Berenberg Bank continues growth through tough 2008
Hamburg. Hamburg-based Berenberg Bank was able to continue on its successful growth path, even through the difficult banking year of 2008. Inflows of assets, the balance sheet total and the number of clients increased significantly. Germany’s oldest private bank wants to continue its growth strategy, also in 2009.
“It is true that in terms of profits, it is impossible, in the current environment, to come close to a historical record result like we had in 2007. However, we are very satisfied with the result achieved in 2008,” Dr. Hans-Walter Peters, speaker of the personally liable partners, comments on the preliminary figures for the last financial year. At EUR 47.1 million, the net profit was below last year (EUR 61.1 million) – “however, the return on equity, at 37.5 %, is a figure which other banks would love to have, even in good times,” says Peters. “What is particularly pleasing is that we were moreover able to significantly expand our business.”
The Bank did not keep any illiquid paper or structured products at any time. The conservative risk strategy of many years did not have to be adjusted, even in times of financial crisis. Berenberg succeeded in acquiring many new clients in 2008, deposits rose strongly. “This shows that we as private bankers, with personally liable partners at the helm, enjoy particular confidence. Our organisation has experienced many national and global crises over the last 400 years already. We have a well functioning business model, geared towards continuity and service for our clients – and given our personal liability, we, of course, consider things with a sense of proportion and common sense and tend to question things twice before we invest.”
Due to the higher business volume, the number of employees increased by 10 % to 837 (previous year: 760).
The balance sheet total rose by 18.2 % to EUR 4.3 billion due to high inflows of funds (previous year: EUR 3.6 billion), the enlarged business volume rose to EUR 4.4 billion (previous year: EUR 3.8 billion, + 16.2 %).
The Bank’s liable capital was raised by EUR 21.9 million in 2008, to EUR 177 million. The Total Ratio pursuant to the German Solvency Regulation (previously Principle I) came to 11.1 % for the Bank and to 13.8 % for the group and was thus markedly above the required 8 %. The group’s core capital ratio (tier 1) amounted to 12.0 % at the end of the year.
The gross profit (provision income, interest income, income from subsidiaries, proprietary trading) was increased from EUR 199.8 million to EUR 202.8 million despite the difficult environment.
Administrative costs received particular attention at an early stage already. Despite investments in the Bank’s further growth (hiring of new employees, investments in IT, marketing activities, expansion of the branches), they remained almost constant, at EUR 134.8 million (previous year: EUR 133.5 million).
While the record result of 2007 was also influenced by strong cancellations in the field of risk provisioning, a net allocation ensued in 2008 as conservative valuation standards were applied. These were characterised by a cautious assessment of the global economic developments.
The cost/income ratio came to 67 % as in the previous year.
“We see ourselves as a high-quality provider in all business segments”, says Peters. Besides the special proximity to its clients, Germany’s oldest private bank also stands out thanks to the continuity in its business policy. Peters will continue on this track together with Andreas Brodtmann and Hendrik Riehmer, who joined the circle of personally liable partners as per the beginning of this year and who have already been with Berenberg for 16 and 18 years, respectively.
Berenberg Bank again managed to record a strong inflow of client funds. In Private Banking, EUR 1.3 billion was newly acquired. “The traditional values of a private bank are highly sought after, particularly in such difficult times. Investors set great store by an individual and personal consulting service, continuity and value retention,” says Andreas Brodtmann.
Berenberg is now represented in Germany at eight locations (Hamburg, Bielefeld, Bremen, Düsseldorf, Frankfurt, Munich, Stuttgart, Wiesbaden), a new representative office will be opened in Salzburg in the spring of 2009. International Private Banking is managed by Berenberg Bank (Schweiz) AG in Zurich, where 63 members of staff are employed.
The business with cooperation partners for whose clients Berenberg assumes asset management tasks or supplies individual solutions showed a very good development. For savings banks, Berenberg has now become the largest cooperation partner in the field of asset management.
Investment Banking recorded an extremely successful year in 2008 and was able to significantly expand its market shares in the field of European equities. The analyst team supplies research on more than 300 listed companies. With the 25 analysts deployed in Hamburg, London, Milan, Paris and Zurich they remain close to the companies they cover, 70 % of which are now outside Germany. In various surveys, Berenberg has ranked highly for many years already. The number of institutional investors serviced was extended from 300 to 340.
“Due to our market penetration, which we have worked hard for in the last few years, and to our close relations to our clients, we will take advantage of the possibilities that are arising. In addition to the small and mid cap arena we will expand our services also to the large cap sector,” says Hendrik Riehmer. This also fits well with our clients' strategic requirements. A sales trading division for fixed income products is currently being developed.
The Corporate Banking division was merged with the Structured Finance division, which was set up 18 months ago, in order to be able to offer our corporate clients tailor-made financing solutions.
Institutional Asset Management
In our Institutional Asset Management department, activities in the financial year just ended focused above all on a further expansion of the concepts in the field of active risk management.. Thanks to our established expertise in the fields of overlay management and optional strategies, we were able to record net inflows totalling EUR 1 billion in the year 2008. Here, it must be noted that our institutional clients inquired after our know-how across all asset categories.
Due to the resulting product portfolio, we are very confident also for the year 2009 to be able to increase our assets under management and to continue to offer our clients a real value-add through active asset management in these volatile times.
The Commercial Banking department focused on shipping (operational business such as, for instance, keeping shipping accounts, payment transactions, but also the financing of used tonnage) as well as financial service providers and trade financing. “We have successfully positioned ourselves as a high-quality provider and are the market leader in defined niches. The Commercial Banking segment is not defined by lending business, but by being a service provider. The share of commission income is significant, and the income from deposits is twice as high as that from loans,” explains Brodtmann.
Berenberg Entrepreneur’s Office
The Berenberg Entrepreneur’s Office, which offers a special expertise in consulting for entrepreneurs, was likewise well accepted. “Consulting services out of one hand permit us to take into consideration the interconnections between financing issues related to a company and those related to an entrepreneur’s assets. This is of particular significance as a major part of an entrepreneur’s assets are tied up in his or her company,” says Peters. This approach is the continuation of the classical services provided by a private banker.
“We will take advantage of the ongoing year to continue on our growth path. Our aim is to gain further market shares. To this end, we will expand both our existing business segments and build up new areas. We will, therefore, continue to search for qualified staff,” is how Peters describes the objectives for the year 2009.
Here you will find a pdf you can download.
Director Corporate CommunicationKarsten Wehmeier
Phone +49 40 350 60-481 firstname.lastname@example.org