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The regulatory environment represents a further factor of
uncertainty for our industry. In short, we all benefit from a
stable financial system: the banks, our customers, governments
and the public at large. This is the point of tightening
the capital and liquidity requirements under Basel III. For this
reason, I welcome the new set of rules relating above all to
core Tier 1 capital.
Of course this is made all the easier for me by the excellent
capital base at HVB. Our core Tier 1 ratio of 15.6% makes us
one of the most stable banks not only in Germany but
anywhere in Europe. Furthermore, we enjoyed an adequate
liquidity structure and solid financing base at all times in the
2011 financial year. And HVB’s leverage ratio (ratio of total
assets to shareholders’ equity shown in the balance sheet)
is also rock solid at 16.5x. Moreover, our parent company,
UniCredit, completed a very successful €7.5 billion capital
increase at the start of 2012, at an early date taking it well
beyond the core capital ratios demanded by the EU bank
supervisors.
With regard to the new regulations, it must be the case that
the rules are fair; individual countries and financial institutions
must not be put at a disadvantage. Last year, I made no
bones of the fact that, as far as I’m concerned, HVB has been
hit harder than most by the bank levy. It cannot be right that
a bank with our balance sheet and risk positions is required
to make the second-biggest contribution to the German crisis
fund. There is clearly a need for legislators to act in this area.
Our results for 2011 are further evidence of the resilience of
our business model. Due to the difficult capital market
environment predominantly in the second half of the year,
our pre-tax profit of €1.6 billion failed to quite match the
very good figure of €1.9 billion reported in 2010. The results
for 2011 again underscore our profitability and solidity as
well as the strength of our customer business.
We were once again able to reduce our loan-loss provisions
after we had already more than halved such provisions
year-on-year to €632 million in 2010. The beneficial lending
environment allowed us to report loan-loss provisions at a
very low level of just €266 million in 2011.
Our strict cost management programme also has a long-term
horizon. The increase of five percent or €178 million in
operating costs in 2011 was caused among other things by
the bank levies outside of Germany that we had to pay for
the first time in Austria and the UK. Without these items and
adjusted for consolidation and currency effects, the cost
increase was moderate, at around two percent (please refer
to the Financial Review for further information about the
annual results).
As in previous years, our Corporate & Investment Banking
division (CIB), which was formed in 2009 when the former
Corporates & Commercial Real Estate Financing and Markets
& Investment Banking divisions were merged, made a major
contribution to our commercial success. Sadly, though, we
were unable to escape the difficult capital market environment
I mentioned earlier; the sharp decline in market
activities in the second half of the year left clear traces in our
net trading income, which fell sharply accordingly. This also
shaped the division’s pre-tax profit (€1,226 million compared
with €1,384 million in 2010).
The Family & SME division (F&SME) performed well, recording
higher operating income in 2011. The division generated a
pre-tax profit of €147 million, comfortably beating the
year-ago figure of €114 million. As part of our One for Clients
project, business customers with annual revenues of up to
€50 million have been served by F&SME since the start of
2011. Also allocated to this division are retail customers with
free assets of less than €500,000.
HypoVereinsbank · 2011 Annual Report 11