Deutsche Bank
Picking the winner in Germany was probably one of the easiest, if not the easiest, decisions the judges could make. While almost all its rivals reported huge losses last year – one of the worst ever for German banks – Deutsche Bank managed to grow net profit, achieve an ROE that was among the highest among the nation’s banks and cut costs.
Unlike its rivals, particularly the nation’s other leading commercial banks, Deutsche ended 2002 largely unscathed from the toxic mix of bearish equity markets, soaring risk provisions caused by record number of corporate insolvencies and declining revenues. As a result, it more than doubled net profit to E397m (pre-tax profits rose 96.8% to $3.7bn), although this was in part due to gains made from portfolio sales. It also achieved an ROE of 10.2% and, owing to extremely effective cost-cutting, reduced its cost-to-income ratio to 78.8% in 2002 from 87.6% in 2001.
The reasons for Deutsche’s excellent relative performance in the difficult conditions are many and complex. The fortunes of the bank, Germany’s only international banking giant, are no longer dependent on the domestic market. Deutsche is also a leader among all international banks in bond trading, enabling it to more than compensate for the lost revenue caused by bearish equity markets.
Deutsche’s other remarkable achievements in 2002 included increasing its global mergers and acquisitions business to 16% from 6% when global levels declined 39%. And it expanded its position in the lucrative US market and emerged as Europe’s leading asset manager with 12.5 million private and business clients.
“Our goal is to take on a leading position in all of our core business lines. We will not become complacent but will continue to work hard to build on the progress we have made – for example, in reducing costs,” said Josef Ackerman, chairman of the bank’s group executive committee.
