Munich – BayernLB increased its earnings again in the third quarter and posted a profit before taxes of EUR 1,296 million in the first nine months of 2023 (9M 2022: EUR 381 million). The results were driven mainly by good operating performance in all customer segments and the interest rate situation. Consolidated profit (after taxes) stood at EUR 908 million (9M 2022: EUR 241 million).
“2023 has been a successful year so far for BayernLB’s business. Our transformation programme, which we have rigorously implemented and now all but completed, is paying off. Earnings increased in all customer segments, boosting our income overall,” commented Stephan Winkelmeier, CEO of BayernLB.
The BayernLB Group’s net interest income climbed to EUR 2,297 million (9M 2022: EUR 1,445 million). The figure benefited considerably from higher interest rates, especially in the deposit-taking business (incl. DKB’s retail business), and from further volume growth in customer business. In addition, BayernLB’s net commission income rose to EUR 333 million (9M 2022: EUR 313 million). The increase was due to good credit business in the Corporates Division at BayernLB and higher income from payment services and card business at DKB.
The BayernLB Group posted a net increase in risk provisions of EUR 28 million for the first nine months of 2023 (9M 2022: net release of EUR 13 million). Risk provisions of EUR 122 million were established (not including recoveries on written down receivables), most of which relating to Real Estate, while Corporates & Markets posted a net fall in risk provisions. Recoveries on written down receivables (including EUR 78 million from HETA) served to offset some of this amount. The post-model adjustment (PMA) was more or less on par with the end of 2022 at EUR 351 million. The NPL ratio, which reflects the share of non-performing loans in relation to the overall lending volume, remained low at 0.7 percent (31 December 2022: 0.6 percent).
The gains or losses on fair value measurement item rose to EUR 138 million from EUR 0 million in the year before period. It was marked by good operating customer business, especially with financial markets products and in precious metals. Other earnings components were a negative EUR 139 million (9M 2022: a negative EUR 116 million), mainly due to losses on securities and interest hedging transactions as a result of the sharp rise in interest rates.
The BayernLB Group’s administrative expenses remained stable at EUR 1,190 million (9M 2022: EUR 1,176 million). BayernLB’s cost base continued to fall thanks to the successful streamlining strategy at the core Bank. DKB posted a rise in expenses that was the result mostly of its strategic investments in growth and in enhancing its services. Expenses for the bank levy and deposit guarantee scheme came in at EUR 108 million (9M 2022: EUR 128 million), with the former accounting for EUR 70 million (9M 2022: EUR 103 million) and the latter for EUR 38 million (9M 2022: EUR 25 million). The decline in the bank levy stems from the general reduction in the target volume of the Single Resolution Fund.
The BayernLB Group’s total assets stood at EUR 285.7 billion (31 December 2022: EUR 259.3 billion). The hike results primarily from higher deposits at DKB and an increase in credit business. Risk-weighted assets (RWAs) inched down to EUR 64.5 billion (31 December 2022: EUR 65.3 billion).
The Group enjoys a solid capital base, with a CET1 ratio of 18.2 percent (31 December 2022: 17.4 percent).
Thanks to good business performance, the cost/income ratio (CIR) improved considerably to 45.3 percent (9M 2022: 71.6 percent), while return on equity (RoE) jumped to 15.3 percent (9M 2022: 4.8 percent).
Profit before taxes in the Real Estate & Savings Banks/Financial Institutions segment climbed to EUR 220 million (9M 2022: EUR 194 million). Higher operating earnings, especially in the deposit-taking business, offset higher risk provisions.
In the Corporates & Markets segment, BayernLB pushed up its profit before taxes to EUR 216 million (9M 2022: EUR 77 million). Good new business performance in the credit and capital market business and a positive earnings contribution from risk provisions as a result of individual releases were responsible for the increase.
The DKB segment’s earnings grew disproportionately. Profit before taxes jumped to EUR 857 million (9M 2022: EUR 161 million), due to changes in interest rates and the increase in net commission income from payment services and the card business. The number of DKB’s retail customers rose to around 5.5 million (9M 2022: approx. 5.3 million).
BayernLB expects to post a profit before taxes for full-year 2023 that is higher than the revised forecast of EUR 1.1 to 1.3 billion in the half-yearly financial report. This forecast is still fraught with significant uncertainty due to high geopolitical risks and the inflation and interest rate situation.
Additional details about the BayernLB Group’s financial figures in the first nine months of 2023 can be found in the supplemental IR presentation.