> comdirect bank AG Half-year report 2014
> Key figures of comdirect group 2014 2013 Change in % Customers, assets under custody and key products 30.6. 31.12. comdirect group* Customers number 2,831,412 2,825,067 0.2 Custody accounts number 1,692,340 1,697,006 0.3 Total assets under custody in million 56,995 55,046 3.5 of which: portfolio volume in million 43,198 41,579 3.9 of which: deposit volume in million 13,797 13,467 2.5 business-to-customer (B2C) business line Customers number 1,846,525 1,823,579 1.3 Custody accounts number 852,387 839,945 1.5 Current accounts number 1,085,189 1,043,192 4.0 Tagesgeld PLUS ( daily money plus ) accounts number 1,489,446 1,461,471 1.9 Total assets under custody in million 33,624 31,891 5.4 of which: portfolio volume in million 19,964 18,564 7.5 of which: deposit volume in million 13,659 13,327 2.5 Credit volume in million 175 159 10.1 business-to-business (B2B) business line Customers number 984,887 1,001,488 1.7 Custody accounts number 839,953 857,061 2.0 Total assets under custody in million 23,372 23,156 0.9 of which: portfolio volume in million 23,234 23,015 1.0 of which: deposit volume in million 138 140 1.4 Orders and order volume Q1-Q2 Q1-Q2 Executed orders number 9,619,806 9,221,751 4.3 of which: B2C number 5,415,109 5,029,616 7.7 of which: B2B number 4,204,697 4,192,135 0.3 Average order activity per custody account (B2C annualised) number 12.8 12.4 3.2 Order volume per executed order (B2C) 1) in 5,543 5,625 1.5 Earnings ratios Q1-Q2 Q1-Q2 Net commission income in thousand 95,360 92,777 2.8 Net interest income before provisions for possible loan losses in thousand 71,251 67,711 5.2 Administrative expenses in thousand 131,536 127,316 3.3 Pre-tax profit in thousand 43,728 42,959 1.8 Net profit in thousand 32,369 31,830 1.7 Earnings per share in 0.23 0.23 0.0 Return on equity before tax (annualised) 2) in % 16.9 16.7 Cost/income ratio in % 75.3 74.5 Balance sheet key figures 30.6. 31.12. Balance sheet total in million 14,510 14,163 2.5 Equity in million 550 552 0.4 Equity ratio 3) in % 3.5 3.7 Regulatory indicators under CRR/CRD IV 4) 30.6. 31.12. Risk weighted assets 5) in million 634 640 0.9 Eligible amount for operational risks in million 16 16 0.0 Core capital in million 394 392 0.5 Own funds for solvency purposes in million 394 385 2.3 Own funds ratio 6) in % 47.1 45.8 Employees figures 30.6. 31.12. Employees number 1,263 1,233 2.4 Employees full-time basis number 1,130.0 1,100.6 2.7 *) B2C: comdirect bank AG; B2B: ebase GmbH 1) Excluding CFD trades 2) Pre-tax profit/average equity (excluding revaluation reserves) in the reporting period 3) Equity (excluding revaluation reserves)/balance sheet total 4) These figures are calculated on the basis of internal calculations; publication is voluntary and based on national and European implementation rules and the figures are not reported to the Supervisory Authority 5) Risk weighted assets in accordance with Section 113 paragraph 6 CRR (intragroup receivables are zero weighted) 6) Own funds for solvency purposes/(risk weighted assets + 12.5 x eligible amounts for operational risks)
FOREWORD 1 Dear Shareholders, The comdirect group closed the first six months of 2014 with a strong interim result. Earnings were up year-on-year and reached a record high. This is because even though we are continuing to invest in growth, our investments in earlier years are already paying off on the income side: increased customer deposits, an all-time high in the portfolio volume and extremely active securities trading have pushed net interest and commission income above the previous year s level. In spite of the rise in administrative expenses of more than 4m, pre-tax profit of 43.7m once again slightly surpassed the figure at the end of June 2013. And we achieved this despite the fact that market conditions, especially interest rates, are anything but favourable. Our B2C business line has sustained the fast pace of growth and set new records in terms of the number of customers and assets under custody. Net inflows in the portfolio volume of more than 500m within six months and the rise in the deposit volume of over 300m demonstrate that comdirect s offering continues to convince. The current account remains the number 1 growth driver: the number of accounts increased by 42,000. We are thus the main bank for more and more customers and are expanding our market share. With practical new features, we are making it as easy as possible for customers to manage their personal finances and we appeal to a broad range of customer groups. In addition, we are bringing the bank closer to the customer through innovative interactive formats. For instance, the video telephony technology that has already been trialled in advice has also been used in Customer Service calls with customers and prospective customers since June. This means we can effectivly provide our customers with personal assistance. We are intensifying our relationships with customers by expanding our advice and guidance formats for online-savvy private investors. The central element here is the Better financial investments investment tool which we launched in the second quarter. Through the comprehensible and transparent investment process, customers gain access to an attractive and high quality portfolio with a well-diversified investment structure that is perfectly tailored to their individual requirements. The inclusion of low-cost equity and index funds at fair terms and conditions provides the opportunity to achieve returns for asset accumulation and old-age provisioning. This enables even novice investors in particular to make their own financial decisions and protect their money from erosion due to inflation. We are thus offering a convincing alternative to traditional in-branch advice. The very positive response from the outset shows that this is the right time for such a solution.
2 The sophisticated financial investment solutions provided by our subsidiary ebase, which conducts business via institutional partners, have also been very well received. The Managed Depot custody account offers standardised, professional asset management for both small and large investment sums and has already been implemented for several partners. ebase s extensive expertise in the partner-specific configuration of white label solutions remains a decisive advantage here. We will maintain our growth course in both business lines in the second half of the year and step up the pace. The associated investments are reflected not only in the increased marketing budget, but also in product development costs and rising personnel expenses. For the year as a whole, we will further increase our administrative expenses and thus invest in growth for the coming years in line with our strategic priorities. The balance between long-term growth and short-term profitability will be preserved in 2014 as well. We aim to achieve a good result with pre-tax profit of 75m. Sincerely yours, Dr Thorsten Reitmeyer
INTERIM MANAGEMENT REPORT 3 > Foundations of the comdirect group The comdirect group continued to implement its growth-oriented strategy in the first half of 2014 and invested in expanding its range of products and services as well as in marketing. The detailed presentation of the key strategic priorities in the B2C (comdirect) and B2B (ebase) business lines in the 2013 group management report continues to apply, as do the explanations regarding group structure, business model and management. > Market and economic review Macroeconomic framework conditions Overall, development in the real economic framework conditions for the capital market and financial sector was stable during the period under review. According to Eurostat, the statistical office of the European Union, the economy in the eurozone grew by 0.2% in the first quarter. Economists at Commerzbank assume that the pace of growth in the eurozone will not have picked up in the second quarter. The correction of macroeconomic imbalances in some euro countries is still curbing domestic demand. The rate of inflation in the eurozone fell again in May and is likely to remain low for the time being. Estimates by the German Institute for Economic Research (DIW) indicate that growth in Germany slowed to 0.3% in the second quarter, having recorded the strongest growth for three years in the first quarter with a rise of 0.8%. However, companies are continuing to benefit from positive consumer confidence and favourable financing conditions. Framework conditions for brokerage The trend in the equity markets was clearly positive in the second quarter of 2014, including as a result of the European Central Bank s (ECB) looser monetary policy. The DAX stood at 9,833 points on 30 June and was thus 2.9% higher than at the close of 2013. During the quarter, the leading index surpassed the psychologically important 10,000 points mark for the first time. In this environment, trading activity on German stock exchanges dropped slightly versus the highly volatile first quarter. While in terms of value, the volume of trading in the German spot market (XETRA, Frankfurt and Tradegate) was up 5.7% year-on-year, the number of orders remained low: in spite of bigger trading volumes, equities recorded a fall in the number of trades of 19.2%. The volume of exchange traded funds (ETF), exchange traded commodities (ETC) and notes (ETN) declined by 7.1% and the number of trades decreased by 23.4%. In derivatives trading (Euwax and Frankfurt stock exchange), stock exchange turnover outstripped the respective figure for 2013 by 2.0%.
4 Demand for retail funds was restrained by comparison with the previous year. The retail funds included in BVI statistics posted inflows of 13.2bn in the first five months of 2014, down 4.3bn on the same period in 2013. Mixed funds and bond funds were particularly popular, while equity funds posted net outflows. The ebase fund barometer, which still stood at 110 points in January, fell to 74.4 points in June, thus reflecting below-average trading activity by fund advisers at ebase s partners compared with the average figure for 2013. Number of orders Deutsche Börse* shares traded (in billion) ETF/ETC/ETN 1.3 0.8 Framework conditions for banking Equities To support the economy in Southern Europe, the ECB Q1 14 Q2 14 H1 13 H1 14 cut the refinancing rate to 0.15% on 5 June and introduced a negative interest rate of 0.1% for deposits Source: Deutsche Börse AG * XETRA, Frankfurt and Tradegate with the ECB for the first time. In spite of the recent declining trend again, at 0.30% on average for the first six months, three-month EURIBOR was slightly higher than the figure for the previous year (0.21%). Yields on government bonds fell again in the wake of the ECB s decision, with risk premiums for bonds from peripheral euro countries dropping in particular. In the first six months of the year, the yield in comdirect s Treasury portfolio was similar to the level in the first half of 2013. On the whole, margins in the deposit business remained under pressure. Framework conditions for advice The framework conditions for Baufinanzierung PLUS were again dominated by sustained low mortgage interest rates in combination with high property prices in major conurbations. comdirect s Building Finance Sentiment Index, which is calculated in conjunction with opinion research institute Forsa, reached a record high of 113.0 points in June (December 2013: 110.0 points). A value greater than 100 indicates a high level of willingness to take out building finance loans. 13.3 10.3 29.2 2.8 23.6 2.1 Industry and regulatory framework conditions The revised Markets in Financial Instruments Directive (MiFID II) was approved by the European Parliament in April 2014, with transposition into national law expected to be required by 2016. The Directive includes provisions for the regulation of OTC trading platforms, which in future will be subject to registration with the national regulatory authorities. Implementing these rules will also involve expenditure in organisational and technical terms for comdirect. Furthermore, the proposed strengthening of investor protection will mean new regulatory amendments for investment advisers, who are one of ebase s customer groups. In addition, in April the European Parliament approved the uniform European bank resolution mechanism (Single Resolution Mechanism SRM) and the Deposit Guarantee Scheme Directive. These regulations must be transposed into national law by 2016 and are expected to lead to a considerable additional burden for the industry. Business performance and earnings situation at the comdirect group Overall assessment of the economic situation The comdirect group posted a strong performance in the first half of 2014 and slightly outstripped the good result recorded in the first six months of 2013. Consequently, despite the investment in growth planned for the second half of the year, the target result with pre-tax profit for the full year of 75m can be achieved. Furthermore, the comdirect group is on the right path to fulfil the expectations relating to the other key performance indicators set out in the 2013 outlook report.
INTERIM MANAGEMENT REPORT 5 Number of customers of comdirect group (in thousand) Total assets under custody of comdirect group (in billion) 1,014 1,001 985 12.5 13.5 13.8 1,756 1,824 1,847 38.2 41.6 43.2 Customers B2B Customers B2C Deposit volume Portfolio volume 30.6.2013 31.12.2013 30.6.2014 30.6.2013 31.12.2013 30.6.2014 Earnings reached a record level, even though our customers were somewhat less active in securities trading in the second quarter than in the first three months. Development in net interest income was somewhat better than forecast at the start of the year and was supported by net fund inflows in the B2C business line and the adjustment of deposit interest rates. The partial reversal of provisions for possible loan losses that had been recognised in previous years also had a positive impact here. Growth in the number of customers in the B2C business line gathered pace again in the second quarter, driven by strong demand for the current account. As a result of sustained net fund inflows and positive price development, assets under custody reached a new all-time high. The Better financial investments investment tool launched in the second quarter is a key element in our advice and guidance offering for online-savvy private investors who want to make their own financial decisions. Business performance As of 30 June 2014, the comdirect group had a total of 2,831.4 thousand customers. In the B2C business line, growth accelerated in the second quarter with the number of customers increasing by a further 19.7 thousand to 1,846.5 thousand (year-end 2013: 1,823.6 thousand). At the same time, the total number of custody accounts, current accounts and Tagesgeld PLUS accounts in the B2C business line climbed by 55.1 thousand or 1.6%. The rise in the annualised figure for order activity per custody account to 12.8 versus the first half of 2013 (12.4) also reflects the high level of customer activity in the period under review. The B2B business line recorded only a slight decline in the number of customers in the second quarter as a result of active new business. At the middle of the year, the number stood at 984.9 thousand (end 2013: 1,001.5 thousand). Compared with the figure at year-end 2013, this reflects the cancellation of custody accounts for capital-building payments (VL) in particular following the expiry of the corresponding VL contracts, which primarily affects the first quarter. In addition, the typical downturn in the number of custody accounts taken over from investment companies in earlier years continued to a small extent. In this context, the decrease in the number of intermediaries stemming from the amendment of IFA legislation in accordance with Section 34f of the Trade Regulation (GewO) is also evident. The increase in assets under custody in the comdirect group in the first half of 2014 of 3.55% to a new record of 57.00bn as of 30 June 2014 (end 2013: 55.05bn) was essentially due to the rise in the portfolio volume, which at 43.20bn was 1.62bn higher than the figure at year-end 2013 ( 41.58bn). In the second quarter alone, the portfolio volume increased by 1.34bn as a result of price effects and net fund inflows. The deposit volume totalled 13.80bn (end 2013: 13.47bn) and thus also registered a significant rise once again after the sideways movement in the first quarter. The upturn was primarily attributable to the higher number of current and Tagesgeld PLUS accounts. Earnings situation At the end of the first six months, pre-tax profit of 43.7m surpassed the respective figure for the previous year ( 43.0m) by 1.8%. Despite higher spending on growth, the result achieved by the comdirect group in the second quarter of 19.6m virtually matched the previous year s level ( 19.3m). The figure includes a positive non-recurring effect in the other operating result (see page 7).
6 Pre-tax profit of comdirect group (in million) Earnings after tax per share (in ) 43.0 43.7 0.23 0.23 24.1 19.6 0.13 0.10 Q1 14 Q2 14 H1 13 H1 14 Q1 14 Q2 14 H1 13 H1 14 Income climbed by 2.3% year-on-year to 174.8m, while administrative expenses rose by 3.3% to 131.5m. The cost/income ratio thus increased from 74.5% in the first half of 2013 to 75.3%. Based on the pre-tax profit and the average equity in the reporting period (excluding the revaluation reserves), the return on equity amounted to 16.9% (previous year: 16.7%). The comdirect group s net profit for the period after tax stood at 32.4m (previous year: 31.8m), which equates to earnings per share of 0.23 (previous year: 0.23). Net interest income and provisions for possible loan losses With market interest rates still low, at 36.1m net interest income before provisions for possible loan losses in the period April to June was slightly higher than in the first quarter of 2014. By comparison with the first half of 2013, net interest income before provisions for possible loan losses climbed by 5.2% to 71.3m (previous year: 67.7m), with the increase stemming from the adjustment in customer interest rates during the course of the previous year as well as a higher deposit volume and other factors. At 0.8m, provisions for possible loan losses were positive in the second quarter. This is due to the regular validation and adjustment of the parameters used to recognise portfolio loan loss provisions in lending to customers. This resulted in the partial reversal of provisions for possible loan losses, that had already been recognised. At the end of the first six months, charges to the provision for possible loan losses amounted to 0.5m (previous year: 0.5m). After provisions for possible loan losses, net interest income for the comdirect group stands at 71.8m (previous year: 67.2m). Result from financial investments The result from financial investments amounting to 2.7m is essentially attributable to the selective disposal of securities. The previous year s high figure of 8.7m was due to the reallocation within the special fund portfolios which was carried out in response to changed market conditions. Result from hedge accounting and trading result As of 30 June, comdirect held interest rate swaps with a nominal volume totalling 48.7m (end 2013: 83.1m) to hedge interest rate-related changes in the market value of several bonds with the same volume and same maturity. In addition, we used forward rate agreements to a small extent to manage the interest book in the period under review. Their nominal volume had been reduced to zero as of the reporting date (end 2013: 650.0m). As a consequence of the above, the result from hedge accounting to be disclosed for the reporting period amounted to 4 thousand (previous year: 11 thousand) and the trading result to 29 thousand (previous year: 59 thousand). Net commission income Net commission income of 95.4m was significantly higher than the previous year s figure ( 92.8m). The rise of 2.8% results in particular from the upturn in the number of trades in the B2C business line in the first quarter. At 43.8m in the second quarter, net commission income was slightly down on the previous year s figure ( 46.8m). Custody account fees and sales follow-up commission from funds business remained largely stable versus the first half of 2013. Commission income from payment transactions exceeded the respective figure for 2013 due to the
INTERIM MANAGEMENT REPORT 7 Net commission income and net interest income (in million) Administrative expenses (in million) 92.8 95.4 67.7 71.3 8.9 8.6 83.5 85.5 51.6 Q1 14 35.1 43.8 36.1 Q2 14 H1 13 H1 14 Net interest income before provisions for possible loan losses Net commission income Q1 14 4.4 42.2 18.2 4.5 43.3 18.9 Q2 14 H1 13 35.2 37.1 H1 14 Depreciation Other administrative expenses Personnel expenses increased number of current accounts, while the contribution from the advisory business approximately matched the level of net commission income in the previous year. Other operating result The other operating result includes a non-recurring effect in the amount of 4.5m in the second quarter. This stemmed from the reversal of a provision for VAT related obligations for several years. The result also encompassed the reversal of other provisions. Over the first six months, the other operating result increased from 1.5m in the previous year to 5.4m. Administrative expenses Higher administrative expenses of 131.5m (previous year: 127.3m) reflect the increasing size of the comdirect group and greater spending on growth in the period under review. At 37.1m, personnel expenses were up by 5.3% on the previous year s figure ( 35.2m) due to the rise in the number of employees and salary adjustments. Other administrative expenses, which include marketing, communication and consulting expenses as well as expenses for external services among other costs, amounted to 85.5m and were up 2.4% on the previous year s figure ( 83.5m). The year-on-year increase in the second quarter stood at 5.1% and was essentially attributable to higher marketing expenses. At 8.9m, the level of depreciation remained at a similarly moderate level to the previous year ( 8.6m). B2C business line Business development in brokerage Through the continual expansion of its advice and guidance formats, comdirect is enabling its customers to make their own investment decisions online. In the second quarter, we enhanced our already extensive information offering with our self-advice tool. The Better financial investments investment assistant recommends a portfolio of suitable funds and ETFs based on the respective investment sum, term and risk appetite and the investments can then be carried out via a block order. Customers can also manually select investments in the three asset classes of equities, bonds and commodities. Moreover, comdirect offers its customers the option of purchasing combined investment proposals and portfolios by block order outside the Better financial investments tool, the first bank in Germany to do so. Since May, customers have been able to use limit functions also for equities, funds and ETFs in OTC trading (LiveTrading). In addition, we offered our brokerage customers two no-fee campaigns in the second quarter.
8 Executed orders B2C (in million) 5.03 5.42 Portfolio volume B2C (in billion) 16.92 18.56 19.96 2.97 2.44 Q1 14 Q2 14 H1 13 H1 14 30.6.2013 31.12.2013 30.6.2014 Our real-time trading platform (ProTrader), which was launched in March and combines first class functionality with ease of use and a very attractive price, was well received by our customers in brokerage. Securities trading comdirect customers were very active in securities trading in the first half of the year. The Brokerage Index, which is calculated monthly, shows a distinctly above-average level of trading in equities, funds and bonds since the start of the year. Warrants and certificates were somewhat less popular. In the first six months of 2014, 5.42 million orders were executed, which is a rise of 7.7% on the previous year (5.03 million). The number of orders per custody account (on annualised basis) climbed to 12.8 (previous year: 12.4). Securities turnover totalled 23.32bn, corresponding to an increase versus the previous year ( 22.85bn) of 2.1%. Portfolio volume The portfolio volume in the B2C business line rose by 1.40bn in the first half of the year. This resulted primarily from price effects amounting to 0.9bn. As of 30 June 2014, the portfolio volume stood at 19.96bn (end 2013: 18.56bn) and thus reached a new record high. The number of custody accounts increased in the first six months by 1.5% to 852.4 thousand (end 2013: 839.9 thousand). Business development in banking As the main product for the broad-based growth that comdirect aims to achieve, the current account was strengthened in the first half of the year with the You re safe with us promise (see quarterly report 2014) and new features relating to its associated cards. To further simplify financial management for our customers, since the second quarter they have been able to transfer sums of up to 1,000 between their own accounts with the bank, for instance from the current account to the Tagesgeld PLUS account or a defined payment account without the need for a TAN. Deposit business Compared with the end of 2013 (1,043.2 thousand), the number of current accounts was up by 42.0 thousand to 1,085.2 thousand. At the same time, the number of Tagesgeld PLUS accounts, usually opened in conjunction with the current account, increased to 1,489.4 thousand (end 2013: 1,461.5 thousand).
INTERIM MANAGEMENT REPORT 9 Deposit volume B2C (in billion) 12.38 13.33 13.66 Number of current accounts and Tagesgeld PLUS accounts (in thousand) 1,461.5 1,489.4 1,392.0 961.4 1,043.2 1,085.2 30.6.2013 31.12.2013 30.6.2014 30.6.2013 31.12.2013 30.6.2014 Tagesgeld PLUS accounts Current accounts The deposit volume, which had fallen slightly in the first quarter, increased by 0.40bn in the second quarter to 13.66bn (end 2013: 13.33bn). We registered inflows in Tagesgeld PLUS accounts and current accounts in particular. Having declined in the first quarter due to maturities, the deposit volume in fixed-term deposits stabilised. As of 30 June 2014, 93.3% (end 2013: 92.6%) of liabilities to customers in the B2C business line were attributable to deposits due on demand. Lending business The volume of utilisation of loans against securities and draws on overdraft facilities by private customers amounted to 175m, up by 10.1% on year-end 2013 ( 159m). The volume of loans against securities increased by 16.1% due to somewhat greater utilisation of settlement accounts for securities investments. The volume of overdrafts was on a par with the figure at year-end 2013. comdirect acts as an intermediary for building finance and consumer loans. Both offerings therefore had no impact on the bank s lending volume. Business development in advice Despite high property prices, low interest rates and the trend towards investments in real assets continued to foster strong demand for our Baufinanzierung PLUS advice service. However, growth is increasingly being hampered by the limited supply of attractive property. At 284m, the volume of building finance placed was higher than the figure for the previous year ( 240m). As of 30 June, our Anlageberatung PLUS investment advice service was being used by 2,880 customers (end 2013: around 2,660 customers). Assets under advice totalled 263m (end 2013: 227m). comdirect is currently trialling investment advice by video telephony, as well as conducting pilot projects for faceto-face advice in Quickborn and in the Baufinanzierung PLUS office in Hamburg. As a result of the positive customer response, the trial is to be expanded during the second half of the year. Earnings situation in the B2C business line With pre-tax profit of 38.1m in the first half of 2014, the B2C business line matched the previous year's level ( 38.2m). The cost/income ratio rose from 73.7% to 74.8%, as a result of the largely parallel increase in income and expenses. The earnings components related to the comdirect group s deposit business net interest income, trading result, result from financial investments and the result from hedge accounting stem mainly from the B2C business line and are thus explained at group level (see page 6). Net commission income climbed by 2.8% to 70.6m (previous year: 68.7m), primarily because of the increased number of trades. Administrative expenses exceeded the figure for the previous year ( 108.2m) at 111.6m. Both personnel expenses and other administrative expenses went up as a result of growth.
10 The other operating result rose to 5.1m (previous year: 1.3m) as a consequence of the situation at group level outlined above. B2B business line Business development In the B2B business line, the focus remained on marketing for the Managed Depot custody account as a partner-specific white label solution. The product is particularly attractive for asset managers and was implemented for three additional partners in the second quarter. Total assets under custody B2B (in billion) 21.45 23.16 23.37 Moreover, ebase recorded notably increased demand for ETFs in the first half of the year, particularly in conjunction with VL savings plans, which ebase is the only service provider in Germany to offer. Over a third of all new VL savings plans concluded now feature ETFs. 30.6.2013 31.12.2013 30.6.2014 Custody account customers and portfolio volume The number of customers at ebase fell by 16.6 thousand to 984.9 thousand. The cancellations primarily affected custody accounts for capital-building payments and other expiring savings plans; however this effect related almost exclusively to the first quarter. In the second quarter, the downturn in customers was significantly curbed by the upswing in new business. The portfolio holdings that have been taken over via migrations are subject to a natural downturn and these also registered a slight decline. The number of custody account customers decreased by 2.0% in the first six months of 2014 to 840.0 thousand (end 2013: 857.1 thousand). Nevertheless, the portfolio volume climbed to 23.23bn (end 2013: 23.02bn). The rise of 0.21bn in the second quarter was primarily due to price effects. Accounts and deposit volume At 138m, the deposit volume was slightly lower than at the end of 2013 ( 140m). Most of the deposit volume was attributable to the settlement accounts linked with the custody account (Flex account). At the moment, these accounts are still primarily being used for buying and selling transactions in funds business, but are also available to accept inflows from expiring insurance policies and as a fully fledged online-type account for payment trans actions. Earnings situation in the B2B business line At 5.6m, pre-tax profit in the B2B business line outstripped the respective figure for 2013 ( 4.8m) by 16.2%. The cost/income ratio improved to 78.1% (previous year: 79.9%). Net commission income climbed by 2.6% to 24.7m, essentially due to the higher funds volume compared with the first six months of 2013 and resultant sales follow-up commission. Original net interest income from investments increased to 243.6 thousand (previous year: 173.0 thousand). As a result of negative interest rate effects from pension provisions, net interest income amounted to 137.7 thousand overall. The rise in administrative expenses to 20.0m (previous year: 19.1m) was mainly attributable to the increase in personnel expenses and higher depreciation on investments in new products in the previous year. Investments in the course of implementing regulatory issues additionally had an impact. Financial situation and assets of the comdirect group The Treasury department of comdirect bank ensures adequate cash holdings at all times and manages the liquidity and interest rate risk in particular. By investing customer deposits in the money and capital markets, the comdirect group achieves a positive interest margin. Here the bank once again carried out a significant share of
INTERIM MANAGEMENT REPORT 11 the investments with companies in the Commerzbank Group. Claims on Commerzbank AG and selected other subsidiaries in the Commerzbank Group as well as the securities of these companies are comprehensively collateralised via a general assignment agreement. There are also five special funds that are included in the comdirect group s accounts. Derivative financial instruments are used to a small extent to hedge interest rate risks from bonds and for interest book management in the Treasury portfolio. Investments Investments totalled 6.5m in the first half of 2014 (previous year: 6.4m) and were mostly dominated by the acquisition of IT software. The balance sheet additions in the B2C business line amounting to 3.9m were attributable to continued investment in the IT infrastructure as well as further development of the web presence. In the B2B business line, the investment volume of 2.6m related to the further development of custody account software among other factors. Balance sheet structure of the comdirect group As a result of the increased deposit volume, the balance sheet total of the comdirect group as of 30 June 2014 was up by 346.9m to 14.51bn compared with year-end 2013 ( 14.16bn). As before, around 95% is attributable to liabilities to customers. Assets Claims on banks, which primarily relate to promissory notes and fixed-term deposits, increased by 9.4% compared with the end of 2013 ( 9.05bn) to 9.90bn. The volume of financial investments barely changed and stood at 3.72bn (end 2013: 3.57bn). This line item mainly comprises bonds and Pfandbriefe. Money market transaction with the Federal Republic of Germany with a nominal volume of 500m are included in claims on customers. As a result, this line item increased to 707.8m. Compared with the level on 31 December 2013 ( 1,292.8m), the cash reserve was reduced again to 122.9m. Almost all of this amount relates to the credit balance at Deutsche Bundesbank. Financing The financing side of the balance sheet essentially comprises the deposits of private customers. Liabilities to customers totalled 13.82bn (end 2013: 13.49bn). Liabilities to banks, which reflect the balances of the current clearing accounts at Commerzbank, amounted to 37.1m (end 2013: 2.1m). As of 30 June, the derivatives used for hedging showed a negative fair value of 0.9m overall (end 2013: 2.6m). Provisions stood at 43.6m and were therefore below the respective figure at the end of 2013 ( 45.5m). This is mainly due to the reversal of provisions for VAT related obligations for several years. Other liabilities amounting to 52.1m (end 2013: 62.8m) primarily comprise trade accounts payable. Equity amounted to 549.6m (end 2013: 551.6m). The revaluation reserves included in this figure increased by 19.2m compared with the end of 2013 as a result of the movement in market interest rates. To be able to continue to adjust equity resources in line with business and legal requirements, the annual general meeting approved the creation of new authorised capital amounting to 70.0m up until 14 May 2019. The authorised capital that expired on 5 May 2014 was thus replaced by authorised capital of the same amount. Cash flow statement of the comdirect group Due to the comdirect group s business model, the cash flow from operating activities is predominantly influenced by the development of customer deposits and their reinvestment. In the reporting period, it amounted to 1,113.2m (previous year: 629.0m). The cash reserve built up as part of operational liquidity management as of 31 December
12 2013 was thus reduced again. The cash flow from investment activities stood at 5.9m (previous year: 6.4m). The dividend distribution in May 2014 results in a cash flow from financing activities of 50.8m (previous year: 62.1m). Non-financial performance indicators Relationships with customers To intensify the dialogue with customers, in the first half of the year comdirect presented the company at Börsentag trade fairs in Dresden and Munich, as well as at the Deutsche Anlegermesse investment fair in Frankfurt for the first time. At the re:publica digital conference in May, we bestowed the awards for the best financial blog in Germany, now in their fourth year. The winner in 2014 was the investment portal Feingold Research. comdirect bank measures the quality of its customer relationships by means of regular customer surveys in Customer Services and independent customer satisfaction analyses. As a central indicator of customer satisfaction and loyalty in the B2C business line, the net promoter score (NPS) is ascertained annually and published in the annual report. To promote the dialogue with customers, comdirect also makes use of new interactive formats. For instance, the video telephony technology that has already been trialled in advice has also been used in Cus tomer Service calls with customers and prospective customers since June. The conversation is carried out by telephone as usual, but this time it is accompanied by a video image of the respective staff member. The initial aim is to gain practical experience with the new video chat format. In addition to customer satisfaction, brand awareness and likeability are key competitive factors, especially in the B2C business line. The results attained in performance comparisons also contribute to these. In the first quarter, comdirect was named Online Broker 2014 by financial magazine uro am Sonntag (issue 8/2014). comdirect was the overall winner in the Customer Services category in the uro bank test ( uro, 05/2014) and came top again in the Online Broker of the Year 2014 awards on online portal brokerwahl.de. Personnel The number of employees increased to 1,263 in the first six months of 2014 (end 2013: 1,233). In the B2C business line, the number climbed to 1,016 (end 2013: 988 employees). The number of employees in the B2B business line rose to 247 (end 2013: 245 employees). Number of employees of comdirect group 1,016 971 988 Through focused measures for staff, executive and team development, as well as active employer branding, the comdirect group is positioning itself as an attractive and responsible employer. For instance, in the 237 245 247 second quarter, four employees successfully completed our internal project manager certification programme Business line B2B Business line B2C offered in conjunction with the Frankfurt School of Finance & Management. Moreover, other measures instigated by comdirect include the introduction of an emergency childcare service. Since April, 30.6.2013 31.12.2013 30.6.2014 staff have been able to arrange for their children to be looked after by an emergency childminder. There is also a new parent/child office, where parents can supervise their own children whilst at work. Capital market relations The price of comdirect shares dropped by 8.8% versus the level at the end of December and closed at 7.57 on 30 June 2014. This is partly due to the ex-dividend markdown following the annual general meeting on 15 May 2014. The distributable profit of comdirect bank AG approved in accordance with the German Commercial Code (HGB) of 50.8m, equating to 0.36 per share, was paid out in full.
INTERIM MANAGEMENT REPORT 13 In the same period, the SDAX gained 8.8%, while our sector index, DAXsector Financial Services Performance Index, was up by 7.1%. At 61.0 thousand on average, the number of units traded per day was below the corresponding figure for 2013 (73.7 thousand). The market capitalisation amounted to 1,069m (as of end June 2014). 86.27% of the share capital was represented at the annual general meeting on 15 May in Hamburg and all items on the agenda were passed with majorities of between 96.68% and 99.99%. The shareholders were able to follow the entire annual general meeting with sound and images online and cast their votes in real time via an innovative procedure, as well as view the attendance register electronically. Data and key figures of the share H1 2014 Data German securities code no. 542 800 ISIN code DE0005428007 Stock exchange code COM Reuters: CDBG.DE Bloomberg: COM GR Stock exchange segment SDAX Number of shares issued 141.220.815 no-par-value shares Designated sponsor Commerzbank AG Shareholder structure 81.13% Commerzbank AG 1) 18.87% Free float Key figures H1 2014 Average daily turnover XETRA in units Frankfurt Tradegate Other stock exchanges OTC Opening quotation XETRA (2.1.2014) 8.49 Highest price XETRA (15.1.2014) 2) 8.87 Lowest price XETRA (30.6.2014) 2) 7.57 Closing quotation XETRA (30.6.2014) 7.57 33,838 3,261 7,358 6,700 9,801 60,958 Market capitalisation (30.6.2014) 1,069m Earnings per share 0.23 Total shareholder return 4.5% Dividend yield 3) 4.3% 1) Indirectly 2) Daily closing quotation 3) Based on the dividend paid for financial year 2013 and closing quotation at year-end comdirect share price performance 30.12.2013 to 30.6.2014 (in ) 8.30 January February March April May June 7.57 comdirect share SDAX DAXsector Financial Services Performance Index Source: Bloomberg; indices normalised to the comdirect share price as of year-end 2013 Supplementary report No major events or developments of special significance have occurred since the reporting date of 30 June 2014.
14 > Outlook, risk and opportunity report The economic framework conditions have essentially developed in line with the assumptions indicated in the outlook report of the 2013 group management report (pages 38 to 39 of the financial report). Following the renewed cut in the base rate, market interest rates in the eurozone are likely to remain low for the foreseeable future, while credit spreads for corporate and government bonds should persist at the present level or may even tighten further. We expect the trading environment in the equity market to remain friendly in the second half of the year. Low interest rates will continue to provide incentives to invest in equities and funds in the future as well; however, the price level reached in the equity markets makes them more susceptible to price corrections, which could increase volatility. Given the strong business and earnings development, after completing the first half of the year, we are in principle affirming the expectations outlined in the 2013 outlook report. On the whole, we continue to consider it possible that the B2C business line will record a moderate rise in order numbers compared with 2013. After the rise in the first six months, assets under custody for the year as a whole are also set to outstrip the respective figure for the previous year in the comdirect group and in both business lines. Pre-tax profit for the comdirect group, which was influenced by the extraordinarily favourable trading environment in the first quarter and by a non-recurring effect in the second, is set to reach 75m for the year as a whole. A further increase in spending on growth is planned for the second half of the year and the fourth quarter in particular. On the earnings side, we still expect a slight upturn in net commission income. According to current forecasts, net interest income before provisions for possible loan losses should at least match the previous year s level. In the B2C business line, we aim to achieve strong growth in the number of customers in the second half of the year as well. The current account with its continually improved functionalities and security features remains the central lever and the number of current accounts is set to record further gains in the second half of the year. There is also the Better financial investments tool, through which we facilitate broad-based access to tailored, profitable securities investments and thus offer an alternative to traditional in-branch advice. The great start for the investment assistant highlights the potential of our Better financial investments tool in the coming months and beyond. In the B2B business line, marketing continues to centre on the Managed Depot custody account. The marketing successes in the first quarter demonstrate the potential offered by standardised fund asset management. In addition to asset managers, the product is set to be increasingly offered to small and medium-sized banks in the second half of the year. The position of the comdirect group in terms of risk and opportunity is essentially unchanged compared with the presentation in the 2013 annual report. The risk and opportunity report can be found on pages 40 to 52 of the financial report, while note (58) regarding the risk reporting of financial instruments is on pages 104 to 108. The comdirect group has enough of a risk buffer to certainly withstand even lengthy weak market phases. From today s perspective, there are no realistic risks in evidence that could threaten the continued existence of the comdirect group.
INTERIM FINANCIAL STATEMENTS 15 > Income statement Income statement of comdirect group according to IFRS thousand 1.1. to 30.6. 1.4. to 30.6. 2014 2013 2014 2013 Interest income 99,157 108,007 49,643 53,929 Interest expenses 27,906 40,296 13,507 19,694 Net interest income before provisions for possible loan losses 71,251 67,711 36,136 34,235 Provisions for possible loan losses 508 537 769 443 Net interest income after provisions for possible loan losses 71,759 67,174 36,905 33,792 Commission income 164,261 158,070 77,855 80,007 Commission expenses 68,901 65,293 34,068 33,243 Net commission income 95,360 92,777 43,787 46,764 Result from hedge accounting 4 11 1 5 Trading result 29 59 36 19 Result from financial investments 2,671 8,713 924 1,417 Administrative expenses 131,536 127,316 66,728 63,565 Other operating result 5,441 1,541 4,674 858 Pre-tax profit 43,728 42,959 19,599 19,290 Taxes on income 11,359 11,129 5,105 4,814 Net profit 32,369 31,830 14,494 14,476 Undiluted/diluted earnings per share 1.1. to 30.6. 1.4. to 30.6. 2014 2013 2014 2013 Net profit (in thousand) 32,369 31,830 14,494 14,476 Average number of ordinary shares (number) 141,220,815 141,220,815 141,220,815 141,220,815 Undiluted/diluted earnings per share (in ) 0.23 0.23 0.10 0.10 > Statement of comprehensive income Statement of comprehensive income of comdirect group according to IFRS thousand 1.1. to 30.6. 1.4. to 30.6. 2014 2013 2014 2013 Net profit 32,369 31,830 14,494 14,476 Items which cannot be reclassified to the income statement Change in actuarial gains/losses recognised in equity 2,675 867 1,040 204 Items which can be reclassified to the income statement Changes in the revaluation reserves after tax 19,166 27,438 13,829 15,979 Comprehensive income 48,860 5,259 27,283 1,299 Net profit and comprehensive income for the reporting period are attributable in full to the shareholders of comdirect bank AG.
16 > Balance sheet Balance sheet of comdirect group according to IFRS Assets thousand as of 30.6.2014 as of 31.12.2013 Cash reserve 122,910 1,292,775 Claims on banks 9,903,212 9,048,745 Claims on customers 707,792 189,866 Trading assets 0 150 Financial investments 3,715,178 3,572,484 Intangible assets 27,820 30,383 Fixed assets 11,185 11,687 Current income tax assets 5,938 6,667 Deferred income tax assets 0 3,149 Other assets 15,684 6,931 Total assets 14,509,719 14,162,837 Liabilities and equity thousand as of 30.6.2014 as of 31.12.2013 Liabilities to banks 37,091 2,132 Liabilities to customers 13,816,630 13,487,874 Negative fair values from derivative hedging instruments 880 2,563 Trading liabilities 470 440 Provisions 43,626 45,502 Current income tax liabilities 7,718 9,900 Deferred income tax liabilities 1,604 0 Other liabilities 52,065 62,813 Equity 549,635 551,613 Subscribed capital 141,221 141,221 Capital reserve 223,296 223,296 Retained earnings 111,346 114,020 Revaluation reserves 41,403 22,237 Consolidated profit 2013 0 50,839 Net profit 1.1. to 30.6.2014 32,369 Total liabilities and equity 14,509,719 14,162,837
INTERIM FINANCIAL STATEMENTS 17 > Statement of changes in equity thousand Subscribed Capital Retained Revaluation Group Total capital reserve earnings reserves 1) result Equity as of 1.1.2013 141,221 223,296 103,618 55,519 62,137 585,791 Net profit from 1.1. to 31.12.2013 60,534 60,534 Change in actuarial gains/losses recognised in equity 708 708 Change in the revaluation reserves 33,282 33,282 Comprehensive income 2013 708 33,282 60,534 27,960 Profit distributions 62,137 62,137 Allocation to reserves/ transfer from reserves 9,695 9,695 0 Equity as of 31.12.2013/1.1.2014 141,221 223,296 114,020 22,237 50,839 551,613 Net profit from 1.1. to 30.6.2014 32,369 32,369 Change in actuarial gains/losses recognised in equity 2,675 2,675 Change in the revaluation reserves 19,166 19,166 Comprehensive income from 1.1. to 30.6.2014 2,675 19,166 32,369 48,860 Profit distributions 50,839 50,839 Equity as of 30.6.2014 141,221 223,296 111,346 41,403 32,369 549,635 1) Pursuant to IAS 39 thousand Subscribed Capital Retained Revaluation Group Total capital reserve earnings reserves 1) result Equity as of 1.1.2013 141,221 223,296 103,618 55,519 62,137 585,791 Net profit from 1.1. to 30.6.2013 31,830 31,830 Change in actuarial gains/losses recognised in equity 867 867 Change in the revaluation reserves 27,438 27,438 Comprehensive income from 1.1. to 30.6.2013 867 27,438 31,830 5,259 Profit distributions 62,137 62,137 Equity as of 30.6.2013 141,221 223,296 104,485 28,081 31,830 528,913 1) Pursuant to IAS 39 In financial year 2014, dividends amounting to 50,839 thousand (previous year 62,137 thousand) were distributed to the shareholders of com direct bank AG. This corresponds to 0.36 (previous year 0.44) per share.
18 In financial year 2014, comdirect did not make use of either the existing authorisations of the annual general meeting to purchase own shares for the purpose of securities trading pursuant to Section 71 (1) No. 7 German Stock Corporation Act (AktG) or of the resolutions of the annual general meeting authorising the purchase of own shares pursuant to Section 71 (1) No. 8 German Stock Corporation Act (AktG) for purposes other than securities trading. > Cash flow statement thousand 2014 2013 Cash and cash equivalents as of 1.1. 1,292,775 551,760 Cash flow from operating activities 1,113,157 629,005 Cash flow from investment activities 5,869 6,403 Cash flow from financing activities 50,839 62,137 Cash and cash equivalents as of 30.6. 122,910 1,112,225 Cash and cash equivalents correspond to the balance sheet item cash reserve and include cash on hand and balances held at central banks. The cash flow from operating activities is essentially determined by the taking in of customer deposits and their reinvestment in the money and capital markets. The cash flow from investment activities results from the acquisition and disposal of tangible and intangible assets. The cash flow from financing activities stems from the dividend distribution by comdirect bank AG to its shareholders. The cash flow statement is of minor importance for the comdirect group. It does not replace liquidity and financial planning, nor is it used as a management tool. It provides no information about the actual liquidity situation, which in principle is dependent on the operating business and not on cash on hand or the credit balance with the central bank. > Notes Administrative expenses thousand 1.1. to 30.6. 1.4. to 30.6. 2014 2013 2014 2013 Personnel expenses 37,055 35,200 18,844 17,969 Other administrative expenses 85,538 83,518 43,326 41,211 Marketing expenses 28,216 28,148 15,940 12,542 Communication expenses 4,177 6,317 2,212 4,512 Consulting expenses 8,122 7,008 4,160 3,612 Expenses for external services 22,441 20,594 10,893 10,691 Sundry administrative expenses 22,582 21,451 10,121 9,854 Depreciation of office furniture and equipment and intangible assets 8,943 8,598 4,558 4,385 Total 131,536 127,316 66,728 63,565
INTERIM FINANCIAL STATEMENTS 19 Segment reporting by business line thousand 1.1. to 30.6.2014 B2C B2B Consolidation comdirect group total Net interest income before provisions for possible loan losses 71,389 138 0 71,251 Provisions for possible loan losses 508 0 0 508 Net interest income after provisions for possible loan losses 71,897 138 0 71,759 Net commission income 70,634 24,743 17 95,360 Result from hedge accounting 4 0 0 4 Trading result 29 0 0 29 Result from financial investments 2,114 557 0 2,671 Administrative expenses 111,592 19,961 17 131,536 Other operating result 5,061 380 0 5,441 Pre-tax profit 38,147 5,581 0 43,728 Segment investments 3,929 2,575 6,504 Segment depreciation 6,770 2,173 8,943 Cost/income ratio 74.8% 78.1% 75.3% Segment income 188,642 86,195 of which external income 188,625 86,037 of which inter-segmental income 17 158 Segment expenses 150,495 80,614 thousand 1.4. to 30.6.2014 B2C B2B Consolidation comdirect group total Net interest income before provisions for possible loan losses 36,215 79 0 36,136 Provisions for possible loan losses 769 0 0 769 Net interest income after provisions for possible loan losses 36,984 79 0 36,905 Net commission income 31,669 12,127 9 43,787 Result from hedge accounting 1 0 0 1 Trading result 36 0 0 36 Result from financial investments 351 573 0 924 Administrative expenses 57,025 9,712 9 66,728 Other operating result 4,527 147 0 4,674 Pre-tax profit 16,543 3,056 0 19,599 Segment investments 2,614 1,445 4,059 Segment depreciation 3,477 1,081 4,558 Cost/income ratio 78.3% 76.1% 78.0% Segment income 92,198 42,994 of which external income 92,181 42,909 of which inter-segmental income 17 85 Segment expenses 75,655 39,938
20 Segment reporting by business line thousand 1.1. to 30.6.2013 B2C B2B Consolidation comdirect group total Net interest income before provisions for possible loan losses 67,839 128 0 67,711 Provisions for possible loan losses 537 0 0 537 Net interest income after provisions for possible loan losses 67,302 128 0 67,174 Net commission income 68,663 24,126 12 92,777 Result from hedge accounting 11 0 0 11 Trading result 59 0 0 59 Result from financial investments 9,060 347 0 8,713 Administrative expenses 108,196 19,141 21 127,316 Other operating result 1,257 293 9 1,541 Pre-tax profit 38,156 4,803 0 42,959 Segment investments 4,522 1,907 6,429 Segment depreciation 6,631 1,967 8,598 Cost/income ratio 73.7% 79.9% 74.5% Segment income 196,842 82,230 of which external income 196,833 82,171 of which inter-segmental income 9 59 Segment expenses 158,686 77,427 thousand 1.4. to 30.6.2013 B2C B2B Consolidation comdirect group total Net interest income before provisions for possible loan losses 34,278 43 0 34,235 Provisions for possible loan losses 443 0 0 443 Net interest income after provisions for possible loan losses 33,835 43 0 33,792 Net commission income 34,322 12,450 8 46,764 Result from hedge accounting 5 0 0 5 Trading result 19 0 0 19 Result from financial investments 1,694 277 0 1,417 Administrative expenses 53,746 9,827 8 63,565 Other operating result 724 134 0 858 Pre-tax profit 16,853 2,437 0 19,290 Segment investments 1,244 1,090 2,334 Segment depreciation 3,401 984 4,385 Cost/income ratio 75.7% 80.1% 76.3% Segment income 95,725 42,275 of which external income 95,725 42,242 of which inter-segmental income 0 33 Segment expenses 78,872 39,838
INTERIM FINANCIAL STATEMENTS 21 The management focuses on two business lines: Business to Customer (B2C) and Business to Business (B2B). The segmentation carried out reflects the internal reporting of the comdirect group and corresponds to the management approach. The respective customer groups in particular constitute the main delimitation feature of the business segments. The B2C business segment comprises the activities of comdirect bank AG. These relate to services in brokerage, banking and advice in direct business with modern investors. The activities in the B2B business segment are carried out via ebase GmbH. Through its B2B partners, ebase offers comprehensive and tailored solutions for asset accumulation and investments. The figures for the B2B business segment were derived from the internal reporting of ebase GmbH and correspond to the contributions of ebase GmbH included in the income statement of the comdirect group. In the B2B business segment, interest income of 141 thousand (previous year: 43 thousand) was achieved as part of Treasury investments in the B2B business segment. The corresponding level of interest expenses was recorded in the B2C business segment. In both segments, segment assets and segment liabilities are not relevant management indicators within the meaning of IFRS 8 and are therefore not shown in the table.
22 Income statement of comdirect group according to IFRS on a quarterly comparison thousand 2013 2014 Q1 Q2 Q3 Q4 Q1 Q2 Interest income 54,078 53,929 54,651 52,157 49,514 49,643 Interest expenses 20,602 19,694 18,345 17,533 14,399 13,507 Net interest income before provisions for possible loan losses 33,476 34,235 36,306 34,624 35,115 36,136 Provisions for possible loan losses 94 443 274 618 261 769 Net interest income after provisions for possible loan losses 33,382 33,792 36,032 34,006 34,854 36,905 Commission income 78,063 80,007 79,510 85,768 86,406 77,855 Commission expenses 32,050 33,243 33,007 36,718 34,833 34,068 Net commission income 46,013 46,764 46,503 49,050 51,573 43,787 Result from hedge accounting 6 5 3 1 3 1 Trading result 40 19 93 126 7 36 Result from financial investments 7,296 1,417 435 95 1,747 924 Administrative expenses 63,751 63,565 60,197 72,353 64,808 66,728 Personnel expenses 17,231 17,969 18,392 19,810 18,211 18,844 Other administrative expenses 42,307 41,211 37,350 47,794 42,212 43,326 Marketing expenses 15,606 12,542 11,052 20,124 12,276 15,940 Communication expenses 1,805 4,512 2,147 3,507 1,965 2,212 Consulting expenses 3,396 3,612 3,828 3,526 3,962 4,160 Expenses for external services 9,903 10,691 10,194 10,487 11,548 10,893 Sundry administrative expenses 11,597 9,854 10,129 10,150 12,461 10,121 Depreciation of office furniture and equipment and intangible assets 4,213 4,385 4,455 4,749 4,385 4,558 Other operating result 683 858 199 3,086 767 4,674 Pre-tax profit 23,669 19,290 23,062 14,011 24,129 19,599 Taxes on income 6,315 4,814 6,302 2,067 6,254 5,105 Net profit 17,354 14,476 16,760 11,944 17,875 14,494
INTERIM FINANCIAL STATEMENTS 23 Fair value of financial instruments The table below shows the fair values of balance sheet items compared with their book values. In accordance with IFRS 13, the fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. thousand Fair value Book value 30.6.2014 31.12.2013 30.6.2014 31.12.2013 Loans and receivables Cash reserve 122,910 1,292,775 122,910 1,292,775 Claims on banks 10,135,305 9,189,230 9,903,212 9,048,745 Claims on customers 707,792 189,866 707,792 189,866 Total 10,966,007 10,671,871 10,733,914 10,531,386 Available for sale financial assets Financial investments 3,715,178 3,572,484 3,715,178 3,572,484 Total 3,715,178 3,572,484 3,715,178 3,572,484 Liabilities measured at amortised cost Liabilities to banks 37,091 2,132 37,091 2,132 Liabilities to customers 13,856,399 13,514,505 13,816,630 13,487,874 Total 13,893,490 13,516,637 13,853,721 13,490,006 Other Trading assets 0 150 0 150 Negative fair values from derivative hedging instruments 880 2,563 880 2,563 Trading liabilities 470 440 470 440 Total 1,350 3,153 1,350 3,153 With regard to the financial instruments in the line items other assets and other liabilities, the book value is equivalent to their fair value. Except for financial investments, the above-stated fair values are to be exclusively allocated to valuation level 2. Allocation of fair values of financial investments is presented in the fair value hierarchy.
24 Fair value hierarchy The table below shows all financial instruments reported in the balance sheet at fair value. It also breaks fair values down into three levels: Level 1: Prices quoted in active markets (not adjusted) for identical assets or liabilities. Level 2: Exemplary prices calculated with the exception of the quoted prices included in Level 1, which can be observed for assets or liabilities either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: Exemplary prices calculated for assets or liabilities, which are not based on observable market data (non-observable input data). thousand 30.6.2014 Total Level 1 Level 2 Level 3 Available for sale financial assets Financial investments 3,715,178 2,380,137 1,335,041 0 Other Trading assets 0 0 0 0 Negative fair values from derivative hedging instruments 880 0 880 0 Trading liabilities 470 0 470 0 Total 3,716,528 2,380,137 1,336,391 0 thousand 31.12.2013 Total Level 1 Level 2 Level 3 Available for sale financial assets Financial investments 3,572,484 2,208,815 1,363,669 0 Other Trading assets 150 0 150 0 Negative fair values from derivative hedging instruments 2,563 0 2,563 0 Trading liabilities 440 0 440 0 Total 3,575,637 2,208,815 1,366,822 0 In the reporting period, securities with a fair value of 134m were reclassified from level 1 into level 2 as no quoted market prices were available. Conversely, securities with a fair value of 51m were reclassified from level 2 into level 1 as an active market is assumed due to increased market activity.
INTERIM FINANCIAL STATEMENTS 25 > Accounting standards and other information Accounting standards The interim financial statements of the comdirect group as of 30 June 2014 were prepared pursuant to Section 37w in conjunction with Section 37y No. 2 of the German Securities Trading Act (WpHG) in accordance with International Accounting Standard 34 (IAS 34) approved and published by the International Accounting Standards Board (IASB). The same measurement and calculation methods were applied as for the financial statements of the comdirect group as of 31 December 2013. The rules to be applied for the first time in the reporting period had no impact on the consolidated financial statements. The calculation of commission income in the funds business was adjusted retrospectively in financial year 2013. The respective figures for prior periods were adjusted accordingly and thus differ from those in the interim report as of 30 June 2013. Consolidated companies There were no changes in the comdirect group s scope of consolidation during the reporting period. Notes to the financial statements The interim management report contains details of the earnings situation and assets of the comdirect group as well as information regarding the macroeconomic environment. Statement of comprehensive income The table shows the other comprehensive income for the period after tax. The following breakdown indicates the tax amounts included. Other comprehensive income for the period thousand Before tax Tax After tax 1 January to 30 June 2014 Actuarial gains and losses 3,665 990 2,675 Change in the revaluation reserves 26,308 7,142 19,166 Other comprehensive income for the period 22,643 6,152 16,491 1 January to 30 June 2013 Actuarial gains and losses 1,178 311 867 Change in the revaluation reserves 36,075 8,637 27,438 Other comprehensive income for the period 34,897 8,326 26,571 Other comprehensive income for the period thousand Before tax Tax After tax 1 April to 30 June 2014 Actuarial gains and losses 1,415 375 1,040 Change in the revaluation reserves 18,488 4,659 13,829 Other comprehensive income for the period 17,073 4,284 12,789 1 April to 30 June 2013 Actuarial gains and losses 247 43 204 Change in the revaluation reserves 21,570 5,591 15,979 Other comprehensive income for the period 21,323 5,548 15,775
26 Result from hedge accounting and trading result As of the reporting date, interest rate swaps with a nominal volume totalling 48.7m (end 2013: 83.1m) were held to hedge interest rate-related changes in the market value of several bonds with the same volume and same maturity. Where these instruments meet the requirements of IAS 39, hedge accounting is applied (micro fair value hedges). In addition, comdirect uses forward rate agreements to manage the interest book. As of the reporting date, no forward rate agreements were held (end 2013: nominal volume 650.0m). As of the reporting date, the above produced a result from hedge accounting of 4 thousand (previous year: 11 thousand) and a trading result of 29 thousand (previous year: 59 thousand). Measurement of financial instruments The fair value is measured at a financial instrument price determined on an active market (level 1 valuation hierarchy). For debt instruments, these are primarily transaction prices and quotations on the interbank market. For equity instruments, the fair value is measured using market prices, and for fund units, the fund s net asset value is used. If no quoted prices for identical or similar financial instruments are available, valuation models that use market data as parameters to the greatest extent possible are used to determine the fair value (level 2 valuation hierarchy). The comdirect group primarily uses the discounted cash flow method. Discounting is performed at interest rates and credit spreads observable on the market. The interest rates have been transferred generally from the 3-month swap curve. The instrument or issuer-specific credit spreads are determined using, for example, the Pfandbrief curve or highly liquid bonds of an issuer. If current verifiable market data is insufficient for valuation with valuation models, unobservable inputs are also to be applied. These initial inputs may contain data that, in the form of approximate values, is determined on the basis of historical data, among other factors (level 3 valuation hierarchy). No instruments are currently allocated to this category at the comdirect group. Transfers between hierarchical levels are always reported as of the last day of the relevant quarter. Further information on the valuation hierarchies may be found in the tables in the notes section. Asset impairments The result from financial investments in the current financial year includes impairment losses of 170 thousand (previous year: 288 thousand). Of this figure, 30 thousand was attributable to the second quarter (previous year: 219 thousand). Provisions for possible loan losses In the balance sheet, the provisions for possible loan losses are deducted from the respective receivables. The provisions for possible loan losses amounting to 2,069 thousand (31 December 2013: 2,311 thousand) relate in full to claims on customers. Provisions were also recognised for risks relating to unutilised credit lines of 4,006 thousand (31 December 2013: 4,780 thousand). In each case, the decreases are based on experience adjustments to the individual parameters used in retail lending. Annual general meeting At the proposal of the Board of Managing Directors and the Supervisory Board, the annual general meeting in Hamburg on 15 May 2014 resolved to use the distributable profit of comdirect bank AG for a dividend of 0.36 per share. Furthermore, at the proposal of the Supervisory Board, the annual general meeting of comdirect bank AG elected PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Frankfurt/Main, Hamburg branch, as the auditors for the annual financial statements and consolidated financial statements as well as the auditors to review the interim financial reports outstanding for financial year 2014 and the interim report for the first quarter of 2015.
INTERIM FINANCIAL STATEMENTS 27 Related party disclosures The parent company of comdirect bank AG is Commerz Bankenholding Nova GmbH, Frankfurt/Main. The ultimate parent company is Commerzbank AG. comdirect bank AG uses services provided by Commerzbank AG through a general agreement effective as of 1 January 1999, as well as through service level agreements concluded separately on this basis. On 6 August 2007, a master agreement was concluded with Commerzbank AG which supersedes the existing general agreement. The individual contracts concluded under the general agreement remain in place until expiry of their respective term. New individual contracts will be concluded based on this master agreement. As part of its money and capital market transactions, comdirect bank AG consigns investment activities to Commerzbank AG and its affiliated companies. These transactions are collateralised in return for payment under an assignment agreement. For placement activities for the benefit of ebase GmbH, Commerzbank AG receives sales and sales follow-up commission. As part of its processing and management services for custody accounts, ebase GmbH procures support services from Commerzbank AG. During the reporting period, there were financial relations with related natural persons (members of the Board of Managing Directors and the Supervisory Board and members of their immediate family), including through the use of products of comdirect group as part of the normal product and service offering. All products and services were carried out at normal third party terms and conditions and are of secondary importance for the company. The related parties did not accrue any unjustified advantage from their position with the comdirect group, nor did the comdirect group suffer any financial losses. For further information, please see note (26) in our financial report for financial year 2013. Declaration of the Board of Managing Directors To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the interim consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the group, and the interim management report of the group presents a fair review of the development and performance of the business and the position of the group, together with a description of the principal opportunities and risks associated with the expected development of the group for the rest of the financial year. Quickborn, 22 July 2014 The Board of Managing Directors Dr Thorsten Reitmeyer Holger Hohrein Martina Palte
28 > Review Report To comdirect bank Aktiengesellschaft, Quickborn We have reviewed the condensed consolidated interim financial statements comprising the condensed balance sheet, condensed income statement, condensed statement of comprehensive income, condensed statement of changes in equity, condensed cash flow statement and selected explanatory notes and the interim group management report of comdirect bank Aktiengesellschaft, Quickborn for the period from January 1 to June 30 2014 which are part of the half-year financial report pursuant to (Article) 37w WpHG ( Wertpapierhandelsgesetz : German Securities Trading Act). The preparation of the condensed consolidated interim financial statements in accordance with the IFRS applicable to interim financial reporting as adopted by the EU and of the interim group management report in accordance with the provisions of the German Securities Trading Act applicable to interim group management reports is the responsibility of the parent Company's Board of Managing Directors. Our responsibility is to issue a review report on the condensed consolidated interim financial statements and on the interim group management report based on our review. We conducted our review of the condensed consolidated interim financial statements and the interim group management report in accordance with German generally accepted standards for the review of financial statements promulgated by the Institut der Wirtschaftsprüfer (Institute of Public Auditors in Germany) (IDW). Those standards require that we plan and perform the review so that we can preclude through critical evaluation, with moderate assurance, that the condensed consolidated interim financial statements have not been prepared, in all material respects, in accordance with the IFRS applicable to interim financial reporting as adopted by the EU and that the interim group management report has not been prepared, in all material respects, in accordance with the provisions of the German Securities Trading Act applicable to interim group management reports. A review is limited primarily to inquiries of company personnel and analytical procedures and therefore does not provide the assurance attainable in a financial statement audit. Since, in accordance with our engagement, we have not performed a financial statement audit, we cannot express an audit opinion. Based on our review, no matters have come to our attention that cause us to presume that the condensed consolidated interim financial statements have not been prepared, in all material respects, in accordance with the IFRS applicable to interim financial reporting as adopted by the EU nor that the interim group management report has not been prepared, in all material respects, in accordance with the provisions of the German Securities Trading Act applicable to interim group management reports. Hamburg, July 22, 2014 PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft Lothar Schreiber Wirtschaftsprüfer (German Public Auditor) ppa. Uwe Gollum Wirtschaftsprüfer (German Public Auditor)
29 > Financial calendar 2014 19 February Press-/Analysts conference in Frankfurt/Main 28 March Annual report 2013 24 April Quarterly report 15 May Annual General Meeting in Hamburg 24 July Half-year report 23 October Nine-month report > Contacts Investor Relations Dr André Martens Phone +49 (0) 41 06-704 19 66 Fax +49 (0) 41 06-704 19 69 email investorrelations@comdirect.de Tobias Vossberg Phone +49 (0) 41 06-704 19 80 Fax +49 (0) 41 06-704 19 69 email investorrelations@comdirect.de Press Johannes Friedemann Phone +49 (0) 41 06-704 13 40 Fax +49 (0) 41 06-704 34 02 email presse@comdirect.de Annette Siragusano Phone +49 (0) 41 06-704 19 60 Fax +49 (0) 41 06-704 34 02 email presse@comdirect.de Stefanie Wallis Phone +49 (0) 41 06-704 13 83 Fax +49 (0) 41 06-704 19 69 email investorrelations@comdirect.de comdirect bank AG Pascalkehre 15 D-25451 Quickborn www.comdirect.de Concept, layout and translation ergo Unternehmenskommunikation, Cologne/Frankfurt am Main/Berlin/Munich Photography David Maupilé, Hamburg You can download our annual and interim reports in German or in English from our website at www.comdirect. de/ir/publications. In addition you will find the annual report as an online version in German and English and initially as of 2013 as a Tablet designed version. Our order service also offers the option of inclusion in the distribution list, which means that the reports will be sent to you on publication. You can download our published press releases in German or in English on our website at www.comdirect.de/pr. The English translation of the comdirect group half-year report is provided for convenience only. The German original is definitive.
30 comdirect bank AG Pascalkehre 15 D-25451 Quickborn www.comdirect.de