SEC Form 20-F - Deutsche Bank Annual Report 2012

Deutsche Bank
Annual Report 2010 on Form 20-F
Operating Results (2009 vs. 2008)
Item 5: Operating and Financial Review and Prospects 73
Net Interest Income
Net interest income in 2009 was € 12.5 billion, virtually unchanged compared to 2008. Interest income and
interest expenses decreased significantly by € 27.6 billion each, mainly reflecting decreasing interest rate levels
as a result of further rate cuts by central banks in 2009, in response to the credit crunch, and targeted asset
reductions. Average interest earning assets, mainly trading assets, were reduced more significantly than average
interest-bearing liabilities. The resulting decline in net interest income was offset by the positive effects
from lower funding rates compared to 2008. These developments resulted in a widening of our net interest
spread by 46 basis points and of our net interest margin by 40 basis points.
Net Gains (Losses) on Financial Assets/Liabilities at Fair Value through Profit or Loss
Net gains (losses) on financial assets/liabilities at fair value through profit or loss from Sales & Trading (debt
and other products) were gains of € 4.1 billion in 2009, compared to losses of € 6.5 billion in 2008. This development
was mainly driven by significant losses in our credit trading businesses and mark-downs relating to
provisions against monoline insurers, residential mortgage-backed securities and commercial real estate loans
recorded in 2008. In addition, the result in 2009 included a strong performance in ‘flow’ trading products. In
Sales & Trading (equity), net gains (losses) on financial assets/liabilities at fair value through profit or loss were
gains of € 1.1 billion in 2009, compared to losses of € 1.5 billion in 2008, mainly due to the non-recurrence of
losses recognized in Equity Derivatives and Equity Proprietary Trading in 2008. In Other products, net gains of
€ 1.9 billion on financial assets/liabilities at fair value through profit or loss in 2009 were mainly related to our
minority stake in Deutsche Postbank AG recognized in CI and to gains from derivative contracts used to hedge
effects on shareholders’ equity, resulting from obligations under share-based compensation plans recorded in
C&A. Net losses of € 2.0 billion from Other products in 2008 included net mark-downs of € 1.7 billion on leveraged
finance loans and loan commitments.
Net Interest Income and Net Gains (Losses) on Financial Assets/Liabilities at Fair Value through
Profit or Loss
Corporate & Investment Bank (CIB). Combined net interest income and net gains (losses) on financial assets/
liabilities at fair value through profit or loss from Sales & Trading were € 11.8 billion in 2009, compared to negative
€ 1.5 billion in 2008. The main drivers for the increase were the non-recurrence of losses in Equity Derivatives,
Equity Proprietary Trading and Credit Trading, as well as significantly lower mark-downs on credit-related
exposures. In addition, the result in 2009 included a strong performance in ‘flow’ trading products. The decrease
in Loan products was driven by lower interest income and gains (losses) on financial assets/liabilities at fair value
through profit or loss in the commercial real estate business, partly offset by mark-to-market gains in 2009,
versus losses in 2008, on the fair value loan and hedge portfolio. In Transaction services, combined net interest
income and net gains (losses) on financial assets/liabilities at fair value through profit or loss decreased
by € 188 million, primarily attributable to the low interest rate environment and lower depository receipts. The
improvement of € 2.1 billion in Remaining products resulted mainly from significantly lower net mark-downs
on leveraged loans and loan commitments in 2009 compared to 2008. In addition mark-to-market gains in
2009, versus mark-to-market losses in 2008, on investments held to back insurance policyholder claims in
Abbey Life (offset in Policyholder benefits and claims in Noninterest expenses) contributed to the increase.