SEC Form 20-F - Deutsche Bank Annual Report 2012

Deutsche Bank
Annual Report 2010 on Form 20-F
Item 5: Operating and Financial Review and Prospects 54
In 2010, provision for credit losses was € 1.3 billion, versus € 2.6 billion in 2009, primarily driven by significantly
decreased provisions for assets reclassified in accordance with IAS 39.
Our noninterest expenses were € 23.3 billion in 2010, versus € 20.1 billion in 2009. Half of the increase was
attributable to the aforementioned acquisitions in 2010. In addition, compensation expenses in 2010 reflected
higher amortization expenses for deferred compensation following the aforementioned change in compensation
structures, including the impact of accelerated amortization for employees eligible for career retirement. The
remainder of the increase was due to the aforementioned investments in the integration of our CIB businesses,
in our IT platform and in other business growth initiatives.
We recorded income before income taxes of € 4.0 billion in 2010, including the aforementioned € 2.3 billion
charge taken in the third quarter 2010 related to the Postbank acquisition, compared with € 5.2 billion for 2009.
Our pre-tax return on average active equity was 9.6 % in 2010, versus 15.1 % in 2009. Our pre-tax return on
average shareholders’ equity was 9.5 % in 2010 and 15.3 % in 2009. Diluted earnings per share were € 2.92 in
2010 and € 6.94 in 2009.
The aforementioned shifts in currencies led to an increase in our assets, liabilities and invested assets compared
to December 31, 2009. After the successfully completed capital increase, our Tier 1 capital ratio was 12.3 %
and our Core Tier 1 capital ratio was 8.7 % as of December 31, 2010. Risk-weighted assets at year-end 2010
were € 346 billion, versus € 273 billion at year-end 2009, largely as a result of € 60 billion attributable to the
first-time consolidation of Postbank.
Trends and Uncertainties
The development of our results in 2010 was significantly impacted by the aforementioned acquisitions, which
will continue to impact our revenues and expenses going forward.
The development of revenues in CB&S showed a mixed trend in 2010. While certain flow businesses (such as
Money Markets, Rates and Cash Equities) suffered from more normalized margins and subdued client activity,
others (like Foreign Exchange and Flow Credit Trading) held up on the back of higher volumes and improved
market share. Structured products benefited from lower mark-downs on legacy positions and lower trading losses.
During 2010 we exited our designated equity proprietary business, following the closure of our designated
proprietary credit trading business in 2009. Within Origination & Advisory we improved rank and market share
in key markets. Changes in the regulatory landscape, in investor sentiment as well as in the competitive and
macroeconomic environment would be likely to impact revenues in CB&S.
Revenues in GTB benefited from the aforementioned acquisition in the Netherlands (including a one-time
recognition of negative goodwill in 2010) and from a shift towards fee income which partly offset the adverse impact
from the continued low interest rate environment. Interest rate levels, international trade volumes, cross-border
payments, corporate action as well as global growth are likely to impact the revenue development in GTB.
The further integration of the CIB businesses is expected to yield revenue and cost synergies.