Themen:
News
April 29, 2020
Dear Colleagues,
The first quarter was defined, in part, by the most severe pandemic in recent history. We can be very satisfied with our bank’s performance in this environment. It is a testament to how much our clients appreciate our advice and our financial solutions in this coronavirus crisis that our revenues and results are substantially ahead of market expectations. We also made further progress in our transformation and are fully on track on costs.
Before we discuss the numbers, I would like to thank all of you for your continued hard work. Since March at the latest, many of you have been working in a profoundly changed environment, often with more to do than before the pandemic. On behalf of the entire Management Board, I’d like to say how proud we are of what we have all achieved together over the recent weeks and months. At this time of crisis we are at our best – for our clients across the whole world.
Your performance has brought us to financial success this quarter. Group profit before tax was 206 million euros in the first quarter, despite bank levies of 503 million euros. After tax the bank reported a profit of 66 million euros.
I am particularly proud of our performance in the Core Bank, that is to say, all of our businesses we want to continue. It increased its adjusted pre-tax profit by 32 percent year on year to 1.1 billion euros. One of the main drivers was a 7 percent increase in Core Bank revenues to 6.4 billion euros while remaining disciplined on reducing costs. Let me mention a few highlights:
So the first quarter confirms once again that we set the right strategic course last year. Our business model is robust and resilient, and this is particularly evident in these turbulent times.
Despite the global crisis and the massive effort it has required, we also made good progress with our own transformation. Adjusted costs ex-transformation charges and bank levies decreased by 7 percent to 4.9 billion euros – the ninth successive year-on-year reduction in adjusted costs. We reaffirm our full-year cost target of 19.5 billion euros.
We continue to operate on very solid foundations. Although many corporates drew down their credit lines at the beginning of the coronavirus crisis, our liquidity remained strong at 205 billion euros at the end of the quarter, comfortably above regulatory requirements. Provision for credit losses increased notably, but our loan book is low-risk and well diversified. Our Common Equity Tier 1 capital ratio was 12.8 percent at quarter-end, substantially above regulatory requirements which we exceeded by approximately 240 basis points.
We have, however, made a conscious decision to allow our capital ratio to fall modestly and temporarily below our 12.5 percent target if credit demand by our clients remains strong. We need this flexibility to strengthen our market position further and to contribute to economic recovery. We want to be part of the solution. I need you to know, though, that we have not given up on the 12.5 percent marker; it remains our target. If we fall below this level, then it should only be temporarily.
We have to make sure that we can serve our clients in a way not many other banks can – as a ‘global Hausbank’. This time of crisis is showing us more clearly what our clients expect of us. And we are now working together in our bank in a way we couldn’t previously have imagined: non-bureaucratic, open and direct. It is precisely these lessons that we will take with us once the crisis is over – lessons that will not only help us reduce costs but also increase our revenues.
At the same time, we have a responsibility to play our part in helping the economy and society to weather what is probably the deepest crisis in post-war history. This is about more than just providing support for our clients; it is about social responsibility.
Many of you are supporting your local communities in a number of ways from sewing masks to helping young people with home study. And we are particularly proud of how generously you have been supporting our matched-giving campaign for food and shelter charities. You have already donated more than 600,000 euros globally, and our bank will not only double this commitment, but we also donated 500,000 euros to get the ball rolling.
This brings us up to 1.7 million euros already – and the initiative is far from over. The money will go to charities we’ve been working with for many years. You can find the details here.
We on the Management Board and the Group Management Committee know that we can count on you. You have proven that again in recent weeks, so let me thank you once more. I wish you and your families all the very best and continued good health. Please take care of yourselves and those around you.
Best wishes,
Christian Sewing
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