26th Feb 2009 08:31
Dresdner Bank AG:
Dresdner Bank's preliminary results impacted massively by financial crisis
26.02.2009
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• High value adjustments and loan impairment losses at Investment Banking• Additional impact of one-time tax effect• Private & Corporate Clients business profitable
The worsening financial crisis massively affected Dresdner Bank's results last year. The total impact in 2008, which was due primarily to value adjustments and the need for loan impairments, amounted to €6.2 billion. In addition, write-downs of deferred tax assets in the amount of approximately €1.3 billion were incurred in relation to the takeover of Dresdner Bank by Commerzbank. According to the preliminary, unaudited figures, Dresdner Bank closed 2008 with a loss of €6.3 billion, despite the positive result recorded by the Private & Corporate Clients business.
Dresdner Bank's total operating income in 2008 was down by a good 87 per cent year-on-year to €0.7 billion. This was due to value adjustments, which mainly related to portfolios of structured credit products, monoliner hedges and structured investment vehicles. Net interest and current income amounted to € 2.8 billion (previous year: €3.1 billion). On a like-for-like basis, the traditional interest-driven business recorded year-on-year growth of around 6 per cent. Net fee and commission income fell by slightly less than 24 per cent to €2.2 billion (previous year: €2.9 billion). This was due primarily to declining income from the securities business. Because of the value adjustments mentioned above, net trading income fell to €-4.3 billion (previous year: €-0.5 billion).
At €4.5 billion, administrative expenses were down approximately 5 per cent year-on-year. Total staff costs fell by around 8 per cent to €2.7 billion. Non-staff operating costs recorded a decline of around 4 percent to €1.8 billion. Loan impairment losses amounted to €1.7 billion, after net reversals of €132 million in the previous year. The increase is primarily due to the need for additional value adjustments on LBO finance transactions in the fourth quarter.
The operating loss for 2008 amounted to €5.6 billion, after an operating profit of €710 million in the previous year. At €3.9 billion, the operating loss for Q4 2008 widened by slightly less than €3.5 billion year-on-year.
In the non-operating area, Dresdner Bank generated positive net income from financial investments of €936 million (previous year: €183 million). This was due in particular to the sale of equity investments in the course of the acquisition of Dresdner Bank by Commerzbank. Dresdner Bank's tax expense amounted to over €1.5 billion despite the negative result for 2008. This was due to the fact that - as a result of the change in ownership - loss carryforwards at Dresdner Bank AG can no longer be utilised, leading to deferred tax assets having to be written off.
The Private & Corporate Clients division generated an operating profit of €537 million despite the market turbulence (previous year: €862 million). The decline was due in particular to lower income from the securities business, which led to a €354 million drop in net fee and commission income to €1.5 billion. The deposits business turned in a positive performance, with net inflows of more than €8 billion in the second half of 2008.
Investment Banking was hit increasingly hard by the financial market crisis in the course of 2008. This resulted in an operating loss of €6.3 billion (previous year: loss of €665 million). Net trading income fell by €4.2 billion to €-4.6 billion as a result of market factors and value adjustments. Despite the difficult market environment, income growth was generated in Fixed Income and in selected business areas of the Global Banking unit.
Due to the massive impact on earnings, the Dresdner Bank Group's equity declined from €10.6 billion to €2.8 billion. Dresdner Bank's total assets fell by 15.8 per cent to €421.0 billion.
The Dresdner Bank Group's core capital ratio as at 31 December 2008 was around 4.0 per cent, and the total capital ratio was around 8.4 per cent, with risk-weighted assets amounting to €114.9 billion. After adjustment for the transfer of CDOs agreed with Allianz and the silent partner's stake by Allianz in the amount of €750 million, the Dresdner Bank Group's pro forma core capital ratio would be 4.8 per cent.
Based on the preliminary figures, Dresdner Bank AG's loss for the period amounted to €6.2 billion. It is to be expected that a net accumulated loss will be reported even after the reversal of all reserves. This will lead to a loss participation on the part of the outstanding hybrid capital and profit participation certificates.
Preliminary 2008 results Change Change Q4 Q4 (in € million) 2008 2007 2008 2007 € per € per million cent million cent Net interest and current income 2,813 3,061 -248 -8.1 771 675 96 14.2 Net fee and commission income 2,180 2,866 -686 -23.9 447 670 -223 -33.3 Net trading income -4,313 -481 -3,832 > 100 -2,786 -867 -1,919 > 100 Other operating income 13 - 13 13 - 13 Total operating income 693 5,446 -4,753 -87.3 -1,555 478 -2,033 Administrative expenses 4,539 4,849 -310 -6.4 965 1,075 -110 -10.2% Other operating expenses 81 19 62 > 100 26 12 14 > 100 Total operating expenses 4,620 4,868 -248 -5.1 991 1,087 -96 -8.8% Loan impairment losses 1,671 -132 1,803 1,334 -208 1,542
Operating loss/profit -5,598 710 -6,308 -3,880 -401 -3,479 > 100
Net income from financial investments 936 183 753 > 100 1,096 -33 1,129 Net income from intangible assets -39 - -39 -39 - -39 Restructuring charges 0 50 -50 -100 -17 34 -51 Loss/profit before tax -4,701 843 -5,544 -2,806 -468 -2,338 > 100 Tax expense 1,535 373 1,162 > 100 1,108 -32 1,140
Loss/profit after tax -6,236 470 -6,706 -3,914 -436 -3,478 > 100
Profit attributable
to minority interests 62 60 2 3.3 14 12 2 16.7
Loss/profit -6,298 410 -6,708 -3,928 -448 -3,480 > 100 Indices Core capital ratio 1) 4.0 % 9.1 % Total capital ratio 1) 8.4 % 13.8 % Risk-weighted assets
1) 114,896 123,115 -8,219 -6.7 Employees (FTEs) 23,295 26,309 -3,014 -11.5
1) 2008 according to Basel II, 2007 according to Basel I
Frankfurt, 26th of February 2009
The Board of DirectorsDresdner Bank AG
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Language: EnglishIssuer: Dresdner Bank AG Juergen-Ponto-Platz 1 60301 Frankfurt GermanyTelephone: +49 (0)69 / 263-50750Fax: +49 (0)69 / 263-15839E-Mail: [email protected]: www.dresdner-bank.de
ISIN: GB0004955547, Primary Capital Undated Floating Rate Note issued by Dresdner Kleinwort Group Limited
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