Glossary

Certificate volumeThe certificate volume comprises only the certificates issued by Deka. It does not include cooperation certificates.

Cost/income ratio (CIR)In the Deka Group, this indicator is calculated from the ratio of total expense (excluding restructuring expense) to total income (excluding risk provisions in the lending and securities business) in the financial year.

Economic perspectiveThe economic perspective is one of two approaches on which the internal capital and liquidity adequacy assessment processes (ICAAP and ILAAP) are based. In the context of the ICAAP, the economic perspective is implemented via the concept of risk-bearing capacity. It serves to secure the capital of the Deka Group in the longterm, thus making a key contribution to ensuring the institution’s survival. The aim is also to protect creditors against losses from an economic view. In the context of the integrated quantification, management and monitoring of liquidity risk (ILAAP), the key risk measure in the economic perspective is the “combined stress scenario” funding matrix defined by the Board of Management as being relevant for management purposes.

Economic ResultAs a key management indicator, together with the risk in the economic and normative perspective, the economic result forms the basis for risk/return management at the DekaGroup and is, in principle, determined in accordance with accounting and measurement policies of IFRS. As well as the total of profit or loss before tax, the economic result also includes changes in there valuation reserve before tax as well as the interest rate- and currency-related valuation result from financial instruments recognised at amortised cost, which are not recognised in the income statement under IFRS but are relevant for assessing financial performance. The interest expense in respect of AT1 bonds (Additional Tier 1 capital), which is recognised directly in equity, is also included in the economic result. Furthermore, the economic result takes into account potential future charges that are considered possible in the future but that are not yet permitted to be recognised under IFRS due to the fact that accurate details are not yet available. The economic result is therefore a control variable on an accrual basis, whose high level of transparency enables recipients of the external financial reporting to consider the company from the management perspective.

Gross certificate salesGross certificate sales are an indicator of certificate sales performance. Redemptions and maturities are not taken into account, since the impact on earnings primarily occurs at the time of issue. Gross certificate sales include both certificates issued by Deka and cooperation certificates issued by other institutions and sold via sales support platforms.

Gross loan volumeIn accordance with the definition set out in section19 (1) of the German Banking Act (Kreditwesengesetz), the gross loan volume includes debt instruments issued by public authorities and bills of exchange, amounts due from banks and customers, bonds and other fixed-interest securities, shares and other non-fixed-interest securities including fund units, equity investments and shares in affiliated companies, equalisation claims against the public sector, items for which lease agreements have been concluded as the lessor, irrespective of their recognition in the balance sheet, other assets where they are subject to counterparty risk, sureties and guarantees, irrevocable lending commitments as well as market values of derivatives. In addition, the gross loan volume includes underlying risks from derivative transactions, transactions for the purposes of covering guarantee payments on guarantee funds, as well as the volume of off-balance sheet counterparty risks.

Net funds inflow (according to BVI)Difference between the funds inflow from the sale of units and the outflow from the redemption of units. Unlike net sales, this figure does not include the funds of cooperation partners or advisory/management and asset management mandates. However, net volumes in relation to proprietary investments are taken into account in the net funds inflow.

Normative perspectiveThe normative perspective is one of two approaches on which the internal capital and liquidity adequacy assessment processes (ICAAP and ILAAP) are based. In the context of the ICAAP, the normative perspective includes all internal instruments, regulations, controls and processes aimed at ensuring that regulatory and supervisory capital requirements are met on an ongoing basis, i.e. also prospectively, over the next few years. This means that it directly pursues the objective of ensuring that the institution can continue as a going concern. In the context of the integrated quantification, management and monitoring of liquidity risk (ILAAP), the key risk measure in the normative perspective is the LCR in accordance with the CRR in conjunction with Commission Delegated Regulation (EU) 2015/61 as well as 2018/1620 and the NSFR in accordance with the requirements of the CRR.

Number of (active) employeesThe number of employees is the effective number of active full-time employees at the reporting date, with part-timers being counted in proportion to their working hours. Active employees means staff members who are actively involved in DekaBank’s work processes. This includes the Board of Management, other managers, core staff members, contract staff and temporary staff. Vocational and other trainees, interns and employees on long-term leave are not included.

Return on equity (RoE)Return on equity before tax at the Deka Group is calculated as the return on balance sheet equity. The annualised economic result is expressed relative to the average balance sheet equity excluding Additional Tier 1 (AT1) capital and adjusted for intangible assets. Average balance sheet equity is calculated based on the capital at the previous year-end and the last quarterly financial statements. At business division level, return on equity before tax is calculated as regulatory return on equity. This involves expressing the annualised economic result (before income distribution of the Treasury function) relative to the average regulatory capital employed. The average is calculated using monthly risk-weighted assets multiplied by 13% (the strategic target for regulatory capital employed), starting with the figure at the previous year-end.

Risk appetiteRisk appetite refers to the overall aggregate risk of individual risk types that the Deka Group is prepared to enter into, within the limits of its risk capacity, in order to achieve its strategic objectives and business plan. In the economic perspective, the risk appetite for risks affecting profit and loss is defined in the risk-bearing capacity analysis as the allocated risk capital (allocation) for overall risk at Group level. The maximum permissible risk appetite is equal to risk capacity less a management buffer. With regard to liquidity risk, the Deka Group has defined its risk appetite in the economic perspective as the scenario that gives it an indefinite survival period in an extreme hypothetical stress scenario involving a simultaneous institution-specific and market-wide stress event. This hypothetical stress scenario is illustrated in the “combined stress scenario” funding matrix. Permanent solvency and an unlimited survival horizon are achieved by setting a limit of 0 on the liquidity balances of all relevant maturity bands for periods of up to 20 years.

Risk-bearing capacityThe aim of the risk-bearing capacity analysis is to ensure the adequacy of capital resources from an economic view. Sufficient assets must be available to cover risk events, even those which materialize extremely rarely. This involves combining all risk types with a holding period of one year and a correspondingly high confidence level of 99.9%. The total risk is then compared with the internal capital derived from the balance sheet and taking into account appropriate deduction items.