+62% net profit for Deutsche Bank Luxembourg
Deutsche Bank Luxembourg published its annual results for the 2021 financial year on May 12. On this occasion, the bank announced that it had recorded a net result of 148 million euros, compared to 91 million euros in 2020, an increase of 62%. At the same time, net income increased by 35.5 million euros to reach 325.4 million euros. Also growing, the balance sheet total amounted to 27.5 billion euros at December 31, 2021, compared to 25.7 billion during the previous financial year.
For their part, loans and advances to customers, on the other hand, fell slightly, from 13.7 billion euros in 2020 to 13.5 billion euros in 2021.
Quoting “a difficult economic environment”, Frank Rückbrodt, CEO and member of the management board of the Luxembourg entity, nevertheless declared: “Our bank has once again recorded rental growth and has thus been able to strengthen the level of its optional reserves, while paying its parent company a dividend of some 151 million.
Rising costs
In terms of expenses, the CEO of Deutsche Bank Luxembourg indicates that he has followed the upward trend in the sector: “So we have had an increase in expenses. However, less than in the sector, our general administration costs increased by 6%, while in Luxembourg these costs increased by 10.6%.” The increase in costs experienced by the banking institution is explained in particular by “a strengthening of controls, in particular in the areas of KYC”.
In 2021, the banking institution reduced its net provisions for risks, to 24.4 million euros, “thanks to active and conservative risk management”. In 2020, on the other hand, this figure amounted to 51 million euros “due to the pandemic”.
Deutsche Bank Luxembourg’s regulatory capital amounted to 5.9 billion euros. They are maintained at a stable level compared to the 6 billion euros of the previous year. Still in terms of risks, the liquidity needs coverage ratio reached 167.8%, “well above the minimum threshold of 100%”, indicates the bank.
The side effects of war
“Despite the good results for 2021, we remain cautious,” explains Frank Rückbrodt, adding that “the economic consequences of the war in Ukraine, as well as the persistent challenges linked to the pandemic, are a source of uncertainty.”
The CEO of Deutsche Bank Luxembourg that the group had already started to reduce its exposure to Russia since the Russian annexation of Crimea in 2014. In view of the current events in Ukraine, he declares that “we have no long-term material exposure on the side of customers in Russia or Ukraine”, attests that “there is no existing material credit risk”.
Despite everything, Frank Rückbrodt does not rule out risks of market contagion. “From the point of view of the primary impact, Luxembourg is not materially affected. However, the big uncertainties are the second and third round effects, which we cannot yet see.” In this way, the CEO of the Luxembourg entity expects uncertainties on the world economy, on the financial markets and “on our customers when it comes to the increase in oil prices, but also on the raw materials “.
In an uncertain macroeconomic environment, Frank Rückbrodt, on the other hand, wants to be reassuring for the results of 2022. He indeed mentions the bank’s off-balance sheet items, in this case the syndicated loans in the investment banking division. “They increased by 2.6 billion euros year on year, from 36.2 billion euros to 38.8 billion euros,” he says. And to clarify: “We earn money thanks to this, because it contributes to our net interest income (…), which represents future income for the bank”.
Looking for a new building
From the point of view of human resources, the bank employs 313 people, an increase compared to the previous year. Two-thirds of these workers are cross-border workers, 90% of whom live in Germany.
The bank, which currently operates on a rotation basis with 50% of its face-to-face and teleworking staff, announces that it will leave its current headquarters, based in the upper Kirchberg, in the medium term. She is therefore actively looking for a new building that will respond to a hybrid way of working.
Founded in 1970, Deutsche Bank Luxembourg offers services and products related to commercial banking, investment banking, private banking and asset management to institutional clients. A subsidiary of Deutsche Bank AG, it is one of the systemic banks identified in Luxembourg and is therefore regulated by the European Central Bank (ECB). This Luxembourg entity is of some importance for the banking group. As Frank Rückbrodt reminds us, in terms of income at group level, Luxembourg ranks third, after the United States and Germany.