Speech delivered at the AGM 2011

Transcription

1 Stefan Jütte Chairman of the Management Board Annual General Meeting Deutsche Postbank AG Frankfurt am Main, May 24, 2011 Check against delivery Dear shareholders, dear shareholder representatives, dear ladies and gentlemen, On behalf of the entire Management Board and all Postbank employees, I am pleased to welcome you to our Annual General Meeting here in Frankfurt. I can report about a fiscal year that demanded a lot of us but that we managed to shape successfully in the end. I am pleased to be able to tell you today: Postbank has achieved the turnaround and is on track to return to its former strength. We have recorded a series of successes across all of our Bank s segments and board departments. Let me illustrate this with a number of highlights from fiscal year 2010: Naturally, a particularly gratifying achievement is the increase in our profit before tax for 2010 by an impressive 713 million to 315 million. This achievement is founded on a continually strong performance of our operational customer business. Our net interest income, in particular, improved markedly. We have successfully defended our leading market position in our core business. Our strategy program Postbank4Future, which we initiated at the end of 2009, has contributed significantly to this achievement. Our program to reduce capital market investments and our exposure to the associated risks, which we launched in 2008, is bearing fruit. This is reflected most clearly in the significant decline in negative effects from our risk portfolio, the reduction of portfolio positions and our higher capital ratio /- 11 -

2 Another major event of the past year, ladies and gentlemen, concerns the change in majority ownership: with Deutsche Bank, we are now part of one of the world s strongest banking groups. I will now take a closer look at these and several other issues. Developments in fiscal year 2010 Postbank achieved a significant turnaround in We posted a positive pre-tax result in each quarter last year. Following two years of losses, profit before tax for fiscal year 2010 amounted to 315 million an impressive result, particularly in view of the difficult market environment. This corresponds to an increase of 713 million compared to The favorable earnings development in 2010 was driven largely by rising contributions from the operating business. A key driver of this development was our net interest income, which amounted to 2.73 billion and thus exceeded the previous year s level by an impressive 13.6%. Taken together, net trading income and net income from investment securities remained negative at 242 million. However, this corresponds to an improvement of 404 million compared to the previous year s level. Our de-risking strategy and the resulting decline in negative effects from our risk portfolio are clearly paying off here. At 1.32 billion, net fee and commission income in 2010 was only 1.6% lower than the previous year s level. As expected, this item was negatively affected by declining income from the postal business, which could not be offset by operating income from the traditional banking business. Due mostly to markedly lower negative effects from risk positions and the strong increase in net interest income, total income rose by a strong 22.9% to 3.81 billion after 3.10 billion a year earlier /- 11 -

3 Allowances for losses on loans and advances amounted to 561 million in the past fiscal year, a significant drop compared to the crisis-related high previous year s level of 678 million. The net addition ratio amounted to about 50 basis points and was thus at the lower end of the range of 50 to 60 basis points that we had expected for Even during the crisis years, Postbank s need for allowances on loans and advances remained distinctly below the international average. This is due, in particular, to the high proportion of highly collateralized German private mortgage loans in our loan portfolio. Administrative expenses rose slightly by 70 million or 2.4% to 2.93 billion. This figure includes higher structural expenses resulting from the acquisition of 277 additional Deutsche Post retail outlets at the beginning of the third quarter and the recognition of 58 million in provisions for planned staff reductions as part of the Postbank4Future strategy program. We will maintain our focus on strict cost management in the future. A rigorous cost culture remains a particularly important aspect of a retail bank s business model given the continually difficult margin situation in many market segments. This is why many of the measures included in our Postbank4Future strategy program are aimed at continued efficiency improvements. As mentioned above, profit before tax amounted to 315 million after 398 million in the same period a year earlier. After deduction of income taxes, consolidated net profit stood at 138 million after 76 million a year earlier. The return on equity before taxes increased to 5.7% after -7.8% in the previous year. The costincome ratio also improved substantially to 77.1% (92.5% in 2009). To summarize, this exceedingly gratifying development in fiscal year 2010 results largely from a strong increase in total income, which in turn stems from substantially higher net interest income from our customer business. Added to this must be the strict cost management over the past years, which has capped the increase in administrative expenses at a very moderate level despite regulatory and provisioning-related one-time expenses /- 11 -

4 Another development is also bearing fruit. The negative effects of the financial crisis were considerably less than those of last year than in the preceding years. In 2010, we recorded negative effects of 427 million (2009: 919 million). To a large extent, these negative effects concerned our structured credit portfolio, which has since been markedly reduced from 5.8 billion to 3.7 billion as part of our de-risking strategy. In line with our strategy, we also reduced our investment securities by 18% or 13 billion to 59 billion over We will forge ahead with the rigorous and active reduction of our structured credit portfolio and our investment securities in the future. Our stated goal since 2008 has been to reduce our investment securities by up to 45% by The reduction of these portfolios has resulted in a decline in our total assets, which dropped by about 12 billion to around 215 billion year-on-year as of December 31, We posted a strong increase in recognized capital, something we achieved out of our own strength and without state aid. Our recognized capital rose from 5.3 billion to 5.6 billion in The full retention of consolidated net profit and the distinct improvement in the currently negative revaluation reserve contributed to this increase. The revaluation reserve has been reduced by 229 million to 273 million since the end of This also led to a gratifying increase in the Tier 1 ratio of the Postbank Group. After 6.6% in the previous year, the Tier 1 ratio stood at 8.1% at year-end This strong increase is a result of our de-risking strategy as well as, in particular, the rigorous implementation of our initiatives to measure and recognize our risk positions more exactly based on advanced measurement models. For example, these measures enabled us to markedly reduce our recognized market and operational risks in We will continue to push ahead with these activities in future periods with a view to the stricter capital adequacy requirements under Basel III. For example, we intend to further reduce our capital market risk and portfolios. In addition, we expect a further increase in our capital ratios by introducing additional advanced measurement models to calculate our risk-weighted assets and by retaining profits. As you will know, Postbank will fully use its profits generated in fiscal years 2010 to 2012 to strengthen its capital ratio. We once again ask for your understanding of this decision /- 11 -

5 First-quarter performance in 2011 The encouraging earnings trend of 2010 continued in the first quarter of 2011 as well. Postbank has gotten off to a dynamic start in the new year, generating 142 million in profit before tax during the first three months of 2011 compared with 131 million year-on-year. Once again, its strong customer business provided significant momentum, with net interest income being the key driver, as in In addition, first-quarter earnings for 2011 were affected by a number of non-recurring factors, whereby expenses clearly predominated. The sale of our Indian subsidiary resulted in a disposal gain before tax of 55 million. The recognition of staff-related provisions and the harmonization of the accounting treatment of partial early retirement programs in the total amount of 155 million had the opposite effect, resulting in a significant increase in staff costs in the first quarter of Earnings adjusted for non-recurring factors total 238 million, a figure that underscores Postbank s positive operating performance. The negative effects from the Bank s risk positions declined tangibly. In our structured credit portfolio, we reported positive overall measurement and disposal effects in net trading income and net income from investment securities for the first time since the start of the financial market crisis. We successfully reduced our holdings of structured credits from 3.7 billion to 3.1 billion and once again significantly reduced holdings of investment securities by around 3.5 billion to 55.5 billion. The allowance for losses on loans and advances also continued to decline, contributing to the positive earnings trend. It amounted to 95 million, down 45 million in comparison with the figure for the first quarter of Strategy/Postbank4Future Postbank undisputedly remains the No. 1 retail bank in Germany. We are proud of this market position because it reflects the many years of outstanding efforts by our employees. I and surely on your behalf as well would like to sincerely thank the more than 20,000 Postbank employees for their hard work /- 11 -

6 I can assure you that we will continue to focus our efforts on perpetuating the success story of Postbank. The strategy program Postbank4Future launched at the end of 2009 will help us do this. With this program, we are once again more strongly focusing on our original strength of being the bank for the essentials. In essence, Postbank4Future aims to sharpen both our customer and product profiles, in particular by creating a more transparent and equally appealing product range, focusing on the respective strengths of the sales channels and expanding service quality and accessibility. We have made significant progress in implementing this program over the past year. We have made a lot of headway in streamlining the product range by reducing its complexity and have ceased to distribute about one-fourth of our products and product options to date. And we have done this without losing any income. Thanks to these steps, our product range is now clearly defined, easier to understand and more transparent. At the same time, it continues to cover all our customers needs and supports the customer trend toward seeking security and solidity in a bank. The second key pillar of Postbank4Future is built around further improving accessibility for our customers. In this respect, the highlight of 2010 was without doubt our acquisition of an additional 277 Deutsche Post retail outlets at the start of the third quarter. With these locations, Postbank now has a network comprising more than 1,100 own branches as of December 31, In addition, we have set up a network of self-service branches and have improved cash-withdrawal opportunities for our customers by expanding our partnership with Shell and OBI. All told, we had an impressive 7,600 customer contact points at the end of December 2010, including the Deutsche Post partner agencies 1,000 more than one year ago and more than we have ever had before. As a result, we, as an individual institution, have greater coverage than any other bank in the German banking market. Easy accessibility goes hand in hand with the continuous improvement of our service quality.in doing so, Postbank relies on intensive dialog with its customers. The importance of the continuous improvement of our customers satisfaction is underscored by the fact that we have recently introduced a new customer advisory council, thereby expanding the existing advisory council 60plus to include the entire customer base /- 11 -

7 I am confident that we, working together with the advisory council, will be able to better incorporate the needs and desires of our customers into our daily business activities. For me, customer proximity and service means that we actively include the customer perspective in our decision-making. We want the old and new members of the customer advisory council to pinpoint our weaknesses and clearly tell us where shortcomings in service, quality and products still exist. Developments in customer business In implementing Postbank4Future, we markedly improved the quality of new business with our checking accounts. Customers opened about 460,000 new checking accounts with us. Many of these were opened as a customer s primary checking account. We are also very pleased with the development of Postbank s second core business division in the Retail Banking segment, the deposit business. Even though interest rates remained low, savingsdeposit volume was relatively stable, totaling 56.8 billion (2009: 57.2 billion). And in private mortgage lending, the key pillar of our lending business in the Retail Banking segment, we defended our leading market position. Despite the stagnating market, we saw a slight increase in the total volume of mortgage loans, which rose to 74 billion. The volume of new business, which continues to post high margins, amounts to 8 billion after totaling 8.3 billion the previous year. In mid-2006, we decided to expand the Corporate Banking segment and planned to increase total income to more than 500 million by the end of Last year, we generated 762 million, proving that our roughly 30,000 corporate customers believe in Postbank and its services. The expansion of the product range which is also in line with our commitment to being the bank for the essentials has contributed to this success as has intensifying our customer care service. The Corporate Banking segment has long since evolved into the second strong pillar of our business. In the changing competitive environment characterizing the German banking market, we see this as an area that still offers growth potential for our business. In the coming years, we want to further expand business with SME customers in particular /- 11 -

8 We are also very pleased with the development of the Transaction Banking segment. For the very first time, our subsidiary Betriebs-Center für Banken AG (BCB) processed more than 8 billion transactions in fiscal year As a result, we now have a market share in Germany of 20%. In February 2010, BCB began processing payment transactions for its new customer, HSH Nordbank. At the same time, however, we are losing a customer in Commerzbank, who is reintegrating payment transactions for Dresdner Bank, which it recently acquired. As a result, the net transactions will fall to around 7.4 billion in On the whole, it is clear that Postbank is on track to find its way back to its old earnings power and leave the financial crisis behind it. Our strategy and position as the bank for the essentials for private and corporate customers works, and our operating business is doing well in all segments. Fiscal year 2010 and the first quarter of 2011 have demonstrated that Postbank has a solid business model. We are taking the right approach with our overall strategy and its customer-focused business divisions. The strategic adjustments we initiated with Postbank4Future are taking hold. As a result, we are creating added value for our customers, for our employees and ultimately for you, our shareholders. Performance of the Postbank share In 2010, the performance of the Postbank share was substantially influenced by speculation regarding the acquisition of Postbank by Deutsche Bank AG and ultimately by the voluntary takeover bid made public on September 12, On October 20, 2010, the Management and Supervisory Boards of Deutsche Postbank AG issued a joint declaration pursuant to 27 of the German Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz - WpÜG) regarding the voluntary public takeover bid of Deutsche Bank AG. In their declaration, the two Postbank bodies came to the conclusion that the bid of per Postbank share is financially adequate and therefore recommended that the Company s free-float shareholders accept the bid. This view was endorsed by a so-called fairness opinion issued by the investment bank J.P. Morgan plc. During the offer period ending on November 24, 2010, the share price hovered at approximately the offer price of 25. The Postbank share began moving downward after the takeover offer expired, - 8 -/- 11 -

9 tracing the path already taken by the European banking index. Overall, the Postbank share price sank 9% in 2010 after climbing 48% a year earlier. The share currently trades at about 21 to 22. During the course of takeover bid, more than 21% of Postbank shares were offered for sale to Deutsche Bank. That corresponds to approximately two-thirds of the shares in free float at the time. As a result, Deutsche Bank was able to increase its shareholding to nearly 52% and has consolidated Postbank in its accounts since December Synchronization with Deutsche Bank Without doubt, Postbank has thus become part of one the world s highest-performing and most stable financial institutions. Deutsche Bank recognizes Postbank s strength and has confirmed both our strategy and its decision to maintain our brand. Now it is up to us to continue to strengthen Postbank within the Deutsche Bank Group in the interest of all Postbank stakeholders. Our contribution to Deutsche Bank s first-quarter 2011 results and the recognition that we have received for our achievements show that we have already done quite well in this respect. As far as legally possible, the ongoing synchronization process is based on the successful and professional partnership the two companies have entertained for the past two years. Together we have appointed working groups that focus on the identification of value-creating measures. This process will take more time until the path for a closer union of the two banks has been charted. For this reason, I cannot specify any details here today. One thing is certain, though: Postbank will embody an important cornerstone of Deutsche Bank s strategy, particularly in the retail banking business, but also in the business with business and corporate customers. Our brand will continue to stand for a simple, but well-structured business model. This clearly differentiates our integration into Deutsche Bank from other recent mergers in the German banking sector. Nothing will change for our customers. They will remain Postbank customers. They have consciously chosen us because they value our services and the type of banking business that we represent. Changing this is neither in our interest nor in the interest of our new majority shareholder. To summarize, I would like to emphasize one more thing regarding our integration into Deutsche Bank: Thanks to our good results, we are entering the new phase of our partnership with self /- 11 -

10 confidence. Postbank does not view the majority takeover by Deutsche Bank as a threat to its identity, but rather as an opportunity to further strengthen its core expertise and thereby effectively support our common objective of becoming a new force or a real sector in the German market alongside the two other existing banking networks. Outlook I would like to close my remarks with a brief look at the near future and a summary of our future strategic priorities. Economic parameters will remain favorable this year. Germany is likely to continue to spearhead the European recovery in 2011, and the continued upswing is increasingly permeating all parts of the population. The German economy is in better health than it has been for a long time. Despite certain normalization, the financial market situation remains fragile at least as long as the European debt crisis has not been resolved for good. Other special challenges for us and for the financial industry as a whole include the new regulatory framework that remains a subject of debate. We want to maintain our momentum in the customer business, continue the positive development of our financials from the first quarter of 2011 and further improve our operational excellence over The fiscal year 2010 earnings performance and the continuation of the positive trends in the first quarter of 2011 demonstrate that Postbank has a solid business model characterized by stable, sustainable income streams from its customer business as well as a good refinancing base. We remain firmly committed to the focus on private, business and corporate customers that we initiated in our Postbank4Future strategy program. The Bank will also continue to reduce its capital market investments and exposure to the associated risks. Our expectations are unchanged: we believe that Postbank will be able to continue the good performance of 2010 in 2011 and 2012 and, as a result, return to the profit zone on a long-term basis /- 11 -

11 We are determined to further expand Postbank s strong position on the German market, and we are confident that we will move forward in our drive to generate profitable growth Thank you very much for your attention! /- 11 -