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applied to Greek sovereign bonds. Generally, the situation on the
financial markets will remain very unstable in spite of the intervention
of central banks because as long as the debt crisis remains unresolved,
even seemingly insignificant items of bad news can cause
market distortions and possibly have long-lasting adverse effects on
the markets and the real economy.
General economic outlook
and sector development in 2013
The ongoing recovery in the global economy predicted for 2012 should
essentially continue in 2013, again driven by emerging markets. At
the same time, the negative effects of the drastic austerity measures
taken by numerous eurozone countries should lessen. This means
above all that Germany should remain on course for stable growth on
the back of both foreign demand and an ongoing upwards trend in
domestic spending. Eurozone growth is expected to recover tangibly
overall compared with 2012.
The banking sector can expect to enjoy a healthier earnings position
in 2013 compared with recent years, even if the permanently greater
supervisory requirements will have a negative impact on earnings.
This is based on the assumption that the debt crisis in the eurozone
eases markedly, the equity capital required to meet the additional
regulatory requirements can be successfully raised and economic
growth materialises as forecast in 2013.
Development of HVB Group
In the assumptions of its detailed planning for the 2012 financial year,
HVB Group presumes that operating income will improve slightly in
a persistently difficult environment compared with the year under
review. This increase will be driven primarily by improved net trading
income, which was depressed in 2011 by credit value adjustments,
while net interest is expected to decline. There will be a slight decrease
in operating costs over last year as a result of our strict cost management.
The net write-downs of loans and provisions for guarantees
and commitments, which were at a very low level on account of the
favourable credit environment in 2011, are expected to normalise in
the 2012 financial year and thus increase to what is still a moderate
level compared with the previous year. All in all, we expect the profit
before tax to improve slightly compared with the good figure recorded
in 2011 to return to a good level.
The expectations concerning the performance of HVB Group for the
2013 financial year are derived from the multi-year plan. Provided
that the underlying economic conditions develop favourably both in
Germany and worldwide and there is no sharp economic downturn,
we assume that HVB Group will develop favourably and operating
income will rise, particularly due to net trading income while operating
costs decline slightly.
The trends in results of HVB Group in 2012 and 2013 are as follows
for the individual operating divisions:
HVB Group’s performance in the 2012 financial year will again crucially
depend on the operating performance of the Corporate & Investment
Banking division, in particular the earnings and the net write-downs
of loans and provisions for guarantees and commitments. For 2012,
we expect slightly higher operating income and a stable development
of operating costs. For 2013 we proceed on the assumption that the
performance of the division’s operations will be favourable. At the
same time, there will be a significant increase in operating income
and a slight decline in operating costs.
In the Family & SME division, we expect a moderate rise in operating
costs in the 2012 financial year which should be more than offset by
a stronger increase in operating income. The Private Banking division
will also succeed in improving its operating income in 2012 while
operating costs will be kept at the previous year’s level. We believe
that both divisions will perform well on the operating side also in 2013.
HypoVereinsbank · 2011 Annual Report 41