Postbank increases profits in 2014 despite low interest rates and a reduction in risk
- Profit before taxes rises significantly to 457 million Euros
- Continuously stable, profitable customer business despite significantly lower balance sheet total
- Core capital ratio once again considerably improved, reaching 10.5%
- RoE rises to 7.2%
- Frank Strauß: “Our business model is future-proof, and we are successful even in challenging times”
Deutsche Postbank AG continued to develop successfully during the financial year 2014, and grew in profitability despite persistently difficult market condition. The company’s profit before taxes rose by a significant 44% reaching 457 million Euros compared to 318 million Euros in the previous year. At the same time, Postbank was able to continue to reduce risks and thus make the bank more financially secure. Accordingly, the company’s balance sheet total fell to 155.4 billion Euros – 3.8% below the previous year’s value of 161.5 billion Euros. The fully-phased core capital ratio – which is calculated without the easing provided for by the Basel III temporary regulations – rose from 8.8% in the previous year to a much-improved 10.5%. Other indicators also show that Postbank has been able to continue its positive development. Its return on equity (RoE) improved from 5.5% to 7.2% in 2014.
Chairman of Postbank’s Board of Management, Frank Strauß, said: “We have increased our profit despite the fact that the climate for deposit-rich banks has become even more challenging. Over the past five years, Postbank has reduced its balance sheet by approximately 60 billion Euros in total. 2014 has been yet another year in which we have been able to reduce risks and make Postbank even more financially secure. This means that Postbank has been able to achieve higher profits despite having significantly fewer resources – and despite being integrated into Deutsche Bank during the same period. Our RoE is respectable when compared with those of similar banks. Our business model is future-proof, and we are successful even in challenging times.”
Postbank’s core operative business without any special factors shows that despite consistently low interest rates it was able to achieve 949 million Euros before tax – almost as much as in the previous year (991 million Euros). In general, the positive and negative special effects experienced by the company were balanced out in its bottom line. Postbank had to cope with a number of non-recurring effects in the fourth quarter of 2014 in particular. For example, it had to pay 129 million Euros for reimbursements of consumer loan processing fees following the rulings of the German Federal Court of Justice (BGH). Expenses related to the bank’s integration into Deutsche Bank Group (147 million Euros) in addition to ex-gratia settlements in the securities business which totalled 86 million Euros. There were, however, also positive effects – deconsolidation effects from the pooling of so-called service companies in Deutsche Bank Group (Platform Holding) led to savings of 361 million Euros.
The company’s profit after tax was reduced due to additional tax payments for previous years, coupled with taxation as a result of the deconsolidation of the so-called Platform Holding companies to 278 million Euros (compared with 330 million Euros in the previous year).
Despite low interest rates, Postbank was able to achieve relative growth in significant areas of business with private and business clients. For example, the number of private current accounts rose to 5.3 million – with 430,000 new accounts being opened in 2014. New business in savings accounts amounted to 6.8 billion Euros, while consumer credit saw a growth of 12% compared with the previous year.
Postbank focusses on digitisation and branches
In 2014 Postbank made excellent progress in business linked to the mega trend of digitisation as well as sales via direct banking channels. For example, the proportion of new business for consumer credit via the online channel in 2014 rose significantly – around 46% were contracted in this way. A considerable proportion of 15% among the 430,000 new current accounts were also sold online. In addition to successes which could be measured in plain numbers, Postbank also made great progress in terms of innovation. For example, it introduced fingerprint authorization in its mobile banking services, and made it possible for customers to make transfers by email. The bank also pooled the competences of Postbank’s direct banking experts with those of norisbank – in the new Direct Bank Center in Bonn.
In view of its particularly future-proof business model based on its partnership with Deutsche Post DHL, Postbank will continue to invest significantly in improving customer experience in its approximately 1,100 branches, as well as in contact with Postbank’s financial advisory services. 2014 saw the first two of a total of 50 planned Postbank Centers established – in which customers can find all Postbank services under one roof. Postbank also began equipping its branches with cash recyclers, and will continue to work intensively on this and other projects.
“Very early on, we at Postbank recognised the mega trend digitisation as an opportunity to be seized, and set it at the heart of our own strategy in order to be able to provide our customers with the best service possible. In keeping with its motto ‘digital and personal’, Postbank wishes to offer its customers services in any areas where they need advice and support in terms of their personal finances. We are making excellent progress in this regard – in 2014, we were able to consolidate our position as Germany’s largest and most secure online bank,” said Frank Strauß.
Looking out to 2015, due to continued pressures – such as those due to the integration into Deutsche Bank Group – coupled with the absence of non-recurring effects in 2014, Postbank expects to see its profit before taxes fall by a higher two-digit millions of Euros. As 2015 at the same time Postbank will also see substantially lower tax burdens, the company expects to see its profit after taxes rise by an amount in the low to middle two-digit millions of Euros.