Defining Values – and Living up to Them
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A partnership built on trust Defining values – and living up to them Annual Report 2020 S Finanzgruppe Key Performance Indicators at a Glance Excerpt from the Profit and Loss Account 2 2020 2019 Regulatory-law key indicators 31.12.2020 31.12.2019 in € m RWA in € m 10,321 9,984 Net interest income 313.1 309.7 CET1 ratio in % 13.4 13.3 Net commission income 20.0 17.8 Total capital ratio in % 15.8 16.0 Staff expenditure 82.0 92.4 Leverage ratio in % 4.1 4.6 Other operating expenditure 70.1 67.5 of which: Expenditure for bank levy 13.4 12.0 2 After adoption. Write-offs on fixed assets 21.1 12.4 Operating expenditure 173.2 172.3 Other operating result –1.7 –1.6 Issue ratings 31.12.2020 31.12.2019 Risk provisioning 61.6 –2.2 Moody's Valuation result of lending business 81.4 7.5 Pfandbriefe Aaa (stable) Aaa (stable) Valuation result of securities business –19.8 –9.7 Senior preferred Aa2 (stable) Aa2 (stable) Operating result 96.6 155.8 Senior non-preferred A2 A2 Net income from investments –2.8 –4.0 Fitch Provision for general banking risks 70.0 90.0 Pfandbriefe - - Other taxes 0.2 0.2 Senior preferred AA- (negative) A+ (stable) Operating result before income taxes Senior non-preferred A+ (negative) A+ (stable) and profit transfer 23.6 61.6 Profit transfer 23.4 61.0 Net income for the year 0.0 0.0 Cost-income ratio in % 52.3 52.9 Return on equity in % 6.8 11.6 Sustainability ratings oekom Sustainalytics B- (Prime) Low Risk Excerpt from the Balance Sheet in € m 31.12.2020 31.12.2019 Balance sheet total 33,423 27,021 Other 31.12.2020 31.12.2019 of which: mortgage loans 23,864 21,774 Number of employees (as at the reporting date) 593 606 NPL1 141 181 1 Screening of NPL portfolio by rating (previously: risk class) in accordance with EBA guidelines from 2017 onwards; comparable figure for previous year adjusted. Business development in € m 2020 2019 New lending 5,664 6,253 Extensions (capital employed ≥ 1 year) 1,062 1,023 6,8 % Return on equity Aaa (Moody's) € 6,7 billion Pfandbrief issue rating New lending (including extensions with capital employed ≥ 1 year) Board of Management and Supervisory Board Management Report Annual Financial Statements Declaration by the members Service Bodies of the Bank and Other Important Functions Supervisory Board Helmut Schleweis Siegmar Müller Chair (since 26 March 2018) Chair of the Board of Management of President of Deutscher Sparkassen- und Sparkasse Germersheim-Kandel Giroverband e. V. Landesobmann of the Rhineland-Palati- nate Savings Banks Board of Management Jana Pabst Members Deputy Chair Bank employee Reinhard Sager Deputy Chair of the Works Council of President of German Administrative Berlin Hyp AG District Parliament County Council Chairman of East Holstein Joachim Fechteler District Bank employee (until 31 December 2019) Employee representative Andrea Schlenzig Bank employee Bernd Fröhlich Employee representative Chair of the Board of Management of Sparkasse Mainfranken Würzburg Peter Schneider President of Savings Banks Association of Gerhard Grandke Baden-Wuerttemberg Managing President of German Savings Banks and Giro Association of Walter Strohmaier Hesse-Thuringia Chair of the Board of Management of Sparkasse Niederbayern-Mitte Artur Grzesiek (until 27 May 2020) Bundesobmann of the German savings banks Former Chair of the Board of Management of Sparkasse KölnBonn Ulrich Voigt (from 27 May 2020) Chair of the Board of Management of Dr. Harald Langenfeld Sparkasse KölnBonn Chair of the Board of Management of Stadt- und Kreissparkasse Leipzig René Wulff Bank employee (until 31 August 2019) Thomas Mang Employee representative President of Savings Banks Association of Lower Saxony Board of Management Thomas Meister Bank employee Sascha Klaus Chair of the Works Council of Berlin Hyp AG Chair Gero Bergmann (until 31 December 2020) Alexander Stuwe (from 1st July 2020) 2 Supervisory Board Committees Presiding and Nomination Committee Audit Committee Helmut Schleweis Thomas Mang Chair Chair Walter Strohmaier Gerhard Grandke Deputy Chair Deputy Chair Dr. Harald Langenfeld Joachim Fechteler Thomas Mang Siegmar Müller Thomas Meister Peter Schneider Andrea Schlenzig Compensation Control Committee Loans Committee Helmut Schleweis Chair Walter Strohmaier Chair Walter Strohmaier Deputy Chair Dr. Harald Langenfeld Deputy Chair Thomas Mang Bernd Fröhlich Jana Pabst Artur Grzesiek (until 27 May 2020) Ulrich Voigt ( from 26 June 2020) Cover Pool Monitor René Wulff Christian Ax Deputy Cover Pool Monitor Wolfgang Rips Philip Warner 3 Board of Management and Supervisory Board Management Report Annual Financial Statements Declaration by the members Service 2020 Supervisory Board Report of Berlin Hyp AG Berlin Hyp is a subsidiary of Landesbank Berlin agement and satisfied itself that it was acting Holding AG and an independent commercial properly, deliberated on all relevant aspects in real estate financier within the S-Group of the this context and provided recommendations. Sparkassen-Finanzgruppe. According to the In particular, the Supervisory Board intensively regulations of the German One-Third Partic- discussed and reviewed the plausibility of busi- ipation Act, its Supervisory Board comprises ness transactions of importance to the company five members on the staff side and ten on the on the basis of written and oral reports of the shareholder side. Apart from the five employee Board of Management. representatives, the Supervisory Board is made up entirely of representatives of the Sparkas- Focus of the Supervisory Board’s Activities sen-Finanzgruppe and a representative of the In particular, reports on the effects of the local authorities. It advises and monitors the COVID-19 pandemic were discussed at all Board of Management and particularly supports Supervisory Board meetings in 2020, in the Board of Management in the networking addition to the detailed reporting of the Board with savings banks throughout Germany. of Management on current business develop- ment, including its underlying conditions and Berlin Hyp continued its solid business devel- projects, the risk situation and the status of the opment in 2020 and reinforced its position as strategic investments. In addition, the Board one of the leading real estate and Pfandbrief of Management regularly informed on S-Group banks. business development and on the external audits currently being carried out at Berlin Hyp. With regard to operations, the overarching theme was the COVID-19 pandemic, which has Following the reports made by the Board been spreading since the middle of the first half of Management and the auditors and after of 2020 and has led to a high increase in mobile intensive consultation and review, the annual working at Berlin Hyp. The existing infrastruc- accounts and Management Report as at ture was capable of handling all essential work. 31 December 2019 were approved and adopted in the balance sheet meeting of the Supervi- The financial year was also positive overall, with sory Board on 26 March 2020. The Supervisory a result that exceeded expectations. Despite Board Report, the Corporate Governance Report the persistently low level of interest rates, the and the Non-Financial Statement (sustainability high level of competition in commercial real report) were discussed and adopted. estate financing and the continued increase in regulatory requirements, Berlin Hyp is satisfied The Supervisory Board also took note of the with the better-than-expected earnings trend reports on the Bank’s derivatives portfolio of the 2020 financial year. Significant negative and the report on the processing of findings effects of the COVID-19 pandemic have not yet from the IT Compliance audit focus. In view of been recorded. The Supervisory Board regards regulatory requirements, adverse scenarios Berlin Hyp’s performance and its ability to hold were taken into account in the medium-term its own ground in a difficult market environment planning for 2020 to 2024. while adhering to a conservative risk strategy and culture as steadfast and highly favourable. In the course of this meeting, the annual reports of the Compliance Officer and the Internal Audit In accordance with the legal requirements, the were also discussed and acknowledged. Supervisory Board once again concerned itself promptly, regularly and comprehensively with The Supervisory Board also passed the neces- the position and the development of Berlin sary resolutions on the agenda of the Annual Hyp, the planning situation, the risk situation, General Meeting of Berlin Hyp. risk management as well as compliance, both orally and in writing, in 2020. It constantly Following the resignation of Supervisory monitored the actions of the Board of Man- Board member Artur Grzesiek, the sharehold- 4 ers needed to elect a new SB member. After Loans Committee. The Supervisory Board conducting its own review, the Supervisory therefore appointed the newly elected Ulrich Board endorsed the recommendation of its Voigt as a new member of the Loans Committee. Presiding and Nomination Committee and proposed to the Annual General Meeting the The targets for 2020 were agreed for Alexander election of Ulrich Voigt as the new member Stuwe and Gero Bergmann’s appointment as of the Supervisory Board (see remarks under a member of the Board of Management was Personnel Issues of the Supervisory Board). extended for a further five years. In accordance with the provisions of the German In its meeting on 23 September 2020, the Remuneration Ordinance for Institutions (IVV), Supervisory Board defined the key audit the Supervisory Board took note of the overall issues for the 2020 financial year based on bonus pool for employees set by the Board of a proposal from the Audit Committee. In Management and established the total amount addition to the regular reports, it took note of variable remuneration for the Board of of the revised report on the new construction Management.