Deutsche Postbank 2010 Group Annual Report 2010 Group 2010 Annual Report 20 Deutsche Postbank AG 10 Postbank Group in figures 2010 Jan. 1 – Dec. 31, 2010 Jan. 1 – Dec. 31, 20091 Consolidated income statement Total income €m 3,805 3,097 Administrative expenses €m – 2,934 – 2,864 20 Profit/loss before tax €m 315 – 398 Consolidated net profit €m 138 76 Total cost/income ratio % 77.1 92.5 Return on equity before tax % 5.7 – 7.8 after tax % 2.5 1.5 Earnings per share € 0.63 0.35 Dec. 31, 2010 Dec. 31, 2009 Consolidated balance sheet Total assets €m 214,684 226,609 Customer deposits €m 116,201 111,067 Customer loans €m 109,303 108,971 Allowance for losses on loans and advances €m 1,764 1,641 Equity €m 5,627 5,251 Tier 1 ratio % 8.1 6.6 Headcount (FTEs) thousand 20.36 20.86 10 Long-term ratings Moody‘s A1 / outlook negative Aa3 / outlook rating under review Standard & Poor‘s A / outlook stable A – / outlook positive Fitch A + / outlook stable A + / outlook stable Information on Postbank shares Dec. 31, 2010 Dec. 31, 2009 Share price at the balance sheet date € 20.80 22.88 Share price (Jan. 1 – Dec. 31) high € 27.80 26.86 low € 19.47 6.81 Market capitalization on December 31 €m 4,551 5,006 Number of shares million 218.8 218.8 1 Prior-year figures adjusted (see Note 6) Milestones in fiscal year 2010 I February 25, 2010 The Postbank Group announced its business results for 2009, concluding the year with a consolidated net profit of €76 million. I March 24, 2010 Postbank successfully issued its fourth mortgage Pfandbrief with a volume of €1 billion. I April 29, 2010 The Annual General Meeting of Postbank was held in Frankfurt am Main. All motions were approved by large majorities. I June 22, 2010 Postbank announced that it would acquire 277 retail outlets of Deutsche Post as of July 1, 2010, as part of its “Postbank4Future” strategy program. I September 12, 2010 Deutsche Bank AG announced a voluntary public takeover offer to Postbank shareholders of the free float, combined with the goal of consolidating Postbank in 2010. I October 7, 2010 Deutsche Bank published the offer document for the Postbank takeover bid. The offer price is €25.00 per Postbank share. I November 29, 2010 Deutsche Bank announced that the voluntary public offer was accepted for a total of 23,080,965 Postbank shares, which corresponded to about 22.02 % of share capital and voting rights at Postbank. I December 1, 2010 Postbank announced the sale of its Indian subsidiary Deutsche Postbank Home Finance Ltd. to a buyer consortium led by Dewan Housing Finance Ltd. The transaction is expected to be concluded during the first quarter of 2011 and is still subject to approval by the Indian regulatory body National Housing Bank. I December 10, 2010 Deutsche Bank AG announced that U.S. anti-trust officials had approved the takeover of Deutsche Postbank AG. Its stake in Postbank now totaled 51.98 %. I December 17, 2010 The Supervisory Board appointed Rainer Neske as its Chairman effective January 1, 2011. Financial Calendar 2011 Financial Calendar 2011 / Milestones 2010 I March 30, 2011 Publication of 2010 Group Annual Report I May 11, 2011 Results as of March 31, 2011 I May 24, 2011 Annual General Meeting, Frankfurt am Main I August 4, 2011 Results as of June 30, 2011 I November 9, 2011 Results as of September 30, 2011 No responsibility is taken for the correctness of this information – the right is reserved to make changes at short notice. Deutsche Postbank AG 2010 Group Annual Report The Postbank Group, with approximately 14 million customers and more than 20,000 employees, is one of the largest financial service providers in Germany. In addition to our core business with private customers, we also serve corporate customers and are active in the fields of transaction banking and financial markets. The positive development of our operating business in the past few years can be attributed in particular to an attractive range of products tailored to the needs of our target groups and the structure of our sales organization, which is unique on the German banking market. We intend to build on these strengths to further enhance our innovativeness and service quality. Our goal is to continue to stay one step ahead of the market, with innovative new products and processes as well as excellent services. To a much greater degree, however, we owe our success to our clients, who have given us their trust. Trust is established through transparency and dialog. That’s why we want to use this annual report to provide clear information about us and our business. We also want to show how we see our role as a customer-oriented service company and how we fulfill this role, both with our employees and in cooperation with strong partners. Contents Postbank Group 2010 For our Shareholders Our Business Divisions Our Responsibility 4 Letter to our Shareholders 12 Retail Banking 20 Report of the Supervisory Board 8 Management Board 16 Corporate Banking 28 Corporate Governance 10 Shareholders and Stock 18 Transaction Banking Report including 19 Financial Markets Annual Corporate Governance Statement 42 Employees 44 Sustainability Postbank Journal March I 2011 Postbank Journal I Focal point The economy in 2011 I Branch sales Advisory services are setting standards I Corporate banking Long-term business relationships Fiscal Year 2010 Group Management Report Consolidated Financial Other Information Statements 48 Business and 103 Consolidated Statement 177 Consolidated Income Environment of Comprehensive Income Statement Quarterly Overview 49 Disclosures in accordance 104 Consolidated Balance with sections 289(4) Sheet 178 Consolidated Income and 315(4) of the HGB Statement and explanatory report 105 Statement of Changes Multi-Year Overview in Equity 51 Remuneration of the 179 Consolidated Balance Management Board 106 Consolidated Cash Flow Sheet – and Supervisory Board Statement Multi-Year Overview 52 Employees 108 Notes 180 Segment Reporting – Multi-Year Overview 52 Macroeconomic 141 Segment Reporting environ ment in 2010 (Note 42) 182 International Financial 176 Auditors‘ Report Reporting Standards 55 Net Assets, Financial (IFRSs) Position, and Results of Operations 184 Executive Bodies 57 Segment Reporting 186 Glossary 59 Total Assets 192 Contact Details 60 Report on Post-Balance Sheet Date Events 61 Risk Report 96 Report on Expected Developments Key Cover foldout Cross-reference 123 C2 Key data with page number C3 Milestones @ Reference to Internet C3 Financial Calendar Reference to service C4 Contacts Postbank made a clear turnaround in 2010. With a profit before tax of €315 million, we have left the losses of the past two years behind us. Compared with fiscal year 2009, we improved profit by more than €700 million. This satisfying performance resulted primarily from a sharp rise in our total income, which climbed 23 % year-on-year. The increase was largely generated by the strong growth of net interest income from our customer business. One other positive development had an effect as well: The impact of the financial market crisis – as expected – has significantly waned in the past fiscal year compared with previous ones. The need for the allow- ance for losses on loans and advances in the lending business eased significantly as well, reaching a level that was at the lower end of our expected range and once again well below the average level of European banks. The solid performance of fiscal year 2010 is reflected in particular by the results of our operating business divisions – Retail Banking, Corporate Banking and Transaction Banking. In Retail Banking, we boosted profit before tax by 25.1 % to €897 million. The key factor here was growth in net income from the interest-bearing customer business. Postbank is the market leader in Germany in the areas of savings and demand deposits as well as in the customer loan business – particularly in mortgage lending with our brands BHW and DSL. Thanks to the systematic, value-oriented management of new business and existing business, Postbank succeeded in considerably increasing the contribution that these product areas made to total comprehensive income. In this regard, initiatives carried out as part of the “Postbank4Future” strategy program that we introduced at the end of 2009 had a positive effect. The goal of this program is to make the Bank more appealing to customers by focusing even more intensely on customer needs, increasing service quality and substantially streamlining our product range. One critically important milestone in 2010 was the acquisition of an additional 277 retail outlets of Deutsche Post AG, which gives Postbank a network of more than 1,100 branches. Because of this move and the partnership with Shell and OBI regarding cash-withdrawal opportunities, we have once again succeeded in increasing our presence in Germany. Thanks to our network of approximately 13,000 contact points, the much-distinguished Internet banking service and telephone banking, our customers have access nationwide. In taking these steps, we further bolstered our position as Germany’s No. 1 retail bank and laid the foundation for future growth. 4 Postbank Group I Letter to our Shareholders For our Shareholders For our Shareholders An unsere Investoren An unsere Investoren In Corporate Banking, which we conduct with about 30,000 customers based in Germany, we generated a profit before tax of €382 million in 2010. This is an increase of €413 million compared with 2009. Here, too, we profited from solid trends in volume and a further attractive margin level. A key reason for this improved performance Our Business Divisions was a considerable drop in the need for the allowance for losses on loans and advances.