Deutsche Kreditbank AG Annual Report 2016 Investing in assets that last: land and people 2DKB | DKB Annual Annual Report Report 2016 2016 Company profile Company profileKapiteltitel | 1 | 1 Deutsche Kreditbank AG (DKB) employs more than 3,300 people, has net assets of approx. EUR 76.5 billion and is one of the top 20 banks in Germany. Our products are leaders in the market and distinguished by fair terms. We serve more than 3.5 million customers. They can conduct their banking transactions comfortably and securely online using the latest technology. Our industry experts assist our business customers in person at their offices. Entrepreneurial, sustainable actions are of great importance to us: this is why we use more than 80% of our net assets for loans, e. g. for the construction of energy-efficient housing adapted to the needs of the elderly and families as well as in- and outpatient healthcare facilities and building projects in schools and daycare facilities in Germany. We ensure that the local agricultural sector remains competitive by investing in factors of production and bioenergy. In addition, we have been providing loans for a large number of renewable energy projects in the wind, solar and hydropower sectors since 1996. We foster a culture of appreciation and together- Deutsche Kreditbank AG ness – both amongst ourselves as well as with our customers and business partners. A variety of tasks and development opportunities for our employees and optimal framework conditions for daily working life make us a responsible and attractive employer. The DKB MANAGEMENT SCHOOL is our in-house further education and training academy for strengthening our em- ployees’ and customers’ competencies. Our social commitment via our foundation, DKB STIFTUNG, is proactive and comprehensive. 2 | DKB Annual Report 2016 Investing in Germany EUR 19.6 EUR 2.5 EUR 9.0 billion billion billion Housing Health and care Local authorities, education, research education, authorities, Local Investing in GermanyKapiteltitel | 3 | 3 We are the bank that sets new benchmarks in our industry by inves- ting in lasting values: for our customers and for a sustainable future in Germany. Via loans, we return 83 % of our lending volume into the economy of our country. The funds are invested in industries that ensure regional economic and power supply stability and enable the implementation of new ideas. Das kann Bank. EUR 12.0 EUR 8.1 EUR 5.9 EUR 3.5 billion billion billion billion Deutsche Kreditbank AG Private households Private Energy and utilities Energy Food and agriculture Food Environmental technology Environmental 4 | DKB Annual Report 2016 Housing EUR 19.6 billion The requirements for housing in the 40 million German households are rising and represent a challenge for the housing industry, e. g. in the areas of energy efficiency and housing for the elderly. Our customers now include 1,700 housing companies and associations who own more than 3.6 million homes. More than 2/3 of these have undergone energy-efficient refurbishment / modernisation since 1990. We also assist our customers with sector-specific solutions beyond traditional banking products for the purchase and sale of housing. Investing in GermanyKapiteltitel | 5 | 5 Improved housing space Deutsche Kreditbank AG Civil engineer and DKB employee, Franziska Röder, talks to Klaus Grünert from the management of Bauträgergesellschaft mbH about the current project status. 6 | DKB Annual Report 2016 Health and care EUR 2.5 billion Demographic change and new medical care options are increasingly raising public awareness on the topics of health and care. As a financing partner for hospitals, medical care facilities and nursing institutions, we offer our customers cross-sectoral healthcare models and close networking of the disciplines within the sector. We have financed 9,000 doctors’ practices and pharmacists as well as 440 care homes and hospitals since 1999. Investing in GermanyKapiteltitel | 7 | 7 Supporting regional services Deutsche Kreditbank AG No shortage of doctors here: Dr Ulrich Schwantes ensures that the residents of Oberkrämer in Brandenburg are well looked after with his rural medical practice. 8 | DKB Annual Report 2016 Local authorities, education, research EUR 9.0 billion The numerous local, educational and research institutions in our country ensure that our everyday life runs smoothly and that the regions can successfully develop their key areas of performance. As a financing part- ner, we assist them in fulfilling their public service mandate – by providing loans, account management ser- vices and investment forms tailored to their needs. Thanks to our excellent regional expertise, we now finance around 1,000 daycare facilities and schools. Investing in GermanyKapiteltitel | 9 | 9 Making educa- tional diversity possible Deutsche Kreditbank AG Lars Schulze, managing director of Gallierhaus GmbH, with his daughter in a daycare facility built by a parent initiative – a project financed by DKB. 10 | DKB Annual Report 2016 Private households EUR 12.0 billion Our private everyday life needs successful financial management. Throughout Germany, we assist more than 3.4 million customers with the financial services provided by a modern online bank. In doing so, we provide our customers with more than just easy to understand services at competitive terms. We also ensure that they can easily access these services at any time throughout the world. Regular, independent evaluations prove that this is not mere lip service. Investing in GermanyKapiteltitel | 11 | 11 Making banking transactions easier Deutsche Kreditbank AG We offer private customers products and solutions that make it possible for our customers to enjoy financial flexibility. 12 | DKB Annual Report 2016 Environmental technology EUR 8.1 billion Energy turnaround in Germany: we have been involved in this for more than 20 years – you could say we are one of the pioneers. As a lender for green electricity, we have realised 2,150 wind-power projects, 1,350 photo- voltaic projects and financed 600 biogas projects since 1996. The installed electrical output is equivalent to 7.5 gigawatts. With the power these facilities have generated, around 4.3 million 2-person households can be supplied or 5 nuclear power stations can be replaced. Investing in GermanyKapiteltitel | 13 | 13 Contributing to the energy transition Deutsche Kreditbank AG On the road in the service of our customers: DKB expert Jörg-Uwe Fischer in front of a type E-125 wind turbine that generates 13 million kWh of electricity per year. 14 | DKB Annual Report 2016 Energy and utilities EUR 5.9 billion In more than 12,000 German cities and municipalities, many people work at making sure that our local infra- structure functions well: they work for municipal utilities, organise waste disposal or regulate the regional bus and rail transport services. By reliably assisting them in financial matters, we help ensure they can focus on their core duties in their everyday life. For example, 2 billion passengers are transported annually by transport com- panies with which we have a business relationship. Investing in GermanyKapiteltitel | 15 | 15 Securing utility services Deutsche Kreditbank AG Annette Meyer and Dr Alfred Kruse from the municipal utility Stadtwerke Burg ensure that the region is supplied with gas, district heating and electricity – we look after the finances. 16 | DKB Annual Report 2016 Food and agriculture EUR 3.5 billion In Germany, more than 16 million hectares of agricultural land contributes to ensuring the food supply. Some of this land is managed by our 6,000 agricultural customers to whom we provide EUR 3.5 billion. This makes us a leading agricultural bank in Germany. Our consultants – many of them qualified agricultural engineers and process engineers – find solutions that allow each of these customers to establish competitive production systems. Investing in GermanyKapiteltitel | 17 | 17 Supporting local agriculture Deutsche Kreditbank AG Our customer Wolfgang Jaeger (Managing Director Bauernverband retired) checks the quality of the canola. 18 | DKB Annual Report 2016 Performance indicators EUR million 2016 2015 Net interest income 795.1 790.4 Risk provisions 128.7 143.8 Net commission income 6.9 –1.3 Administrative expenses 417 376.8 Profit before taxes 331.2 236.0 Cost/income ratio (CIR) in % 45.8 % 48.0 % Return on equity (ROE) in % 12.4 % 9.6 % Balance sheet figures EUR million 2016 2015 Total assets 76,522.3 73,428.8 Equity 3,019.1 2,945.7 Core capital ratio in % 8.9 % 8.2 % Customer receivables 63,228.3 61,582.1 Customer deposits 53,438.0 48,558.2 Customer figures 2016 2015 Number of customers 3,518,055 3,250,968 Number of retail current accounts (DKB-Cash) 2,501,689 2,214,771 Employee figures 2016 2015 FTE | headcount as at 31 Dec 3,032 | 3,316 2,937 | 3,220 Average age in years 42.8 42.5 Average length of service in years 8.2 7.9 Gender breakdown m | f in % 41.7 | 58.3 40.5 | 59.5 Gender breakdown by management position m | f in % 61.1 | 38.9 62.5 | 37.5 Workforce availability in % 95 95.3 Training days | employee 3.4 2.4 Contents | 19 Contents Letter from the Board of Management 20 Executive bodies 23 Report of the Supervisory Board 26 Highlights in 2016 28 Awards 32 Group management report 34 Deutsche Kreditbank AG Basic principles of the Group 36 Report on the economic positiont 41 Non-financial performance indicators 66 Report on opportunities and risks 73 Report on expected developments 101 Consolidated financial statements 107 Consolidated