Press releases

25.11.2010

DekaBank: strong third quarter

• Result for the first nine months up by 35% to EUR 678 million
• Good fund performance generates rise in commission income to EUR 778 million
• Standard & Poor’s affirms A rating for unsecured long-term liabilities
  

• 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 has expanded the excellent result for the first half of 2010 and thanks to a strong third quarter increased its result for the first nine months of the year by 34.9% to EUR 677.9 million (same period in 2009: EUR 502.5 million). At EUR 288 million, over 42% of this result was attributable to the last three months of the reporting period. Three factors are essentially responsible for this achievement:

• The excellent performance of the Deka investment funds resulted in an increase in assets under management and higher commissions. 
• The risk provision of EUR 29.6 million was in the positive range and therefore considerably lower than the previous year’s figure (EUR -256.3 million), which was still severely affected by the financial market crisis.
• Structured capital market credit products recorded revaluation gains of EUR 92 million.

Franz S. Waas, Ph.D., Chairman of the Board of Management of DekaBank, explains: “We have achieved continuous growth and posted positive figures for the past six quarters. As a result of our integrated business model, which has proved its worth as a sound basis in all market situations, and some positive non-recurring factors, we are now reporting the best nine-month result in the Bank’s history. Having come through the financial crisis without assistance from the government, we are now reaping the rewards of the strong basis we established in recent years.” As recently as in financial year 2009, DekaBank achieved a record result of EUR 661.8 million.

The shareholders of DekaBank also benefit from this success. For example, the added value for the savings banks and Landesbanken, which comprises payments to the alliance partners and the economic result, amounted to EUR 818 million in 2004 but had risen to more than EUR 1.5 billion by 2009. After the first nine months of this year, the figure totals almost EUR 1.4 billion. Thanks to an above-average liquidity position, DekaBank is also an important player in terms of refunding for the Sparkassen-Finanzgruppe. Even in 2008, a difficult year, and the subsequent years, DekaBank made around EUR 20 billion available to its alliance partners.

The DekaBank Group’s stability is also reflected by current ratings and its core capital ratio. Standard & Poor’s affirmed the A rating for unsecured long-term liabilities at the end of October, while Moody’s rating is Aa2. The core capital ratio including market price risk has increased since 2009 from 9.7% to a strong 12.0%. This key figure includes silent capital contributions of around EUR 500 million. Excluding this amount, the ratio would stand at 10.2%. DekaBank is preparing for the significantly more stringent requirements which will result for the banking sector as a whole under Basel III and the Banking Supervisors’ stress test.

Compared with the same period in the previous year, fund sales rose in the first nine months of 2010. Net sales in the Asset Management Capital Markets (AMK) and Asset Management Property (AMI) business divisions of around EUR 1.3 billion were up on the approximately balanced previous year’s figure. According to Franz S. Waas, “This pleasing development reflects that customers are regaining confidence and increasingly moving away from a hold strategy to return to actively managed investments.” Net sales in the AMK business division of EUR -185 million (2009: EUR -1.9 billion) remained only slightly negative, since the continuing low interest rate level was responsible for outflows from money market and bond funds. Despite the difficult conditions in the sector, the AMI business division recorded net inflows of EUR 1.5 billion (2009: EUR 1.9 billion). Assets under management at AMK and AMI climbed to EUR 153.8 billion as at 30 September 2010 (end of December 2009: EUR 151.2 billion).

Although net sales have increased overall, Franz S. Waas believes that there is additional growth potential with regard to fund sales: “Following the crisis, we find ourselves in a new investment environment. Customer requirements have changed, and instead of off-the-peg investments they now want tailor-made investments, in other words they require comprehensive, continuous and individual advice.” DekaBank will therefore launch a new investment product in the market in early 2011, which has been developed in cooperation with the savings banks. It will mark the beginning of a new era in fund-based asset management by introducing a concept that will be suitable for almost every budget. The concept offers individually tailored, cost-effective and professional asset management on a high level. “In connection with this product, customers receive comprehensive support across all investment topics (asset accumulation, retirement provision and hedging).”

In terms of the individual income components at the DekaBank Group, net commission income continued to rise sharply in the third quarter and compared with 30 September 2009 was up by 19.2% to EUR 778.3 million (2009: EUR 653.1 million). The higher average level of assets under management compared with the same period in the previous year contributed to achieving a higher profit contribution from investment fund business. Net interest income of EUR 290.1 million was below the figure for the comparable period in the previous year (EUR 355.4 million). Here, the ongoing low market interest rates resulted in a decline in income from investment for the Bank’s own account and from Treasury business. With regard to risk provisions, the release of specific valuation allowances which were no longer required, in particular, generated a positive profit contribution of EUR 29.6 million (EUR -256.3 million). Lower profit contributions from trading transactions with customers resulted in a decrease in net financial income of 55.9% to EUR 164.8 million (2009: EUR 373.8 million).

The valuation result from capital market credit products, which is comprised in net financial income, showed a positive trend following scheduled repayments and revaluations and amounted to EUR +91.6 million at the end of September 2010 (2009: EUR -1.9 million). Overall, income in the Group of EUR 1.3 billion exceeded that of the same period in the previous year (EUR 1.1 billion) by 13.3%. At the same time, the measures launched in 2009 as part of the quality and process campaign and lower write-downs and restructuring expenses produced a 4.4% reduction in expenses to EUR 582.7 million (2009: EUR 609.8 million).

DekaBank also expects to achieve a positive economic result in the fourth quarter of 2010.

• Interim Report as at 30 September 2010