Bank of America Merrill Lynch Bank & Insurance Conference. Marc Hess, CFO London, September 28, 2010

Transcription

1 Bank of America Merrill Lynch Bank & Insurance Conference Marc Hess, CFO London, September 28, 2010

2 Disclaimer REPRODUCTION PROHIBITED This presentation contains forward-looking statements that relate to macro-economic developments (in particular the development of money and capital market rates), the business and the net assets, financial position and results of operations of the Deutsche Postbank Group. Forward-looking statements are not historical facts and are in some instances indicated by words such as "believe", "anticipate", "predict", "target", "plan", "estimate", "aim", "expect", "assume" and similar expressions. Forward-looking statements are based on the Company's current plans, estimates, projections and forecasts and are therefore subject to risks and uncertainties that could cause actual development or the actual results or performance to differ materially from the development, results or performance expressly or implicitly assumed in these forwardlooking statements. Readers of this presentation are expressly cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this presentation. Deutsche Postbank AG does not intend and does not undertake any obligation to revise these forward-looking statements. Due to rounding, numbers presented throughout this document may not add up precisely to the totals we provide and percentages may not precisely reflect the absolute figures. Page 2

3 Agenda Key developments H Financials Customer business Outlook Appendix Page 3

4 Key developments H Postbank Group Financials Profit before tax in H1 10: 225m (H1 09: -100m), Q2 10: 94m (Q1 10: 131m) Development supported by strong increase of net interest income (NII): +12% vs. H1 09, Q2 10: 671m (Q1 10: 675m) Continued cost containment: Admin expenses at 1,408m (+0,4% vs. H1 09) Q2 10: 716m incl. 21m staff-related provisions (Q1 10: 692m) Risk provisions at 315m (H1 09: 228m), annualized net addition ratio of 57 bps in line with expected range of 50 to 60 bps Q2 10: 175m, slight increase vs. Q1 10 ( 140m) due to higher allowances for selected CRE loans SCP related burdens continue to decline: Q2 10: 69m (Q1 10: 98m, H1 09: 355m) Tier I ratio at 7.3% incl. market risk position (7.9% excl. market risk position) Management s Agenda Major steps taken in strategic program Postbank4Future (PB4F): Acquisition of additional 277 branches from Deutsche Post AG accomplished, increasing distribution reach and securing business locations for approx. 2m Postbank customers Postbank passes EU-wide stress test with overall moderate impact on Tier 1 ratio Page 4

5 H status of our ongoing strategic program Postbank4Future (PB4F) Highlights of measures designed and put into practice in H to sharpen business profile and raise profitability Simplifying products Streamlining the product range, number of products down by ~1/3 Improvement of product features (e.g. relaunch Giro extra) 2009 Strategic program Postbank4Future initiated Focusing on distribution Enhancing service level Alignment of steering Reducing cost base Takeover of 277 former Deutsche Post branches Ongoing modernization and increase in number of ATM/self-service terminals Establishment of Customer Service Centers for improved complaint proceedings Integration of customer retention measures into sales management Implementation of a value-oriented steering concept Instruments for planned personnel reductions in use; e. g. staff-related provisions in Q2 10 Page 5

6 PB4F: Significant extension of Postbank's distribution network Number of Postbank branches Comments Transaction details ,119 (1) 842 Q July Acquisition of 277 Deutsche Post retail outlets located across Germany complementing 1,119 (1) finance centers - 2m Postbank customers frequently using these locations - Increasing focus on banking services in these branches to unlock additional revenue potential - In addition support for >1,000 partner retail outlets of Deutsche Post that offer financial services Key financials - No acquisition price, except for furniture and office equipment, no goodwill - Additional costs of approx. 60m - 70m p.a. (starting with ~ 30m in H2 10) expected - Positive profit contribution expected mid-term (1) As of July 27, 2010 Page 6

7 PB4F: Postbank s multi channel distribution network Branch distribution > 1,100 own branches (~1 Mio customer contacts per day) > 4,500 partner agencies of Deutsche Post Area-wide supply of cash ~ 9,000 ATMs within cash group New: cash supply in ~ 1,200 Shell gas stations and ~ 180 OBI Hardware stores Mobile distribution Largest German bank owned mobile distribution network Direct distribution Call Center 7 x 24 hours Online-Banking and Online-Brokerage Third party distribution ~ 5,000 DSL mortgage distribution partners BHW distribution partners Page 7

8 Key findings stress test Tier I capital ( m) 4,906 YE , (1) Results RWAs ( m) 4,180 Tier I ratio (%) 62,040 Adverse scenario Tier I ratio in adverse scenario including additional sovereign shock: 6.6% 6.7 Comments Decline of Tier I ratio in adverse scenario incl. sovereign shock at 0.5%-pts vs. German average of 2.0%-pts. PB s business model relatively robust as a result of: - Composition of loan book: 68% in granular, highly collateralized retail mortgages - Regional split of loan book: 83% of customer loans in Germany - Quality of assets: 91% rated BBB or higher Implementation of Advanced IRBA not included in stress test result; significant relief for RWAs and Tier 1 capital expected (2) Postbank continues to strengthen its capital position by - Retaining earnings until RWA reduction (implementation of advanced models and deleveraging) Postbank's solid liquidity position was not considered in test design (1) The preprocessing (netting of economically balanced interest bearing positions) implemented in Q with regard to the calculation of market risk positions has already been considered in the calculation of the Tier1 ratio as of December 31, 2009 in coordination with the national regulator (2) Based on current own expectations for the risk parameters under the Advanced IRBA and subject to successful completion of internal projects and approval by regulatory authorities (BaFin, Bundesbank). Page 8

9 Agenda Key developments H Financials Customer business Outlook Appendix Page 9

10 PbT H1 10: Continued decrease of burdens from risk portfolio Overview of selected non-recurring items in H1 10 ( m) Q1 10 Q Thereof related to SCP: 47 in H Thereof related to SCP: 120m in H Reported PbT Trading income Income from financial investments Not taking into account non-recurring items, PbT would have increased significantly compared to the prior year period SCP related burdens at 69m in Q2 10, reflecting downward trend (Q1 10: 98m, H m) 21m staff-related provisions included in admin expenses in Q2 10 to further align head office and support functions Admin expenses Page 10

11 Net Interest Income (NII): Strong performance continued in Q2 10 NII quarter-on-quarter ( m) Non-recurring items Q Q Q Q Q Comments NII stable on strong level of Q1 10 Increase of 12% vs. H1 09 Customer business main driver of positive development: - Growth of customer volumes - Repricing of liabilities - Higher profitability of mortgage business and corporate business Positive contribution from steeper yield curve Deleveraging of financial investments is expected to negatively influence NII going forward Noticeable increase of NII in FY10 vs. FY 09 expected Page 11

12 TI and IIS: Continuous decline of financial market related burdens Trading income and income from investment securities ( m) Comments Trading income 15 Income from investment securities Trading income (TI) - Burdens from SCP at 38m in Q Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Burdens related to SCP ( m) Income from investment securities (IIS) - Impairments / realized losses on SCP 31m in Q Impairments on bonds 3m in Q Impairment on mutual funds and investments 4m Q FY FY 2009 Q Q Page 12

13 Commission income: Decline in Q2 10 due to lower fees from insurance and giro business Net fee and commission income q-o-q ( m) % 11% Core Banking Fees Transaction Banking Non-banking Fees (2) 38% Q2 09 (1) Q3 09 (1) Q4 09 (1) Q1 10 (1) Q2 10 (1) Commission income H1 10 above H1 09: +1,5% despite structural decline from branch business (postal services) and Transaction Banking (- 15m vs. H1 09) Q2 10 down vs. Q1 10 due to lower level of fees from insurance and giro business (lowering minimum threshold for free checking account to 1,000) Consolidation of commission income on Q2 10 level expected in H2 10 (1) Figures restated (2) Fees from postal services and third party products sold in branches Page 13

14 Admin. expenses: Ongoing strong cost containment Admin. expenses q-o-q ( m) Comments Non-recurring items Sound underlying cost development reflecting PB s strict cost containment m staff-related provisions included in admin expenses in Q2 10 to further align head office and support functions, excluding this nonrecurring item Q % vs. Q2 09 H2 10 above H1 10, amongst others due to integration of additional branches, higher project related costs and seasonal effects FY10 cost base expected to be moderately above FY09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Banking levy would result in non-tax deductible amount of approx. 40m p.a. (1) (1) Based on current draft law Page 14

15 Risk provisions: H1 development in line with own expectations Risk provisions q-o-q ( m) Comments 308 Accelerated provisioning level in Q2 due to higher allowances for selected CRE loans NAR (1) for combined US and UK CRE business annualized at 217bps No meaningful deterioration in credit quality of Postbank s highly collateralized and granular retail loan book Provisioning needs for H2 10 expected not to exceed H1 10 level and to stay within target range Q2 09 Q3 09 Q4 09 Q2 10 Q1 10 (1) Net addition ratio (llps/total customer loans) Page 15

16 Risk Provisions: Below sector development Split of customer loans H1 10 (%) Net addition ratio (bp) 3.5% 0.9% 0.1% Home f inance % 10.6% 67.6% Total: 109.0bn Consumer f inance Ret ail overdraf t s Ot her Commercial Real Est at e Ot her Corporat e FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY FY FY 2008 (2) 2009 (2) 2010E Loan loss charge / average customer loans Postbank European banks sector (1) 122e Target bps 57 (3) Postbank s annualized NAR (4) significantly below average of European banking sector NAR (4) for combined US and UK CRE business expected to be between 200 and 300 bps in 2010 NAR (4) for total loan book in 2010 expected between bps (1) Sector data: UBS Research (2) Restated figures (3) Postbank H data annualized (4) Net addition ratio (llps/total customer loans) Page 16

17 Key developments in Retail Banking segment Profit before tax ( m) H1 09 H1 10 Key P&L items ( m) H H Net interest income 1,053 1,160 Trading income Net commission income Total income 1,558 1,663 Admin expenses -1,115-1,092 Risk provisions Profit before tax (1) Figures restated (1) Comments NII: Benefiting from repricing of customer liabilities as well as higher new business margins Trading income: Negative result from fair value option at BHW used for hedging retail mortgages (expected long term result: 0m) Net commission income: Stable H1 10 vs. H1 09, but declining trend in Q2 10 due to lower fees from insurance business and giro (lowering minimum threshold for free checking account to 1,000) Admin expenses: Stable despite rise of customer volumes and one off from staff-related provisions ( 17m) Risk Provisions: Limited impact from macroeconomic downturn in 2009 on overall credit quality PbT: Up by 40% y-o-y Page 17

18 Key developments in Corporate Banking segment Profit before tax ( m) H1 09 H1 10 Key P&L items ( m) (1) H H Comments NII: Up 34% y-o-y as a result of higher margins in new business, higher volumes and technical effect from unwinding Trading income: Significant decline of financial market crisis related burdens Risk provisions: Increase of risk provisions reflects ongoing fragility of international commercial real estate markets PbT: More than tripled y-o-y Net interest income Trading income Income from financial investments Net commissions Total income Admin expenses Risk provisions Profit before tax (1) Figures restated Page 18

19 Key developments in Transaction Banking segment Profit before tax ( m) H1 09 H1 10 Key P&L items ( m) (1) H H Net commission income Total income Admin expenses Profit before tax Comments Gradual termination and retransfer of former Dresdner Bank payment processing business to Commerzbank initiated in Q2 10 Integration of transaction banking business of HSH Nordbank started according to plan in February, to be completed by YE 2010 Admin expenses: Decline by 4.4% despite staff-related provisions ( 4m) in Q2 10 PbT: Up by 42% y-o-y (1) Figures restated Page 19

20 Tier I ratio: Ongoing improvement Tier I ratio incl. market risk position YE 2008 (1) PB s Basel II Tier I ratio (%) YE 2009 Tier I ratio excl. market risk position Risk-weighted assets and Tier I ratio H YE 09 H1 10 Credit and Counterparty Risk ( m) 57,738 58,650 Market risk positions (MPR) ( m) 9,725 5,675 Operational risk ( m) 6,538 6,438 Comments Implementation of Advanced IRBA (3), retaining earnings until 2012 and ongoing deleveraging are expected to contribute positively to development of Tier I ratio Target of ~9.5% (2) Tier I ratio (incl. market risk position) for YE2012 after implementation of advanced models (Advanced IRBA, AMA, and internal model for market risk) (3) Tier I ratio excl. market risk positions (%) Tier I ratio incl. market risk positions (%) (1) Figures restated (2) According to current regulatory definition including CRD 2 (3) Based on current own expectations for the risk parameters under the Advanced IRBA and subject to successful completion of internal projects and approval by regulatory authorities (BaFin, Bundesbank). Page 20

21 Agenda Key developments Q Financials Customer business Outlook Appendix Page 21

22 New business: Good momentum in retail loan business Private checking accounts: New accounts ('000) Q Home finance (self-originated): New business ( bn) 2.2 Q Q Savings: Gross new deposits ( bn) 4.1 Q Q Q Consumer finance: New business ( m) 361 Comments Private checking: Stable new business; improved product features and expanded reach expected to lead to positive impetus Savings: New business in Q2 10 below record numbers of prior quarters in line with PB s strategy for its savings business Home finance: BHW with good momentum in new business; continued focus on profitability Consumer finance: Slight increase vs. Q1 10 with focus on profitable and risk-sensitive new business Q Q Q Q Q Q Page 22

23 Leading market position in German retail banking Private checking accounts: Total accounts (m) Savings deposits: Total volume ( bn) Home savings: Total volume ( bn) 4.9 +/-0% % Overnight money +5.1% Other savings deposits H1 09 Q1 10 H1 10 (1) Market share in % H1 09 Q1 10 H1 10 H1 09 Q1 10 Market share in % Market share in % H Home finance: Total Volume ( bn) +1.2% H1 09 Q1 10 H1 10 Portfolio acquisitions Self originated volume Market share total volume in % 3.4 Consumer finance: Total volume ( bn) +12% H109 Q1 10 H1 10 Market share in % (1) Latest available German sector data as of December 2009, constant market volume for Q1 10 and Q2 10 assumed Source: Bundesbank and Postbank data Page 23

24 Loan to deposit ratio at 96% in H1 10 Customer loans ( bn) Customer deposits ( bn) % % Corporate Other Overdrafts Consumer Home finance Corporate Sight Home savings Savings H YE 2009 H H H YE 2009 Page 24

25 Agenda Key developments Q Financials Customer business Outlook Appendix Page 25

26 Financial outlook 2010 for selected areas (1) E Comments Core revenues (NII/NCI) Admin exp. Credit quality (LLPs) - + Slight decline in 2009 NII expected to benefit from steepness of yield curve, higher asset margins and repricing of customer liabilities NCI expected to consolidate below 2009 level Integration of 277 new branches increases cost base approx m p.a. Net addition ratio expected between bps H2 10 expected not to exceed H1 10 level German retail business O O Only slight deterioration of credit quality in 2009 due to highly collateralized portfolio Economic downturn in 2009 expected to have only limited negative impact on credit quality in 2010 Commercial Real Estate -- - Difficult environment in international real estate markets led to higher risk provisions in CRE in 2009, esp. UK/US LLPs expected to moderately decrease vs levels SCP - -/O Tier I ratio + + Portfolio valuation negatively impacted by rating migration and single events (e. g. CIT) in 2009 Further burdens to be expected (esp. Non-Corporate CDOs); magnitude expected to be lower going forward, single event risk remains Increase and reduction of volatility achieved in 2009 Measures identified and implemented for further improvement (1) Outlook based on current base case scenario for economic development and conditions at capital markets + +, +, O, -, -- qualitative evaluation of expected relative development Page 26

27 Agenda Key developments Financials Customer business Appendix Financials Credit quality SCP Page 27

28 Balance sheet ( m) 06/30/09 12/31/09 06/30/10 Assets Loans and advances to other banks 22,245 14,467 24,943 Loans and advances to customers 107, , ,181 Allowances for losses on loans and advances -1,419-1,641-1,810 Trading assets 20,168 20,471 32,784 Investment securities 80,254 72,359 62,907 Other items (2) 8,515 9,910 10,670 Total assets 237, , ,675 Shareholders' equity and liabilities Deposits from other banks 53,134 39,318 39,144 Due to customers 129, , ,711 Securitised liabilities 16,205 16,722 16,218 Trading liabilities 21,630 22,434 35,476 Provisions 2,156 2,148 2,229 Other items (3) 9,206 8,748 8,432 Shareholders' equity 4,995 5,251 5,465 Total shareholders' equity and liabilities 237, , ,675 (1) Restated figures (2) Cash reserve, Hedging derivatives, Property and equipment, Intangible assets, Deferred tax assets, Other assets (3) Hedging derivatives, Other liabilities, Subordinated debt Page 28

29 Postbank: Sovereign Exposure in m Gross exposures as of July 20, 2010 of which banking book of which trading book Net exposures Austria 1,170 1, ,170 Belgium 1,840 1, ,840 Bulgaria Cyprus Czech Republic Denmark Estonia Finland France 2,595 2, ,595 Germany 4,206 4, ,206 Greece 1,337 1, ,337 Hungary Iceland Ireland Italy 4,581 4, ,581 Latvia Liechtenstein Lithuania Luxembourg Malta Netherlands Norway Poland Portugal Romania Slovakia Slovenia Spain 1,186 1, ,186 Sweden United Kingdom Page 29

30 P&L: Quarterly overview ( m) Group Q2 10 Group Q1 10 Group Q4 09 (1) Group Q3 09 Group Q2 09 Group Q1 09 Group Q4 08 Group Q3 08 Group Q2 08 Net interest income Net trading income Net income from investment securities Net fee and commission income Total income Administrative expenses Allowances for losses on loans and advances Other income / expenses Profit before Tax Cost / income ratio 73.6% 71.9% 99.1% 87.2% 90.8% 93.1% Na 179.0% 75.3% Return on equity before taxes 6.8% 9.7% -19.9% -2.3% -2.3% -5.8% -87.5% -41.9% 14.8% (1) (1) (1) (1) (1) (1) (1) Figures restated Page 30

31 P&L: Segment reporting ( m) RB CB TB FM OT Cons Group Net interest income Q Net interest income Q Trading income Q Trading income Q Income from investments Q Income from investments Q Net fee income Q Net fee income Q Total revenues Q Total revenues Q Admin expenses Q Admin expenses Q Loan loss provisions Q Loan loss provisions Q Other income / expenses Q Other income / expenses Q Profit before Tax Q Profit before Tax Q RWA Basel II H ,454 23,280-7,470 11,446-58,650 RWA Basel II H ,487 23,671-7,278 14,164-61,600 Equity H (average) 2, ,807-5,433 Equity H (average) 2, ,504-4,939 ROE pre tax Q ROE pre tax Q Page 31

32 Overview of selected non recurring items in 2010 ( m) Q1 Q2 H1 ( m) Q1 Q2 H1 Group Trading Income ED in SCP Income from Investments SCP Bonds Mutual funds and investments Retail Banking Income from Investments Mutual funds and investments Corporate Banking Financial Markets Trading Income ED in SCP Income from Investments SCP Bonds Other Trading Income ED in SCP Income from Investments SCP Bonds Mutual funds and investments Trading Income ED in SCP Income from Investments SCP Bonds Page 32

33 Agenda Key developments Financials Customer business Appendix Financials Credit quality SCP Page 33

34 Development of sub-performing loans Sub performing loans ( m) Impaired loans Impaired loans coverage ratio (1) 4,189 4,191 4, YE 2009 Q H (1) Impaired loans coverage ratio = Amount of impairment loss / (Carrying amount before impairment - Fair value of collateral for impaired instruments) Page 34

35 Commercial Real Estate Loan Portfolio CRE loan volume ( bn) CRE loan volume by region H (%) H YE 2009 H West Europe 22 Other 5 Germany 34 CRE new business ( bn) 1.4 Domestic/Western Europe US, UK North America 21 UK 18 H FY 2009 H Page 35

36 Risk provisions: Commercial real estate loan portfolio Net addition ratio (1) (bps) Comments 2008 restated 2009 H annualized CRE portfolio intensively monitored Net addition ratio for total CRE portfolio slightly below 2009 level Net addition ratio (NAR) for combined UK and US portfolio expected to maintain between bps Total portfolio PB London (UK) & PB Capital (US) (1) Annualized loan loss charges / average loan exposure Page 36

37 Commercial Real Estate Loan Portfolio - Loan to values PB London (UK) (1,2) PB Capital (US) (1,2) >80% 6% (7%) >80% 6% (10%) 60% - 80% 13% (15%) 60% - 80% 13% (12%) 40% - 60% 23% (24%) 40% - 60% 23% (22%) 20% - 40% 28% (27%) 20% - 40% 28% (28%) 0% - 20% 30% (27%) 0% - 20% 30% (28%) PB Europe (1,3) PB Domestic (Germany) (1,3) >80% 1% (1%) >80% 5% (5%) 60% - 80% 6% (6%) 60% - 80% 10% (10%) 40% - 60% 22% (22%) 40% - 60% 20% - 40% 35% (35%) 20% - 40% 0% - 20% 36% (36%) 0% - 20% 23% (23%) 29% (29%) 33% (33%) (1) Q figures in brackets (2) Based on net commitments H (3) Based on net exposure H Page 37

38 Agenda Key developments Financials Customer business Appendix Financials Credit quality SCP Page 38

39 Breakdown of Postbank s SCP as of June 30, 2010 Rating structure (1) (%) Breakdown by product (1) (%) Corporate CDOs 12 (15) 11 (9) 9 (8) 6 (6) AAA AA 46 (44) 27 (29) Non-Corporate CDOs Others A BBB Other SCP assets ABS 62 (62) < BBB 3 (3) 5 (5) 11 (11) RMBS 8 (7) CMBS Nominal volume 5.6bn ( 5.7bn) Total volume down, mainly due to sales, partially offset by foreign exchange effects Rating migration, esp. of CDO portfolio, slow down 1.3bn of other SCP assets with structurally higher quality (1) Q1 10 figures in brackets Page 39

40 Other SCP assets: Breakdown of RMBS, CMBS and ABS exposure Breakdown by product (1) (%) Rating structure (1) (%) Nominal volume 1.3bn ( 1.3bn) RMBS: Nominal volume 0.6bn ( 0.7bn) 7 AAA 47 (49) 33 (31) 20 (20) RMBS CMBS ABS 9 (6) 6 (6) 45 (44) 23 (24) 17 (18) AA A BBB < BBB CMBS: Nominal volume 0.3bn ( 0.3bn) Comments 1.3bn of SCP with overall better quality given: - RMBS exposure >90% Western Europe (mainly Germany, UK and Netherlands) - CMBS exposure with focus on Europe (98%) - ABS exposure includes high proportion of structures with US government guaranteed underlying assets 12 (10) 8 (12) 30 (28) AAA AA A BBB 32 (38) 18 (11) < BBB 10 ABS: Nominal volume 0.4bn ( 0.4bn) 70 (72) (19) 1 (1) 6 (5) 4 (4) AAA AA A BBB < BBB (1) Q1 10 figures in brackets Page 40

41 Breakdown of CDO book Breakdown by product (1) (%) Rating structure (1) (%) Nominal volume 4.1bn ( 4.2bn) 37 (40) 63 (60) Corporate CDO Non-Corporate CDO 6 (5) Corporate CDO: Nominal volume 2.6bn ( 2.5bn) 12 (7) 3 (3) 3 (10) 7 76 (74) AAA AA A BBB < BBB Comments Non-Corporate CDO: Nominal volume 1.5bn ( 1.7bn) Non-Corporate CDOs volume down, mainly due to sales Speed of rating deterioration decreased especially on underlying level 4 (4) 1 (3) 11 (8) 84 (85) AA A BBB < BBB (1) Q1 10 figures in brackets Page 41

42 Contact and financial calendar Postbank s IR Team Lars Stoy, Head of IR lars.stoy@postbank.de Tel. +49-(0)228 / Jürgen Stöckel, Rating juergen.stoeckel@postbank.de Tel. +49-(0)228 / Aiga von Kesselstatt, Fixed Income & Equity IR aiga.vonkesselstatt@postbank.de Tel. +49-(0)228 / Jörg Pütz, Equity IR joerg.puetz@postbank.de Tel. +49-(0)228 / Marcin Siuda, Equity IR marcin.siuda@postbank.de Tel. +49-(0)228 / Q results August 4, 2010 Q results November 11, 2010 Financial calendar Page 42