Letter from the Management Board

Dear clients and business partners of Deutsche Leasing,

The financial year 2022/23 was shaped by challenges and transformations. However, these also presented opportunities for the Deutsche Leasing Group. The war in Ukraine and the related international trade conflicts continued to shape the economic environment in Germany, Europe and the world at large. The German economy was adversely affected by high energy costs and price rises. The rapid interest rate hike to counter inflation curbed the level of macroeconomic demand, and the economy experienced a significant slowdown.

In addition to the economic trend, the SME sector continued to be faced with major processes of change. After the general public was granted access to ChatGPT in November 2022, artificial intelligence has slowly penetrated our everyday working lives and is set to bring fundamental changes to economic life as well. Digitalisation and decarbonisation remain the big issues driving the transformation of the SME sector. For the Deutsche Leasing Group as a leading asset finance partner, the support it provides for the business sector’s necessary investments represents attractive business and revenue potential that was already exploited in the financial year 2022/23.

A further event and its knock-on effects posed a major challenge for us at Deutsche Leasing: in early June 2023, we detected a cyber attack on our systems. While this event demanded a great deal from us – and you – we joined forces and successfully did what was required of us. As a result, we are now working with a newly installed, state-of-the-art IT infrastructure. 

Yet, despite these circumstances, we can look back on a very successful financial year. We also have you, our customers, the savings banks and our partners to thank for the fact that we were able to cope so effectively with the economic trends and transformational issues as well as the criminal attack. We received a great deal of support and understanding from you in the past financial year, and for that we would like to thank you wholeheartedly. 

We also owe our employees a solid word of thanks after what was another challenging financial year. We are impressed by our workforce’s dedication and team spirit, which go far beyond the norm. These two characteristics are key to our success and will remain so in future.

Volume of new business again exceeds EUR 10 billion

Our broad market positioning has once again demonstrated the solid foundation it provides for our business activities. Moreover, we made targeted use of potential in the field of transformation financing – particularly in the area of renewable energy.
 

In terms of our volume of new business, we exceeded the EUR 10 billion mark for the third time in our company’s history. The volume of new business for the financial year 2022/23 amounts to EUR 10.1 billion and is thus slightly lower than in the previous year (EUR 10.4 billion). Once again, we have slightly increased our economic result year-on-year to EUR 180 million (previous year: EUR 177 million) and thus further strengthened our business group’s capital base. 

Expansion of renewable energy remains a growth segment

The development of our business segments by asset class varied in the past financial year and reflects the general economic trend:

Dynamic development of factoring business continues

Deutsche Factoring Bank (DFB) achieved factoring turnover of EUR 21.8 billion in the calendar year 2023. This represents a slight decrease of around 5 per cent on the previous year. In 2021, DFB exceeded the EUR 20 billion mark for the first time in its history. It was not quite able to match the record level seen in 2022, but the dynamic course of business with new and, above all, existing customers continued. This business success was driven by its continuous and efficient market exploitation together with Deutsche Leasing and the savings banks. With its receivables financing and debt management products, Deutsche Factoring Bank focuses on small and medium-sized enterprises and is Sparkassen-Finanzgruppe’s factoring centre of excellence.

BHI expands existing business and gains new customers

Bad Homburger Inkasso (BHI) expanded its existing business in the financial year 2022/23, picked up new customers and acquired a large number of new cases. It is active on behalf of 1,391 clients in total, including 359 savings banks and other Sparkassen-Finanzgruppe members. BHI supervises a volume of receivables amounting to approx. EUR 26.8 billion.
 

As an associated company of the Deutsche Leasing Group, Bad Homburger Inkasso offers solutions covering bad loans, dunned receivables, debts legally enforceable by execution and dismissed debts as well as the market-oriented resale of collateral (debt and collateral management).

SKP once again outperforms the market in 2023

The gross new business volume of S-Kreditpartner (SKP), a joint venture of Deutsche Leasing and Landesbank Berlin/Berliner Sparkasse, was, at EUR 4.0 billion in the calendar year 2023, slightly weaker than in the previous year due to the economic slowdown. However, with an increase in its end-customer base of 5.6 per cent, SKP significantly exceeded the growth rate for the overall market of 3.1 per cent. Its volume of existing retail and corporate customer business rose to EUR 11.3 billion, which represents a growth rate of 8 per cent on the previous year. Nearly 60 per cent of all savings banks are now working with S-Kreditpartner through fully fledged partnerships. In 2023, eleven new fully fledged partnerships were established. For the calendar year 2024, a moderate increase in the new business trend should be expected.

Strategic projects expanded

Since the past financial year, we have been visibly expressing our deep roots in Sparkassen-Finanzgruppe through the Deutsche Leasing Group’s brand identity. The savings banks’ “S” symbol has been incorporated into the brands of Deutsche Leasing as well as DAL Deutsche Anlagen-Leasing and Deutsche Factoring Bank since the summer of 2023.
 

We have also stepped up our integration with the savings banks in various ways, so as to enhance our ability to assist the SME sector with its impending transformation processes. Our establishment of a new unit providing central and strategic support for the savings banks was an important step towards closer dovetailing of our activities. Many savings banks have made use of our advisory service, gained access to new market analysis tools and, together with us, forged ahead with strategic market exploitation. As part of the DSGV’s “Transformation of the SME sector” initiative, on behalf of the savings banks Deutsche Leasing has launched a sales campaign and pooled shared expertise in the fields of energy generation, energy efficiency and e-mobility in the SME sector.

Overall, the Deutsche Leasing Group has stepped up its activities in the field of sustainability, and here in particular in the areas of decarbonisation and renewable energy. A team of sustainability advisors was established in the past financial year. Together with their sales colleagues, they visit SMEs on site and assist with current ESG requirements and investment issues. With the supplementary expertise of our subsidiary DAL Deutsche Anlagen-Leasing for the structured financing of solar and wind farms, as well as PPA green electricity projects and our investment solutions for more energy-efficient machinery and equipment, together with climate-friendly mobility in the vehicle fleet, commercial vehicles and local public transport segments, Deutsche Leasing serves its customers and partners as a competent transformation service provider. With the goal of achieving climate-neutral status for our own business operations by 2035, we are systematically continuing down our ESG pathway, producing an annual climate assessment and measuring the level of progress and success achieved through our own ESG efforts and measures. 

With our action and investment programme, we are now in the fourth year of a focused modernisation plan for our IT infrastructure, processes and products and are investing in future-oriented digital solutions. It is thanks to this long-term commitment that we were able to migrate to a new IT infrastructure at short notice in the past financial year. vent.io, the Deutsche Leasing Group’s digital venture, has expanded its activities in the areas of digital customer and partner interfaces, MVP development and data science models incorporating AI. Partnerships with and investments in B2B start-ups were intensified, and three additional companies were added to the existing portfolio: Colonia, rabot.charge and Unchained Robotics.

The geopolitical upheavals also affected the Deutsche Leasing Group’s international business: in the second quarter of the calendar year 2023, the business group fully withdrew from the Russian market through the sale of its Russian subsidiary (Deutsche Leasing Vostok AG). In early March 2022, we had already frozen active new business in response to Russia’s war of aggression against Ukraine. Overall, international business with our global vendor partners remains stable and continues tooffer solid business potential. Apart from sales financing for German machinery and plant manufacturers, we assist companies with their direct investments outside Germany and can report positive trends for export financing, ECA business and the expansion of our range of global asset insurance products. We also serve SME customers in foreign markets together with the savings banks and their S-International units.

Cautious optimism for the financial year 2023/24

The market environment will remain challenging in the current financial year, and the economic uncertainty poses risks. In all likelihood, there will be no significant easing of the geopolitical situation. In addition to the Ukraine war, at the start of our financial year the permanently smouldering Middle East conflict transformed into a war and a further human tragedy. The conflict over Taiwan has not eased, and the outcome of the elections in the USA may pose entirely new challenges for Europe and Germany.

In Germany, the interest rate level will remain high for the time being, leading to continued investment restraint. The economic trend is weak and not expected to improve significantly over the remainder of the year. Most small and medium-sized enterprises are suffering due to high energy prices, growing bureaucracy and weak consumer demand. Some sectors are under particularly strong pressure, and the insolvency rate is on the rise. Moreover, various elections are due to take place in Germany in the current financial year, which could severely impact the country’s democratic structure. For us, there is no alternative to strengthening, preserving and defending the fundamental values of Europe’s liberal democracy. We are committed to Europe since a strong European Union and a strong euro will safeguard our (economic) prosperity and thus also the attractive market potential for the Deutsche Leasing Group.

Investment needs and the current momentum in the development and expansion of renewable “green” energy production continue to offer the Deutsche Leasing Group solid business potential. Since large transactions in the renewable energy segment can in almost all cases be structured as project financing arrangements, various areas of expertise of the Deutsche Leasing Group (e.g. DAL, DL Finance and also Sparkassen-Finanzgruppe) profitably converge here. In the current financial year, we will continue to assist with these transformation needs together with the savings banks, take our partnership with them to the next level and jointly develop market potential. In this context, we are continuously expanding our general range of advisory services in the area of sustainability.

Next to “green” transformation financing, intragroup business with the savings banks will continue to play a key role in the financial year 2023/24, in additional market segments as well. Our offering for combined strategic market exploitation is to be expanded and our S-Mobilitätsportal piloted for the savings banks’ smaller commercial customers. In our international business too, we will continue to rely on close and solid relationships with the savings banks. 

Despite the geopolitical uncertainty, we see market opportunities in international business. Our broad international presence and our stable partnerships compensate for fluctuations in market trends in individual countries. We continue to see additional potential in international business by stepping up our export financing business and our range of insurance products.

In the current financial year, we will once again push forward with our internal digitalisation and IT modernisation activities and will renew further core systems. With vent.io, Deutsche Leasing’s digital subsidiary, we are focusing on asset-related digitalisation and automation as well as ESG and mobility solutions for companies. Further options for investments in start-ups are under review, and digital customer and partner interfaces are undergoing further development, also incorporating artificial intelligence.

In all these activities and financing projects, our customer satisfaction is (and always will be) at the heart of everything we do. We measure this every year. The high level of customer satisfaction documented in the past financial year encourages us in our ongoing development and serves as a benchmark. 
 
Now more than ever, we must remain flexible and innovative in order to keep pace with the rapid technological changes, geopolitical developments and the transition to a sustainable economic model, and to realise the available market potential. We are motivated by the expectations and satisfaction of our customers, the savings banks and our partners. This is the focus of our activities, and it will remain that way in the financial year 2023/24.