Annual Financial Statements and Management Report of Dz Bank Ag Key Figures
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2014 ANNUAL FINANCIAL STATEMENTS AND MANAGEMENT REPORT OF DZ BANK AG KEY FIGURES DZ BANK AG Dec. 31, Dec. 31, € million 2014 2013 2014 2013 FINANCIAL PERFORMANCE ECONOMIC CAPITAL ADEQUACY AND Operating profit before allowances LIQUIDITY ADEQUACY for losses on loans and advances 573 800 (DZ BANK GROUP) Allowances for losses on loans and Economic capital adequacy (percent) 166.2 158.9 advances -55 -292 Stress scenario with the lowest Operating profit 518 508 minimum liquidity surplus (€ billion) 11.4 13.0 Net income for the year 213 166 Cost / income ratio (percent) 62.2 53.1 REGULATORY CAPITAL ADEQUACY (DZ BANK AG) Dec. 31, Dec. 31, Total capital ratio (percent) 24.9 31.5 2014 2013 Tier 1 capital ratio (percent) 17.8 20.5 NET ASSETS Core Tier 1 capital ratio (percent) 17.8 Assets AVERAGE NUMBER OF EMPLOYEES Loans and advances to banks 80,716 82,695 DURING THE YEAR 4,250 4,111 Loans and advances to customers 22,443 22,634 Bonds and other fixed-income LONG-TERM RATING securities 39,821 39,825 Standard & Poor’s AA- AA- Shares and other variable-yield Moody’s Investors Service A1 A1 securities 66 315 Fitch Ratings A+ A+ Trading assets 45,540 56,652 Other assets 15,598 15,777 Equity and liabilities Deposits from banks 85,388 87,757 Deposits from customers 22,855 29,505 Debt certificates issued including bonds 39,016 34,626 Trading liabilities 37,028 47,245 Other liabilities 11,903 12,304 Equity 7,994 6,461 Total assets / total equity and liabilities 204,184 217,898 Volume of business1 226,813 238,779 1 Total equity and liabilities including contingent liabilities and other obligations. DZ BANK AG 01 2014 ANNUAL FINANCIAL STATEMENTS AND MANAGEMENT REPORT CONTENTS CONTENTS 02 MANAGEMENT REPORT OF DZ BANK AG 06 DZ BANK AG fundamentals 12 Business report 25 Events after the balance sheet date 26 Human resources report and sustainability 30 Outlook 34 Opportunity and risk report 158 ANNUAL FINANCIAL STATEMENTS OF DZ BANK AG 160 Balance sheet as at December 31, 2014 162 Income statement for the period January 1 to December 31, 2014 164 Notes 218 RESPONSIBILITY STATEMENT 219 AUDIT OPINION (TRANSLATION) 220 ADVISORY COUNCILS 230 PRINCIPAL SHAREHOLDINGS 02 DZ BANK AG 2014 ANNUAL FINANCIAL STATEMENTS AND MANAGEMENT REPORT MANAGEMENT REPORT OF DZ BANK AG CONTENTS MANAGEMENT REPORT OF DZ BANK AG 06 DZ BANK AG FUNDAMENTALS 26 HUMAN RESOURCES REPORT AND SUSTAINABILITY 06 Business model 26 Human resources report 06 Strategic focus as a network-oriented central 26 Regulatory requirements for the remuneration institution and financial services group strategy 07 Corporate Banking 26 Launch of ‘Verbund First’ career development program 07 Retail Banking 26 2014 employee survey: DZ MeinungsSpiegel 07 Transaction Banking 26 Launch of the DZ BANK Group’s employer branding 08 Capital Markets campaign 26 Professional development 08 Management of DZ BANK 27 Training and development of young talent 08 Governance 27 Health management 10 Management units 27 Work and family life 11 Key performance indicators 27 Employer awards 11 Management process 28 Sustainability 28 Cooperatives: responsibility as a corporate objective 12 BUSINESS REPORT 28 Sustainability-related products and services 29 Group Corporate Responsibility Committee 12 Economic conditions 29 Transparency in sustainability activities 13 Efforts to stabilize the financial sector continue in the shadow of geopolitical crises 30 OUTLOOK 15 Financial performance 30 Economic conditions 15 Financial performance at a glance 30 Global economic trends 16 Financial performance in detail 30 Trends in the USA 21 Number of branches 30 Trends in the eurozone 30 Trends in Germany 21 Net assets 31 Trends in the financial sector 23 Financial position 31 Changes in financial position and financial performance 31 Financial performance 25 EVENTS AFTER THE 33 Liquidity BALANCE SHEET DATE DZ BANK AG 03 2014 ANNUAL FINANCIAL STATEMENTS AND MANAGEMENT REPORT MANAGEMENT REPORT OF DZ BANK AG CONTENTS 34 OPPORTUNITY AND RISK REPORT 73 Risk strategy 73 Organization, responsibility, and risk reporting 34 Disclosure principles 74 Risk management 84 Lending volume 35 DZ BANK Group 93 Portfolios with increased risk content 98 Non-performing lending volume 35 Summary 100 Allowances for losses on loans and advances 35 Statements from the Board of Managing Directors 102 Risk position 35 Opportunity and risk management system 104 Summary and outlook 36 Material developments 38 Risk factors, risks, and opportunities 104 Equity risk 104 Definition and causes 39 Risk strategy 104 Risk strategy and responsibility 105 Risk management 39 Fundamental principles of managing 105 Risk factors and risk position opportunities and risks 39 Regulatory framework for risk management 106 Market risk 43 Opportunity and risk-oriented corporate governance 106 Definition and causes 47 Risk management tools 106 Risk strategy 107 Organization, responsibility, and risk reporting 53 Opportunities 108 Risk management 53 Management of opportunities 112 Risk factors 54 Potential opportunities 112 Risk position 114 Summary and outlook 55 General risk factors 55 Market and sector risk factors 115 Technical risk of a home savings and 60 Overarching bank-related risks loan company 115 Definition and causes 62 Risk capital management 115 Risk strategy and responsibility 62 Strategy, organization, and responsibility 115 Risk management 62 Management of economic capital adequacy 115 Risk factors 67 Management of regulatory capital adequacy 116 Risk position 71 Outlook 116 Business risk 72 Bank sector 116 Definition and causes 116 Organization and risk management 72 Credit risk 117 Risk factors and risk position 72 Definition and causes 04 DZ BANK AG 2014 ANNUAL FINANCIAL STATEMENTS AND MANAGEMENT REPORT MANAGEMENT REPORT OF DZ BANK AG CONTENTS 118 Reputational risk 144 Market risk 144 Definition and causes 118 Operational risk 145 Risk management 118 Definition and causes 148 Risk factors 118 Risk strategy 149 Lending volume 119 Organization, responsibility, and risk reporting 150 Credit portfolios with increased risk content 119 Central risk management 152 Risk position 120 Management of special risks 153 Summary and outlook 127 Loss events 128 Summary and outlook 153 Counterparty default risk 153 Definition and causes 128 Liquidity risk 153 Risk management 128 Definition, causes and risk factors 154 Risk position 128 Risk strategy 129 Organization, responsibility, and risk reporting 154 Operational risk 130 Risk management 154 Definition and causes 132 Quantitative variables in liquidity risk 154 Risk management 133 Risk position 155 Risk factors 135 Summary and outlook 156 Risk position 135 Insurance sector 157 Entities in other financial sectors 135 Basic principles of risk management in the Insurance sector 135 Risk strategy 136 Organization, responsibility, and risk reporting 137 Actuarial risk 137 Definition and causes 138 Management of life actuarial risk 139 Management of health actuarial risk 140 Management of non-life actuarial risk 142 Risk factors 143 Claims rate trend in non-life insurance 143 Risk position 144 Summary and outlook DZ BANK AG 05 2014 ANNUAL FINANCIAL STATEMENTS AND MANAGEMENT REPORT MANAGEMENT REPORT OF DZ BANK AG CONTENTS NOTE DZ BANK AG Deutsche Zentral- Genossenschaftsbank, Frankfurt am Main, (DZ BANK) implements the transparency require- ments as specified in section 289 of the German Commercial Code (HGB) with the publication of this management report. In addition, the report satisfies German accounting standard no. 20 (Group Management Report), which relates to management reports that apply at group level. All figures are rounded to the nearest whole number. This may result in minor discrepancies in the calculation of totals and percentages. 06 DZ BANK AG 2014 ANNUAL FINANCIAL STATEMENTS AND MANAGEMENT REPORT MANAGEMENT REPORT OF DZ BANK AG DZ BANK AG fundamentals I. DZ BANK AG 2. STRATEGIC FOCUS AS A NETWORK- ORIENTED CENTRAL INSTITUTION AND fundamentals FINANCIAL SERVICES GROUP The strategic focus at DZ BANK follows the guiding 1. BUSINESS MODEL principle of fulfilling the role of a network-oriented central institution and financial services group. With its core functions as a central institution, corpo- Its objective is to consolidate the positioning of the rate bank, and holding company, DZ BANK AG Volksbanken Raiffeisenbanken cooperative financial Deutsche Zentral-Genossenschaftsbank, Frankfurt network as one of the leading financial services pro- am Main, (DZ BANK) focuses closely on the viders in Germany on a long-term basis. To achieve this local cooperative banks, which are its customers aim, DZ BANK is steadfastly pursuing a strategy of and owners. network-oriented growth, consistent focus, and closer integration of DZ BANK within the cooperative Based on close cooperation with the local cooperative financial network. banks in their end-customer business and the sub- sidiary provision of competitive products and services, DZ BANK works in close cooperation with DZ BANK Group makes significant contribution to WGZ BANK AG Westdeutsche Genossenschafts- strengthen market position of the cooperative banks. Zentralbank, Düsseldorf, (WGZ BANK) and the In addition, the local cooperative banks benefit special committees of the Bundesverband der from substantial financial support in form of fees, Deutschen Volksbanken und Raiffeisenbanken e.V., commissions, bonuses, profit distributions, and Berlin, (BVR) [National Association of German the transfer of cost benefits. Cooperative Banks] to address overarching future- related