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 55
In PCAM, revenues reflected the aforementioned acquisitions of Sal. Oppenheim/BHF-BANK in the first quarter
2010 and of Postbank in December 2010. Additionally, PCAM’s investment management businesses recorded
higher commissions and performance fees reflecting improved market conditions and client activity, with client
demand shifting to less complex and lower margin products. Revenues are likely to continue to be impacted by
changes in market conditions and investor sentiment. Loan and deposit revenues in PCAM will continue to be
impacted by volume and margin developments. In Asia, the contribution of Hua Xia Bank is likely to impact
revenues in PBC.
The integration of Sal. Oppenheim was concluded in 2010 and the sale of BHF-BANK is expected to be finalized
in 2011. The integration of Postbank will continue in 2011 and is expected to yield revenue and cost synergies.
In CI, revenues will not continue to be impacted by the share price and the results of Postbank. In December,
The Cosmopolitan of Las Vegas commenced its operations and will continue to be reported in CI, together with
other investments.
The decrease in provision for credit losses in 2010 compared to 2009 resulted primarily from assets reclassified
in accordance with IAS 39 in CB&S. The impact of the aforementioned acquisitions increased provision for
credit losses. In PBC, provisions (excluding Postbank) decreased due to measures taken on portfolio and
country level. A sharp drop in economic growth would be likely to increase provisions.
Compensation and benefits increased in 2010 compared to 2009 from the aforementioned acquisitions and due
to higher amortization expenses for deferred compensation. The development of compensation expenses will
continue to depend significantly on the operating performance of our businesses, the governance of bank
executive compensation and future amortization of deferred compensation.
Severance charges in 2010 remained on prior year levels as a consequence of continued measures to reduce
complexity in our operations and to standardize processes as well as the initiated integration of our CIB businesses.
Similar measures, including integration-related initiatives, are expected to continue in 2011.
The increase in general and administrative expenses in 2010 primarily reflected the aforementioned acquisitions,
including integration-related expenses. In addition, the increase included higher investment spend in IT and
business growth (including operating costs related to our consolidated investments), partly offset by the nonrecurrence
of significant specific items recorded in 2009. While the acquisitions will continue to increase our
expenses, the impact of savings from integration, complexity reduction and standardization measures should
decrease them. The implementation of bank levies is expected to impact our expenses.
The actual effective tax rate of 41.4 % in 2010 was predominantly impacted by the Postbank related charge of
€ 2.3 billion, which did not have a corresponding tax benefit. The future actual effective tax rate could continue
to be influenced by the potential occurrence of specific factors.
Foreign exchange rate fluctuations are likely to continue to impact our reported euro revenues and expenses.