Commerzbank Ag · XETR:CBK
Commerzbank — Debt Investor Presentation (August 2006)
43 slides from Commerzbank's debt investor presentation, August 2006
Slide 1: Commerzbank - the leading German commercial bank
Commerzbank - the leading German commercial bank Roadshow for the issuance of subordinated capital August 2006 Investor Relations and Group Treasury
Slide 2: Executive Summary
Issuance lower Tier 2 Executive Summary Commerzbank is the leading commercial bank in Germany with sustainable and diversified earnings power in all divisions Initiatives taken in recent years have restored financial flexibility and business strength The acquisition of Eurohypo has created substanti
Slide 3: Agenda
Issuance lower Tier 2 Agenda 1. Commerzbank´s path to stability and growth 2. Capital markets and funding strategy 2
Slide 4: Commerzbank´s path to stability and growth
Issuance lower Tier 2 Commerzbank´s path to stability and growth Progressing: Stability and focused growth • Strong stand-alone position Regained: • Active role in consolidating Improved core business German banking market (2003-2005) • Enhancing profitability in all • Significantly de-risked divisi
Slide 5: High earnings quality maintained in H1
Issuance lower Tier 2 High earnings quality maintained in H1 Q2 `06 vs. Q2 `05 H1 `06 vs. H1 `05 Operating profit, in € m 700 2.4x 1,659 2.0x Net profit, in € m 2852 62.8% 1,025 79.8% Net RoE1, in % 10.02 +2.4pps 17.9 +5.5pps CIR, in % 58.9 1 annualized; 2 including restructuring charges of €214m -1
Slide 6: Strong net interest income
Issuance lower Tier 2 Strong net interest income Net interest income Loan loss provisions in € m • Upward trend in net interest 3,133 3,172 income, despite low interest 3,013 rate level 2,776 H2´06 • Full consolidation of Eurohypo as of Q2 `06 1,885 • Provisioning of €379m still as H1´06 budgeted 1,
Slide 7: Great improvement in commission income
Issuance lower Tier 2 Great improvement in commission income Commission income in € m • Substantial upward trend driven by strong underlying 2,415 business in Private & 2,250 Business Customers and 2,120 2,136 H2´06 Mittelstand • Substantial increase in distribution of asset management products 1,37
Slide 8: H1 trading profit already close to full-year 2005 result
Issuance lower Tier 2 H1 trading profit already close to full-year 2005 result Trading profit1 in € m • Concentration of all resources on client-driven revenue generation proving to be the H2´06 right decision • Sustainable trading profit due 777 685 to strong client-focus 691 545 • Particularly pos
Slide 9: Continued focus on revenue-related cost management
Issuance lower Tier 2 Continued focus on revenue-related cost management Operating expenses in € m • Total revenues as of June 06 €4.2bn 6,379 • Substantially expanding 5,347 5,504 revenues accompanied 5,070 by flat costs 5,155 4,662 • Higher personnel 4,511 4,493 expenses due to H2´06 performance-r
Slide 10: Commerzbank has already earned practically entire 2005 result
Issuance lower Tier 2 Commerzbank has already earned practically entire 2005 result Operating profit Net profit in € m • Outstanding first half- H2´06 year 1,717 1,6591 • Consistently strong 1,165 1,011 1,0251 revenue performance • Sale of KEB stake 559 H1´06 362 • Substantial 192 improvement of RoE
Slide 11: Revaluation reserve remains on high level despite disposals
Issuance lower Tier 2 Revaluation reserve remains on high level despite disposals Revaluation reserve 1,995 Net result on investments and securities portfolio in € m in € m 647 629 1,600 58 Result on available-for- 571 1,240 sale 1,118 securities 153 Bonds 965 339 Equities 291 Net result on particip
Slide 12: Core capital improving
Issuance lower Tier 2 Core capital improving Own funds (balance sheet) Regulatory capital (Tier I) in € bn in € m Dec 2005 Jun 2006 Subscribed capital 1,705 1,707 Reg. reserves 9,647 10,234 1,025 -477 Minority interests 809 914 1,938 27,395 Hybrid capital - 2,269 Total 12,161 15,124 2,186 930 Subord
Slide 13: New Group structure
Issuance lower Tier 2 New Group structure Commerzbank CRO: Hartmann CEO: Müller CFO: Strutz CRE, Public Finance and PCAM CIB Treasury Private & Public Asset Corporates & Commercial Business Mittelstand Markets Finance & Management Real Estate Customers Treasury • Retail Banking • German Asset • Mitt
Slide 14: Private & Business Customers / Asset Management
Issuance lower Tier 2 Private & Business Customers / Asset Management Private & Business Customers Operating profit in € m • comdirect: Expansion of affluent customers base (overall 15% more clients since Jan 2005) 17.9% • Private Banking: Growing via 39 private banking centres 158 163 throughout Ge
Slide 15: Mittelstand / Corporates & Markets
Issuance lower Tier 2 Mittelstand / Corporates & Markets Mittelstand Operating profit in € m • Steady acquisition of new customers, more than 10,000 new clients since 2004 25.2% 293 • Growing existing business by increasing share of wallet (“value manager” to measure economic profit of each client)
Slide 16: Earnings growth at historically low risk levels
Issuance lower Tier 2 Earnings growth at historically low risk levels in € m Breakdown sales & trading (Markets H1 `06) VaR1 20,0 16% 15,0 48% 20% Average VaR in Q2 €8.2m 10,0 10% 6% 5,0 Trading profit at Corporates & Markets² Equity derivatives 312 305 305 Equities Sales & Trading 259 FX trading 22
Slide 17: Commercial Real Estate / Public Finance & Treasury
Issuance lower Tier 2 Commercial Real Estate / Public Finance & Treasury Commercial Real Estate Operating profit in € m • Germany’s No. 1 commercial real estate bank 18.0% • Germany’s No. 2 home finance provider 152 • European market leader for real estate syndications and CMBS • CB holds participat
Slide 18: Main benefits of Eurohypo transaction
Issuance lower Tier 2 Main benefits of Eurohypo transaction • Reinforce Commerzbank’s position as the leading German commercial bank Strong business fit • Broaden exposure in the recovering German real estate market (No. 1 with market share of 22%) • Increasing and more stable earnings • EPS and ROE
Slide 19: Integration of Eurohypo progressing well
Issuance lower Tier 2 Integration of Eurohypo progressing well All integration projects fully in line with plan ü Required measures at executive level initiated Focus in H2: Joint business processes established • Implementation ü Key functions centrally managed of defined measures • Origination Tota
Slide 20: Commerzbank's main areas of focus
Issuance lower Tier 2 Commerzbank’s main areas of focus • Strengthening leading position in Germany • Playing an active part in consolidating the German 1. Strategy banking market • Balance of focused growth and profitability • Keeping strong momentum in Mittelstand and C&M 2. Additional shareholder
Slide 21: Agenda
Issuance lower Tier 2 Agenda 1. Commerzbank´s path to stability and growth 2. Capital markets and funding strategy 20
Slide 22: Issuing entities of Commerzbank Group in capital markets
Issuance lower Tier 2 Issuing entities of Commerzbank Group in capital markets Issuers under the Commerzbank umbrella Issuer Instrument Pfandbriefe ü ü Lettres de Gage ü ü Unsecured (short-term) ü ü ü ü Domestic Unsecured unsecured (long-term) ü ü Tier I / II / III Capital ü ü 21
Slide 23: Capital Market Committee sets boundaries for member´s activities
Issuance lower Tier 2 Capital Market Committee sets boundaries for member´s activities CapitalCapital Markets Committee Markets Committee Framework for capital market activities Coordination of Issuance calendar, roadshows capital market activities Processes CB AG Eurohypo Essenhyp EEPK BRE Bank Sys
Slide 24: Integrated approach of Commerzbank - Eurohypo in capital markets
Issuance lower Tier 2 Integrated approach of Commerzbank - Eurohypo in capital markets Funding teams of CB AG and Eurohypo part of Centralized group funding integrated Group Treasury § Funding needs § Market access Issuing entity decision based upon § Investor demand § Funding costs Covered Bonds Un
Slide 25: Issuance plan of Commerzbank AG for 2006
Issuance lower Tier 2 Issuance plan of Commerzbank AG for 2006 Total volume planned €6-7bn Issued as of August approx. €4bn Status (in € bn) Senior Tier 2 § Senior unsecured 1.6 unsecured § Lower Tier 2 0.2 20% - § Hybrid Tier 1 2.2 35% - 30% 45% ü Hybrid Tier 1 to finance acquisition of Eurohypo 30
Slide 26: Capital market issuances of Commerzbank AG well diversified
Issuance lower Tier 2 Capital market issuances of Commerzbank AG well diversified Distribution by product type Outstanding volume as of 30.06.06 in € bn Credit-linked notes Equity-linked notes Lower Tier 2 5.0 0.7 Capital instruments 60% Interest rate structures 2.2 Upper €25.0bn 8.4 Tier 2 14% €8.4
Slide 27: Capital levels sound, despite Eurohypo consolidation
Issuance lower Tier 2 Capital levels sound, despite Eurohypo consolidation RWAs and capital ratios of Commerzbank group Regulatory haircuts and redemptions of outstanding capital instruments for Commerzbank/Eurohypo, in € m Total capital ratio First time 13.0 consolidation 12.6 of Eurohypo 12,000 In
Slide 28: Commerzbank's inaugural hybrid Tier 1 offerings earlier in the year
Issuance lower Tier 2 Commerzbank`s inaugural hybrid Tier 1 offerings earlier in the year Commerzbank Capital Funding Trust I § Highly successful inaugural Tier 1 issue Non-cumulative non-voting Trust Preferred Sec. Size: EUR 1 billion Structure: PerpNC10 (12. April 2016) Coupon: 5.012% § Transactio
Slide 29: Description of the offering
Issuance lower Tier 2 Description of the offering Issuer: Commerzbank AG Instrument: Lower Tier 2 Currencies / market: Euro Amount: Benchmark size Maturity: min. 10 years (bullet or callable structure) Expected ratings: A3 / BBB+ / A- (Moody’s / S&P / Fitch) Lead Manager: Citigroup and Commerzbank C
Slide 30: Our reason for raising lower Tier 2 capital
Issuance lower Tier 2 Our reason for raising lower Tier 2 capital Issuance of lower Tier 2 is driven by regulatory haircuts / redemptions Meet strong investor interest from Commerzbank’s investor base Built on the strong demand for Commerzbank credit seen in spring Maintain regulatory requirements f
Slide 31: Annex
Annex 30 | ideas alaead | COMMERZBANK °!2
Slide 32: Commerzbank's rating profile
Issuance lower Tier 2 Commerzbank‘s rating profile (as of August 2006) Senior debt A2 A- A Short term debt P-1 A-2 F1 Subordinated debt A3 BBB+ A- Hybrid Tier 1 Baa1 BBB A- Outlook stable stable stable 31
Slide 33: Commerzbank Group Quarterly results in new Group structure
Issuance lower Tier 2 Commerzbank Group Quarterly results in new Group structure €m Q l 2005 Q II 2005 Q III 2005 Q IV 2005 Q I 2006 Q II 2006 Net interest income 721 847 771 833 825 1.060 Provision for possible loan losses -198 -177 -151 -40 -154 -225 Net interest income after provisioning 523 670
Slide 34: Private and Business Customers Quarterly results
Issuance lower Tier 2 Private and Business Customers Quarterly results in new Group structure €m Q l 2005 Q II 2005 Q III 2005 Q IV 2005 Q I 2006 Q II 2006 Net interest income 276 272 290 301 283 322 Provision for possible loan losses -46 -46 -46 -67 -55 -73 Net interest income after provisioning 23
Slide 35: Asset Management Quarterly results
Issuance lower Tier 2 Asset Management Quarterly results in new Group structure €m Q l 2005 Q II 2005 Q III 2005 Q IV 2005 Q I 2006 Q II 2006 Net interest income 4 -1 -7 -6 -4 -6 Provision for possible loan losses 0 0 0 0 0 0 Net interest income after provisioning 4 -1 -7 -6 -4 -6 Net commission inc
Slide 36: Mittelstand Quarterly results
Issuance lower Tier 2 Mittelstand Quarterly results in new Group structure €m Q l 2005 Q II 2005 Q III 2005 Q IV 2005 Q I 2006 Q II 2006 Net interest income 274 305 299 317 311 282 Provision for possible loan losses -105 -91 -44 11 -75 -76 Net interest income after provisioning 169 214 255 328 236 2
Slide 37: Corporates & Markets Quarterly results
Issuance lower Tier 2 Corporates & Markets Quarterly results in new Group structure €m Q l 2005 Q II 2005 Q III 2005 Q IV 2005 Q I 2006 Q II 2006 Net interest income 89 91 94 89 93 68 Provision for possible loan losses -22 -15 -2 70 -12 -11 Net interest income after provisioning 67 76 92 159 81 57 N
Slide 38: Commercial Real Estate Quarterly results
Issuance lower Tier 2 Commercial Real Estate Quarterly results in new Group structure €m Q l 2005 Q II 2005 Q III 2005 Q IV 2005 Q I 2006 Q II 2006 Net interest income 39 43 38 56 48 216 Provision for possible loan losses -17 -18 -47 -48 -4 -57 Net interest income after provisioning 22 25 -9 8 44 15
Slide 39: Public Finance & Treasury Quarterly results
Issuance lower Tier 2 Public Finance & Treasury Quarterly results in new Group structure €m Q l 2005 Q II 2005 Q III 2005 Q IV 2005 Q I 2006 Q II 2006 Net interest income 79 112 88 120 94 144 Provision for possible loan losses -8 -7 -12 -6 -8 -8 Net interest income after provisioning 71 105 76 114 8
Slide 40: Others and Consolidation Quarterly results
Issuance lower Tier 2 Others and Consolidation Quarterly results in new Group structure €m Q l 2005 Q II 2005 Q III 2005 Q IV 2005 Q I 2006 Q II 2006 Net interest income -40 25 -31 -44 0 34 Provision for possible loan losses 0 0 0 0 0 0 Net interest income after provisioning -40 25 -31 -44 0 34 Net
Slide 41: Group equity definitions
Issuance lower Tier 2 Group equity definitions Reconciliation of equity definitions Equity basis for RoE Equity definitions in €m Jun 2006 Subscribed capital 1,707 Basis for RoE on net profit since 2005 Capital reserve 5,698 § unchanged Retained earnings 4,153 Reserve from currency translation -130
Slide 42: For more information, please contact
For more information, please contact: Dr. Kai Franzmeyer Commerzbank Investor Relations Head of Group Treasury P: +49 69 136 42867 M: kai.franzmeyer@commerzbank.com Jürgen Ackermann (Head of Investor Relations) P: +49 69 136 22338 Franz-Josef Kaufmann M: juergen.ackermann@commerzbank.com Head of Cap
Slide 43: Disclaimer
Issuance lower Tier 2 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
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