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Postbank’s operating business makes substantial gains
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Press release of Nov. 09, 2011
- Operating result up some 20% year-on-year
- Positive profit before tax of €12 million as of September 30, 2011
- Value adjustment to Greek government bonds leads to negative business results in the third quarter
- Tier 1 capital ratio compared with year-end 2010 rises substantially to 9.8% in spite of write-downs
Deutsche Postbank AG continued the positive performance of its customer business in the first nine months of 2011. Thanks to rising income from its business with retail and corporate customers and a noticeable decline in the allowance for losses on loans and advances, the Bank increased its operating profit before tax by around 20 percent compared with the prior year to €716 million. The positive trend was diluted by a value adjustment to Greek government bonds. They have now been written down to 42% of their principal amount in the third quarter of 2011 on the basis of resolutions made at a summit of European heads of state and government. As a result, the income statement in the third quarter was impacted in the amount of €341million, €527 million for full-year 2011. Postbank, as a consequence, showed a profit before tax of €12 million as of September 30, 2011 (previous year: €296 million). The third quarter figure was negative, at €–132 million. The Bank continued to follow its strategy to systematically reduce capital market investments and exposure to the associated risks. As against year-end 2010, its holdings of investment securities and the risk positions contained therein were cut by almost 20% to just under €48 billion. This was also one of the fundamental reasons for the rise in Postbank’s Tier 1 capital ratio to 9.8%, an increase of 1.7 percentage points compared to year-end 2010.
“We were able to consolidate and further expand our leading market position in the retail banking business,” said Stefan Jütte, Chairman of the Management Board of the Bonn-based Bank. “The focus on sustainability and quality in the retail customer business is the right one. This can also be seen in the fact that we passed the five million mark in private checking accounts for the first time in the Bank’s history in October 2011.”
Income statement
Net interest income amounted to €2,157 million as of September 30, 2011, an increase of €90 million or 4.4% on the comparable prior-year figure. This encouraging trend is largely due to the strong margin situation as well as an overall increase in volumes for both Retail Banking and Corporate Banking.
Net trading income improved by €216 million year-on-year in the first nine months, to €1 million. This was primarily due to the contribution made by the remeasurement of embedded derivatives in the structured credit substitution business.
Net income from investment securities amounted to €–449 million, following €54 million in the previous year. This includes value adjustments to Greek government bonds, which totaled €527 million. Taken together, the value adjustments and sales of other risk exposures resulted in charges of €–81 million (previous year: €–51 million).
Net fee and commission income for the year to date declined as expected by 2.7% year-on-year to €951 million. This was mainly due to a decline in fee and commission income from the classic banking business and the termination of a business relationship in Transaction Banking.
The
allowance for losses on loans and advances amounted to €281 million, improving by 37% on the prior-year period. This encouraging trend is due to a substantial decline in the cost of risk in the area of international commercial real estate finance and the high stability of our credit portfolio in the retail banking business.
Administrative expenses rose by 10.1% to €2,363 million (previous year: €2,146 million). The increase is largely due to non-recurring factors totaling €155 million that were recognized in the first quarter of 2011. At that time the Bank recognized staff-related provisions of €52 million and harmonized the accounting treatment of obligations under partial early retirement programs. In addition, the proportionate expenses relating to the bank levy were recognized (€18 million).
Total assets
Postbank’s
total assets amounted to €203.3 billion as of September 30, 2011, following €231.5 billion as of September 30, 2010, and €214.7 billion at the end of the last fiscal year.
Despite the impact of the impairment losses charged on holdings of Greek government bonds, the
Tier 1 capital ratio remained unchanged compared with June 30, 2011, at a stable 9.8%. Once again, this figure is 1.7 percentage points higher than at year-end 2010. This means that Postbank has already exceeded its 2012 year-end target of a Tier 1 capital ratio of 9.5%.
Outlook
Unless the sovereign debt crisis escalates further, Postbank currently expects to report a profit before tax for full-year 2011 as well and the earnings situation to improve sustainably in the coming periods on the basis of our stable retail and corporate banking businesses.
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