Press releases
DekaBank Group achieves income growth at a high level in 2010
- Economic result of €925m (2009: €662m)
- At €247m, fourth quarter also above average
- Net commission income rises by 8.2% to almost €1.1bn
- Net sales of AMK and AMI of €908m clearly positive again
| Key indicators (under IFRS) | 20101) | 2009 | Change in % |
|---|---|---|---|
| €m Net interest income | 422.0 | 473.0 | - 10.8 |
| €m Risk provisions | 52.0 | - 352.4 | + 114.8 |
| €m Net commission income | 1,061.7 | 980.8 | + 8.2 |
| €m Net financial income | 250.9 | 392.2 | - 36.0 |
| €m Total income | 1,758.0 | 1.499.9 | + 17.2 |
| €m Total expenses | 832.9 | 838.1 | - 0.6 |
| €m Economic result 2) | 925.1 | 661.8 | + 39.8 |
| €m Net sales (AMK and AMI) | 908 | 1 | (> 300) |
- 1) The key indicators published here are preliminary figures. The competent corporate bodies will review the annual and consolidated financial statements on 7 April.
- 2) The economic result is the central control and performance variable for the Group. In addition to income before tax under IFRS, it comprises the relevant valuation result for financial instruments recognised directly in equity with no impact on profit or loss.
In 2010, the DekaBank Group once again exceeded the previous year’s strong economic result. This was mainly achieved with:
- the strong performance of the Deka investment funds and
- stabilised costs,
- as well as non-recurring effects.
The sound fund performance resulted in a rise in net commission income, the key income source, of 8.2% to almost €1.1bn (2009: €980.8m). The increase in income was also boosted by non-recurring effects, such as one-off, market-driven revaluations and profits realised in non-core business as well as the positive balance of risk provisions amounting to €52.0m (2009: €-352.4m). This more than compensated the downward trend in net interest and financial income, two income components which were affected by low market interest rates and the high level of liquidity made available by the central banks. In addition, the actively pursued significant reduction of risk positions impacted negatively on net financial income. At €250.9m, this item was 36.0% down on the extraordinarily high previous year’s figure of €392.2m. Net interest income decreased by 10.8% to €422.0m (€473.0m). Expenses of €832.9m were almost unchanged compared with the figure for 2009 (€838.1m). In total, DekaBank achieved an economic result of €925.1m for the year as a whole (€661.8m). The strong fourth quarter also contributed to achieving this result, which further increased the good nine-month result (€677.9m) by €247.2m. This growth in business has also further stabilised our ratings, with Standard & Poor’s and Moody’s both affirming their excellent ratings for DekaBank. The long-term unsecured debt rating remains A (S&P) and Aa2 (Moody’s) respectively with a stable outlook stated by both rating agencies.
Franz S. Waas, Ph.D., Chairman of the Board of Management of DekaBank commented: “DekaBank’s strong business performance confirms that we took the best possible decisions both before and during the financial market crisis for the benefit of our customers and shareholders.“ For the savings banks and Landesbanken, the added value which comprises payments to the alliance partners and the economic result was increased once again compared with 2009 from €1.5bn to €1.8bn.
The strong results reported in 2009 and 2010 have also strengthened the Bank’s capital base considerably. The core capital ratio has climbed from 9.7% to 12.9% since the end of 2009. This very robust capitalisation would also enable DekaBank to buy back up to €1bn of its own shares from the Landesbanken. Moreover, the savings banks are planning to buy additional DekaBank shares. Franz S. Waas explained: “The fact that our most important sales partners are prepared to invest €1.3bn in their central asset manager is a sign of trust and at the same time an obligation for us. We welcome this development, because it means that the cooperation between DekaBank and the savings banks will be geared even more to customers and their requirements. This will result in greater efficiency on both sides. However, in the future, the Landesbanken will also remain important business partners for us within the Sparkassen-Finanzgruppe.”
The Asset Management Capital Markets (AMK) business division made the most substantial contribution to the Group’s economic result last year with €428.0m (€316.6m). Despite the ongoing pressure in the capital markets and continuing and marked restraint of investors with regard to securities investments, new business was stabilised. Net sales performance, which compared with the BVI statistics only includes direct sales in business with private and institutional investors, was still slightly negative at €-0.8bn (€-2.5bn). This was due to the continuing market-driven high level of net outflows from money market and bond funds of around €7bn. Nevertheless, assets under management, which reflect the income-relevant volume of AMK fund products, rose on the back of a strong performance from €130.1bn to €132.5bn. As at the year-end, 48.9% of equity and 71.7% of bond funds outperformed their respective benchmarks.
In the Asset Management Property (AMI) business division, net sales of €1.7bn (€2.5bn) remained at a high level. Of this figure, €1.5bn (€2.2bn) were attributable to open-ended mutual property funds, the sale of which was consistently managed on the basis of sales quotas, as was the case in previous years. This ensures that the volume of funds raised is limited to an amount which can be invested wisely. With total liquidity of approximately €4bn, retail funds consistently remained open and further increased their assets while other providers were forced to suspend acceptance of returned fund shares due to liquidity difficulties or even had to take their funds from the market. In this respect, AMI benefited from its close integration with the savings banks. Assets under management in AMI rose from €21.1 bn to €22.8bn in 2010. In terms of performance, the market leader’s open-ended mutual property funds were also convincing. With growth of between 1.4% and 2.7%, they clearly outstripped the sector average. In Real Estate Lending, new business amounted to a volume of around €2.2bn (excluding extensions), with a pleasing €1.3bn syndicated. This sub-division generated around 45% of AMI’s income. The total economic result for AMI before non-recurring effects amounted to €88.3m (€57.0m). Including non-recurring effects, the result totalled €55.1m (€19.4m).
The economic result of the Corporates & Markets (C&M) business division of €247.1m failed to match the high previous year’s level (€517.2m), which was due to non-recurring effects in connection with hedging measures. As a result of market developments, income from customer trading activities in repos business and trades in fixed-income securities was down on the respective figures for the previous year. In addition, margins on liquidity investment declined significantly. Conversely, commission business and write-backs of risk provisions (€12.2m) were ahead of schedule and impacted positively.
The economic result in non-core business of €182.7m considerably exceeded the negative previous year’s figure (€-127.4m). Positive factors included the revaluation of securitised products and profits realised on early repayments. Non-core business comprises trade and export finance, which is not ECA-covered, equity financing and structured capital market credit products. The strong result achieved in non-core business highlights that the decision taken in spring 2009 to keep these positions in principle but reduce them while safeguarding assets was right. As part of this process, lending business which is not assigned to core business decreased by 18.5% to €6.6bn in 2010 (€8.1bn), and the securitisation portfolio was down to €2.1bn (€2.9bn).
In the current financial year, new cross-divisional measures have been launched. Franz Waas explained: “We now need to exploit the strong starting position we have created in the past five years to develop our integrated business model further.” The following projects have already started:
- Market launch of the Deka-Vermögenskonzept
- Expansion of the range of products and advisory tools for investments for own account by the savings banks and other institutional customers
- Ongoing development of the AMK product portfolio
- Future-proof, customer-focused optimisation of banking processes
For 2011, the current financial year, DekaBank expects results of around €400m to €500m, which would be in line with the Bank’s long-term planning and the average for the past five years. This forecast takes into account continuing growth and stability risks in the wake of the financial and economic crisis as well as the fact that interest rate and return levels remain comparatively low in the money and bond markets.