Grown Stability. the Annual Report 2016
Total Page：16
File Type：pdf, Size：1020Kb
Grown stability. The annual report 2016. Landesbank Baden-Württemberg Key figures of the LBBW Group. 1) Income statement (EUR million) 1 Jan. – 31 Dec. 2016 1 Jan. – 31 Dec. 2015 Net interest income 1 624 1 654 Allowances for losses on loans and advances – 51 – 55 Net fee and commission income 527 515 Net gains/losses from financial instruments measured at fair value through 190 209 profit or loss Net gains/losses from financial investments and net income/expenses 195 94 from investments accounted for using the equity method Other operating income/expenses 101 134 Total operating income/expenses (after allowances for losses 2 586 2 551 on loans and advances) Administrative expenses – 1 814 – 1 782 Guarantee commission for the State of Baden-Württemberg – 93 – 121 Expenses for bank levy and deposit guarantee system – 71 – 73 Impairment of goodwill – 379 0 Net income/expenses from restructuring – 87 – 44 Consolidated profit/loss before tax 142 531 Income taxes – 131 – 109 Net consolidated profit/loss 11 422 Key figures in % 1 Jan. – 31 Dec. 2016 1 Jan. – 31 Dec. 20151) Return on equity (RoE) 1.1 4.1 Cost/income ratio (CIR) 74.3 70.9 Balance sheet figures (EUR billion) 31 Dec. 2016 31 Dec. 2015 Total assets 243.6 234.0 Equity 13.1 13.6 Ratios in accordance with CRR/CRD IV (with transitional rules) 31 Dec. 2016 31 Dec. 2015 Risk weighted assets (EUR billion) 77.4 74.5 Common equity Tier 1 (CET 1) capital ratio (in %) 15.5 16.4 Total capital ratio (in %) 21.7 21.9 Ratios in accordance with CRR/CRD IV (Basel III after full implementation) 31 Dec. 2016 31 Dec. 2015 Risk weighted assets (EUR billion) 77.4 74.5 Common equity Tier 1 (CET 1) capital ratio (in %) 15.2 15.6 Total capital ratio (in %) 21.5 21.4 Employees 31 Dec. 2016 31 Dec. 2015 Group 10 839 11 120 Rating (2 March 2017) Moody’s Investors Fitch Rating Service Rating Ratings Long-term rating (non-guaranteed obligations) Long-term rating (non-guaranteed obligations) A–, stable Long-term bank deposits Aa3, stable Senior unsecured and long-term issuer ratings A1, stable Short-term rating P–1 Short-term rating F1 Financial strength baa3 Financial strength bbb + Public-sector covered bonds Aaa Public-sector covered bonds – Mortgage-backed covered bonds Aaa Mortgage-backed covered bonds – 1) After taking into account adjustments pursuant to IAS 8. Figures may be subject to rounding differences. 2016 FOREWORD AND REPORTS REPORTS AND FOREWORD Foreword and Reports 2 Key figures of the LBBW Group. ......................................................................................... 2 Foreword by the Board of Managing Directors. .................................................................. 3 Report of the Supervisory Board. ....................................................................................... 7 Corporate governance at LBBW. ....................................................................................... 16 Remuneration report. ...................................................................................................... 25 Compliance. .................................................................................................................... 28 Combined Management Report 31 Group overview. .............................................................................................................. 33 Business report for the Group. ........................................................................................ 46 Risk and opportunity report. ........................................................................................... 60 ICS with regard to the accounting process. ................................................................... 109 REPORT MANAGEMENT COMBINED Outlook. ........................................................................................................................ 113 Explanatory notes on the annual financial statements of LBBW (Bank). .......................... 119 Consolidated Financial Statements 128 Income statement ......................................................................................................... 131 Total comprehensive income ......................................................................................... 132 Balance sheet ................................................................................................................ 134 Statement of changes in equity ..................................................................................... 136 Cash flow statement ..................................................................................................... 138 Notes ............................................................................................................................ 141 Basis of group accounting. ........................................................................................ 141 Accounting policies. .................................................................................................. 141 Segment reporting. ................................................................................................... 166 Notes to the income statement.................................................................................. 173 Notes to the balance sheet. ....................................................................................... 181 Notes on financial instruments. ................................................................................. 199 STATEMENTS FINANCIAL CONSOLIDATED Other notes. .............................................................................................................. 226 Additional disclosures in accordance with Section 315a HGB. .................................... 242 Further Information 255 Responsibility statement. .............................................................................................. 256 Auditor’s report. ........................................................................................................... 257 Note regarding forward-looking statements. ................................................................. 258 Advisory Board of LBBW/BW-Bank. ................................................................................. 259 Customer Advisory Board of LBBW Rheinland-Pfalz Bank. .............................................. 262 Customer Advisory Board of LBBW Sachsen Bank. .......................................................... 263 Glossary. ....................................................................................................................... 264 FURHTER INFORMATION FURHTER INFORMATION Foreword and reports. 2 FOREWORD AND REPORTS — FOREWORD BY THE BOARD OF MANAGING DIRECTORS Foreword by the Board of Managing Directors. FOREWORD AND REPORTS REPORTS AND FOREWORD Dear Readers, LBBW's customer-oriented business model has proved to be successful in the challenging market environment we experienced in 2016. After adjustments for non-recurring items, we remained on target and achieved net consolidated profit almost matching the previous year's level. The stable performance in the operating business shows the high level of trust our customers place in us during these uncertain times. Today, LBBW features among the banks with the highest level of capital resources in Germany, and also enjoys an appropriate risk profile. This is a strategy that we will continue to pursue in the future. It is certain that the market and competitive environment for banks will remain challenging going forward. In the fourth quarter of 2016, LBBW thus amortized goodwill from a previous company takeover amounting to EUR 379 million, pursuant to financial accounting under IFRS. This value adjustment did not impact our very solid capital ratios. We are now in an even more robust position to cushion difficult economic developments or negative movements on the market. In other words, if the underlying conditions were to worsen noticeably, we would not be required to adjust any more goodwill on our balance sheet. Despite the high amortization, we generated a significantly positive consolidated profit before tax of EUR 142 million. Our operating strength is also mirrored in our profit before tax of EUR 269 million, in accordance with the German Commercial Code (HGB), which is not affected by the goodwill amortization. The solid development of the past years is based on a balanced business segment portfolio with a healthy blend of sales and refinancing. Our excellent clientele promises good income potential going forward. With a measured risk policy and outstanding capital base, we as a bank will remain a sought-after partner for other financial backers. 3 FOREWORD AND REPORTS — FOREWORD BY THE BOARD OF MANAGING DIRECTORS However, we cannot afford to, and we do not intend to, remain content with what we have achieved so far. LBBW and, likewise, its customers are required to prepare for numerous political and economic uncertainties in 2017. Other factors are a high pressure to invest in our IT platforms, persistently low interest rates, fierce competition and mounting regulatory costs. At the same time, customer behavior is changing as part of the digitalization process, and their demands and expectations of us as a bank are growing. We are already focusing massive efforts on all these topics, which require vision and ideas; vision for examining the challenges that digitalization will bring us and our customers, and ideas on how to recognize the associated significant opportunities and translate them into economic