Non-Core Operations Unit Corporate Division (NCOU)

 

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

Net revenues

20

402

(382)

(95)

50

1,121

(1,071)

(96)

Provision for credit losses

42

239

(197)

(82)

128

500

(372)

(74)

Total noninterest expenses

1,026

1,361

(335)

(25)

2,082

2,751

(669)

(24)

Thereof:

 

 

 

 

 

 

 

 

Restructuring activities

1

0

1

N/M

4

17

(13)

(76)

Impairment of intangible assets

0

0

0

N/M

0

0

0

N/M

Noncontrolling interests

0

1

0

(59)

0

0

0

N/M

Income (loss) before income taxes

(1,049)

(1,199)

151

(13)

(2,160)

(2,130)

(31)

1

2014 to 2013 Three Months Comparison

The results for NCOU this quarter reflect the ongoing progress from de-risking activity, as well as fair value movements, impairments and developments related to litigation-related matters.

Net revenues for the NCOU in the reporting period decreased by € 382 million, or 95 %, to € 20 million. This includes the impact from lower portfolio revenues reflecting the significant reduction in assets year-on-year, as well as the net effect arising from valuation adjustments and mark-to-market impacts. NCOU’s de-risking activity generated revenue losses of € 41 million compared to a marginal net gain in the same period in 2013.

Provision for credit losses in the third quarter 2014 were € 197 million lower versus the same quarter in 2013 due to lower provisions taken against IAS 39 reclassified assets, mainly driven by European Commercial Real Estate exposures.

Noninterest expenses decreased by € 335 million, or 25 %, compared to the third quarter 2013. The decrease versus the previous year was predominately due to lower litigation-related expenses, while direct costs have also decreased by € 51 million, or 14 %, driven by the sale of BHF-BANK.

The loss before income taxes decreased by € 151 million, versus the same quarter in 2013, primarily driven by the aforementioned movements and impacts.

2014 to 2013 Nine Months Comparison

During 2014, NCOU 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 legacy IAS 39 reclassified assets, the Credit Correlation and Monoline portfolios as well as Commodities’ exposures. Asset de-risking in 2014 has delivered net gains of € 124 million.

Net revenues in the NCOU were € 50 million, or 96 %, lower in the first nine months compared to the same period in 2013 primarily due to lower portfolio revenues reflecting the significant reduction in assets year-on-year. In addition, mark-to-market losses in 2014 include € 302 million from Maher debt refinancing and € 151 million arising on commodities exposure to the US power sector.

Provision for credit losses for the first nine months of 2014 were down € 372 million, or 74 % compared to the first nine months of 2013, due to lower provisions taken against IAS 39 reclassified assets, mainly driven by European Commercial Real Estate exposures.

Noninterest expenses for the first nine months of 2014 were € 2.1 billion, a decrease of € 669 million, or 24 %, compared to the same period in 2013, mainly driven by lower litigation-related expenses. Direct costs also decreased as a result of the divestment of certain operating assets including BHF-BANK. This was partly offset by an impairment of € 57 million taken in the current year.

The loss before income taxes increased by € 31 million versus the first nine months of the prior year, with each period having been impacted by a number of different factors as described above.