DHL 2008 Annual Report Download - page 180

Deutsche Post World Net Annual Report 2008
lending business.  is is especially true for commercial real estate
 nancing in some foreign markets where the challenging environ-
ment is expected to continue. So far, only a very few signs of pay-
ment irregularities have been noticeable in the portfolio.  e rele-
vant portfolios are closely monitored so that measures to limit the
risk can be taken early on when needed.
 e loan portfolios in the retail banking business are largely
well collateralised and highly granular. From a credit risk perspec-
tive, there have been no conspicuous developments despite the clear
economic downturn in Germany. Should the decline continue or
accelerate, potential repercussions for borrowers cannot be ruled
out.
 anks to its comparatively stable re nancing basis from
customer deposits, the Deutsche Postbank Group’s liquidity position
is sound. However, due to the massive crisis of con dence and the
still limited absorptive capacity of the capital market, the Deutsche
Postbank Group is also making use of the comprehensive re nanc-
ing facilities provided by the central bank.  ere have been and still
are no identi able risks among the risk types described that could
jeopardise the Deutsche Postbank Group’s continued existence as
a going concern.
Derivative fi nancial instruments
 e Deutsche Postbank Group uses derivatives for hedging
purposes as part of its asset/liability management policy. Deriva-
tives are also used for trading. Foreign currency derivatives are
mainly used in the form of currency forwards, currency swaps,
cross-currency swaps and currency options. Interest rate deriva-
tives mainly consist of interest rate swaps, forward rate agreements,
interest futures and interest options; in isolated cases, forward trans-
actions in  xed-interest securities were conducted. Equity derivative
contracts are signed in particular in the form of stock options and
equity / index futures. Only a few credit default swap contracts were
entered into. Credit default swaps are basically the result of deriva-
tives separated from synthetic s.  e notional amounts represent
the gross volume of all sales and purchases and serve as a reference
value for determining reciprocally agreed settlement payments; they
do not represent recognisable receivables or liabilities.  e fair values
of the individual contracts were calculated using recognised valua-
tion models and do not re ect any netting agreements.  e deriva-
tives portfolio is classi ed by economic purpose as follows:
Presentation of risk position
 e risks described below are assessed as being the material
negative factors currently a ecting the net assets,  nancial position
and results of operations of the Deutsche Postbank Group. How-
ever, these are not necessarily the only risks to which the Deutsche
Postbank Group is exposed. Risks of which it is currently unaware
or which it does not yet consider to be material could also negatively
impact business activities.
In view of the ongoing  nancial market crisis, which has
been marked by extreme volatility on the money and capital markets,
and a clear slowdown in the overall economic development in many
parts of the world, uncertainty about future developments has risen
considerably and is presenting an extreme challenge to risk manage-
ment at banks. Economic risk-bearing capacity and regulatory capi-
tal ratios will remain under pressure in the entire sector. Against the
backdrop of the unprecedented dynamics of the economic slowdown
and the as yet uncertain e ectiveness of both the economic stimulus
plans being implemented across the world and concerted actions by
central banks, future risk development is hard to assess.  e Deutsche
Postbank Group accepts normal banking risk within a de ned frame-
work strictly re ecting its risk-bearing capacity.  e relevant risks
are measured and monitored continuously and reported regularly
to the Deutsche Postbank Group management.
 e market disruptions have had a clearly negative impact
on capital market portfolios and thus on the earnings situation of
the Deutsche Postbank Group in  nancial year .  e risk pro-
 le of the Deutsche Postbank Group in , which is focused on a
well-diversi ed retail portfolio and, by comparison, is relatively con-
servative, could not prevent the recognition of signi cant charges on
the credit side and in the market price risk area. Despite the meas-
ures taken to reduce capital market portfolios and risk, considera-
ble risk potential remains.  e risks emanating from the Postbank
portfolio of structured credit products are systematically and thor-
oughly analysed for potential default and continuously monitored
and managed in a dedicated project structure.  e entire portfolio
is subjected to regular impairment tests. In view of the ongoing dis-
ruptions on the capital markets and the clear economic downturn,
the Deutsche Postbank Group expects further negative e ects dur-
ing the course of the year.
 e economic slowdown and the resulting slump in real
estate markets could lead to higher default rates in the customer
Derivative fi nancial instruments
€ m Notional amounts Positive fair values Negative fair values
2007 2008 2007 2008 2007 2008
Trading derivatives 518,853 665,517 5,427 15,853 5,593 16,987
Hedging derivatives 34,052 46,557 421 474 873 2,693
Total 552,905 712,074 5,848 16,327 6,466 19,680
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