The financial market crisis impacted Dresdner Bank's results in the first quarter of 2008. Value adjustments amounting to 845 million euros in the ABS trading book at the investment bank Dresdner Kleinwort reduced the operating profit of 712 million euros in the prior-year period to an operating loss of 397 million euros in Q1 2008. The negative effect on the Bank's net trading income was particulary pronounced; this item amounted to minus 509 million euros in the first quarter, after 343 million euros in the previous year. Excluding the value adjustments, Dresdner Bank's operating profit in the first three months was 448 million euros.
Dresdner Bank: Financial market crisis impacts Q1 results
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Performance of net interest and current income and net fee and commission income
Net interest and current income fell by 27 percent in the first quarter to 683 million euros, primarily due to special factors. After adjustment for special factors, this item was at the prior-year level. Net interest and current income in the Private & Corporate Clients (PCC) division rose by six percent year-on-year as a result of the strong deposits business. Investment Banking increased its net interest and current income by seven percent due to a positive performance in its structured finance business, among other things.
The decline in net fee and commission income reflects the cautious attitude currently adopted by clients with regard to securities investments: this item amounted to 604 million euros in the first quarter, after 789 million euros in the prior-year period. Net fee and commission income in the PCC division was slightly below the average for the prior-year quarters (minus six percent).
Dresdner Bank's total operating income amounted to 778 million euros in the first three months of the year, 62 percent down on Q1 2007. Excluding value adjustments on the Bank's ABS trading book exposure totalling 845 million euros, total operating income was 1,623 million euros.
Performance of the divisions
The Private & Corporate Clients division generated an operating profit of 217 million euros in the first quarter of 2008. This is on a par with the average for the prior-year quarters. Total operating income fell by 12 percent to 875 million euros. The cost-income ratio was 75 percent.
Dresdner Kleinwort recorded an operating loss of 575 million euros, after an operating profit of 219 million euros in the previous year. Total operating income declined by 921 million euros to minus 31 million euros, mainly due to the above-mentioned value adjustments.
Costs reduced, stable capital base
Dresdner Bank's total operating expenses fell by 14 percent as against the first quarter of 2007 to 1,165 million euros. Total staff costs decreased from 888 million euros to 722 million euros, in particular due to lower performance-related remuneration, while non-staff operating costs fell from 470 million euros to 437 million euros.
Loan impairment losses recorded a moderate net addition of 10 million euros in the first quarter, after releases of seven million euros in the previous year. This reflects the continuing high quality of the Bank's loan portfolio.
The return on risk-adjusted capital (RoRAC) was also impacted by the value adjustments and amounted to minus 25.8 percent. At 9.2 percent, the core capital ratio according to Basel II shows that the Bank continues to have a strong capital base.
Note:
The figures given in this press release relate to the Dresdner Bank subgroup and have been prepared in accordance with the IFRSs. The classification of the figures is comparable with those for other major German banks that apply IFRSs. The figures for the Dresdner Bank subgroup prepared in accordance with the IFRSs are not identical to those published by Allianz for its Banking Segment, which includes all of Allianz's banking activities.
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