Private & Business Clients Corporate Division (PBC)

 

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

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

Net revenues:

 

 

 

 

 

 

 

 

Global credit products

882

841

41

5

2,619

2,535

84

3

Deposits

743

741

1

0

2,249

2,261

(12)

(1)

Payments, cards & account products

249

258

(9)

(3)

743

765

(21)

(3)

Investment & insurance products

306

266

40

15

962

889

73

8

Postal and supplementary Postbank Services

103

107

(3)

(3)

311

323

(12)

(4)

Other products

110

111

(2)

(1)

351

384

(33)

(9)

Total net revenues

2,392

2,324

69

3

7,235

7,157

79

1

Provision for credit losses

150

171

(21)

(13)

435

476

(41)

(9)

Total noninterest expenses

1,886

1,805

81

4

5,520

5,343

177

3

Thereof: Impairment of intangible assets

0

0

0

N/M

0

0

0

N/M

Noncontrolling interests

0

0

0

N/M

1

0

0

N/M

Income before income taxes

356

347

10

3

1,279

1,337

(57)

(4)

 

 

 

 

 

 

 

 

 

Breakdown of PBC by business

 

 

 

 

 

 

 

 

Private & Commercial Banking:

 

 

 

 

 

 

 

 

Net revenues

934

902

32

4

2,889

2,759

131

5

Provision for credit losses

20

26

(7)

(25)

59

67

(8)

(12)

Noninterest expenses

875

801

73

9

2,493

2,373

119

5

Income before income taxes

40

74

(35)

(47)

338

319

20

6

 

 

 

 

 

 

 

 

 

Advisory Banking International:

 

 

 

 

 

 

 

 

Net revenues

537

506

31

6

1,607

1,541

66

4

Provision for credit losses

57

60

(3)

(4)

187

176

10

6

Noninterest expenses

299

292

7

2

947

845

102

12

Income before income taxes

181

155

26

17

473

520

(47)

(9)

 

 

 

 

 

 

 

 

 

Postbank:1

 

 

 

 

 

 

 

 

Net revenues

921

915

6

1

2,739

2,857

(118)

(4)

Provision for credit losses

73

85

(12)

(14)

190

233

(43)

(18)

Noninterest expenses

712

712

0

0

2,080

2,125

(45)

(2)

Noncontrolling interests

0

0

0

N/M

1

0

0

N/M

Income before income taxes

135

117

18

15

468

498

(30)

(6)

2014 to 2013 Three Months Comparison

PBC’s income before income taxes slightly increased compared to the prior year quarter despite the continued low interest rate environment and some negative effects including charges for loan processing fees triggered by a change in German legal practice in May 2014. Furthermore, PBC’s infrastructure expenses were above prior year levels mainly reflecting increased regulatory requirements and there was an increase of costs-to-achieve resulting from our OpEx program.

Net revenues in PBC increased by € 69 million, or 3 %, to € 2.4 billion, compared to the prior year quarter. Higher Credit revenues of € 41 million, or 5 %, compared to the third quarter 2013 reflected good growth momentum with higher loan volumes and improved loan margins. Revenues from Investment & insurance products increased by € 40 million, or 15 %, reflecting positive net new assets as well as higher levels of transactions compared to the prior year period. Net revenues from Deposit products remained stable compared to last year’s third quarter in a continued challenging interest rate environment in Europe. Net revenues from Payments, cards & account products decreased by € 9 million, or 3 %, compared to the third quarter 2013, impacted by changes in regulatory requirements regarding payment fees. Net revenues from Postal and supplementary Postbank Services decreased by € 3 million, or 3 %, compared to the third quarter 2013. Other product revenues declined by € 2 million, or 1 %, reflecting decreased revenues related to Postbank nonoperating activities as well as a change in the reporting classification of certain product-related expenses. This decline was partly compensated by better performance of the Hua Xia Bank equity investment.

Provision for credit losses decreased by € 21 million, or 13 %, compared to the third quarter 2013 benefiting from the quality of PBC’s loan book and a benign economic environment in Germany.

Noninterest expenses increased by € 81 million, or 4 %, to € 1.9 billion, compared to the third quarter 2013. The increase was primarily driven by the aforementioned change in German legal practice in 2014 as well as by higher infrastructure expenses mainly reflecting increased regulatory requirements. In addition cost-to-achieve as part of our OpEx program increased. However, PBC continued to realize offsetting, incremental savings from efficiency measures as part of our OpEx program.

Income before income taxes increased by € 10 million, or 3 %, compared to the third quarter 2013.

Invested assets increased by € 3 billion compared to June 30, 2014, mainly due to inflows in deposits and securities partly offset by a decline in market values.

2014 to 2013 Nine Months Comparison

PBC performance continued to be affected by the low interest rate environment. In addition, several specific items impacted the results of the first nine months 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 and third quarter of 2014 included charges for loan processing fees triggered by a change in German legal practice in May 2014. The first three quarters 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. Apart from these effects, PBC’s result remained fairly stable compared to the prior year period.

Net revenues in PBC increased by € 79 million, or 1 %, versus the first nine months of 2013. Growth in revenues from Credit products of € 84 million, or 3 %, compared to the first nine months of 2013 was driven by an increase in loan volumes and improved loan margins. Net revenues from Investment & insurance products increased by € 73 million, or 8 %, compared to last year’s period, reflecting positive net new assets and higher levels of transactions. Net revenues from Other products decreased by € 33 million, or 9 %, compared to the first nine months of 2013. The first three quarters of 2014 included the aforementioned gain from a business sale closed in a prior period. This was more than offset by decreased revenues related to Postbank nonoperating activities as well as a change in the reporting classification of certain product-related expenses. Additionally, the first nine months of 2013 were positively impacted by a partial release of loan loss allowances in Postbank, which is reflected in Other product revenues as the allowances were created prior to consolidation. Net revenues from Payments, cards & accounts decreased by € 21 million, or 3 %, compared to the prior year period mainly caused by changes in regulatory requirements regarding payment fees. Net revenues from Deposits decreased by € 12 million, or 1 %, compared to the first nine months of 2013, as a result of de-leveraging mainly in Postbank. Net revenues from Postal and supplementary Postbank Services declined by € 12 million, or 4 %, compared to the first three quarters of 2013, reflecting usual revenue fluctuations.

Provision for credit losses decreased by € 41 million, or 9 %, versus the first nine months of 2013, benefiting from a favorable environment in Germany. In the prior year, an additional credit of € 61 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 € 177 million, or 3 %, compared to the first nine months of 2013. The prior year period benefited from the release of a provision related to the Hua Xia Bank credit card cooperation whereas the current period reflects the negative impact of the aforementioned change in German legal practice. Additionally, higher infrastructure expenses, mainly caused by regulatory requirements, resulted in cost increases. Excluding these items, noninterest expenses remained stable between current and prior year periods.

Income before income taxes decreased by € 57 million, or 4 %, compared to the first nine months of 2013, mainly driven by specific items as mentioned above.

Invested assets increased by € 7 billion versus December 31, 2013, due to € 5 billion in net inflows, mainly in securities, and additional market appreciation.