Press releases
DekaBank defies financial market crisis with its integrated business model
- At EUR 661.8 million, highest economic result in the Group’s history
- Quality of Deka’s investment funds has continuously improved
- All three business divisions outperformed target figures
- Further improvement in core capital ratio from 10.5% to 12.7%
- Franz S. Waas, Ph.D.: from an economic to a sustained result
| Key indicators (under IFRS) | 20091) | 2008 | Change % |
|---|---|---|---|
| €m Net interest income | 473.0 | 390.5 | 21.1 |
| €m Risk provisions | - 352.4 | - 291.9 | - 20.7 |
| €m Net commission income | 980.8 | 958.5 | 2.3 |
| €m Net financial income | 401.5 | - 123.6 | > 300 |
| €m Total income | 1.499.9 | 880.4 | 70.4 |
| €m Total expenses | 838.1 | 808.9 | 3.6 |
| €m Economic result 2) | 661.8 | 71.5 | > 300 |
- 1) The key indicators published here are preliminary figures. The authorized corporate bodies will review the annual and consolidated financial statements on 15 April.
- 2) The economic result is the central control variable and profit measure of the Group. In addition to the IFRS net income before tax, it includes the relevant valuation result from financial instruments not recognised in the income statement.
The DekaBank Group achieved an economic result of EUR 661.8 million in 2009, the highest in the company’s history. In 2007, the central asset manager for the Sparkassen-Finanzgruppe (Savings Banks Finance Group) had recorded its best result up to that point of EUR 514.1 million. According to Franz S. Waas, Ph.D., Chairman of the Board of Management of DekaBank: “We have defied the financial market crisis on the strength of our integrated business model and are back on track again.” Income from repo/lending transactions and the investment of liquidity available from operating business were among the key growth drivers. As Waas explains, “The close integration of Asset Management and supporting capital market activities generated a substantial increase in income and turned an economic result into a sustained result at the same time.” This also includes the fact that approximately four fifths of the equity and bond funds outperformed their respective peers. More than one in five equity funds and one in three bond funds were given an above-average fund rating by Morningstar at year-end. The quality of Deka’s investment funds has never been better, and this has been confirmed by a large number of awards.
The core capital ratio considerably increased to 12.7% (2008: 10.5%). Higher risk provisions of EUR 352.4 million (2008: EUR 291.9 million) provided comprehensive cover for potential loan losses in the prevailing difficult financial market environment. At the same time, Group risk was reduced from EUR 3.3 billion to EUR 2.9 billion in the year under review. For the coming years, a further gradual reduction by EUR 800 million is planned. The financial strength and guaranteed risk-bearing capacity at all times again gave DekaBank significant competitive advantages in 2009. Accordingly and bucking the trend in the banking sector, the leading international rating agencies, Standard & Poor’s and Moody’s, confirmed their excellent ratings of A and Aa2 for long-term unsecured debt with a stable outlook in each case.
With an economic result of EUR 330.3 million (EUR 241.5 million), the Asset Management Capital Markets (AMK) business division made a decisive contribution to growth at the DekaBank Group. Fund sales of AMK were affected by the substantial funds outflows from money market funds, whose volume had risen overproportionally to EUR 32 billion up to August 2008. As a result of the low interest rate level, they recorded outflows in direct sales of approximately EUR 5.4 billion. Consequently, total net sales of AMK reported in the 2009 annual report of EUR - 2.5 billion were down on the previous year’s figure (EUR 520 million). Unlike BVI statistics, this figure only includes direct sales to private and institutional investors. Assets under management (AuM), which reflect the income-related volume of fund products in AMK, rose by 5.3% to EUR 130.1 billion (EUR 123.5 billion) thanks to the strong fund performance.
The Asset Management Property (AMI) business division continued to manage net sales of open-ended mutual property funds consistently on the basis of sales quotas in 2009. While other companies were again forced to suspend acceptance of returned fund units in order to secure liquidity, the mutual property funds solely available to private investors remained open without interruption, with liquidity quotas ranging from 17.7% to 25.9%. Overall, AMI achieved an increase in net sales of EUR 2.5 billion (EUR 1.4 billion). In the Real Estate Lending sub-division, the gross loan volume was down by 6.8% to around EUR 6.9 billion (EUR 7.4 billion) as a result of market-driven risk-aware new business allocation. AMI’s economic result amounted to EUR 60.8 million before non-operating non-recurring effects. This represents a decline on the previous year’s level (EUR 105.1 million). Taking into account unscheduled amortisation (EUR 25 million) on shares in WestInvest GmbH acquired in 2004 and expenses for buildings used by the Group, the economic result of the AMI division totalled EUR 23.2 million.
In 2009, Corporates & Markets (C&M) made the greatest profit contribution. Following the Group-wide focus on driving forward the integrated business model, the C&M business division concentrates more consistently on activities which support Asset Management for customers. Repo/lending business was stepped up and the development of derivatives accelerated, which are used by the funds for risk hedging and to simplify the representation of asset classes – especially in guaranteed products and funds with clear yield targets. These services consistently expand the value-creation chain in Asset Management, add attractive product features to the funds and reduce market risks in the funds. At the same time, C&M expanded its range of ETF products. The volume of the 32 index funds totalled EUR 4.7 billion at year-end 2009 (end 2008: EUR 1.8 billion in ten ETFs). No valuation discounts were recorded in 2009 on capital market credit products allocated to C&M. The valuation result amounted to EUR 138 million (previous year: EUR - 83 million). With an economic result of EUR 527.2 million, the C&M business division clearly exceeded the previous year’s figure of EUR 408.2 million – net of non-core business.
The economic result for non-core business climbed from EUR - 739.3 million to EUR - 127.2 million. This was mainly attributable to lower valuation losses on the capital market credit products allocated to this category, which at EUR - 97.6 million were clearly down on the previous year’s figure (EUR
- 626 million). This business includes trade and export finance, which is not covered by state export credit insurance (ECA), acquisition financing and structured capital market credit products.
Regardless of successes, Waas believes that further action is required: “We will need to increase the impact of our sales performance considerably. In this respect, we have joined forces with the savings banks to catch-up.” In the future, investment advice will centre even more than before on fund investors and their individual requirements. As part of the integrated finance concept of the savings banks, which is aimed at providing comprehensive advice to customers, regular reviews will be used to check whether the relevant savings and investment strategy still matches the individual savings target and investment horizon of customers. For each customer, advisers establish the ideal combination of basic and supplementary investments for a long-term wealth structure. DekaBank supports the savings banks with an extensive range of products, training courses and concepts for their customer events. Waas comments: “When customers increasingly start considering investing again, the savings banks will benefit above-average because, above all, they represented security during the crisis. They also continue to enjoy the greatest level of trust, far more so than cooperative and private banks. This is an unbeatable advantage and points us in the right direction, away from being a pure product provider.”
For the current financial year, DekaBank continues to expect difficult economic conditions. Experience has shown that pressure on the labour market and in terms of companies going bankrupt tends to increase in the final phase of a recession. Despite these conditions, DekaBank anticipates a strong economic result again in 2010. However, matching the very high level recorded in 2009 will represent a challenge.