Press releases
DekaBank: 2010 half-year result more than doubled
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Economic result increased to EUR 390 million
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Net commission income rises significantly by 27% to EUR 533 million
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Core capital ratio including market risk positions at a steady 11.9%
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Further improvement in fund ratings confirms high quality of Deka’s funds
| Key figures (according to IFRS) | 1st half 2010 | 1st half 2009 | Change in % |
|---|---|---|---|
| EUR m Net interest income | 193.7 | 235.6 | -17.8 |
| EUR m Risk provision | -9.9 | -218.9 | +95.5 |
| EUR m Net commission income | 533.0 | 419.6 | +27.0 |
| EUR m Net financial income | 44.5 | 123.9 | -64.1 |
| EUR m Total income | 767.4 | 549.3 | +39.7 |
| EUR m Total expenses | 377.5 | 407.1 | -7.3 |
| EUR m Economic result 1) | 389.9 | 142.2 | +174.2 |
| EUR m Net sales AMK and AMI | 803 | -134 | --- |
- 1) The economic result is the central control variable and performance figure in the Group. In addition to net income before tax under IFRS, it includes the relevant valuation result from financial instruments not recognised in the income statement.
The DekaBank Group generated an economic result of EUR 389.9 million in the first six months of 2010. This figure has more than doubled compared with the same period in the previous year (EUR 142.2 million) and according to Franz S. Waas, Ph.D., Chairman of the Board of Management, it “is the result of an outstanding second quarter in 2010 (EUR 192.1 million)”. Three factors are essentially responsible for this achievement:
- Positive performance of Deka´s funds
- Significant reduction of risk provision
- Reduced costs following the consistent implementation of the quality and process campaign.
Franz Waas explained: “This outstanding result in the first half of 2010 was achieved on the strength of our sustainable business model and the cooperation between savings banks and DekaBank, which is based on trust and is characterised by the focus on forward-looking market analysis, creativity and a sound sales performance.”
he product range has been expanded in very close cooperation with the savings banks to include precisely-tailored fund solutions for their customers. There is a growing demand for mixed investment funds with intelligent risk management. They include, for example, the Deka-Wertkonzept product series, which enables investors to invest in a large number of different asset classes. The unique feature of this concept is that the maximum acceptable loss compared with the previously high is specified for each fund variant. Savings bank customers invested a gross total in excess of EUR 1.6 billion (EUR 0.7 billion) in the DekaBank Group’s mixed funds. Franz Waas commented: “Not only this highlights that Deka provides excellent investment opportunities.” The high quality of products and services is also underpinned by further improvements in fund ratings. Around 35% of the funds were given an above-average rating by investment research firm Morningstar. As at 30 June 2010, 63% of bond funds and almost 47% of equity funds also outperformed their respective benchmark indices.
In investment fund business, net sales in the Asset Management Capital Markets (AMK) and Asset Management Property (AMI) business divisions were back up to EUR 803 million, following a figure of EUR -134 million in the first half of 2009. AMI contributed to this with an increase of EUR 1.1 billion (same period in the previous year: +EUR 1.3 billion). In the AMI business division, the continuing weak interest rate environment resulted in further substantial outflows from money market funds. At the same time, investor’s risk affinity declined again, which in turn severely limited new business. Nevertheless, net fund sales improved from EUR -1.4 billion in the previous year to EUR -316 million.
f the three business divisions, AMK made the highest contribution to total income with an economic result of EUR 220.5 million (2009: EUR 94.1 million). The economic result in Corporates & Markets (C&M) of EUR 106.5 million fell short of the comparative figure for the previous year (EUR 355.4 million). AMI made a contribution of EUR 51.7 million (2009: EUR 0.6 million incl. non-recurring effects) to total consolidated income. Non-core business was reduced as scheduled. It includes trade and export finance which is not covered by state export credit insurance, acquisition financing and structured capital market credit products. The volume of lending business and credit substitute transactions was reduced from EUR 8.1 billion to EUR 7.6 billion. At the same time, the economic result rose following the market-driven higher valuation of the relevant securities from EUR -287.2 million to a positive EUR 42.9 million. Franz Waas said: “Our strategy is working. We assessed market developments accurately and held onto the securities. Now we are benefiting from the upward revaluation and can reduce their volume while safeguarding assets.”
In terms of the individual income components at the DekaBank Group, net commission income was 27.0% up on the same period in the previous year to EUR 533.0 million (2009: EUR 419.6 million). Here, DekaBank profited from higher average assets under management compared with the half-year before last, which produced a rise in portfolio-related commissions. The increase in the performance of Deka’s funds made a decisive contribution in this respect. In line with expectations, net interest income of EUR 193.7 million remained below the high previous year’s figure of EUR 235.6 million. One reason was the downward trend in market interest rates, which produced a lower profit contribution from investment for the Bank’s own account.
Significantly reduced risk provisions of EUR -9.9 million returned to a low level again. In the same period of the previous year (EUR -218.9 million), risk provisions covered specific valuation allowances for loan commitments, which were primarily applied according to a very conservative approach. In the first half of 2010, they were limited to marginal portfolio valuation allowances for creditworthiness risks. Net financial income of EUR 44.5 million was 64.1% down on the figure for the first half of 2009 (EUR 123.9 million). This was partly due to a renewed increase in spreads, which resulted in valuation discounts on liquidity investments in government bonds and bonds from banks. Despite the unrest in the markets, the DekaBank Group significantly increased its total income by 39.7% to EUR 767.4 million (2009: EUR 549.3 million). At the same time, expenses were down by 7.3% to EUR 377.5 million (2009: EUR 407.1 million). This was mainly attributable to the measures taken as part of the quality and process campaign launched in the previous year.
For 2010 as a whole, DekaBank expects a strong economic result once again. However, in view of the ongoing uncertainty in the financial markets, no accurate forecast is possible at this stage with regard to the results of the second half of the year. From today’s point of view, total income is expected to remain below the record figure for 2009 (EUR 661.8 million).
The Interim Report as at 30 June 2010 is available to download at www.dekabank.de.