Deutsche Postbank AG, Bonn Annual Financial Statements (HGB) As of December 31, 2010 20 10 Contacts

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Deutsche Postbank AG, Bonn Annual Financial Statements (HGB) As of December 31, 2010 20 10 Contacts Deutsche Postbank AG, Bonn Annual Financial Statements (HGB) as of December 31, 2010 20 10 Contacts Published by Design and layout Deutsche Postbank AG EGGERT GROUP, Düsseldorf Head Office Investor Relations Coordination/editing Friedrich-Ebert-Allee 114–126 Postbank 53113 Bonn, Germany Investor Relations Postfach 40 00 53105 Bonn, Germany Translation Phone: +49 228 920 - 0 Deutsche Post Corporate Language Services et al. Investor Relations Phone: +49 228 920 -18003 E-mail: [email protected] www.postbank.com/ir This Report contains forward-looking statements that relate to macroeconomic developments (in particular the development of money and capital market rates), the business and the net assets, financial position and results of operations of Deutsche Postbank AG. Forward-looking statements by definition do not depict the past and are in some instances indicated by words such as “believe”, “anticipate”, “predict”, “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 forward-looking statements. Readers of this Report are expressly cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this Report. Deutsche Postbank AG does not intend and does not undertake any obligation to revise these forward-looking statements. The English version of the Report constitutes a translation of the original German version. Only the German version is legally binding. Deutsche Postbank AG, Bonn Annual Financial Statements for the Period Ended December 31, 2010 and Management Report for Fiscal Year 2010 2 Management Report 40 Balance Sheet as of December 31, 2010 42 Income Statement for the period January 1, 2010 to December 31, 2010 44 Notes 76 Auditors‘ Report Group management at Postbank Deutsche Postbank AG Postbank is responsible for the management of the business Management Report throughout the Group. The management within the Postbank Group is based on an inte- I Business and Environment grated and consistent system of key performance indicators that is uniform Group-wide. The system links targets, planning, opera- tional management, performance measurement and remuneration. Organization and management The objective of this management approach is to optimize profit- Business activities ability and efficiency. Deutsche Postbank AG (Postbank) provides financial services for retail and corporate customers as well as other financial services providers The central profitability target for the capital market-oriented manage- primarily in Germany. The focus of its business activities is Retail ment of the Postbank Group is the expectation of returns on equity Banking. Its work is rounded out by the business it conducts with in accordance with IFRSs, as measured by return on equity (RoE) corporate customers (payment transactions and financing), settlement before and/or after taxes. This includes profit after tax, a parameter services (Transaction Banking) as well as money market and capital that allows reconciliation from profitability to efficiency. market activities. Through the use of the fundamental earnings components of total Key locations income and administrative expenses, the cost/income ratio (CIR) The head office of Postbank is located in Bonn and for parts of the can be determined as the central benchmark for income and produc- Financial Markets division in Frankfurt am Main. In addition, the tivity management, and, as a result, for efficiency. It measures number of branch locations operated by Postbank across Germany the relation of administrative expenses to total income before the was 1,104 at the end of 2010. The subsidiary BHW Bausparkasse allowance for losses on loans and advances. AG is domiciled in Hamelin. As the most critical parameter used to assess and manage income In European regions outside Germany, Postbank is represented in its power, total income includes in particular net interest income as retail banking business in Luxembourg and in Italy. the key income indicator in the customer business. In the divisions of Corporate Banking and Financial Markets, On the segment level, Postbank directs its activities on the basis Postbank is also represented by subsidiaries in Luxembourg and of a management information system whose core component is New York as well as by a branch in London. manage ment accounting by business division. In general, manage- ment is conducted in a similar manner to the way it is performed Fundamental sales markets and competitive position on the Group level, in which expectations for returns are measured In Retail Banking, Postbank conducts its business almost exclusively on the basis of RoE before taxes. The allocation of equity to the in Germany and is the largest single-entity institution when viewed segments is based on their risk capital requirements. in terms of the number of customers. Its major product fields are savings, checking accounts and private mortgage lending as well as The previously mentioned income and expense figures serve as home savings through its subsidiary BHW Sparkasse AG. Postbank management parameters on the segment level. In the core business, is among the leaders in Germany in each of these areas, based the income drivers of volume, margins and risk as well as the con- on balance-sheet volumes. Private retirement provision solutions, tribution margin are also taken into account in management. personal loans and the securities business round off the product range offered to retail customers. In these areas, Postbank offers For operational management, the strategic and operational targets are some products and services as part of partnerships with other further defined as key performance indicators (KPIs) on the basis of banks and insurance companies. The cooperation with the majority balanced scorecards and subjected to regular reviews. This assures that shareholder, Deutsche Bank AG – which began in 2008 and has all business activities are focused on achieving company objectives. been and will continue to be intensified – is a key element in this area. Postbank’s major competitors in the retail banking business In addition to the previously mentioned, established management in Germany are providers from the sector of savings banks and parameters, Postbank began in 2010 to add a risk/return ratio to co operative banks as well as several major banks. its management framework. Similar to RoE, the return is calculated on the basis of regulatory capital and forms a fundament basis for In addition to retail banking, Postbank is involved in the corporate decision making on the individual transaction level and the aggregate banking business. As a mid-sized provider, we focus in this area in level. Management of the return on the basis of economic capital particular on German SMEs. Postbank is also currently the largest pro- is being prepared. Both resources are expected to yield an appro- vider of the in-sourcing of payment transaction services. With four priate return, which is derived from the return expectations of the clients and some 8 billion transactions per year, it has achieved a capital market and to be generated by both the Group and indi- good competitive position in a market characterized by a com- vidual business units. paratively small number of providers. The variable remuneration of Management Board members, execu- tives and employees in the Postbank Group is closely linked to this 2 Management Report I Business and Environment management system. It is based on loss/profit before tax and the CIR. The free float traded on the stock exchanges therefore amounts to As a result of new regulatory requirements for our executives, risk around 8.5 % of Postbank’s share capital. takers and the Management Board, a sustainability factor will be used to calculate a portion of the variable remuneration, the so-called Powers of the Management Board to issue or repurchase shares earnings or long-term component (which makes up 30 % to 60 % of By way of a resolution adopted by the Annual General Meeting on variable remuneration). The earnings or long-term component itself April 22, 2009, the Management Board was authorized, with the is evaluated after the end of the fiscal year, withheld, and then consent of the Supervisory Board, to increase the Bank’s share capital evaluated with the sustainability factor in the following third year. on one or more occasions in whole or in part by up to a total of For Management Board members this occurs in the following fourth €273.5 million up to April 21, 2014 by issuing new no-par value year. At that time, where appropriate, it becomes due and is paid out, registered shares against cash and/or non-cash contributions or it is forfeited without compensation. including mixed non-cash contributions (Authorized Capital). This sustainability factor is based on the concept of economic value The shareholders are generally granted pre-emptive subscription added and further anchors value-focused, sustainability thinking in rights. The Management Board is authorized, with the consent of the the incentive system at Postbank. Supervisory Board, to determine the additional details of the capital Management Report increase and its implementation.
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