The DekaBank Group, the central asset manager for the Sparkassen-Finanzgruppe (Savings Banks Finance Group), is reporting an economic result of 71.5 million for financial year 2008. The fall in income of 86% is primarily due to the worsening of the financial market crisis in the second half of 2008, which resulted in valuation allowances amounting to 709 million at DekaBank.
These and the higher provisions for loan losses in DekaBank of around 292 million were partially offset by income from the investment of free liquidity. Attractive margins were achieved with counterparties with a good credit rating despite full collateralization.
The core capital ratio rose from 8.5% at the end of 2007 to its current level of 10.5%. As before, DekaBank has a comfortable liquidity cushion and an appropriate risk-bearing capacity. Franz S. Waas, Ph.D., Chairman of the Board of Management of DekaBank: "DekaBank has performed well against the backdrop of the financial market crisis." This is also highlighted by the fact that the leading international agencies Moodys and Standard & Poors confirmed their good ratings for unguaranteed long-term liabilities of Aa2 and A. As in previous years, DekaBank is distributing an unchanged dividend of 28.6 million to its shareholders.
The financial market crisis has set new framework conditions for banking operations and in response DekaBank has drawn up a 6-point action program to make Deka fit for the future. Waas: "We will continue to offer savings banks customers innovation and quality at attractive terms and conditions. To ensure we are ideally positioned to do this, we have included strategic adjustments, cost reductions and marketing campaigns in our program."
The key points of the program are as follows:
In the AMK and AMI business divisions, concentration on products and services for institutional and private investors.
In Corporates & Markets (C&M), focus of all efforts on asset management for the Sparkassen-Finanzgruppe - in trading, repo/lending and market making.
Cessation of capital market activities that do not form part of the core tasks of asset management. Partial reduction of securities in the Liquid Credits portfolio and discontinuation of public finance activities.
Expansion of the growth sector exchange traded funds (ETFs).
Group-wide process and quality offensive to reduce costs and improve efficiency.
Launch of several sales campaigns to expand customer business.
As in previous years, the Asset Management Capital Markets (AMK) business division made the highest contribution to income in the DekaBank Group. However, as a result of the financial market crisis, earnings were considerably lower than originally expected. The price slide on the international markets led to declining fund sales. According to BVI statistics, mutual securities funds in the sector recorded net outflows of 28.4 billion. With net outflows of 4.8 billion, the decline at DekaBank was moderate compared to the rest of the sector. Overall, the central asset manager for the Sparkassen-Finanzgruppe further increased its market share from 19.8% to 20.9%.
Based on the net sales performance stated in the Annual Report, which unlike the BVI statistics only includes direct sales with private and institutional investors, income in 2008 amounted to around 520 million. Assets under Management (AuM), which show the income-relevant volume of fund products at AMK, were down as a result of the price slides in the global financial markets to 123.5 billion (147.5 billion). The divisions economic result fell by around 31% to 221.2 million (319.5 million).
Despite the adverse market environment, the Asset Management Property (AMI) division performed well. Net sales rose from 13 million in 2007 to 1.4 billion and assets under management increased by around 7% to 18.9 billion (17.7 billion). The focus on private investors and consistent quota allocation in the mutual funds made a considerable contribution to this positive development. Even in October, which was partic