Preliminary figures for the financial year 2014
DZ BANK Group reports profit before taxes of € 2.87 billion
- Profit before taxes climbs 29.1 per cent to a new all-time high of € 2.87 billion
- Good operating performance in the DZ BANK Group
- Earnings boosted by robust economy in Germany, relaxed capital markets and one-off effects
- Core tier 1 capital ratio of 12.2 per cent at the end of the year – and of 11.4 per cent on a fully loaded CRR basis
- Dividend proposal of 15 cents per share
- FY 2015 got off to a satisfactory start
- Wolfgang Kirsch: “We are proud of this result. For 2015 we expect a result below that of the two preceding years – in keeping with the inherent profitability of our business model“
The DZ BANK Group reported record earnings again in FY 2014. On the basis of the preliminary IFRS figures, the DZ BANK Group achieved a profit before taxes of € 2.87 billion. This corresponds to an increase of 29.1 per cent compared to the annual result for 2013 (€ 2.22 billion). “This strong annual result is essentially based on a good operating performance within our business segments. This was fostered by factors such as the robust economy in our German home market and the comparatively relaxed situation in the capital markets,” says Wolfgang Kirsch, CEO of DZ BANK AG. In this comparatively friendly environment it was possible to reduce yet further our already negligible risk provisioning. Additional reversals of impairment losses on government bonds, high net income from our insurance activities and one-off effects also had a positive impact. “Ultimately, these factors made a major contribution to our exceptional full-year earnings, which outstrip our expectations,” explains Kirsch.
The DZ BANK Group made use of its good earnings performance to further improve its capital adequacy from its own resources. The combination of the € 1.5 billion capital increase carried out in 2014 and the continuing careful management of risk assets allowed DZ BANK Group to increase its capital ratios significantly. At the end of the year the core tier 1 capital ratio reached 12.2 per cent (2013: 9.2 per cent), on a fully-loaded Capital Requirements Regulation basis it stood at 11.4 per cent (2013: 7.1 per cent). “We continued to make good progress improving our capital base – while at the same time sustaining growth in the business segments. With our present equity base we are well equipped to meet additional requirements. At the same time, effective capital management remains a central mission for us,” says Kirsch.
The DZ BANK Group's results
DZ BANK AG increased its profit before taxes by a significant € 552 million to € 906 million. This result is based on the bank’s stable operating performance. At the same time, very low impairment losses on loans and advances and the absence of the previous year’s trading losses also had a positive impact. DZ BANK AG delivered a good business performance especially in corporate banking. The volume of the loan portfolio increased by nine per cent year-on-year to € 35 billion. Thanks also to effective joint market servicing with the local cooperative banks it was possible to increase the customer count. Besides increasing the volume of business, existing business relationships were also deepened. The performance in the capital markets business with the cooperative banks and institutional clients was satisfactory considering the intense competition, increased regulatory requirements and the low interest rate level. In Transaction Banking DZ BANK again chalked up a new record with 4.7 billion completed payment transactions. Assets held in custody in the custodian bank business rose 17 per cent to over € 117 billion. In retail banking DZ BANK further improved its market position in the business with structured products for retail investors. Having increased its market share measured in terms of the outstanding volume by 1.7 percentage points to 15.5 per cent, the bank now occupies place 2 in the market as a whole. Sales increased by five per cent to € 4.2 billion. Measured in terms of stock market turnovers DZ BANK occupies place 3.
Bausparkasse Schwäbisch Hall reported profit before taxes of € 379 million. This corresponds to an increase of 23.5 per cent and is due primarily to improved net fee and commission income as a result of a changed delineation of fees and commissions. New home savings business amounted to € 31.1 billion and thus continues to chart a long-term growth trend. The year-on-year decline is primarily due to anticipatory effects in 2013 caused by a tariff change. With a market share of 30 per cent the company remains undisputed market leader. At € 13.4 billion, the home finance volume reached another all-time high in the company’s history.
Union Investment reported earnings growth of 21.8 per cent and a result of € 486 million. Assets under management rose steeply again to reach € 232.1 billion at year end (2013: € 206.2 billion). Besides the good performance of the fund offering and a conducive market trend, strong net sales to institutionals (€ 11.1 billion) as well as to retail customers (€ 5.1 billion) also had a positive impact here.
R+V Versicherung reported a result of € 788 million after € 311 million in the previous year. Premiums received increased in all business segments and rose overall by 10.1 per cent to € 14 billion. The significant increase in gains on investments also made an important contribution to the increase in earnings. The exceptionally large claims in connection with storms and flooding in 2013 declined significantly in 2014.
TeamBank achieved a profit before taxes of € 68 million in FY 2014 (2013: € 116 million). The operating performance remained successful. The easyCredit portfolio grew from € 6.6 billion to € 6.8 billion, and the customer count increased to 626,000. The result was materially influenced by negative one-off effects of around -€ 60 million. Provisioning in connection with the ruling of Germany's Federal Constitutional Court on loan processing fees had a particularly great impact.
DZ PRIVATBANK reported a profit before taxes of € 54 million for the past FY after € 88 million in the previous year. The result was influenced by lower net interest income above all as a result of the low interest rate level and a reduced volume of lending. On the other hand, net fee and commission income increased. Assets under management in Private Banking increased from € 13.5 billion to € 14.2 billion and assets under custody in the custodian bank business increased from € 76.8 billion to a record of € 85.9 billion.
DG HYP achieved a result of € 579 million (2013: € 1.2 billion) thanks to a successful performance in its core commercial real-estate finance business. The reversals of impairment losses on government bonds that had marked the previous year continued, but registered a clear downtrend. New commercial real-estate finance business declined slightly due to intense competition and a conservative risk policy, but still remained high.
VR LEASING was greatly affected in FY 2014 by the changed legal situation in Hungary, as a result of which amendments to the law were made retroactive to 2004. Due to the corresponding expenses of € 130 million VR LEASING reported a loss before taxes of -€ 86 million. Meanwhile, the reduction of business in Eastern Europe that already began in 2012 is proceeding according to plan. The operating business performed successfully thanks to the strategic orientation to the cooperative banks: new equipment leasing business increased significantly, up from € 835 million to around € 1 billion.
DVB Bank achieved a result of € 104 million compared to € 124 million in the previous year. Net interest income declined as a result of the end of a one-off effect from asset sales in the previous year, high early repayments and increasing competitive pressure. The net allocation to impairment losses on loans and advances in the Shipping Finance segment was reduced thanks to strict risk management. DVB BANK delivered an encouraging operating performance in a difficult market environment. The volume of new loans and the number of acquired transactions in the core Transport Finance business increased significantly.
Income statement positions in detail
The DZ BANK Group’s net interest income declined by 2.2 per cent to € 3.0 billion. This decline was mainly due to the consequences of the low interest rate level.
Allowances for losses on loans and advances were down 65 per cent to -€ 191 million. The net risk provisioning improved significantly especially in DZ BANK AG, DVB Bank and DG HYP.
Net fee and commission income increased 28 per cent to € 1.4 billion due in particular to the strong business performance that was again reported by Union Investment.
Gains on trading activities increased to € 471 million (2013: € 148 million). This increase is mainly attributable to the end of one-off effects from the valuation of own issues that had negative impacted earnings in the previous year.
Gains and losses on investments improved again reaching € 109 million after -€ 124 million in the year-earlier period. This was due mainly to the sale of shares in Natixis and the proceeds from the sale of asset backed securities.
Other gains and losses on valuation of financial instruments declined to € 327 million from € 1.1 billion in the previous year, which had benefited from significant reversals of impairment losses on government bonds held by DG HYP.
Administrative expenses were up 5.1 per cent to € 3.1 billion. On the one hand, this reflects investments in the further growth of the customer business, especially in corporate banking. On the other hand, staff and project costs in connection with the regulatory requirements increased further.
The core tier 1 capital ratio as at 31.12.2014 was 12.2 per cent. Subject to full implementation of the CRR capital requirement, the core tier 1 capital ratio reached 11.4 per cent (2013: 7.1 per cent).
Profit before taxes increased to € 2.87 billion (2013: € 2.22 billion).
Profit after taxes rose by 47 per cent to € 2.16 billion after € 1.47 billion in the previous year.
A dividend of 15 cents per share is to be proposed to the Annual General Meeting after 13 cents in the previous year. “With this dividend proposal we strike an appropriate balance between our owners' interests, on the one hand, and further strengthening the capital base, on the other,” explains Kirsch.
After the good annual result in FY 2014 and having successfully passed the Comprehensive Assessment, the DZ BANK Group will continue to focus on the ongoing development of its operating business in 2015. “Our industry as a whole is in the grip of a tidal current consisting of ever stricter regulation, permanently low interest rates and digitalization. Preoccupation with the direct repercussions of regulation may not and will not distract our attention from the development of our banking business,” says Wolfgang Kirsch. “We are countering the pressure on earnings caused by low interest rates by further intensifying our joint market servicing with the cooperative banks. In the face of known and new challengers we shall have to defend our good market position with innovative and customer-friendly procedures. And not least we shall have to counter the increasing costs caused by regulation with strict cost management and enhanced efficiency,” adds Kirsch.
DZ BANK’s economists again expect some slight tailwind for our business performance from the solid economy in Germany. Admittedly, geopolitical crises and political tensions within Europe are souring the economic climate. But the low oil price and euro exchange rate are supportive. Overall, German GDP will probably grow by 1.8 per cent in 2015. “We got off to a satisfactory start in the current financial year. After two outstanding results in 2013 and 2014, which benefited from effects such as the reversal of impairments and low impairment losses on loans and advances, in 2015 we are probably moving towards an earnings level that will be below that of the two preceding years and which is in keeping with our inherent profitability,” says Kirsch.
Speech Wolfgang Kirsch (0,12 MB)
Presentation (1,56 MB)
Preliminary (IFRS) income statement DZ BANK Group
In € million
Net interest income
Allowances for losses on loans and advances
Net fee and commission income
Gains and losses on trading activities
Gains and losses on investments
Other gains and losses on valuation of financial instruments
Net income from insurance activities
Other net operating income
Profit before taxes
Cost/income ratio [in %]
-1.3 % points
Total assets [in € billion]