9m 2005: compelling growth in customer...
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9M 2005: Compelling growth in customer business
Analysts' telephone conferenceWulf von Schimmelmann, CEONovember 9, 2005
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Disclaimer
PERSONAL AND STRICTLY CONFIDENTIAL – 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 forward-looking 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.
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Agenda
Highlights 9M 2005
Core business: Strong growth momentum
Financials
Appendix
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543,000 new customers (666,000 in 9M 04)
369,000 new checking accounts (439,000 in 9M 04)
+4.8% to €72.7bn in overall customer deposits (69.4bn in 9M 04)
Highlights 9M 2005
Profit before tax +15% to €517m (€449m in 9M 04)
Cost income ratio 68.5% (70.9% in 9M 04)
RoE before tax 14.1% (13.2% in 9M 04)
Core figures reflect ongoing success…
Core figures reflect ongoing success…
… as well as in traditional business
… as well as in traditional business
+45% to €4.2bn in new self originated mortgages
+54% in new mutual fund sales
Old age provisioning: Year end target already achieved
… in new products…… in new products…
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Postbank performance in 2005: +49%
90.0
100.0
110.0
120.0
130.0
140.0
150.0
31/12
14/1 28/1 11/2 25/2 11/3 25/3 8/422/4 6/520/5 3/617/6 1/715/7 29/7 12/8 26/8 9/923/9 7/1021/1
04/11
31.12.2004(*) - 04.11.2005
Performance of Postbank (*)
DAX + 31.2%Peer Group + 42.6%
Source: Bloomberg, Postbank
Postbank Performance vs.: (absolute)
(*) shares indexed Postbank Last Price 2004 = €32.50 = 100%
Postbank
DAX
Peer Group
Peer Group: Banco Popular Espagnol, Banco Populare di Verona e Novara, Forenings Sparbanken, Svenska Handelsbanken, Alliance & Leicester, Banco Espirito Santo, Erste Bank, Unicredito, RBOS
In %
Beta: .57 raw.71 adj.
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Agenda
Highlights 9M 2005
Core business: Strong growth momentum
Financials
Appendix
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Already close to full year target of 600,000 new customers in 2005 Compelling socio-demographic structure sustained (34 Øage; € 2,700 Øincome)Checking accounts as key driver despite increase of hurdle rate
New customers and checking accounts well above own expectations
New checking accounts(1) ('000)
(1) Private customers only
New customers ('000)
186
666
543
133159
369
Q2 Q2
Q1 Q1
191
175
210 190
172
263
120134
124
115
146129
9M 2003 9M 2004 9M 20059M 2003 9M 2004 9M 2005
571212
181
Q3 Q3
382439
130
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Accelerated growth in fund business
Customer funds (€bn)
4.2Mutual Funds
6.0Total
1.5Stocks, Bonds
0.3Liquidity
9M 04
Securities in detail (€bn)
5.1
7.7
2.2
0.4
9M 05
9M 2004 9M 2005
46.149.3
6.0 7.7
40.1 41.6 Savings
Securities
+6.9%
Innovative savings products prove their attractiveness in low interest rate environment
Strong performance of mutual fund business (new sales €1,305m,+54% vs. 9M 04) like “Top Invest” (€481m sales) add additional value
Cross selling success well reflected in retail segment’s fee income (+22% vs. 9M 04)
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Postbank’s retail loan business soars
Volume residential mortgages (€bn)New residential mortgages (€bn)
5.4
7.5
Self originated
Acquired portfolios 22.3
26.127.9
2004 Q2 05 Q3 059M 2004 9M 2005
2.5
3.3
4.22.9
+39%
+45%
+25%
Q1 05
26.8
Self originated mortgages up by +45% to €4.2bn in 9M 05 vs. €2.9bn 9M 04 (Q3 05: €1.4bn vs. Q3 04 €0.9bn)
Consumer loan volume significantly increased to €1.5bn vs. €1.2bn in 9M 04
New consumer loans in 9M 05 expanded to €568m (+ 41% vs. 9M 04)
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Liability overhang melting further by continued strong loan generation
Customer loans (€bn)(1) Customer deposits (€bn)(1)
Satisfying deposit growth given redirection of new customer funds into investment products
Dynamic customer loan growth backed by low risk residential mortgages
71.7 70.8 72.7
2004 Q2 05 Q3 052004 Q2 05 Q3 05
34.3(2)
40.8 42.0
+1.4%
+22% 72.0
Q1 05
39.7
Q1 05
(1) End of period(2) 2004 numbers restated by structured finance portfolio reallocated from CB to segment “others” in Q1 2005; therefore no more classified as customer loans
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Agenda
Highlights 9M 2005
Core business: Strong growth momentum
Financials
Appendix
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Value drivers – Mirroring the positive trend
449
Profit before tax (€m) Total revenues (€m)
Cost income ratio (%)RoE before tax (%)
70.9 68.5
66.069.2
9M 2004 9M 2005
517
9M 2004 9M 2005
1,9442,104
9M 2004 9M 2005
13.214.1
9M 2004 9M 2005
+15%
+0.9 pts
-3.2 pts
Traditional banking business
+8.2%
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BSR concept secures growth in historic low rate environment
Balance sheet related revenues (€m) Comments
NII
TI
1,5111,575
IFI
528 533
Net Interest Income (NII):– Strong customer volumes
back growth in 9M results comparison
– Historic low interest environment resulting in slight decrease vs. Q2
Trading Income (TI):– Stable contribution in Q3
Income Financial Inv. (IFI):– Realization of bond and
fund gains at historic low rates
+9.3%
186
1,148
177
1,255
154166
9M 2004 9M 2005
426
6438
407
5967
Q2 2005 Q3 2005
+4.2%
+0.9%
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Retail and Transaction Banking lift fee income up
Transaction Banking fully contributing
Success in cross-selling boosting Retail segment’s fee income:- Up €53m or 22% vs.
9M 04
- Despite of increased fee payments to DSL agents by €-20m vs. 9M 04 for record new mortgage volume
Net fee income (€m) Comments
433
529
178176
9M 2004 9M 2005 Q2 2005 Q3 2005
+22%
+1.1%
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Limited cost increase despite of dynamic business expansion
Increase of 4.6% vs. 9M 04 to largest extent related to start of Transaction BankingQuarterly comparison proves ability to add new business at low marginal costs
CommentsOperating expenses (€m)
Personnel costsOther operating expenses
1,3791,442
Depreciation and writedowns
486480
9M 2004 9M 2005
56
858
465
46
905
491
15
310
161165
299
16
Q2 2005 Q3 2005
+4.6%
+1.3%
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Agenda
Highlights H1 2005
Core business: Strong growth momentum
Financials
Appendix
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Postbank Group – Abbreviated P&L
(€m) 9M ‘04 9M ‘05 in % Q2 ‘05 Q3 ‘05 in %
Balance sheet related revenues 1,511 1,575 4.2 528 533 0.9
Net fee income 433 529 22.2 176 178 1.1
Total revenues 1,944 2,104 8.2 704 711 1.0
Loan loss provisions -126 -155 23.0 -52 -52 0.0
Operating expenses -1,379 -1,442 4.6 -480 -486 1.3
Other income / expenses 10 10 0.0 1 6 -
Profit before tax 449 517 15.1 173 179 3.5
Taxes -157 -181 15.3 -60 -63 5.0
Minorities -1 -1 0.0 0 0 0.0
Net Profit 291 335 15.1 113 116 2.7
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Risk provisions in-line with loan expansion
Despite expansion of customer loans by 25% new allocations just up 9.1% vs. 9M 2005
Reversals of risk provisions significantly reduced by -27%
Net addition ratio (annualized) at 36 bps on target level
CommentsBreak-down of net new risk provisions (€m)
Allocation
Reversal
Net risk provisions
9M 2004 9M 2005
175
-36
-49
126
+23%
191155
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Segment reporting – Operating segments consistently improving
(€m) RB CB TB FM OT Group Net interest income 9M 2005 1,248 176 4 61 -234 1,255
Net interest income 9M 2004 1,218 159 2 44 -275 1,148 Trading income 9M 2005 0 -1 0 41 114 154
Trading income 9M 2004 0 2 0 56 128 186 Income from investments 9M 2005 0 4 0 1 161 166
Income from investments 9M 2004 0 9 0 2 166 177 Balance sheet related revenues 9M 2005 1,248 179 4 103 41 1,575
Balance sheet related revenues 9M 2004 1,218 170 2 102 19 1,511 Net fee income 9M 2005 289 79 215 45 -99 529
Net fee income 9M 2004 236 63 124 40 -30 433 Total revenues 9M 2005 1,537 258 219 148 -58 2,104
Total revenues 9M 2004 1,454 233 126 142 -11 1,944 Loan loss provisions 9M 2005 -114 -28 0 2 -15 -155
Loan loss provisions 9M 2004 -85 -27 0 4 -18 -126 Operating expenses 9M 2005 -1,018 -126 -197 -61 -40 -1,442
Operating expenses 9M 2004 -1,042 -112 -121 -64 -40 -1,379 Other income / expenses 9M 2005 -1 3 -2 0 10 10
Other income / expenses 9M 2004 4 3 -2 0 5 10 Profit before taxes 9M 2005 404 107 20 89 -103 517
Profit before taxes 9M 2004 331 97 3 82 -64 449
RWA (BIS) 9M 2005 20,507 13,262 -- 8,348 15,474 57,591 RWA 9M 2004 16,746 10,981 -- 7,340 14,228 49,295
Equity 9M 2005 (average) 2,206 409 -- 672 1,611 4,898 Equity 9M 2004 (average) 1,978 455 -- 673 1,423 4,529
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(%) RB CB TB FM OthersRoEp 9M 2005 24.4 34.7 – 17.7 -9.1RoEp 9M 2004 22.3 28.3 – 16.2 -6.1
Retail dominating good performance of operating segments
Change in PbT (€m)
9M 2004 RB CB 9M 2005TB FM Others
449
73 1017 7 -39
517
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Balance sheet related revenues up across all segments
Change in balance sheet related revenues (€m)
9M 2004 RB CB 9M 2005TB FM Others
1,51130 9 2 1 22 1,575
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Postbank’s fee income of increasing importance
Change in fee income (€m)
9M 2004 RB CB 9M 2005TB FM Others
433
53 16
91 5 -69
529
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Fee income in Retail segment: Up 22%!
Strong increase of fee income by product… (€m)
Checking accountsMutual funds &
brokerageInsurance
Credit cards
Mobile sales forceHome mortgage
loansOthers 9M 2005
9M 2004
175
1613
-456
4011
20759
112120
-25
16
… and fee income per customer (€)
19.823.7
9M 2004 9M 2005
+20%
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Tight cost control maintained
Change in costs (€m)
9M 2004 RB CB 9M 2005TB FM Others
1,379 -24 14
76 -3 0 1,442
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Co-operation payments:Slight increase vs. 9M 04 reflecting good financial performance
Split of Postbank’s total branch related costs (€m)
(1) Gross margin minus standard costs and standard risk costs
Commissionsfor existingbusiness
Commissionsfor new
business
Participationin investment
Others Total paymentto DPWN
31 2183
9M 2005
233368
Commissionsfor existingbusiness
Commissionsfor new
business
Participationin investment
Others Total paymentto DPWN
31 2294238
385
9M 2004
63%23% 8% 6%
100%
62%24% 8% 6%
100%
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Balance Sheet – Customer loans expanded noticeably
(€m) 12/31/04(1) 09/30/05 Assets
Loans and advances to other banks 23,820 18,788 Loans and advances to customers 47,739 51,839 Allowances for losses on loans and advances -667 -783 Trading assets 9,695 12,079 Financial assets 43,483 48,669 Other items(2) 4,049 3,258
Total assets 128,119 133,850 Shareholders' equity and liabilities
Deposits from other banks 16,215 19,943 Due to customers 80,519 82,924 Securitised liabilities 16,490 14,538 Trading liabilities 2,702 3,947 Provisions 1,938 2,123 Other items(3) 5,570 5,293 Shareholders' equity 4,685 5,082
Total shareholders' equity and liabilities 128,119 133,850
Key facts
Loans to customers increased by €4.1bn
Shift from inter-bank money into short-term financial assets
Deposits from customers up by €2.4bn
Further reduction of expensive securitised liabilities by €-2.0bn
Revaluation reserve at comfortable €453m
(1) Restated(2) Cash reserve, Hedging derivatives, property and equipment, Other assets(3) Hedging derivatives, Other liabilities, subordinated debt
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Legacy portfolio running down according to plan
Outstanding volume DSL issuances (€bn)
5.15% 5.06% 5.08% 5.05% 4.98% 4.81%
Average yield
4.89%4.84%
Average9M 2005:
26.5
2003 2004 2005 2006 2007 2008 2009 2010
40.8
32.6
25.9
21.617.7
14.2
9.66.3
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Sound Tier 1 levels maintained
Tier 1 ratio (BIS) (%)
Development of core capital (BIS) (€m)
Tier 1 ratio provides good basis for BHW integration
Basel II effects will provide further upside
Please note: Consolidated profit of 2005 not yet included in Tier 1 calculation
Comments
RWAsMarket risk posit.
49,4577,075
57,5917,838
in €m
9M 2004 (1) 9M 2005
8.47.1
9M 2004 9M 2005
3,535
4,865
+1.3 pts
+38%
(1) based on internal calculations
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Postbank's Investor Relations team
Marc Hess, Head of [email protected]. +49-(0)228 / 920-18000
Aiga von [email protected]. +49-(0)228 / 920-18010
Marcin [email protected]. +49-(0)228 / 920-18012
Axel [email protected]. +49-(0)228 / 920-11106