Frankfurt/Main, 15 March 2010 – Deutsche Leasing Group (DL) had a very satisfactory financial year 2008/09 considering the economic environment. New business volume reached € 8.3 billion falling only 8 percent short of the previous year’s all-time high while new business volume in the leasing sector as a whole nosedived 29 percent in the same period. Deutsche Leasing’s domestic new business volume excluding real estate leasing and structured finance came to € 5.2 billion (-7 percent) while foreign new business declined 11 percent to € 1.4 billion. Rebased to the group’s financial year, Deutsche Anlagen-Leasing (DAL) contributed € 1.7 billion from real estate, large property, and intangible asset leasing as well as structured finance. The 9 percent year-on-year drop is actually a very good result compared to the 52-percent new business plunge amongst its peer group. Although this is a far cry from the high growth rates of years past, Deutsche Leasing still managed to keep its operating earnings in the black. “Defaults and crumbling resale values prevented us from matching the previous year’s new business-based operating result,” says Deutsche Leasing’s CEO Hans-Michael Heitmüller. “Considering the economic environment, however, we can still be proud of our operating earnings.”

Annual financial statements
Group parent, Deutsche Sparkassen Leasing AG & Co. KG, is reporting net profit at the prior year’s level with € 32.5 million. The audited net asset value amounts to € 1,309 million (previous year: € 1,210 million). Net operating income reached € 50 million (previous year: € 149 million) reflecting € 98 million worth of negative impact from the economic crisis. Deutsche Leasing still keeps its distribution to shareholders at the prior year’s level (€ 22.5 million) representing a dividend yield of 11 percent.

The fully disclosed consolidated equity stands at € 390 million. Consolidated total assets rose to € 14.99 billion (+8 percent). Deutsche Leasing Group’s assets under management from leasing, capital leasing, and banking activities reached € 33.5 billion (previous year: € 30.7 billion).

Leasing revenue increased by € 561 million to € 5.7 billion in the period under review. The price quality of new business (earnings contribution in percent of historical costs) significantly exceeds both the group’s target and prior year figures compensating for volume-related shortfalls in marginal income. The cost of doing business increased quite disproportionately less than operating income thanks to strict cost management.

Deutsche Leasing’s overall risk management fundamentally corresponds to that of the traditional financial sector. Good asset management allows the group to greatly minimise asset risks arising from contracts with open residual values. Broad industry diversification in the client portfolio with no definite sector focus further limits asset risk. Nonetheless, last year’s actual defaults exceeded projected defaults for the first time in many years due to the much higher incidence of insolvencies.

Deutsche Leasing’s treasury activities are conservative exclusively serving supporting functions by ensuring sufficient liquidity for the group’s growth going forward. Deutsche Leasing does not trade in money and capital market products on its own account. At unchanged conservative valuation standards, Deutsche Leasing has appropriately provided for all discernible risks in its consolidated financial statements.

The auditing firm KPMG has attested that Deutsche Leasing’s asset, financial, and income positions are sound and unconditionally approved both the consolidated annual financial statements and the individual financial statements of the consolidated companies.

In the past financial year, Deutsche Leasing Group had 2,072 employees, of which the German staff has been with the group for almost 10 years on average. Deutsche Leasing is substantially investing into vocational and advanced education with 42 apprentices as well as some undergraduate and graduate students, trainees, and interns. The group also takes its social responsibility seriously regularly engaging in a broad range of cultural pursuits from charities to sports, science, and art.

DAL
Compared to its peer group, Deutsche Anlagen-Leasing (DAL) has shown an admirable performance in a very challenging market environment. In its fiscal year 2009 (calendar year), DAL acquired new business of over € 1.25 billion (previous year: € 1.9 billion) with the decline being primarily due to the divestment of DAL’s equity interest in Amentum. DAL still has over 50 percent market share in real estate leasing.

While DAL’s business volume brokered through the savings banks dropped 14 percent, the nature of business matured from mostly real estate leasing towards more large property deals. DAL maintains foreign subsidiaries in Scandinavia, Poland, and Romania supporting the respective DL subsidiaries there with real estate leasing solutions.

The company’s earnings quality of new business developed favourably in the past fiscal year although the resulting income could not fully make up for the decline in new business volume. DAL Bautec’s earnings position looks quite good considering the state of the construction industry in general.

DAL reports some € 25 million (previous year: € 14 million) in net profit for fiscal 2009 thanks to its lean and efficient structure with a correspondingly stable cost base and some extraordinary accounting effects. DAL’s assets under management dropped to about € 12 billion (previous year: € 13 billion) as of year end 2009. The contract portfolio reduction resulted from the Amentum divestment.

“Our business model with a dual focus on SMEs and savings banks, on the one hand, and big ticket items and structured finance, on the other, has been successful,” says Kai Ostermann, Managing Director of DAL and Deutsche Leasing’s second in command. “We are doing rather well compared to our peers given the difficult market environment.” DAL intends to expand its market position in 2010.

Conclusion and outlook
Owing to the extremely difficult market environment, Deutsche Leasing Group is projecting markedly lower new business volume for the first half of its current financial year (October 2009  March 2010) than in the same period the year before. The global recession and the group’s risk policies currently prevent higher new business acquisition. Positive margin development can partially offset the effects from new business volume shortfalls.

Deutsche Leasing AG (DL), Landesbank Berlin AG (LBB), and readybank AG have entered into negotiations to merge their activities in car and consumer finance. DL’s and LBB’s managements have already agreed on the cornerstones of their groups’ future cooperation. Both companies consider it possible and desirable to integrate readybank’s activities into their joint project. The supervisory boards of the institutions still have to approve the project before it can go forward. The companies will report their supervisory board decisions without delay.

The German Savings Bank Association (Deutscher Sparkassen- und Giroverband, DSGV) welcomes this Deutsche Leasing initiative and its LBB collaboration including the resulting prospects. The DSGV will make a statement on this development and the corresponding consolidation of market clout at its financial press conference on 17 March in Frankfurt.

Deutsche Leasing will go into its next financial year (October 2010) flying the savings banks’ corporate colour red to make a strong visual statement as a member of Sparkassen Finanzgruppe. “However, we do not want to come across as just another savings bank extension,” Heitmüller says emphatically. “This move is also supposed to boost our direct sales and vendor business.”