Chillin' out till it needs to be funded
Revenues in both Corporate Banking & Securities and Personal/Private Banking trended down lazily for the bank at 4% and 1% respectively while the bank was busy repairing its assets for the coming Basel 3 deluge bringing the value of optimization completed to $143 B or EUR 111 B. Sales and Trading ervenue was down 14% on year ago quarter. Retail and Business Banking revenues were shored up by 11% uptick in Discretionary portfolio / Advisory fee income in Germany and low rates contributed to a 5% uptick in Deposit and payment and Credit products as well
That meant that the banks jump in profits came from increased Transaction Banking revenues and cost efficiencies of an additional 5% in non interest costs, leaning on 3% reduction in Comp as well as a 12% betterment in General and Administrative expenses. The Bank also plans to issue 10% new equity shares to add EUR 2.8 B in Capital, even as the uncertainity around Taunus comes down
The bank reports gross profit per segment as IBIT and expects the 25% plus uptick in IBIT to be a continuing feature. However the IBIT growth shoerd up by reduction in loan loss provisions as for other banks, was marre d by a solitary credit event in growing Transacton banking segments of almost EUR 100 mln
The Bank’s tax rate also went up to 31% despite further lo hanging fruit and restructuring savings in non core operations designed to cut thru the cluttered overlap from inorganic growth over the years still taking net profits to $2.2 B on revenues of $12.2 Bln i.e. EUR 1.7B on EUR 9.4 B
Bank assets still lie upward of EUR 2 T and the bank expects to issue EUR 18 B in 2013 of which it raised EUR 6 B ata spread of just 49 bps in Q1
Liquidity and Funding ratios are unlikely to buzz the bank further despite its initial monthly runs with suspect syndicates at BNP for inter bank funding matching limited by the CRD and related UK regulation. The bank also reports complete detailed quarterly results apparently under German law instead of opaque trading statements prefered by London based banks. SCB and HSBC report on May 7 and 8th next week.