BMW 2012 Annual Report Download - page 32

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18 COMBINED GROUP AND COMPANY
MANAGEMENT REPORT
18 A Review of the Financial Year
21 General Economic Environment
24 Review of Operations
24 Automotive segment
30 Motorcycles segment
31 Financial Services segment
33 Research and development
36 Purchasing
37 Sales and Marketing
39 Workforce
41 Sustainability
44 BMW Stock and Capital Market
47 Disclosures relevant for takeovers
and explanatory comments
50 Financial Analysis
65 Internal Control System and
explanatory comments
66 Risk Management
74 Outlook
Multi-brand financing up sharply
Demand for multi-brand financing grew sharply in
2012 with a total of 163,945 new contracts signed
(+ 17.3 %). At the end of the reporting period, the multi-
brand financing line of business covered 417,408 con-
tracts (2011: 370,999 contracts: + 12.5 %).
Increased dealer financing volumes
The total volume of financing disbursed to the dealer
organisation amounted to € 12,669 million at 31 Decem-
ber 2012, an increase of 11.0 % compared to one year
earlier (2011: € 11,417 million).
Deposit volume again higher than at the end of
the previous year
Deposit business represents a significant component of
the BMW Group’s refinancing strategy. The Financial
Services segment’s deposit volume totalled € 13,018 mil-
lion (+ 8.1 %) at the end of the reporting period. By con-
trast, decreases were recorded for securities and credit
card business, with the number of securities custodian
accounts falling by 5.5 % to 23,042 and credit card con-
tracts down by 2.4 % to 281,464.
Dynamic growth for insurance business
In addition to its leasing and financing products, the
Financial Services segment also offers a wide range of
insurance services relating to individual mobility. New
business grew by 15.7 % to 979,776 contracts in 2012.
The insurance contract portfolio expanded by 7.6 %
compared to last year’s figure to stand at 2,158,892 con-
tracts
(2011: 2,007,268 contracts).
Risk profile largely unchanged
The BMW Group’s credit and residual value risk profile
remained largely unchanged. The loss ratio on lending
decreased further in the year under report, falling by
one basis point from 0.49 % in 2011 to 0.48 %. Average
losses on residual value risks also decreased slightly.
The Financial Services segment uses the value at risk
(VaR) methodology to measure the amount of unex-
pected loss for major risk categories (credit, residual
value and interest rate risks, operational risks and in-
surance business-related risks), based on a confidence
level of 99.98 % and a holding period of one year.
Awards for quality of service
The BMW Group’s Financial Services segment was again
the recipient of numerous international awards in
2012. In the annual survey carried out by the market
research institute J. D. Power and Associates, our Finan-
cial Services business in the USA came first for the ninth
time in succession in the category “Dealer Financing
Satisfaction StudySM ”. The award presented by this in-
ternationally renowned market research institute is
acknowledgement of the high level of dealer satisfaction
achieved with our leasing and financing products.
Expansion of BMW Bank continued in line with plan
Further progress was made in 2012 to expand the BMW
Bank. With effect from August 2012, financial services
business in France was integrated directly with the BMW
Bank by means of a subsidiary. Financial Services
business in Germany now covers entities in Germany,
France, Italy, Portugal and Spain.
Strong growth for fleet business
Alphabet International, with its wide range of multi-
brand products, is one of the top four fleet service pro-
viders in Europe. At the end of the reporting period,
Alphabet was managing a portfolio of 502,397 fleet
contracts, up 5.8 % on the previous year (2011: 474,717
contracts).
Contract portfolio retail customer financing of
Financial Services segment 2012
as a percentage by region
EU-Bank 32.8 Europe / Middle East / Africa 24.6
Americas 31.4 Asia / Pacific 11.2
EU-Bank
Americas
Asia / Pacific
Europe / Middle
East / Africa