- Profit before taxes of EUR 164 million driven by good operating earnings and net positive risk provisions
- Net interest and commission income up at EUR 570 million (Q1 2020: EUR 497 million), partly boosted by good operating performance and favourable funding conditions
- Administrative expenses stable, despite growth investment in DKB’s infrastructure, thanks to savings at BayernLB core Bank
- Capital base still solid: CET1 ratio of 15.4 percent
Munich - BayernLB posted very positive profit before taxes of EUR 164 million in the first quarter of 2021. This includes charges for the bank levy and contributions to the deposit guarantee scheme totalling EUR 144 million for the full year. The loss of EUR 151 million in the year-before period was due in particular to additional risk provisions established to cover losses from the coronavirus pandemic and measurement losses resulting from the slump in the capital markets in March 2020.
“Our operating business at BayernLB and DKB performed well in the first quarter of 2021. This positive trend shows that we have made progress under our Fokus 2024 transformation programme, have managed to significantly cut our costs and are starting to feel the benefit of implementing our sector strategy,” commented BayernLB CEO Stephan Winkelmeier.
Despite the economically challenging climate, BayernLB’s net interest income was up on the year-before period at EUR 476 million (Q1 2020: EUR 426 million). Stable customer business and the favourable funding conditions at the ECB contributed to this. Net commission income rose to EUR 94 million (Q1 2020: EUR 71 million). The credit business, customer-driven foreign notes and coins and precious metals trading and the Group subsidiaries Real I.S. And DKB made greater contributions than in the year-before period.
Risk provisions performed quietly in the first three months of the year, unlike in the year-before period. They came in at EUR 32 million (Q1 2020: a negative EUR 72 million) and included recoveries on written down receivables.
Gains or losses on fair value measurement grew considerably on the year-before period to EUR 85 million (Q1 2020: loss of EUR 65 million), marked largely by measurement gains from positive market performance and operating customer business. Gains or losses on financial investments amounted to EUR 6 million (Q1 2020: EUR 11 million).
Administrative expenses in the Group stood at EUR 394 million, on par with the year-before period (Q1 2020: EUR 390 million). While administrative expenses at BayernLB fell year on year, DKB made planned investments in its infrastructure and in new employees as part of its growth strategy.
BayernLB’s total assets moved around 12 percent higher compared to the end of 2020, climbing to EUR 286 billion as at 31 March 2021 (31 December 2020: EUR 256 billion). This was fuelled particularly by short-term money-market transactions. Risk-weighted assets (RWAs) at the end of the first quarter amounted to EUR 65.8 billion (31 December 2020: EUR 65.0 billion).
BayernLB’s capital base remains solid in the first quarter of 2021, with CET1 capital amounting to EUR 10.1 billion (31 December 2020: EUR 10.3 billion). This put the CET1 ratio at 15.4 percent (31 December 2020: 15.9 percent).
Return on equity (RoE) at BayernLB stood at 6.4 percent (Q1 2020: a negative 6.1 percent). The cost/income ratio (CIR) improved to 58.7 percent from 91.4 percent in the year before period.
Earnings improved in all segments
The Real Estate & Savings Banks/Financial Institutions segment contributed EUR 86 million (Q1 2020: EUR 50 million) to quarterly earnings. The commercial real estate business is on a growth trajectory in line with strategy. The precious metals business continued to generate high earnings.
The Corporates & Markets segment produced earnings of EUR 73 million (Q1 2020: loss of EUR 87 million): it also managed to fully implement the new sector-based sales approach in the first quarter. The year-before period was marked by high risk provisions in light of the uncertain economic situation caused by the coronavirus pandemic.
DKB posted good profit before taxes of EUR 63 million (Q1 2020: EUR 28 mil-lion), driven by persistently successful customer business. In its retail business, DKB recorded strong growth in the number of securities accounts opened (+47 percent on Q1 2020) and in securities transactions (+101 percent on Q1 2020). DKB also benefited from consistently focusing on its core business areas and the related lending growth in the corporate clients, infrastructure and renewable energy sectors.
Earnings in the Central Areas & Others segment were a negative EUR 59 million (Q1 2020: loss of EUR 142 million) and included in particular net interest income, which was boosted by the favourable funding conditions granted by the ECB.
Outlook for full-year 2021
The Group still expects profit before taxes of between EUR 200 million and EUR 400 million for the full year. As it is unclear how the pandemic will unfold or what the potential, currently unpredictable impact on the German economy and financial markets will be, the forecast is fraught with a high level of uncertainty.