Preliminary figures for the financial year 2011 – DZ BANK Group: good operating performance – severe strains caused by sovereign debt crisis

Successes at the operating level thanks to close cooperation with the cooperative banks
Strains caused by the sovereign debt crisis reduce profit before taxes to €324 million
Tier 1 capital ratio rises to 11.7 per cent despite tougher regulatory requirements
Dividend of 5 cents per share
Gratifying start to the 2012 financial year

The DZ BANK Group sustained its good operating performance in the past financial year. On the basis of its preliminary figures (IFRS), the DZ BANK Group reported a profit before taxes of €1.89 billion after adjustment for the impact of the sovereign debt crisis. This is above the good year-earlier profit before taxes of €1.62 billion. "This good operating performance is the result of the ever closer cooperation with the local cooperative banks," said Wolfgang Kirsch, CEO of DZ BANK AG. "The DZ BANK Group has thus once again demonstrated that it is a reliable and stable partner for its customers and owners and has a coherent business model as a network-related financial services group. In addition, as part of the cooperative financial network our Standard & Poor’s rating has now improved from A+ to AA-, the highest credit standing in the German banking landscape."

The good performance achieved during the past financial year contrasted with the severe strains caused by the European sovereign debt crisis. Including the impairment losses of €451 million on Greek government bonds and the further temporary impairment of €1.11 billion on bonds issued by the euro zone periphery countries, the profit before tax reached €324 million in the past financial year. "Our results reflect the tension between the successes scored in the customer business and the influences of the sovereign debt crisis. On the bottom line, we are naturally not satisfied with this. However, we also realise that we are in good shape with regard to our inherent profitability," continued Kirsch.

DZ BANK Group’s results

DZ BANK AG believes that the lending business for small and medium-sized enterprises harbours substantial growth potential for the cooperative financial network. This was also confirmed in the 2011 financial year. The number of new loan applications in the joint credit business with the local cooperative banks increased by 7 per cent while the volume of lending rose by 3 per cent. The corporate banking business with large and medium-sized companies grew by 10 per cent (new loan applications) and 14 per cent (volume). DZ BANK AG’s retail banking segment charted a stable performance despite the uncertainty in the capital markets. The sales volume for certificates and structured securities was €5.2 billion, which almost matched the year-earlier level (2010: €5.4 billion). The capital markets business also developed gratifyingly, especially with financial institutions. In the primary market business, DZ BANK supported a total volume of €23 billion of euro bond issues, making it number two among German banks.

With regard to the subsidiaries, Bausparkasse Schwäbisch Hall extended its leading position significantly in 2011, achieving a market share of around 30 per cent. With around 900,000 contracts, new home savings business grew by 10.5 per cent or €3 billion and the total home savings volume reached €31.7 billion. At R +V Versicherung gross premiums increased by 2.1 per cent overall to €11.3 billion and thus continued on their growth course. The premium growth in direct property and casualty insurance (+ 5.6 %) was especially gratifying. At Union Investment assets under management as at December 31, 2011, stood at around €170 billion compared to the historical high of around €177 billion recorded in the previous year. The cooperative financial network’s fund provider thus remains the number one by a long distance for capital preservation funds and fund-based Riester solutions. With its consumer finance product "easyCredit" TeamBank increased its loan portfolio by around 16 per cent to €7.2 billion and thus grew significantly faster than the market as a whole again. At DZ PRIVATBANK assets under management increased to €12.7 billion due partly to the pooling of the retail banking units of DZ BANK and WGZ BANK. The merger has created a joint subsidiary partner for the cooperative banks in an important and fast-growing market. VR Private Banking’s market initiative got off to a good start, attracting over €1 billion of new assets.

At €3.14 billion, net interest income was around 15 per cent higher than the already very good year-earlier figure of €2.73 billion. TeamBank, Bausparkasse Schwäbisch Hall and DVB Bank reported substantial increases in net interest income. The increase in net operating interest income is also due to DZ BANK’s SME business with the cooperative banks, which was driven by very good demand for credit.

Allowances for losses on loans and advances increased in the DZ BANK Group to €395 million (previous year: €258 million). The further decline in specific loan loss allowances is more than offset by a higher addition to the portfolio loan loss allowances.

Net fee and commission income decreased by 13.5 per cent to €963 million (previous year: €1.11 billion). This is mainly due to the higher fee and commission expenses at Bausparkasse Schwäbisch Hall, which do, however, reflect the very successful new home savings business. At the same time, the Union Investment group’s performance-related management fees were down on the previous year’s high level due to the situation in the capital markets.

At €398 million, the DZ BANK Group’s gains and losses on trading activities were around 61 per cent lower than the previous year’s figure of €1.02 billion. The significantly lower valuations of securities portfolios occurring against the background of the difficult market environment had a marked effect on the Group’s net gains on trading activities, especially at DZ BANK AG.

Gains and losses on investments improved from -€708 million to -€333 million. This takes account of €386 million of impairment loses on Greek government bonds.

At -€999 million after -€88 million in the previous year, other gains and losses on valuation of financial instruments were also greatly affected by the spread widenings with respect to bonds from the European periphery states. DG HYP’s sovereign portfolio had a particularly notable impact here.

Administrative expenses in the DZ BANK Group increased by 5.2 per cent compared to the previous year to reach €2.72 billion (2010: €2.59 billion). "While maintaining a high level of cost awareness in the DZ BANK Group we also invested systematically in growth areas in 2011, especially at Union Investment and DZ PRIVATBANK," said Kirsch. The bank levy of €19.2 million is included in the administrative expenses.

At around €100 billion at the end of 2011, the risk-weighted assets in the DZ BANK Group were already around €20 billion lower than in 2008 even taking account of the CRD III implementation that is now taking effect and which significantly increases RWA.

The Tier 1 capital ratio in the DZ BANK Group increased to 11.7 per cent as at December 31, 2011, (including profit retention from the 2011 financial year and the reclassification of the allocation to the section 340 f HGB reserves). This compares to 10.6 per cent as at December 31, 2010. The CRD III effect is also already taken account of here. Adjusted for this effect, the Tier 1 capital ratio would have been 13.0 per cent at the end of 2011.

The net profit amounted to €609 million (2010: €1.13 billion). The higher deferred tax assets resulting from reversed impairment losses are responsible for the increase compared to the profit before taxes.

A dividend payment of 5 cents per share will be proposed to the Annual General Meeting (previous year: 12 cents). "We shall therefore pay a dividend that represents a good balance between shareholders’ interests and capital accumulation within the DZ BANK Group," said Kirsch.


The interplay between political, regulatory and economic conditions will also leave its mark on the work of the DZ BANK Group as well as on the entire financial sector in 2012. "We are already working hard on the implementation of a list of regulatory specifications that is unprecedented in the more recent past," explained Kirsch. The capital adequacy and liquidity requirements have changed fundamentally as a result." We are making good progress on strengthening our capital base. Since 2008 we have increased our Tier 1 capital ratio by 4.3 percentage points – despite the fact that more stringent requirements have already been introduced under the current Basel 2.5 rules. By the end of December 2011 we had already almost closed the capital gap of around €350 million identified by the last stress test of the European Banking Authority (EBA) out of our own resources, in particular by way of profit retention and holding measures," said Kirsch.

While the regulatory conditions remain shrouded in uncertainty, the economic setting is challenging to varying degrees in the major global economic areas. "Our economists believe the growth chances are better in Germany than in the rest of the euro zone. We shall continue to finance the growth of the German economy, especially in the SME segment," said Kirsch. "With regard to our German home market we are, therefore, optimistic about business. Our strategic orientation has also been confirmed and it will continue to pay off this year provided no unexpected obstacles, especially with regard to the sovereign debt crisis, are placed in our path. Subject to the caution that is due at this early point in time, it is fair to say that we have got off to an exceptionally encouraging start in 2012. Assuming "business-as-normal", in other words a setting free of exogenous shocks such as the sovereign debt crisis, I see no reason why a banking group such as ours should not be able to match the profit before taxes that we achieved in 2010."



Martin Roth, phone: +49 69 7447-42750;
Ilja-Kristin Seewald, phone: +49 69 7447-42894;
Silvia Conesa, phone: +49 69 7447-90568;

Speech Wolfgang Kirsch (61 KB)
Presentation (198 KB)

Preliminary (IFRS) Income Statement DZ BANK Group

In € million
In € million
% change
Net interest income3,1372,73214.8
Allowances for losses on loans and advances-395-25853.1
Net fee and commission income9631,113-13.5
Gains and losses on trading activities3981,015-60.8
Gains and losses on investments-333-708-53.0
Other gains and losses on valuation of financial instruments-999-88>100.0
Net income from insurance business348406-14.3
Administrative expenses-2,722-2,5885.2
Other net operating income-73-6>100.0
Profit before taxes3241,618-80.0
Income taxes285-493>100.0
Net profit6091,125-45.9
Cost/income ratio [in %]
Total assets [in €billion]405.9383.55.9