Press releases

24.08.2011

DekaBank achieves solid half-year result again in 2011

• Economic result of €337m at previous year’s level

• National debt crisis reflected in risk provisions

• “DekaBank vor Ort” campaign launched

• 1) This comprises risk provisions for securities in the lar and htm categories of around €-66m (previous year: around €-1m.)
• 2) The previous year’s figures have been adjusted. For details, please refer to the Interim Report as at 30 June 2011.

The DekaBank Group closed the first six months of 2011 with a solid economic result of €336.6m. This means that the half-year results approximately matched the comparative figure for the previous year (€337.7m). Three factors had a decisive impact on the income development:

·         Steady commission income

·         Revaluations of structured capital market credit products

·         Higher income from customer trades

In the wake of the national debt crisis, valuation allowances of around €69m were applied in line with the respective market value for a Greek bond issue and Portuguese bank bonds assigned to the held-to-maturity (htm) category (nominal volume of approx. €192m). Intangible assets, which also include the goodwill on the shares in WestInvest acquired in 2004, were written down by around €41m. These charges were not fully compensated by the revaluation of capital market credit products (approx. €63m). Franz S. Waas, Ph.D., Chairman of DekaBank’s Board of Management commented, “The fact that these extraordinary charges have not decreased the half-year result below the previous year’s figure highlights the high level of earnings achieved in the first six months of this year.”

Due to the excellent results for 2009 and 2010, the Bank was in a position to repurchase its own shares in a volume of approximately €1bn from the Landesbanken in the first half of 2011. Rating agencies have also assessed the change in the shareholder structure as a consistent move, which has made the savings banks sole owners of DekaBank.

With regard to fund unit sales, the Asset Management Capital Markets (AMK) and Asset Management Property (AMI) business divisions recorded negative net sales of €-3.3bn in the reporting period (1^st half 2010: €803m). The reasons for marked investor restraint include ongoing uncertainty about further developments in connection with the national debt crisis in the Eurozone and USA, incidents in Japan and the political revolutions in North Africa and the Middle East. Therefore net funds outflows occurred mainly from AMK’s securities funds (€-3.6bn). The AMI property funds recorded a slight inflow of funds of €307m. As a result of funds outflows and market-driven price losses on securities funds, assets under management in AMK and AMI were down by €4.9bn to €150.3bn in the first half of 2011 (end of 2010: €155.2bn).

In terms of the individual income components at the DekaBank Group, net financial income increased significantly from €-8.7m in the first half of 2010 to €107.7m. Here, the strong profit contribution from customer trades of €139.4m (2010: €37.2m) boosted income in particular. The above-mentioned valuation allowances in securities business (around €69m) particularly reduced the income. Provisions for loan losses were unusually low again at €0.3m after €-9.9m in the previous year. Modest specific valuation allowances and general valuation allowances for portfolio risks in lending business were offset by reversals on approximately the same scale. Net commission income of €519.7m almost matched the record level of the previous year (€533.0m). Commission in banking business was slightly below the strong previous year’s figure while commission from investment fund business was practically at a stable level. At €175.2m, net interest income was 9.6% down on the corresponding figure for 2010 (€193.7m). The main reason for this development was the reduced loan volume. Net interest income from the investment of the Bank’s own funds benefited from higher market interest rate levels. Higher income of €798.2m (2010: €715.2m) was offset by a scheduled increase in expenses by 22.3% to €461.6m (2010: €377.5m), which mainly resulted from the takeover of the private banking activities of WestLB and LBBW in Luxembourg and the associated rise in the number of employees as well as expenses for the implementation of a new IT infrastructure.

“DekaBank vor Ort”

In the second half of the year, DekaBank intends to further intensify cooperation with its owners and has therefore launched the “DekaBank vor Ort” sales campaign. Franz S. Waas explained, “At a time when many investors are unsettled and there is a considerable knowledge deficit regarding securities investments, it is essential to do the groundwork.” Consequently, DekaBank is expanding its sales team, initially by a further 17 employees, to provide additional support to the savings banks in their locations. The central asset manager for the Sparkassen-Finanzgruppe is pursuing two aims with this approach:

·         Provide support for savings bank advisers and conduct further marketing campaigns

·         Step up sales through local specialist fund advisers

Franz S. Waas: “The savings banks have expressly welcomed the measures we have taken to increase fund unit sales. Investment fund advice has become far more complex due to the more stringent legal provisions. This is where our local employees will be able to offer a lot of help.” DekaBank will initially invest approximately €2m per year in its sales campaign.

The central asset manager for the savings banks has also seen first success with its Deka-Vermögenskonzept, launched in February 2011. Around half a billion euros has since flowed into this new generation of fund-based asset management. Most savings banks have included it in their current range of products and services. “This is definitely a respectable achievement for a capital market product in the presently very difficult market environment,” stated Waas. The new service offers savings bank customers individually tailored cost-effective professional asset management combined with comprehensive support on all investment-related matters. At the same time, savings bank customers are given different options for securing their investment. In addition to loss limitation, in case of short-term crash scenarios, other available strategies include capital protection and profit protection.

In the remaining months of the current financial year, DekaBank is not expecting substantial market impetus for its business development and profit performance. Growth and stability risks continue to exist in the wake of the financial and economic crisis and have in some cases become greater, due to the debt crisis in the Eurozone and the USA. As a result, demand from private investors for securities and property funds is likely to remain muted. In addition, the potential impact on the valuation result and risk provisions cannot be estimated. As already announced in spring this year, DekaBank therefore does not expect to repeat the extraordinarily high level of net income achieved in

2010.

The Interim Report as at 30 June 2011 is available to download at www.dekabank.de.