Commerzbank AG · XETR:CBK
Commerzbank — Q3 2008 Earnings Presentation
38 slides from Commerzbank's earnings presentation, Nov 3, 2008
Slide 1: Analyst conference – Capital infusion and Q3 2008 results
Commerzbank Analyst conference – Capital infusion and Q3 2008 results Martin Blessing CEO Dr. Eric Strutz CFO Frankfurt November 3rd, 2008
Slide 2: Our premises
Our premises Increased our mid-term Tier-1 range to 7% – 9% and Stability short-term range to 8-9% in order to reflect current market conditions and peer group levels Despite international recessionary scenarios we are Responsibility committed to continue our role as integral part of the economy Str
Slide 3: Direct action resulting from new international capital adequacy requirements
Direct action resulting from new international capital adequacy requirements Increase of Commerzbank’s Tier-1 ratio to above 10% via a €8.2bn infusion by Soffin Tier-1 ratio moves to 10.9% (according to IFRS) and 11.2% (according to German GAAP) based on Q3 figures Shareholder minded approach: – Ent
Slide 4: Result
Result Commerzbank now on level playing field with international peer group 1. and has mitigated risk of having rating disadvantages The bank faces the current challenging market from an even stronger 2. and more stable position with a significant funding option Once the new Commerzbank is created o
Slide 5: Q3 at a glance
Q3 at a glance 1. Commerzbank affected by the severe market downturn 2. Q3 loss reflecting significant write-downs due to exceptional markets 3. Strong and stable performance in our core client business units 4. Strong deposit and customer growth 5. Commerzbank is well funded and maintains a prudent
Slide 6: Strong operating performance offset by impact of turmoil
Strong operating performance offset by impact of turmoil Q3 2008 vs. Q3 07 vs. Q2 08 Revenues1 in € m 1,390 -20.6% -38.8% Operating profit in € m -475 n.a. n.a. Clean operating profit in € m 477 -9.1% -50.0% Net profit in € m -285 n.a. n.a. Operating RoE in % -12.8% -23.5ppts -26.1ppts 1 before LLP
Slide 7: Clean operating profit at €477m
Clean operating profit at €477m Operating profit in € m 312 149 -424 1,075 -146 908 -180 908 759 763 Clean operating profit -278 581 541 447 484 477 435 One-offs 361 Stated 169 -952 operating profit -475 One-offs in € m Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 MSB/PBC +105 -26 CEE +23 +38 +20 -14 C
Slide 8: Extreme market conditions weighed on Q3
Extreme market conditions weighed on Q3 -151 -13 -323 -44 -200 -30 -379 -153 -218 Income from financial investments -128 -367 -13 Trading profit -119 Loan Loss provisions RMBS/others CDO/TRS Lehman Iceland Total PuG/ MSB CEE -14 -14 C&M (incl. PFT) -25 -274 -357 -232 -888 of which PFT 0 -165 -112 -1
Slide 9: Deposit volume grew by more than 8 billion euros q-o-q
Deposit volume grew by more than 8 billion euros q-o-q Number of retail clients Deposit volume 1) in `000 in € bn +21% 8,883 +23% 8,467 96.9 7,544 7,748 7,320 87.1 88.6 7,135 2,613 2,423 81.1 2,045 2,149 78.4 1,826 1,925 72.6 5,599 5,766 5,949 5,309 5,395 5,499 Jun `07 Sep`07 Dez`07 Mar`08 Jun `08 S
Slide 10: Net interest income significantly up
Net interest income significantly up Net interest income NII improved by 3% q-o-q and 21% y- in € m o-y Strong deposit growth (€8.3bn in Q3) MSB and CEE particularly strong Mixed picture in C&M 1,176 1,213 - Negative contribution from PFT 1,045 1,022 1,003 999 973 - Higher NII result from Corporates
Slide 11: Commission income remains strong
Commission income remains strong Commission income Commission income increased by in € m 5% y-o-y (adjusted for IAM) 847 758 810 CI maintained at strong Q2 levels 96 735 123 17 751 73 718 732 717 720 - Lower income from securities 688 684 transactions in PBC due to challenging environment - Higher n
Slide 12: Trading profit impacted by fair value accounting
Trading profit impacted by fair value accounting No reclassification for assets held for Trading profit in € m trading – fair value accounting fully 11 reflected 74 2 375 C&M 381 -62 364 310 - Solid client-business drives Sales & -128 235 301 299 307 -57 181 201 Trading 173 124 73 - Fair value reduc
Slide 13: LLPs impacted by one-offs
LLPs impacted by one-offs Higher risk provisioning due to weaker Loan loss provisions in € m economic outlook (Run-rate at €232m) One-off LLPs 628 - Lehman (€218m) - Iceland (€119m) 414 - ABS portfolio (€30m) - others 232 160 175 164 151 New LLP guidance for 2009: 107 approx. €1.1bn 61 Q1`07 Q2`07 Q
Slide 14: Risk portfolios in focus
Risk portfolios in focus Portfolio by year end 2008 by year end 2009 Subprime substantially impaired, Low risk exposure – no ABS (incl. subprime) further charges on corporate significant charges expected CDOs possible No further defaults by major Support programs of sovereign Financial Institutions
Slide 15: Operating expenses significantly reduced
Operating expenses significantly reduced Operating expenses down by 4% y-o-y Operating expenses in € m Personnel costs reduced given less P erso nnel performance related accruals Depreciatio n 507 658 Continued strict cost management Others 72 1,360 1,399 1,324 1,283 1,322 1,373 1,237 Q1`07 Q2`07 Q3
Slide 16: Severe market environment weighed down net profit
Severe market environment weighed down net profit Operating profit at minus €475m Operating profit & Net profit in € m 1,075 - Net capital gain on participation 908 portfolio (~€100m) 768 817 - Q3 burdens of €1,074m 609 484 435 Net profit at minus €285m 361 339 280 - Tax benefit of €202m 201 169 - M
Slide 17: Solid Tier 1 ratio maintained
Solid Tier 1 ratio maintained Tier 1 ratio Tier I target range Capital increase of €1.1bn in September (5x oversubscribed) International trends towards higher Basel I Basel II capital requirements Tier 1 target range lifted from currently 6.5% - 7.5% to 7% - 9% 7.5 7.6 RWA increase of €10bn due to 7
Slide 18: Strong performance in core client businesses
Strong performance in core client businesses Operating profit, in € m Private & Business Customers Mittelstandsbank Central & Eastern Europe 385 280 232 245 263 147 157 118 189 205 200 123 92 145 77 64 73 84 104 85 93 59 85 72 67 54 70 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2
Slide 19: Private & Business Customers with a sound Q3 result
Private & Business Customers with a sound Q3 result Operating profit Main P&L items in € m in € m Q3`07 Q1`08 Q2`08 Q3`08 9M`07 9M`08 Net interest income 319 329 343 346 956 1,018 Risk provisioning -58 -40 -40 -43 -197 -123 145 147 157 118 Commission income 391 395 405 346 1,201 1,146 104 85 93 67 T
Slide 20: Mittelstand a stable profit contributor
Mittelstand a stable profit contributor Operating profit Main P&L items in € m in € m Q3`07 Q1`08 Q2`08 Q3`08 9M`07 9M`08 385 Net interest income 278 289 299 324 792 912 280 232 245 263 Risk provisioning 48 -11 -8 -12 20 -31 189 205 200 Commission income 239 145 144 150 515 439 Trading profit 1 5 -2
Slide 21: Closely monitored growth in CEE
Closely monitored growth in CEE Operating profit Main P&L items in € m in € m Q3`07 Q1`08 Q2`08 Q3`08 9M`07 9M`08 Net interest income 103 122 151 207 282 480 Risk provisioning -10 -17 -26 -71 -37 -114 123 92 Commission income 44 47 56 49 130 152 77 64 73 84 59 85 72 54 Trading profit 22 34 35 30 73
Slide 22: Corporates & Markets (incl. PFT) suffered from broadening of financial crisis
Corporates & Markets (incl. PFT) suffered from broadening of financial crisis Operating profit Main P&L items in € m 251 271 233 in € m Q3`07 Q1`08 Q2`08 Q3`08 9M`07 9M`08 227 36 158 Net interest income 80 56 124 84 356 264 10 Risk provisioning -61 -57 -42 -382 -96 -481 -46 -10 Commission income 30
Slide 23: Public Finance hit by market convulsions
Public Finance hit by market convulsions Main P&L items Corporates & Markets Main P&L items PFT in € m Q3`07 Q2`08 Q3`08 9M`07 9M`08 in € m Q3`07 Q2`08 Q3`08 9M`07 9M`08 Net interest income 78 105 136 275 354 Net interest income 2 19 -52 81 -90 Risk provisioning -57 -42 -276 -80 -370 Risk provisioni
Slide 24: CRE – Good operating performance negatively affected by higher impairments
CRE – Good operating performance negatively affected by higher impairments Operating profit Main P&L items in € m 212 164 153 141 147 in € m Q3`07 Q1`08 Q2`08 Q3`08 9M`07 9M`08 106 88 Net interest income 220 210 215 218 642 643 84 46 57 Risk provisioning -26 -50 -298 -92 -104 -440 -56 Commission inc
Slide 25: Germany: Negative outlook for 2009, but better prospects for 2010
Germany: Negative outlook for 2009, but better prospects for 2010 Forecast for 2009/2010 • In 2009 German economy will be in a recession because of strong slowdown of world economy and aftermath of the financial market crisis. • In 2010 the negative effect should have faded away and interest rate cu
Slide 26: Outlook
Outlook 1. Market environment remains very challenging in the next quarters 2. Commerzbank continues to invest in core franchise Dresdner acquisition has stronger strategic rationale in current markets – 3. enables Commerzbank to build on cost efficiency leadership in German banking 4. Deleveraging
Slide 27: Appendix
Appendix 1 Martin Blessing CEO Dr. Eric Strutz CFO Frankfurt November 3rd, 2008 26
Slide 28: Further impairments on ABS portfolio caused by deteriorating credit markets
Further impairments on ABS portfolio caused by deteriorating credit markets ABS Portfolio – Breakdown of Products Portfolio details in € bn 22.4 US RMBS impaired by roughly 70% ABS portfolio significantly de-risked 13.8 Overall high rating quality in both banking and trading book Impairments (in € m
Slide 29: Commerzbank Group
Commerzbank Group Q1 2007 Q2 2007 Q3 2007 9M 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 9M 2008 Budget in € m 9M 2008 Net interest income 1.045 1.003 999 3.047 973 1.022 1.176 1.213 3.411 3.195 Provision for possible loan losses -160 -151 -107 -418 -61 -175 -414 -628 -1.217 -480 Net interest income after
Slide 30: Private and Business Customers
Private and Business Customers Q1 2007 Q2 2007 Q3 2007 9M 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 9M 2008 Budge t in € m 9M 2008 Net interest income 319 318 319 956 340 329 343 346 1,018 998 Provision f or possible loan losses -73 -66 -58 -197 -43 -40 -40 -43 -123 -147 Net interest income af ter provis
Slide 31: Mittelstand
Mittelstand Q1 2007 Q2 2007 Q3 2007 9M 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 9M 2008 Budge t in € m 9M 2008 Net interest income 250 263 278 792 290 289 299 324 912 802 Provision f or possible loan losses -19 -9 48 20 48 -11 -8 -12 -31 -70 Net interest income af ter provisioning 231 254 326 812 338 27
Slide 32: Central and Eastern Europe
Central and Eastern Europe Q1 2007 Q2 2007 Q3 2007 9M 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 9M 2008 Budge t in € m 9M 2008 Net interest income 83 97 103 282 113 122 151 207 480 425 Provision f or possible loan losses -11 -16 -10 -37 -19 -17 -26 -71 -114 -71 Net interest income af ter provisioning 72
Slide 33: Corporates & Markets (incl. PFT)
Corporates & Markets (incl. PFT) Q1 2007 Q2 2007 Q3 2007 9M 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 9M 2008 Budge t in € m 9M 2008 Net interest income 169 107 80 356 15 56 124 84 264 223 Provision f or possible loan losses -18 -17 -61 -96 -35 -57 -42 -382 -481 -61 Net interest income af ter provisionin
Slide 34: Commercial Real Estate
Commercial Real Estate Q1 2007 Q2 2007 Q3 2007 9M 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 9M 2008 Budge t in € m 9M 2008 Net interest income 211 211 220 642 216 210 215 218 643 700 Provision f or possible loan losses -39 -39 -26 -104 -11 -50 -298 -92 -440 -131 Net interest income af ter provisioning 17
Slide 35: Others and Consolidation
Others and Consolidation Q1 2007 Q2 2007 Q3 2007 9M 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 9M 2008 Budge t in € m 9M 2008 Net interest income 13 7 -1 19 -1 16 44 34 94 47 Provision f or possible loan losses 0 -4 0 -4 -1 0 0 -28 -28 0 Net interest income af ter provisioning 13 3 -1 15 -2 16 44 6 66 47
Slide 36: Group equity definitions
Group equity definitions Reconciliation of equity definitions Equity basis for RoE Equity definitions in € m Sep 2008 Jan-Sep 2008 Subscribed capital 1,878 1,725 Capital reserve 6,636 5,803 Retained earnings 5,902 5,964 Reserve from currency translation 90 20 Investors‘ Capital w ithout minorities 1
Slide 37: For more information, please contact Commerzbank's IR team
For more information, please contact Commerzbank´s IR team: Jürgen Ackermann (Head of IR) Wennemar von Bodelschwingh Stefan Philippi P: +49 69 136 22338 P: +49 69 136 43611 P: +49 69 136 45231 M: juergen.ackermann@commerzbank.com M: wennemar.vonbodelschwingh@commerzbank.com M: stefan.philippi@commer
Slide 38: Disclaimer
Disclaimer investor relations This presentation has been prepared and issued by Commerzbank AG. This publication is intended for professional and institutional customers. Any information in this presentation is based on data obtained from sources considered to be reliable, but no representations or