Preliminary figures for the financial year 2012 - DZ BANK Group: profit before taxes reaches around €1.32 billion – Tier 1 capital ratio strengthened significantly
- Profit before taxes quadrupled from €324 million to around €1.32 billion
- Good operating performance by the DZ BANK Group
- Tier 1 capital ratio doubled to 14.9 per cent since 2008[/BU
- Dividend proposal of 10 cents per share
- Satisfying start to the 2013 financial year
- Wolfgang Kirsch: “We believe we are well positioned in an environment that remains challenging.“
The DZ BANK Group increased its earnings significantly in the 2012 financial year. The preliminary figures according to IFRS show a profit before taxes of €1.319 billion. This corresponds roughly to four times the year-earlier figure of €324 million. “This good result reflects our clear positioning as a financial services group focused on the cooperative financial network and is driven by the positive operating performance in virtually all units of the DZ BANK Group,” said Wolfgang Kirsch, CEO of DZ BANK AG. “Given the challenging environment, we can be satisfied with this earnings performance. It provides evidence of the profitability and stability of our business model, which is closely tailored to our customers’ needs. Together with the cooperative banks, we are a reliable partner for the real economy.“
Thanks to its good earnings performance, the DZ BANK Group was able to further strengthen its capitalisation. The Tier 1 capital ratio rose from 11.8 per cent to 14.9 per cent in the course of the year. This means that the ratio has doubled since 2008 even though the group already had to accommodate more stringent capital requirements within the framework of the implementation of Basel 2.5. In 2012 the DZ BANK Group added €2.3 billion to its capitalisation. This was achieved by earnings retention and careful management of risk assets. “We are making good progress improving our capitalisation and we clearly fulfil the minimum regulatory requirements under Basel III“, added Kirsch.
DZ BANK Group’s results
DZ BANK AG can look back on a successful year especially in Corporate Banking. The volume of loan commitments in the corporate customer lending business rose by more than 20 per cent to €9.9 billion. In the development lending business the bank increased the volume of new lendings by around 20 per cent to €7.3 billion. In Corporate Banking, joint servicing of the German SME segment together with the cooperative financial network is bearing fruit. Significant growth was achieved especially in the area of funding for renewable energy projects. Retail Banking felt the impact of the uncertainty prevalent among investors. Against this background, the sales volume of retail structured products came in at €4.3 billion after €5.2 billion in the previous year. In the capital markets business, DZ BANK defended its good position with a bond volume of €22 billion issued with the support of its advisory service.
Bausparkasse Schwäbisch Hall reported record levels of new business, signing around one million new home-savings contracts with a total volume of €32.8 billion (+ 3.6 per cent), which allowed the company to cement its market leadership with a market share of 30.2 per cent.
R+V Versicherung increased its premiums earned in the insurance business to €11.8 billion, up by 5.3 per cent on the previous year's level, which was already high. In the life and pension insurance segments premiums earned increased by 5.1 per cent, while in the non-life business they increased by 6.4 per cent.
Union Investment reported net inflows totalling €9.9 billion. As a result, its assets under management increased by a significant 11.9 per cent and reached €190.5 billion as at 31.12.2012 (31.12.2011: €170.3 billion). In the institutional clients business the fund management company was able to continue the strong sales performance it reported in 2009 and 2010 with net inflows of €8.8 billion. In the retail business it reported net inflows of €1.1 billion.
TeamBank was able to increase its lending volume (+ 6.5 per cent) to €6.2 billion as well as its customer count (+ 5 per cent) with its easyCredit consumer finance product and again outperformed the market as a whole.
DZ PRIVATBANK was able to attract more than €2 billion of gross inflows within the framework of the Private Banking market initiative. Assets under management at balance sheet date totalled €13.5 billion.
DG HYP is now very well established and profitable in its core business as a provider of commercial real estate finance. It increased its lending volume by 19 per cent to €2.2 billion in its joint lending business with the cooperative banks.
The DZ BANK Group’s net interest income increased to €3.26 billion, up by 3.9 per cent on the already good year earlier figure. DZ BANK AG, Bausparkasse Schwäbisch Hall and TeamBank reported significant growth. The increase in the net interest income from operating business at DZ BANK AG is mainly due to the corporate customer lending business, which continued the positive trend it charted in the previous year.
Allowances for losses on loans and advances increased on the previous year by 33.4 per cent to a loss of €527 million. This was mainly due to the higher – but still normal – level of the allocation to DZ BANK AG’s specific loan loss allowances and the increased requirement for loan-loss provisioning in VR LEASING’s business in Eastern Europe.
Net fee and commission income increased by 6.3 per cent to €1.02 billion. Union Investment reported a significant increase in earnings due to the increased volume of assets under management, which led to higher volume-related revenues.
Gains on trading activities increased to €659 million after €398 million in the previous year. This was due to good contributions from the customer business and to the higher valuation of the securities held in the trading portfolio of DZ BANK AG.
Gains and losses on investments deteriorated to a loss of €442 million (previous year: a loss of €333 million). This includes impairment charges and disposals from DZ BANK AG’s ABS portfolio, an impairment on VB-Leasing International Holding, which pools VR LEASING’s business in Eastern Europe, as well as the negative effects resulting from the termination of the use of the equity method at our ÖVAG equity investment, which took effect in the year under review.
Other gains and losses on valuation of financial instruments showed a loss of €276 million in financial year 2012 compared to a loss of €999 million in the previous year. This amounted as reported for the DZ BANK Group largely concerns DG HYP, which was far less negatively affected than in the previous year by write-downs of bonds issued by the European periphery states.
Administrative expenses were 4.9 per cent higher than in the previous year at €2.86 billion. Staff expenses increased by 4.5 per cent due to higher numbers of employees in growth areas such as
DZ BANK AG’s corporate banking business, at DZ PRIVATBANK as a result of the merger with WGZ BANK’s private banking unit, and at Bausparkasse Schwäbisch Hall. Non-staff costs increased by 5.9 per cent. This was also largely due to the increased regulatory requirements.
Risk-weighted assets (RWA) as at 31.12.2012 totalled €89 billion. This is 11 per cent less than in the previous year (around €100 billion). Compared to 2008, RWA were thus reduced by around 25 per cent despite the effects of CRD III (Basel 2.5), which increase RWA. Including the effects of the “Capital Requirements Regulation” (Pro Forma CRR) the RWA totalled €119 billion.
The Tier 1 capital ratio improved to 14.9 per cent (Basel 2.5). Taking account of Pro Forma CRR, the core capital ratio (as at 31.12.2012) is 9.8 per cent.
The revaluation reserve improved significantly at reporting date, up €1.14 billion to €36 million Euro.
The net profit increased to €969 million after €609 million in the previous year.
A dividend of 10 cents per share is to be proposed to the Annual General Meeting. “With the proposed dividend we achieve a good balance between strengthening our Tier 1 capital and serving the interests of our owners“, explained Kirsch.
Like the financial sector as a whole, the DZ BANK Group is confronting fundamental changes in the regulatory and supervisory architecture. “It is not yet possible to make a conclusive and detailed appraisal of the form that the multitude of individual regulatory initiatives will take and thus of what impact they will have on our capital base. What is certain however, is that they will lead to further capital adequacy requirements for us as well as for other banks. We shall, therefore, initially continue to realise every possible improvement in our capitalisation that can be achieved from our own resources. The successes we have scored so far confirm that we are on the right road here“, said Kirsch. “In addition, we are preparing ourselves quietly and with the due care for a situation in which we shall flank the strengthening of our capitalisation in due time with capital increases from among our own owners as soon as the regulatory parameters I have mentioned are firmly in place. We do this in the shared conviction that we wish to continue to shape our destiny ourselves – as we have done in the past – and that we are ready to mobilise our forces to do so”, added Kirsch.
Looking at the economy, we see a patchy picture in the current year. DZ BANK’s economists believe that the euro area’s periphery states will remain in recession in 2013 due to the reform efforts that are being made there. In Germany, by contrast, at 0.4 per cent growth will probably at least remain in positive territory and should then accelerate to 2.2 per cent again next year thanks to positive stimuli from Asia and America. “The good start we have made in the 2013 financial year gives us ground for optimism for the rest of the year. Our business model has proven its viability and profitability is developing gratifyingly, due not least to our deeper partnerly collaboration with the cooperative banks. Barring renewed distortions in the markets, we see good chances of being able to outstrip our 2012 earnings.”
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Speech Wolfgang Kirsch (112 KB)
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Preliminary (IFRS) Income Statement DZ BANK Group
In € million
In € million
|Net interest income||3,260||3,137||3.9|
|Allowances for losses on loans and advances||-527||-395||33.4|
|Net fee and commission income||1,024||963||6.3|
|Gains and losses on trading activities||659||398||65.6|
|Gains and losses on investments||-442||-333||32.7|
|Other gains and losses on valuation of financial instruments||-276||-999||-72.4|
|Net income from insurance business||532||348||52.9|
|Other net operating income||-56||-73||-23.3|
|Profit before taxes||1,319||324||>100.0|
|Cost/income ratio [in %]||60.7||79.1||-18.4 % points|
|Total assets [in €billion]||407.2||405.9||0.3|