply with regulatory requirements, the ongoing implementation of the Operational Excellence (OpEx) program and the associated costs to achieve, increased service relationships costs, and higher legal fees, with these offset by lower settlement provisions taken in respect of litigation.

Income before income taxes was € 2.8 billion for the first nine months 2014. This was down € 276 million compared to the first nine months 2013 results, driven by lower revenues. Post-tax return on average active equity (adjusted) was 14 %, which is lower compared to 19 % in the same period in 2013, due to higher average active equity and a lower adjusted income before income taxes for the first nine months 2014.