Significant drop in loan loss provisions, further cost cuts
Dresdner Bankâs results for the first nine months of the current fiscal year demonstrate the effectiveness of the measures implemented to date. Dresdner Bank significantly reduced its net loan loss provisions and administrative expenses year-on-year. Overall, the Bank was able to improve its result by a substantial â¬1.7 billion. After the first nine months of the year, it generated an operating loss of â¬70 million.
The Bankâs three strategic business units recorded an operating result of â¬768 million, or â¬313 million net of Corporate Items. This was offset by a nine-month operating loss of â¬383 million for its non-strategic operations, which are bundled in the Institutional Restructuring Unit (IRU). Since the start of the year, the IRU has reduced risk-weighted assets in the unit by almost â¬5.7 billion and its lending volume by â¬11 billion.
The Bank recorded a loss before taxes of â¬433 million. This includes other expenses amounting to â¬81 million and restructuring charges of â¬282 million.
Operating income fell by â¬256 million or 4.7%, adjusted for the deconsolidation of Deutsche Hyp and the domestic asset management companies transferred to Allianz. Operating income after net loan loss provisions increased 21% year-on-year to â¬4,420 million. Net loan loss provisions fell significantly by around â¬1 billion to â¬722 million.
As a result of our drive to reduce risk-weighted assets, net interest and current income before loan loss provisions amounted to â¬1,750 million, down 17% on the previous year. Adjusted net fee and commission income fell from â¬2,190 million to â¬1,978 million. At â¬1,414 million, net trading income after nine months was up significantly by â¬325 million year-on-year. Administrative expenses decreased by â¬833 million or 16% as against the adjusted prior-year figures, amounting to â¬4,490 million after nine months.
The Private and Business Clients division generated an operating result of â¬182 million for the first nine months of 2003, despite the ongoing difficult market environment. On the back of a substantial drop in administrative expenses, net fee and commission income in particular increased slightly thanks to targeted sales initiatives.
The Corporate Banking division generated an operating result of â¬304 million. This was due to a slight increase in margins and a reduction in loan loss provisions, as well as successful cost-cutting measures.
Dresdner Kleinwort Wasserstein generated an operating result of â¬282 million in the first nine months. This was achieved despite a reduction in its fixed-income business in the third quarter, and was due to the successful development of its capital markets business and continued strict cost control.
Since the start of the year, the risk-weighted assets bundled in the Institutional Restructuring Unit (IRU) have declined by just under â¬5.7 billion to the current figure of â¬14.2 billion. The IRU reported an operating loss of â¬383 million for the first nine months of 2003. This is mainly due to risk provisions which at â¬506 million accounted for more than two thirds of the Groupâs total risk provisions.
The regulatory liable capital in accordance with BIS capital adequacy rules amounted to approximately â¬16.4 billion at the end of the third quarter. The risk-weighted assets (RWA) in accordance with BIS amounted to approximately â¬122.2 billion at the same date. Thus, the core capital ratio at the reporting date amounted to 6.8%, while the total capital ratio amounted to 13.4%.
The Bank is again making progress thanks to the "New Dresdner" programme introduced in August of this year, and is continuing to implement it systematically and rapidly. The figures for the first nine months show that the Bank is on the way to achieving sustained profitability again. The Board of Managing Directors will keep open the option of further accelerating the reduction in risk-weighted assets in the IRUâs non-strategic portfolio in the fourth quarter. This could mean that the Bank will not yet meet its interim target of breaking even in terms of its operating result at the end of 2003.
Dr. Hartmut KnÃ¼ppel
Tel. + 49 (0)69 263â4974
Tel. + 49 (0)69 263â83637
Tel. + 49 (0)69 263â16712