Deutsche Postbank AG June 2012
Disclaimer REPRODUCTION PROHIBITED This presentation contains forward-looking statements that relate to macro-economic developments (in particular the development of money and capital market rates), the business and the net assets, financial position and results of operations of the Deutsche Postbank Group. Forward-looking statements are not historical facts and are in some instances indicated by words such as "believe", "anticipate", "predict", "target", "plan", "estimate", "aim", "expect", "assume" and similar expressions. Forward-looking statements are based on the Company's current plans, estimates, projections and forecasts and are therefore subject to risks and uncertainties that could cause actual development or the actual results or performance to differ materially from the development, results or performance expressly or implicitly assumed in these forwardlooking statements. Readers of this presentation are expressly cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this presentation. Deutsche Postbank AG does not intend and does not undertake any obligation to revise these forward-looking statements. Due to rounding, numbers presented throughout this document may not add up precisely to the totals we provide and percentages may not precisely reflect the absolute figures. Page 2
Agenda Postbank at a glance Key developments at Postbank Funding Appendix Page 3
Postbank - Germany s leading retail bank Market leader in German retail banking ~14 million customers 74 bn of retail mortgages ~5 million checking accounts Cost leader in Transaction Banking 8.0 billion transactions 98% paperless low unit costs and highest efficiency Profitable Corporate Banking 30,000 domestic corporate customers Core bank to German SME s Selective, low risk growth Strong distribution platform 1,104 own branches access to several thousand postal outlets Several thousand mobile sales agents Page 4
Postbank s history at a glance 1909 Introduction of postal money transfer system (Postscheckdienst) 1939 Start of postal savings 1990 Unwinding into stand-alone company Postbank (Postal reform I) 1995 Full banking licence, change into stock corporation (Postal reform II) 1999 100% subsidiary of Deutsche Post AG 2000 Integration of DSL Bank, start of brokerage business 2001 Founding of Postbank Leasing GmbH and of PB Factoring GmbH Acquisition of PB Capital Corporation in New York (Corporate banking) 2003 Start of SAP for Banking / founding of Postbank Vermögensberatung AG (mobile sales) 2004 Initial Public Offering (IPO) Start of Transaction Banking Founding of PB Firmenkunden AG (Corporate Banking) 2005 Acquisition of Deutsche Postbank London Branch 2006 Acquisiton of BHW Holding AG and 855 branches of Deutsche Post AG Founding of Postbank Finanzberatung AG and of Postbank Filialvertrieb AG 2007 Pfandbrief license / new branch concept 2008 Deutsche Bank AG acquires stake in Postbank; Implementation in 2009 Takeover of further branches of Deutsche Post AG Deutsche Bank holds 29.88% of Deutsche Postbank AG 2012 Deutsche Bank increases its stake to 93.7% Deutsche Postbank AG (controlled entity) and DB Finanz Holding GmbH are preparing for a control and profit and loss transfer agreement Page 5
Postbank`s ownership structure as of March 2012 freefloat 6.1% 93.9% Deutsche Bank AG 10.3% 13.2% 35.3% Deutsche Bank AG increased its stake to 93.9% and is now owner of 205.5 m Postbank-shares 18.8% Page 6
The role of Deutsche Postbank within Deutsche Bank Group Quelle: Präsentation Rainer Neske, Barclays Global Financial Services Conference 2011 Page 7
Advantages of a strong Retail Banking (1) High liquidity (2) Stable earnings (3) Low costs (4) Solid asset quality Page 8
Retail Banking: Postbank s multi channel distribution network Branch distribution > 1,100 own branches (~1 Mio customer contacts per day) > 4,500 partner agencies of Deutsche Post Area-wide supply of cash ~ 9,000 ATMs within cash group Cash supply in ~ 1,200 Shell gas stations and ~ 180 OBI Hardware stores Mobile distribution Largest German bank owned mobile distribution network Direct distribution Call Center 7 x 24 hours Online-Banking and Online-Brokerage Third party distribution DSL and BHW mortgage distribution partners Page 9
Agenda Postbank at a glance Key developments at Postbank Funding Appendix Page 10
Key developments 2011 Financials Strong improvement of clean profit before tax (PbT): 2011: 984m (+ 113m yoy) One-off items dilute sound performance of customer business: Impairment of Greek sovereign bonds ( -632m, thereof in Q4 2011: -105m) Reported PbT 2011: 78m (Q4 2011: 66m), PaT 2011: 111m (Q4 2011: 105m) Solid growth of net interest income and improvement of risk provisions Strong progress in reduction of financial assets (-21% to 46.5bn) and SCP (-46% to 2.0bn) Material improvement of Tier 1 Ratio: +2.7%-pts since YE 2010 to 10.8% Management s Agenda Further de-risking initiatives: reduction of investment securities and SCP Strong cost containment stays in focus of all initiatives Value oriented growth in major product fields Integration into Deutsche Bank PBC Page 11
Key developments Retail Banking segment Profit before tax ( m) 908 940 +3.5% YE 10 YE 11 Key P&L items ( m) (1) YE 2010 YE 2011 Net interest income 2,341 2,448 Trading income 15-9 Net commission income 1,080 1,041 Total income 3,431 3,479 Admin expenses -2,178-2,259 Risk provisions -355-295 Profit before tax 908 940 Comments PBT growth of 3.5 % due primarily to rise in net interest income by almost 4.6% y-o-y Net fee and commission income declined by 3.6% to 1,041 million, partly attributable to the reduction in the minimum limit for incoming payments for our free checking account Risk provisions declined significantly by 16.9% to 295 million due to continuing positive economic trend in Germany and good labor market situation (1) Figures restated Page 12
PBT 2011: good underlying performance Overview of selected non-recurring items FY 2011 ( m) -237 984 +13% 871-673 78 +4 Reported PBT FY 2011 Trading income Income financial investments Admin. expenses Clean PBT FY 2011 Clean PBT FY 2010 Improvement of clean PbT in FY 2011 vs. FY 2010 (+13%) One-off burdens are attributable to Greek sovereign bonds ( -632m), SCP ( -19m), losses on sales of other financial assets ( -73m), staff related provisions ( -142m), alignment of accounting policy for accruals for partial retirements ( -77m) and a write-down on own real estate ( -18m) Extraordinary gain due to divestment of our Indian subsidiary (Q1: +55m) Bank levy ( -23m) not shown as non-recurring item Page 13
Net interest income (NII): strong performance driven by customer business NII year-on-year ( m) Comments 664 2,405 FY 2009 2,731 FY 2010 2,910 FY 2011 NII driver for revenue growth in 2011 (+6,6 %) Strong performance of NII in retail banking business due to positive development in loan and deposit business Low interest rate environment NII quarter-on-quarter ( m) remains challenging for deposit rich banks 726 700 731 753 Reduction of financial assets in line with communicated strategy results in lower related NII Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Page 14
Commission income: investment in free checking account business Net fee and commission income y-o-y( m) Net fee and commission income q-o-q ( m) 1,316 1,252 339 323 310 318 301 Core Banking Fees Transaction Banking Non-banking Fees (1) 50% 10% 40% FY 2010 FY 2011 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Core banking fees down 40m in 2011 mainly due to positive one-off items in 2010 and reduced hurdle rate for free checking accounts Decline of total commission income of 4.9 % to 1,252m (1) Fees from postal services and third party products sold in branches Page 15
TI and IIS: dilution from Greek government debt crisis Trading income and income from investment securities ( m) Comments Trading income 82 10 Income from investment securities 63 Trading income (TI) in 2011 - SCP +4m -26-55 -2-182 -7-349 Burdens related to SCP ( m) -105 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 +13 Income from investment securities (IIS) in 2011 - One-off gain attributable to divestment of Deutsche Postbank Home Finance Ltd. ( 55m) in Q1 - Impairment of Greek sovereign bonds -632m - SCP -23m -19-24 -6-2 - impairment and realizations bonds and mutual funds and losses on other risk positions -426-73m FY 10 FY 11 Q1 11 Q2 11 Q3 11 Q4 11 Page 16
Admin expenses: increase due to several one-off items 2,864 Admin expenses y-o-y ( m) 2,934 3,204 1,458 1,406 1,492 1,442 1,580 1,624 FY 2009 FY 2010 FY 2011 Personnel costs Other expenses Admin expenses q-o-q ( m) Non recurring items 891 841 788 738 734 30 155 758 736 759 82 Comments Significant non recurring items of -237m in FY 2011 dilute overall good underlying cost development: - staff related provisions ( 142m) - alignment of accounting policy for accruals for partial retirements ( 77m) - write-down on own real estate ( 18m) 23m for the bank levy in 2011 Acquisition of 277 branches in 2010 lead to structural increase of cost base by 54m in 2011 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Page 17
Risk provisions: net addition ratio significantly below 2010 level Risk provisions ( m) Comments 561 383 NAR for total loan book 35bps; significantly below FY 2010 112 95 106 80 102 (50bps) and the European banks sector FY 10 FY 11 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Credit quality supported by good macroeconomic Net addition ratio (NAR) (1) (bps) development in Germany 200 Postbank European banks sector 150 100 80 bps e 50 0 2011: 35bps FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 (1) Net addition ratio (llps/total customer loans); sector data: UBS Research / Q3 2011 Page 18
Successful derisking in 2011 Development of investment portfolio (in bn) Development of SCP (in bn) -21% 59.0 46.5-46% 3.7 2.0 FY 2010 FY 2011 FY 2010 FY 2011 Structured credit portfolio (SCP) reduction of 1.7bn in 2011, thereof 0.2bn in Q4 2011 Financial assets decreased by 43% since 9M 2008 which goes along with a reduction by 21% in 2011 => On track to achieve the envisaged reduction of up to 45% by the end of 2013 already in early 2012 Total assets at 192bn, down 23bn vs. 2010 Page 19
Tier 1 ratio: strong improvement in 2011 Basel II Tier 1 ratio (%) Comments 6.6 8.1 10.8 Tier 1 ratio improved by 2.7%-pts in 2011 Positive effects from derisking of portfolio (SCP, financial assets, CRE) YE 2009 YE 2010 YE 2011 Risk-weighted assets and Tier 1 ratio YE 2009 YE 2010 YE 2011 Target of >9.5% Tier 1 ratio for YE 2012 already achieved Further initiatives to strengthen capitalization on track Credit and counterparty risk ( m) 57,738 58,100 51,038 Market risk positions ( m) 9,725 3,863 2,462 Operational risk ( m) 6,538 4,400 3,550 Tier 1 ratio (%) 6.6 8.1 10.8 Page 20
Agenda Postbank at a glance Key developments at Postbank Funding Appendix Page 21
Funding: Liquidity rich - strong deposit base Customer loans ( bn) Customer deposits ( bn) 109.3 108.9 116.2 113.0 30.3 29.7 22.3 19.8 0.1 1.0 3.9 0.1 20.1 20.1 1.0 4.2 17.0 20.7 17.7 74.0 73.9 Corporate Other Overdrafts Consumer Home finance 56.8 54.8 Corporate Sight Home savings Savings YE 2010 YE 2011 YE 2010 YE 2011 Because regulatory requirements impose need for long refinancing (NSFR) Mortgage business as an attractive pre-requisite for future Pfandbrief issues Page 22
Funding Broadening of our diversified funding mix Strong deposit base due to high volume in savings, home savings and funds on checking accounts Loan Deposit Ratio in the customer business below 100 % after high liability surpluses in previous years High share of owner-occupied residential home finance is ideal to issue Mortgage Pfandbriefe for long term funding by launching a Debt Issuance Programme Debt Issuance Programme (DIP) since December 2007 To optimize the funding at the same time Postbank requested a Pfandbrief licence Inaugural Jumbo Mortgage Pfandbrief issued in January 2008 Follow up Jumbo Mortgage Pfandbrief in May 2008 and February 2009 Inaugural Public Sector Pfandbrief in July 2009; tapped in August 2009 First 10 year Jumbo Mortgage Pfandbrief since summer 2009 placed in March 2010 In February 2011 Postbank launched a successful 10 year Jumbo Mortgage Pfandbrief Privat placements issued frequently Page 23
Postbank Pfandbriefe / Covered Bonds Maturity Profile Volume (in m) as of March 31, 2012 3,500 3.500 Total: ~ 23bn 3,000 3.000 2,500 2.500 2,000 2.000 1,500 1.500 1,000 1.000 500 0 2012 2013 20140.2 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 >2025 2.49 0 0.22 1.40 2.00 Outstanding issues amounted to ~ 31bn, more than 70 percent are covered bonds 2.49 1.07 2.00 2.49 Achieve a balanced 1.40proportion between 2.00small taylor made products and benchmark issues Emphasis on Mortgage Pfandbrief as strategic key funding instrument In 2011 the issued volume was reduced due to Postbank s comfortable liquidity situation Page 24
Postbank Jumbo Pfandbriefe Maturity Profile Outstanding Issues Comments in m 1,500 Total: 7.00 bn Aaa/AAA/AAA for all Public and Mortgage Pfandbriefe 1,000 After receiving the Pfandbrief licence the first Jumbo Pfandbrief launched in January 2008 500 Today strategic benchmark issues amounts to 7 bn 0 due due due 01/2013 05/2015 02/2014 Mortgage Pfandbriefe due due due 07/2014 03/2020 02/2021 Public Sector Pfandbriefe Strong Focus on Mortgage Pfandbriefe in line with our business model Page 25
Postbank Mortgage Collateral Pool: Distribution by property type Residential mortgage loans (% of numbers of loans) Comments 3.9 Total: 92,969 / 7.82 bn (1) Total pool size of 8.56bn with 7.82bn of residential mortgage loans across Germany only 27.6 66.1 Almost 94% of the financed properties are owner-occupied residential homes owner-occupied houses owner-occupied apartments Rented houses Rented apartments Substitute collateral of 0.73 bn in highly liquid State bonds No exposure in Portuguese, Italian, Irish, Greek or Spanish Bonds (1) As of March 31, 2012 Page 26
Postbank Mortgage Collateral Pool: Distribution by region Residential Mortgage Loans (in %) Comments Total: 92,969 / 7.82 bn. (1) Thuringia Mecklenburg Western Pomerania Hamburg Saxony-Anhalt Rhineland Palatinate Saxony Berlin Brandenburg Bremen Saarland North-Rhine Westphalia Bavaria The collateral pool purely consists of German residential assets (despite of substitute collateral) It is broadly diversified throughout Germany, almost in line with the general distribution of mortgage loans in Germany Granular Cover Pool: Average Mortgage loan size EUR 84,128 Schleswig-Holstein Over 99% of the loans are smaller than 250 tsd Euro Hesse Lower Saxony Baden - Wuerttemberg Loans valuate already longer than 58 months (weighted average) (1) As of March 31, 2012 Page 27
Postbank Mortgage Collateral Pool: Risk management features Value of Mortgage Pool as of March 31, 2012 Comments Mortgage Assets Mortgage Pfandbriefe in circulation Results from stress tests (dynamic method) show a very comfortable overcollateralization (2% required by law) Overcollateralisation (in bn) (in bn) (in bn) (in %) Nominal (Pfandbrief Act) 8.56 7.26 1.30 17.90 NPV (Net present value) + 100 bp dynamic method./. 100 bp dynamic method 10.06 8.04 2.02 25.12 9.42 7.59 1.83 24.11 10.77 8.55 2.22 25.96 No non-performing loans in the pool; they are immediately removed once they occur Page 28
Postbank Public Sector Collateral Pool Structure of Public Sector Pool (1) Comments Total: ~ 2.7bn KfW guaranteed residential mortgage loans ~ 15.4 % ~ 84.6 % Public Sector Bonds Pool rating of AAA by Standard & Poor's Aaa by Moody's AAA by Fitch Ratings There are two components in the pool: - KfW guaranteed residential mortgages - Public Sector Bonds Since the mortgage portfolio is containing exclusively seasoned residential mortgages in small sizes, Postbank opted for the KfW guarantee as the most cost efficient way to achieve cover pool eligibility for the portfolio 0% risk weighted pool (1) As March 31, 2012 Page 29
Postbank Public Sector Collateral Pool Total ~ 2.7bn Structure of Public Sector Pool (1) Public guaranteed residential mortgage loans 15% German regional Austria authorities 1% 34% Belgien 9% EU 9% German institutions 32% Comments The portfolio of public guaranteed residential mortgage loans: Purely German residential mortgages Geographically diversified throughout Germany High granularity ø loan size of 52,074 Very low (WA) LTV of < 41% (WA) seasoning of ø15 years (WA) maturity of ø 3.6 years Results in triple protection for the investor: Via Postbank directly Via the collateral pool Via KfW guarantee on residential mortgages No exposure in Portuguese, Italian, Irish, Greek or Spanish bonds (1) As of March 31, 2012 Page 30
Postbank Public Sector Collateral Pool: Risk management features Value of Public Sector Pool as of March 31, 2012 Comments Nominal (German Mortgage Bank Act) NPV (Net present value) + 100 bp dynamic method./. 100 bp dynamic method Public Sector Assets Public Sector Pfandbriefe in circulation Results from stress tests (dynamic method) show a very comfortable overcollateralization (2% required by law) Overcollateralisation (in bn) (in bn) (in bn) (in %) 2.70 1.90 0.80 42.11 2.88 2.04 0.84 41.18 2.79 1.98 0.81 40.91 2.97 2.10 0.87 41.43 Page 31
Agenda Postbank at a glance Key developments at Postbank Funding Appendix Page 32
Selected non recurring items FY 2011 ( m) Q1 Q2 Q3 Q4 FY11 Total -96-223 -384-203 -906 Trading income +4-1 +1 0 4 SCP +4-1 +1 0 4 Income from investments +55-222 -385-121 -673 SCP +9-23 -7-2 -23 Other bonds and mutual funds -9-13 -37-14 -73 Greek sovereign bonds -186-341 -105-632 Divestment Indian subsidiary +55 +55 Admin. expenses -155-82 -237 Staff related provisions -52-90 -142 Accruals for partial retirement -103 26-77 Write down of fixed assets -18-18 Page 33
Balance sheet ( m) 12/31/09 12/31/10 12/31/11 Assets Loans and advances to other banks 14,467 12,140 20,322 Loans and advances to customers 111,043 111,783 110,740 Allowances for losses on loans and advances -1,641-1,764-1,826 Trading assets 20,471 24,150 6,892 Investment securities 72,359 58,980 46,480 Other items (1) 9,910 9,395 9,374 Total assets 226,609 214,684 191,982 Shareholders' equity and liabilities Deposits from other banks 39,318 22,419 20,024 Due to customers 131,988 136,476 134,126 Securitised liabilities 16,722 12,860 12,727 Trading liabilities 22,434 26,174 8,591 Provisions 2,148 2,287 2,557 Other items (2) 8,478 8,841 8,248 Shareholders' equity 5,251 5,627 5,709 Total shareholders' equity and liabilities 226,609 214,684 191,982 (1) Cash reserve, Hedging derivatives, Property and equipment, Intangible assets, Deferred tax assets, Other assets (2) Hedging derivatives, Other liabilities, Subordinated debt Page 34
P&L: quarterly overview ( m) Group Q4 11 Group Q3 11 Group Q2 11 Group Q1 11 Group Q4 10 Group Q3 10 Group Q2 10 Group Q1 10 Net interest income 753 731 700 726 664 721 671 675 Net trading income 63-7 10-2 -26-92 -40-83 Net income from investment securities -105-349 -182 82-55 0 26 28 Net fee and commission income 301 318 310 323 339 318 316 343 Total income 1,012 693 838 1,129 922 947 973 963 Administrative expenses -841-734 -738-891 -788-738 -716-692 Allowances for losses on loans and advances -102-80 -106-95 -112-134 -175-140 Other income / expenses -3-11 8-1 -3-4 12 0 Profit before Tax 66-132 2 142 19 71 94 131 Net profit 105-92 -7 105-80 65 57 96 Cost / income ratio 83.1% 105.9% 88.1% 78.9% 85.5% 77.9% 73.6% 71,9% Return on equity before taxes 4,6 % -9.1% 0.1% 9.9% 1.3% 5.1% 6.8% 9,8% Page 35
P&L: segment reporting ( m) RB CB TB FM CC / Cons Group Net interest income FE 2011 2,448 567 2-112 5 2,910 Net interest income FE 2010 (1) 2,341 624 2-228 -8 2,731 Trading income FE 2011-9 0 0 79-6 64 Trading income FE 2010 (1) 15 0 0-255 -1-241 Income from investments FE 2011-1 0 0-612 59-554 Income from investments FE 2010 (1) -5-14 0 18 0-1 Net fee income FE 2011 1,041 106 327-12 -210 1,252 Net fee income FE 2010 (1) 1,080 123 363-5 -245 1,316 Total revenues FE 2011 3,479 673 329-657 -152 3,672 Total revenues FE 2010 (1) 3,431 733 365-470 -254 3,805 Admin expenses FE 2011-2,259-152 -295-132 -366-3,204 Admin expenses FE 2010 (1) -2,178-151 -318-106 -181-2,934 Loan loss provisions FE 2011-295 -85 0-3 0-383 Loan loss provisions FE 2010 (1) -355-209 0 3 0-561 Other income / expenses FE 2011 15 12 14-3 -45-7 Other income / expenses FE 2010 (1) 10 9 20 2-36 5 Profit before Tax FE 2011 940 448 48-795 -563 78 Profit before Tax FE 2010 (1) 908 382 67-571 -471 315 (1) Figures restated Page 36
Commercial real estate: reduction of loan volume and net addition ratio Net addition ratio (1) (bps) 2008 restated 2009 2010 2011 228 127 123 95 83 101 42 15 Comments Annualised net addition ratio (NAR) for CRE at 42 bps Total CRE loan volume declined by 5.7% since YE 2010 due to selective new business activities Total portfolio PB London (UK) & PB Capital (US) CRE loan volume ( bn) CRE loan volume by region 2011 (%) 18.0 17.6 16.6 Western Europe 21 Other 9 Germany 34 YE 2009 YE 2010 YE 2011 (1) Annualized loan loss charges / average loan exposure North America 20 UK 16 Page 37
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Contact Postbank: Credit & Capital Markets Christian Herter Abteilungsleiter Credit & Capital Markets christian.herter@postbank.de Tel. +49-(0)228/920-51550 Sabine Bosch sabine.bosch@postbank.de Tel. +49-(0)228/920-54103 Georg Briele georg.briele@postbank.de Tel. +49-(0)228/920-54104 Claudia Burgner claudia.burgner@postbank.de Tel. +49-(0)228/920-54102 Marc Heimeroth marc.heimeroth@postbank.de Tel. +49-(0)228/920-54102 Richard von Heusinger richard.vonheusinger@postbank.de Tel. +49-(0)228/920-51551 Franziska Berndt franziska.berndt@postbank.de Tel. +49-(0)228/920-54101 Page 39