In the first six months of 2005, Deutsche Postbank AG continued its successful course. At €338 million, profit before tax was 17% up on the first half of the previous year. The result was also positive in a quarterly comparison. Against the strong first quarter, Postbank improved profit before tax by 4.8%, on a year-on-year basis by as much as 18.5%.
After six months, the cost-income ratio was 68.6% against 70.8% in the comparable period of the previous year. In its traditional banking business (without Transaction Banking), the figure declined from 69.9% in the first half-year of 2004 to as low as 65.9%. Return on equity before taxes increased to 14.0% after 12.6% in the comparative period of the previous year.
The growth driver was again higher income, up 10.6% to €1.39 billion. Administrative expenses increased comparatively moderately by 7.3%, due to the start of the new Transaction Banking business division. The 25.6% higher allowance for losses on loans and advances was in line with expectations and moved parallel to expansion of the loan business.
Balance-sheet related income, i.e. the total of net interest income, net income from investment securities and net trading income, moved up by 4.7% to €1.04 billion. Despite the historically low interest environment, net interest income developed very positively. Particularly as a result of the successful customer business, it moved up by 14.0% year-on-year to €848 million. At €99 million, net income from investment activities was 20.2% lower year-on-year. For net trading income there was a comparable decline, by 25.2% to €95 million.
The significant increase of net fee and commission income by 33% to €351 million reflects the new Transaction Banking business division, which was only partly included in the previous year period. But ongoing cross-selling success in the core business also impacted here. The share of net fee and commission income to total income was raised from 21.0% in the first six months of 2004 to a satisfying 25.2%.
In the reporting period, the allowance for losses on loans and advances developed in line with expectations. At €103 million (+25.6%), it moved up somewhat less strongly than the customer loan volume, which increased by 28.7%.
Postbank was very satisfied with the moderate increase in administrative expenses by 7.3% to €956 million due to Transaction Banking. As a result of the scheduled alignment in Transaction Banking, the number of employees in the Postbank Group declined to 9,554 after 10,006 on December 31, 2004.
At €4 million (€3 million in HY1 2004), net Other operating income / expenses was at the usual low level.
In the first six months of 2005, Postbank increased profit before tax considerably against the equivalent period of the previous year, by 17.0% to €338 million.
To June 30, total assets at Postbank were €136.8 billion, approximately €8.6 billion higher than at the end of 2004.
Customer growth stabilizes as a high level
Customer growth of the Postbank in its core business again achieved a satisfyingly high level. For Postbank, 2004 was an exceptional year due to the initial public offering and the higher marketing expenditure and the corresponding media presence. In this year it gained 890,000 new customers. In the first six months of 2005, the Bank gained 362,000 new customers after 454,000 in the first six months of 2004. In the second quarter of this year alone, there was an increase of 172,000 new customers.
In the first six months of 2005, Postbank opened 239,000 new checking accounts after 280,000 in the first half-year of 2004. Savings volume improved slightly against the end of 2004, by 1.2% to €41.3 billion. The key growth driver was Postbank “Gewinnsparen”, with which the Bank achieved a deposit volume of €1.3 billion to June 30, 2005, after €850 million at the end of 2004.
Deposit overhang further reduced
In its private mortgage lending, Postbank posted strong gains. Against the end of the year, volume increased by €4.5 billion or 20.2% to €26.8 billion. There were no additions to the portfolio in the second quarter. Consumer loan volume also increased, from €1.2 billion at the end of 2004 to just under €1.4 billion as of June 30, 2005.
As of June 30, 2005 overall customer deposits reached a volume of €72 billion and customer loans €40.8 billion, so that Postbank reduced its deposits overhang from €37.4 billion to the end of 2004 to €31.2 billion on June 30, 2005.
Even in a relatively unfavorable interest environment, Postbank retains its 2006 objective of achieving a return on equity of 15%, related to shareholders’ equity of approximately €5.1 billion and reducing the cost-income ratio in the traditional banking business to under 65%.
