Annual Press Conference Frankfurt am Main, 5 March 2014
DZ BANK Annual Press Conference, 5 March 2014 Page 2 Agenda 1. Business performance 2. Capital situation 3. Other issues that concern us 4. Summary / Outlook
1. Business performance DZ BANK Annual Press Conference, 5 March 2014 Page 3
DZ BANK Annual Press Conference, 5 March 2014 Page 4 DZ BANK Group: Best result in the bank s history DZ BANK Group (IFRS): Preliminary profit before taxes 2.2 bn (previous year 1.3 bn) Good operating performance throughout the entire DZ BANK Group DG HYP reports good operating business and reversals of impairment losses on bonds issued by euro-area periphery states All main group companies make positive contributions to earnings Capital resources strengthened further
DZ BANK Annual Press Conference, 5 March 2014 Page 5 Economic environment 2013 Economy: Global easing industrialized nations like Germany are the winners Debt crisis: Year of abatement investor confidence restored Central bank policy: Major imponderables start of tapering
DZ BANK Annual Press Conference, 5 March 2014 Page 6 DZ BANK AG: Performance by segments Corporate Banking Retail Banking Customer count up +7% in the large and medium-sized company segment Volume of new export finance business increases by +19% Additions to customer servicing staff N 4 as regards total market volume with a share of 14.8% / market leader in the capital preservation certificates segment with a share of 53.5% N 3 in overall market with 8% share in exchange-traded products (2012: 7.1%) Sales of structured products 4.0 bn (2012: 4.3 bn) Capital Markets Satisfactory customer business in a demanding market environment Primary market business: increased business with domestic issuers Transaction Banking SEPA migration on schedule Record payments: 4.5 billion transactions in 2013 (+5.8% vs. 2012) Service to help cooperative banks implement reporting obligations from EMIR
Performance of the subsidiaries (I/II) DZ BANK Annual Press Conference, 5 March 2014 Page 7 Record new home savings business of 36.0 bn (2012: 32.8 bn) / market share in Germany: 32.3% 1.13 million new home-saving contracts (+130,000 y/y) Home finance volume chalks up new record of 12.7 bn (+5.4% y/y) Assets under management: +8.2% to 206.2 bn Institutional business expands with net sales of 6.4 bn Retail Banking business reports net sales of 3.7 bn Premiums earned grow by +7.7% to 12.7 bn, including Life/health insurance: +12.1% to 6.9 bn Non-life: +4.3% to 4.6 bn easycredit loan portfolio as at 31.12.2013 grows +5.4% to 6.6 bn Customer count up to 621,000 Cooperative financial network s market share of in the consumer loan market: 18.5% as at 31.12.2013
Performance of the subsidiaries (II/II) DZ BANK Annual Press Conference, 5 March 2014 Page 8 Gross fresh money attracted within the framework of the marketing initiative in Germany: around 2 bn Assets under management: stable at year-earlier level at 13.5 bn Assets under custody reached 76.8 bn (2012: 70.8 bn) Good performance in the commercial real estate finance business in Germany Joint business with cooperative banks grows +30.2% to 2.9 bn Business activities remain focused on core business in Germany while activities abroad are scaled back Eastern Europe s risk-provisioning requirement significantly reduced Gratifyingly stable earnings performance in a difficult market environment Volume of new lendings in Q1-Q3 2013: 2.7 bn (previous year: 2.8 bn )
DZ BANK Annual Press Conference, 5 March 2014 Page 9 DZ BANK Group: Stable trend in fees, commissions and bonuses for the cooperative banks Fees, commissions and bonuses (in m) +74% 1.642 1.719 1.778 1.779 1.797 1.410 1.028 2002 2004 2006 2008 2010 2012 2013* *preliminary
DZ BANK Annual Press Conference, 5 March 2014 Page 10 DZ BANK Group: Income Statement Summary (IFRS) Preliminary figures for 2013 in m 01.01. 31.12.2013 01.01. 31.12.2012 Changes in % Net interest income 3,118 3,260-4.4 Allowances for losses on loans and advances -540-527 2.5 Net fee and commission income 1,104 1,024 7.8 Gains and losses on trading activities 148 659-77.5 Gains and losses on investments -121-442 -72.6 Other gains and losses on valuation of financial instruments 1,100-276 >100.0 Net income from insurance activities 373 532-29.9 Administrative expenses -2,937-2,855 2.9 Other net operating income -23-56 -58.9 Profit before taxes 2,222 1,319 68.5 Income taxes -755-350 >100.0 Net profit 1,467 969 51.4 Change in revaluation reserve (RVR) after taxes: 340 m (year-earlier period 1,137 m) RVR after taxes as at 31.12.2013: 376 m (31.12.2012: 36 m)
DZ BANK Annual Press Conference, 5 March 2014 Page 11 DZ BANK Group: Net interest income and allowances for losses on loans and advances Net interest income (in m) Allowances for losses on loans and advances (in m) 3.260-4.4% 3.118 DZ BANK AG: Net interest income was lower due to market-induced decline in interest income from liquidity management Partly offset by increases at DG HYP and TeamBank Requirement for net additions to allowances for losses on loans and advances at a normal level VR LEASING: Significant reduction in allowances for losses on loans and advances (especially Lombard Lizing) +2.5% DZ BANK AG / DVB / Teambank: Increased allowances for losses on loans and advances 527 540 2012 2013 2012 2013
DZ BANK Annual Press Conference, 5 March 2014 Page 12 DZ BANK Group: Net fee and commission income and gains and losses on trading activities Net fee and commission income (in m) Gains and losses on trading activities (in m) 1.024 +7.8% 1.104 Net fee and commission income posts a far more positive trend in the reporting year UMH: Increase due to higher performance-related management fees and significant growth of average assets under management -77.5% DZ BANK AG: Exceptionally high contribution from trading activities in the year-earlier period due to spread tightening 659 148 2012 2013 2012 2013
DZ BANK Annual Press Conference, 5 March 2014 Page 13 DZ BANK Group: Gains and losses on investments and other gains and losses on valuation of financial instruments Gains and losses on investments (in m) +72.6% Gains and losses on investments improved mainly because the negative effects from the ABS portfolio were less pronounced Absence of further negative year-earlier effects (ÖVAG, Greece) Other gains and losses on valuation of financial instruments (in m) >100.0% 1.100 DG HYP: Significant improvement in result due to pronounced tightening of credit-spreads with respect to bonds from the euro area s periphery states -442-121 -276 2012 2013 2012 2013
DZ BANK Group: Administrative expenses DZ BANK Annual Press Conference, 5 March 2014 Page 14 Administrative expenses (in m) 2,855 111 +2.9% 2,937 116 Administrative expenses increased due to regulatory and project costs and market-related investments Cost-management measures implemented in most control units 1,478 1,513 1,266 1,308 2012 2013 Other administrative expenses Staff expenses Depreciation
2. Capital situation DZ BANK Annual Press Conference, 5 March 2014 Page 15
DZ BANK Annual Press Conference, 5 March 2014 Page 16 DZ BANK has strengthened its capital base significantly since 2008 CRD II 1) CRD III 1) Optimization of capital situation has top priority for DZ BANK HGB 13.0 HGB 11.8 14.9 17.1 Steep increase in capital ratios since 2008 Main measures: Strict capital management Earnings retention 7.4 Reduction of non-networkrelated business/ RWA reduction Capital increases in 2009 118 89 100 89 85 2008 2011 2) 2011 2) 2012 2) 2013 2) Regulatory regime Accounting standard RWA, in bn Tier 1 capital ratio under CRD III 1) European implementation of Basel 2 and Basel 2.5 (Capital Requirements Directive) 2) Incl. items carried forward in the financial statements
DZ BANK Annual Press Conference, 5 March 2014 Page 17 New regulatory world creates substantial pressures CRD III 1) HGB CRR 2) HGB Pro forma CRR 2) IFRS Pro forma Two regulatory changes led to a substantial capital charge at the end of 2013 Conversion to IFRS Implementation of CRR 17.1% 12.1% 9.2% Incl. first tranche phase-in 8.6% CRR effects will have a negative effect on the capital ratio in the next 5 years, first tranche fell due on 01.01.2014 85 103 104 104 31.12.2013 Regulatory regime Accounting standard 31.12.2013 31.12.2013 3) (preliminary) RWA, in bn 01.01.2014 (preliminary) Tier 1 capital ratio under CRD III Core tier 1 capital ratio under CRR 1) European implementation of Basel 2.5 (Capital Requirements Directive, CRD III) 2) European implementation of Basel III (Capital Requirements Directive/Regulation, CRD IV/CRR); pro forma 3) Incl. Extraordinary items carried forward (e.g. deferred taxes FbtA and rating transfer)
Capital increase cushions regulatory impact DZ BANK Annual Press Conference, 5 March 2014 Page 18 Basis: CRR and IFRS Core tier 1 capital ratio Capital situation 1) Capital requirements Balance Sheet Assessment (BSA) carried out followed by stress test within the framework of the transfer of banking supervisory powers to the ECB 8.6% ~1.4% 3,5% ~10% Buffer 8% 3.5% ECB s additional requirement (incl. SIFI) Minimum rate for Asset Quality Review of 8 per cent as at 01.01.2014 Including the capital increase of 1.5 bn, the capital ratio is around 10 per cent 4.5% Minimum regulatory requirement 01.01.2014 Effect of capital increase Pro forma 01.01.2014 (including capital increase) ECB requirement according to BSA 1) Indicative estimate 2) Implementation presumably in mid-2014
DZ BANK Annual Press Conference, 5 March 2014 Page 19 Time table for the capital increase November 2013 Broad range of various communication measures launched Since 01.01.2014 CRR and GroMiKV come into effect, exemption of long-term investments within the cooperative financial network from capital deduction May / June 2014 Length of subscription period By 31.07.2014 Capital increase comes into effect / recorded in Register of Companies
DZ BANK Annual Press Conference, 5 March 2014 Page 20 3. Other issues that concern us Regulatory system Strategic growth offensives
DZ BANK Annual Press Conference, 5 March 2014 Page 21 Regulatory system: a consistent approach is required Structural reforms Liikanen / dual banking system Bail-out plans Liability pyramid (bail-in) Capital CRR/CRD IV (capital adequacy) Deduction of local cooperative banks investments in the central institution (CRR) Large credits regime (CRR) IFRS reporting basis Reporting (COREP) Financial conglomerate supervision Leverage ratio (CRR) Liquidity Liquidity Coverage Ratio (LCR) Net Stable Funding Ratio (NSFR) Risk management/controlling (1/2) Comprehensive Assessment Risk Assessment Balance Sheet Assessment / Asset Quality Review Stress test Principles for risk data and risk reports (BCBS 239) 4 th MaRisk amendment Risk management/controlling (2/2) Trading Book Review Reporting (capital adequacy reporting) Regulation for specific business segments Dodd-Frank Act EMIR MiFID II / MiFIR Regulation for automated trading Financial transaction tax Fee-based advisory services SEPA and PSD-II (payments directives) Basic Payment Account and Access to Accounts TARGET2 securities Finance Reporting (FINREP) IFRS 9 (impairments etc.) Tax transparency Personnel & Management Remuneration Regulation for Institutions (Institutsvergütungsverordnung) Restriction of supervisory board mandates Others Solvency II
Strategic growth offensives: Corporate Banking and Retail Banking DZ BANK Annual Press Conference, 5 March 2014 Page 22 Corporate Banking Ambitious growth targets especially in business with large and medium-sized companies with respect to strengthening house bank relationship Extension of regional footprint Continuation of the growth strategy in the DZ BANK Group Retail Banking Topics relevant for the future are addressed systematically within the BVR projects Quality of Advisory Services and Web Success
Strategic growth offensives: Capital Markets and Transaction Banking DZ BANK Annual Press Conference, 5 March 2014 Page 23 Capital Markets Focus on network-oriented capital markets business Further development of product and service offering Transaction Banking Increase market shares in the payments and settlements business Establish innovative payment systems
4. Summary / Outlook DZ BANK Annual Press Conference, 5 March 2014 Page 24
An end of the recession in Europe is in sight and would be very positive for Germany DZ BANK Annual Press Conference, 5 March 2014 Page 25 DZ BANK Euro Indicator German export destinations (2012) 6 4 2 0-2 (% y/y change) EMU 35% Eastern Europe 12% USA 8% UK 7% -4-6 EMU GDP -8 DZ BANK -10 Euro Indicator 2003 2005 2007 2009 2011 2013 Other 28% China 6% Switzerl. 4% Source: Eurostat, DZ BANK
DZ BANK Annual Press Conference, 5 March 2014 Page 26 Three reasons why 2014 could turn out to be a good year German consumers increased propensity to spend Low interest rate level reduces propensity to save and creates investment incentives Demand from abroad is picking up But: Dangers lurk in the new German government s economic policy
DZ BANK Annual Press Conference, 5 March 2014 Page 27 Strengths of the DZ BANK Group Best performance in the DZ BANK Group s history One of best and most stable ratings in the German banking sector The capital base has been strengthened significantly in the past few years General availability of liquidity High level of customer satisfaction Constant evolution of our strategic orientation
DZ BANK Annual Press Conference, 5 March 2014 Page 28 Disclaimer This document is for information purposes only. This document has been prepared by DZ BANK AG Deutsche Zentral- Genossenschaftsbank ( DZ BANK ) and may only be distributed outside Germany in accordance with the local legal requirements, and persons coming into possession of this information and these materials should inform themselves about and observe the local legal requirements. This document constitutes neither a public offer nor a solicitation of an offer for the purchase of securities or financial instruments. DZ BANK does not act as investment adviser or portfolio manager. This document does not constitute a financial analysis. All evaluations, opinions or explanations contained herein are those of the author of the document and do not necessarily correspond with those of third parties. DZ BANK assumes no liability for damages caused directly or indirectly by the distribution and/or use of this document and/or for damages which are in any way connected with the distribution/use of this document. Any investment decision with respect to securities or any other financial instruments should be based on individual advice and a prospectus or information memoranda and under no circumstances on this document. The contents of this document correspond to the status at the point in time at which the document was drafted. Future developments may render them obsolete without the document s having been changed accordingly.