Commerzbank AG · XETR:CBK
Commerzbank — FY2020 Earnings Presentation
51 slides from Commerzbank's earnings presentation, Feb 11, 2021
Slide 1: Strong capital base for transformation
Strong capital base for transformation Analyst conference – Q4 2020 / FY 2020 preliminary and unaudited results 11 February 2021 Commerzbank, Bettina Orlopp, CFO, Frankfurt All figures in this presentation are subject to rounding
Slide 2: Highlights 2020
Strong capital base for transformation Highlights 2020 Operating performance reflects Basis for transformation established Strong capital base impact of Corona NCI up 9% almost compensates impact of €814m restructuring charge for closure of CET1 ratio of 13.2% and distance to pandemic and interest r
Slide 3: Restructuring charges mark start of transformation
Restructuring charges mark start of transformation Number of branches in Germany Restructuring charges (€m) Branches closed in Q4 Occupancy related Corona related closures Personnel reduction ~1,000 Open branches 614 ~200 ~200 201 ~600 43 101 158 2019 YE 2020 Q4 2019 Q3 2020 Q4 2020 200 branches clo
Slide 4: Goodwill write-off and restructuring impact net result
Goodwill write-off and restructuring impact net result Pre-provision result Operating result Net result1 (€m) (€m) (€m) 1,873 1,515 Exceptional 1,253 24 585 Revenue Items 24 1,849 1,775 1,229 -260 -260 27 -233 -2,870 FY 2019 FY 2020 FY 2019 FY 2020 FY 2019 FY 2020 RWA CET1 ratio2 Leverage ratio2 (€b
Slide 5: Result also burdened by exceptional revenue items
Result also burdened by exceptional revenue items 2019 (€m) Revenues 2020 (€m) Revenues Q1 Hedging & valuation adjustments -15 -34 Q1 Hedging & valuation adjustments -160 -173 PPA Consumer Finance (PSBC) -19 PPA Consumer Finance (PSBC) -13 Q2 Hedging & valuation adjustments 86 34 Q2 Hedging & valuat
Slide 6: Operating result driven by risk result in core segments
Operating result driven by risk result in core segments Private and Small Business Corporate Clients Others & Consolidation Customers (€m) (€m) (€m) 4,876 4,776 30 3,274 3,120 Exceptional Revenue Items Revenues 4,846 4,826 3,360 3,216 55 Operating 5 -49 50 -86 -96 result FY 2019 FY 2020 FY 2019 FY 2
Slide 7: Underlying revenues from customer business maintained
Underlying revenues from customer business maintained Underlying revenues (€m) 8,649 8,615 8,447 8,208 321 248 168 342 189 410 456 3,057 3,320 3,089 3,192 5,142 Other 4,828 4,998 4,370 NFV NCI NII -213 2017 2018 2019 2020 Highlights 2020 Growth in underlying NCI of 8.6% more than NFV benefitting fro
Slide 8: Q4 operating loss driven by increase of TLA to -€505m
Q4 operating loss driven by increase of TLA to -€505m Group operating result Group P&L (€m) in €m Q4 2019 Q3 2020 Q4 2020 FY 2019 FY 2020 Revenues 2,172 2,033 2,029 8,639 8,186 449 Exceptional items 11 -63 -19 24 -260 Revenues excl. exceptional items 2,161 2,096 2,048 8,615 8,447 309 o/w Net interes
Slide 9: Manageable operating expenses reduced by €153m
Manageable operating expenses reduced by €153m Operating expenses Compulsory contributions Total expenses (€m) (€m) (€m) Administrative expenses -1.4% / -€94m Personnel expenses 6,766 6,672 -2.4% / -€153m 6,313 6,160 2,770 2,660 +13.0% / +€59m 453 512 3,543 3,500 FY 2019 FY 2020 FY 2019 FY 2020 FY 2
Slide 10: Continued moderate demand for KfW loans by customers
Continued moderate demand for KfW loans by customers Government guaranteed loans Loan deferrals since start of crisis until 31 Dec (€bn Germany) (€bn Germany) 6.0 5.9 5.3 Approved Drawn 4.1 3.3 KfW direct loans1 4.7 3.3 1.9 30 Jun 31 Dec EaD 1.8 1.1 1.5 3.9 affected 0.3 1.2 0.4 1.8 1.7 0.4 1.3 0.3 0
Slide 11: Majority of Q4 risk result for increase of TLA to -€505m
Majority of Q4 risk result for increase of TLA to -€505m Risk result Q4 Risk result FY 2020 Corona TLA by segment (€m) (€m) (€m) -1,748 -505 Corona TLA -681 -505 -456 Corona effects O&C -3 -359 -187 Large single case -373 CC -105 -12 -601 Base -205 -129 PSBC Base top-up Corona Corona TLA Total Q4 FY
Slide 12: 2nd lockdown with clear impact on TLA and risk result
2nd lockdown with clear impact on TLA and risk result Risk result Risk result divisional split (€m) Risk Result in €m Q4 2019 Q3 2020 Q4 2020 FY 2019 FY 2020 Private and Small Business Customers -67 -130 -118 -254 -562 Corporate Clients -156 -120 -505 -342 -1,081 Asset & Capital Recovery - - - -24 -
Slide 13: Continued growth in PSBC – customer base adjusted
Continued growth in PSBC – customer base adjusted Customers (Germany) Loan and securities volumes (Germany) (m) (€bn eop) Inactive customers Customers with accounts at Commerzbank and comdirect 11.5 11.6 11.7 290 11.4 261 262 271 11.3 0.3 239 0.5 Loans Securities 161 177 157 154 133 104 106 108 110
Slide 14: Underlying revenues in PSBC on track despite headwinds
Underlying revenues in PSBC on track despite headwinds Operating result Segmental P&L (€m) in €m Q4 2019 Q3 2020 Q4 2020 FY 2019 FY 2020 313 Revenues 1,152 1,153 1,133 4,876 4,776 o/w Private Customers¹ 657 686 686 2,713 2,800 246 o/w Small Business Customers 206 204 199 811 813 o/w mBank 255 227 22
Slide 15: Active portfolio management in CC
Active portfolio management in CC Loan volume Corporates (quarterly average €bn | Mittelstand and International Corporates) 95 88 89 89 82 84 75 78 Q4 2016 Q4 2017 Q4 2018 Q4 2019 Q1 Q2 Q3 Q4 Highlights Q4 Loan volume reduction predominantly driven by Drawings from Mittelstand customers decreased ac
Slide 16: Corporate Clients strongly impacted by pandemic
Corporate Clients strongly impacted by pandemic Operating result Segmental P&L (€m) in €m Q4 2019 Q3 2020 Q4 2020 FY 2019 FY 2020 Revenues 832 788 775 3,274 3,120 122 148 o/w Mittelstand 452 435 421 1,813 1,736 74 23 43 o/w International Corporates 203 225 198 845 889 o/w Institutionals 137 127 149
Slide 17: Successful mitigation of Corona effects in RWA
Successful mitigation of Corona effects in RWA RWA development by risk types Drivers of credit RWA (€bn eop) Market risk (€bn eop) Operational risk Credit risk 182 183 179 153.2 11 11 12 19 19 18 -6.0 148.0 0.6 -0.4 33 O&C -4.1 4.7 CC 152 153 75 17 mBank 23 PSBC Germany Q4 2019 Q3 2020 Q4 2020 Q3 20
Slide 18: CET1 ratio of 13.2% and buffer to MDA of ~370bp
CET1 ratio of 13.2% and buffer to MDA of ~370bp Transition of CET1 ratio (%) 13.4 13.5 13.2 0.3 -0.6 -29bp -0.3 1 9.8 9.5 2 Q4 2019 Q3 2020 RWA change Capital Q4 2020 Q3 2020 Q4 2020 change MDA Highlights Q4 Capital lower by €1.2bn driven by capital 31bp net benefit from changed Buffer to MDA at ~37
Slide 19: Objectives and expectations for 2021
Objectives and expectations for 2021 Given the uncertainty of With increased We expect slightly the further development We target a CET1 ratio investments and initial We expect a positive lower revenues – of the pandemic we above 12% cost measures from operating result despite reflecting focus on RW
Slide 20: 11 February 2021 Commerzbank, Bettina Orlopp, CFO, Frankfurt
11 February 2021 Commerzbank, Bettina Orlopp, CFO, Frankfurt 19
Slide 21: Appendix
Appendix German economy 21 Funding & rating P&L tables Commerzbank’s MREL requirements 34 Commerzbank Group 41 Corona and risk related information Distance to MDA 35 Private and Small Business Customers 42 Support programs 22 Funding structure / activities 2020 36 mBank 43 Commerzbank’s risk provisi
Slide 22: German economy 2021 – Fighting the Corona virus
German economy 2021 – Fighting the Corona virus DAX Current development Our expectation for 2021 (avg. p.a.) 14.400 The renewed increase in the number of new Corona For large parts of Q1 the German economy will probably 12.431 12.272 12.335 infections and the measures adopted to fight the virus be h
Slide 23: Strong governmental, regulatory and central bank action
Strong governmental, regulatory and central bank action Corona related support measures German Government European Union Regulators and ECB Regulatory Domestic short-time working scheme European short-time working scheme Easing of capital and liquidity requirements measures (SURE) Partial suspension
Slide 24: Risk provisions increased to cover potential Corona effects
Risk provisions increased to cover potential Corona effects Exposure1 Risk provisions2 (€bn, excluding mBank) (€bn, excluding mBank) 397 2,762 391 372 3 4 2,154 2,269 505 18 371 358 19 1,883 154 170 3 4 1,707 3 17 20 93 18 0 1,488 1,611 1,209 1,408 338 352 376 369 348 1,109 324 315 324 339 375 274 2
Slide 25: Retail industry
Retail industry Share of 1.6% of overall portfolio by sub-portfolios 0.6 Food retailing ● Overall stable sector due to high proportion of food retailing and Home improvement / furnitures drugstores (food retailing with 10-15% non food revenues). Top 2.0 10 borrower units represent 57% of sector EaD
Slide 26: Travel related industries
Travel related industries Share of only 0.9% of overall portfolio by sub-portfolios 0.5 Airlines ● EaD reduced by 7% vs 09/20. 18% of the portfolio with Cruise Liners investment grade ratings (09/20 33%) 0.6 €4.0bn Hotels ● Airlines: Portfolio consists of €1.7bn secured aircraft fin. and 2.1 Tour Op
Slide 27: Automotive & mechanical engineering
Automotive & mechanical engineering Share of 4.4% of overall portfolio by sub-portfolios Car parts supplier ● Automotive: Dominating sub-sectors in portfolio are car parts suppliers (52% EAD) and OEM (38% EAD). Major share of 6.6 Automotive OEM 8.3 complete automotive EaD rated investment grade (>85
Slide 28: Residential mortgage business and property prices
Residential mortgage business and property prices German residential properties Overall mortgage portfolio (index values) 200 ● Growing mortgage volume with unchanged ● Due to risk-oriented selection very low risk quality: RD − 12/16: EaD €66.8bn – RD 10bp ● As a consequence of low interest rates, 1
Slide 29: Development of renewable energy portfolio
Development of renewable energy portfolio Renewable Energies (RE) Global footprint of Renewable Energy project finance portfolio Renewable Energy financing portfolio (EaD, €bn eop) +31.4% 0.4% 4.5 4.6 17.2% 4.1 4.2 4.2 3.8 4.0 3.5 €4.6bn 20.9% 61.4% Wind onshore Wind offshore Solar 2013 2014 2015 20
Slide 30: Above-average ESG ratings
Above-average ESG ratings 10 9 8 7 6 5 4 3 2 1 E D C B A CCC B BB BBB A AA AAA Severe High Medium Low Negligible D- D D+ C- C C+ B- B B+ A- A A+ ESG QualityScores Climate Change Rating ESG Rating ESG Risk Rating ESG Corporate Rating ● Commerzbank ● Commerzbank’s rating ● Single A rated in the ● Comm
Slide 31: Commerzbank financials at a glance
Commerzbank financials at a glance Group Q4 2019 Q3 2020 Q4 2020 FY 2019 FY 2020 Operating result (€m) 249 168 -328 1,253 -233 Net result (€m) -97 -60 -2,702 585 -2,870 CET1 ratio (%)¹ 13.4 13.5 13.2 13.4 13.2 Total assets (€bn) 463 544 507 463 507 RWA €bn) 182 183 179 182 179 Leverage ratio fully l
Slide 32: Key figures Commerzbank share
Key figures Commerzbank share Figures per share (€) 1.0 1.0 0.7 0.5 FY 2018 FY 2019 FY 2020 Number of shares issued (m) 1,252.40 1,252.40 1,252.40 -0.2 Market capitalisation (€bn) 7.2 6.9 6.6 Net asset value per share (€) 21.231 21.401 19.82 Low/high Xetra intraday prices (€) 5.50/13.82 4.66/8.26 2.
Slide 33: Loan and deposit development
Loan and deposit development PSBC Corporate Clients (monthly average €bn) (monthly average €bn) 172 176 129 132 97 91 92 84 Sep 20 Dec 20 Sep 20 Dec 20 Loan volume Deposit volume Loan volume Deposit volume Highlights Loan growth in PSBC driven by residential mortgage In CC lower loan volumes reflect
Slide 34: Significant NII potential in rising interest rates scenario
Significant NII potential in rising interest rates scenario 100 bps parallel up-shift in rates yield curve Scenario impact on NII (as of 31 December 2020, %) (€m) 1 ~1,000-1,050 0.5 0,5 0 ~600-650 -0.5 -0,5 -1 0Y 2Y 4Y 6Y 8Y 10Y Year 1 Year 4 Highlights Year 1 effect of ~€600-650m driven by short- T
Slide 35: Comfortable fulfilment of RWA-based MREL requirement
Comfortable fulfilment of RWA-based MREL requirement MREL requirement MREL ratio (% of RWA) 31.5% ● Based on data as of 30 September 2020, Commerzbank fulfils the Other MREL-eligible MREL MREL RWA requirement1 of 27.66% with a MREL ratio of 31.5% >1 year5 4.9% requirement and the MREL subordination
Slide 36: Commerzbank's MDA reduced by lowering of O-SII buffer
Commerzbank’s MDA reduced by lowering of O-SII buffer Distance to MDA based on SREP requirement Highlights (transitional) for 2020 (%) 373bp 13.22 Regulatory actions have been taken in response to Corona which include: ● Changes in pillar 2 requirement structure2 (min. 56.25% CET1 and 75% 9.49 Tier
Slide 37: Capital markets funding
Capital markets funding Funding structure1 Highlights Group issuance activities 2020 (as of 31 December 2020) (nominal values) €7bn issued in 2020 (average term 8 years2) thereof: ● €1.75bn Additional Tier 1: Two AT1 issuances Subordinated Tier 2 debt under newly implemented €3bn AT1 program ● €750m
Slide 38: Rating overview Commerzbank
Rating overview Commerzbank As of 11 February 2021 Bank Ratings S&P Moody’s Counterparty Rating/Assessment1 A- A1/ A1 (cr) Deposit Rating2 BBB+ negative A1 stable Issuer Credit Rating (long-term debt) BBB+ negative A1 negative Stand-alone Rating (financial strength) bbb baa2 Short-term debt A-2 P-1
Slide 39: IAS 19: Development of pension obligations
IAS 19: Development of pension obligations Cumulated actuarial gains and losses (€m) 3.9 2.3 2.6 1.8 1.9 1.9 1.1 0.5 Pension obligations (gross) -713 Cumulated OCI effect1 -1,279 -1,067 -1,446 -1,300 Discount rate in %2 -1,587 -1,7284 -1,699 -7,175 -8,547 -9,201 -9,421 -9,2273 -9,729 -10,2593 -11,12
Slide 40: FX impact on CET1 ratio
FX impact on CET1 ratio QoQ Change in FX capital position Explanation Net positive impact on CET1 ratio1 due to capital relief 148.0 resulting from FX driven lower credit risk RWA which 3.1 +182 overcompensates the decreasing currency translation 12.9 -39 -7 +0 reserve Other 12.6 ● Decreasing Credit
Slide 41: Group equity composition
Group equity composition Capital Capital Capital Ratios Ratios Ratio Q3 2020 Q4 2020 Q4 2020 Q4 2020 FY 2020 FY 2020 EoP EoP Average €bn €bn €bn % % % Common equity tier 1 capital 24.8 23.6 24.3 1 Op. RoCET -5.4% -1.0% CET1-Quote 13.2% DTA 0.6 0.6 Minority interests 0.5 0.5 Prudent Valuation 0.2 0
Slide 42: Commerzbank Group
Commerzbank Group Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY €m 2019 2019 2019 2019 2019 2020 2020 2020 2020 2020 Total clean revenues 2,190 2,095 2,169 2,161 8,615 2,024 2,278 2,096 2,048 8,447 Exceptional items -34 34 13 11 24 -173 -5 -63 -19 -260 Total revenues 2,156 2,129 2,182 2,172 8,639 1,851 2,273 2,033
Slide 43: Private and Small Business Customers
Private and Small Business Customers Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY €m 2019 2019 2019 2019 2019 2020 2020 2020 2020 2020 Total clean revenues 1,212 1,235 1,234 1,166 4,846 1,329 1,190 1,164 1,142 4,826 Exceptional items -20 -21 84 -14 30 -21 -8 -11 -10 -49 Total revenues 1,192 1,214 1,318 1,152 4,876
Slide 44: mBank | Part of Segment Private and Small Business Customers
mBank | Part of Segment Private and Small Business Customers Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY €m 2019 2019 2019 2019 2019 2020 2020 2020 2020 2020 Total clean revenues 274 294 298 255 1,121 305 273 227 220 1,025 Exceptional items - -3 -2 - -5 -7 5 - 1 -1 Total revenues 274 291 296 255 1,116 299 278 227
Slide 45: Corporate Clients
Corporate Clients Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY €m 2019 2019 2019 2019 2019 2020 2020 2020 2020 2020 Total clean revenues 877 807 831 844 3,360 833 815 807 761 3,216 Exceptional items -8 -23 -42 -13 -86 -78 -13 -18 13 -96 Total revenues 869 784 789 832 3,274 755 802 788 775 3,120 o/w Net interest in
Slide 46: Asset & Capital Recovery
Asset & Capital Recovery Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY €m 2019 2019 2019 2019 2019 2020 2020 2020 2020 2020 Total clean revenues 14 -11 - - 3 - - - - - Exceptional items -3 78 - - 75 - - - - - Total revenues 11 68 - - 79 - - - - - o/w Net interest income -15 -8 - - -23 - - - - - o/w Net commission i
Slide 47: Others & Consolidation
Others & Consolidation Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY €m 2019 2019 2019 2019 2019 2020 2020 2020 2020 2020 Total clean revenues 87 63 104 151 405 -138 273 125 145 405 Exceptional items -2 - -29 37 5 -74 15 -33 -23 -115 Total revenues 85 63 74 188 410 -212 288 92 121 290 o/w Net interest income 115 13
Slide 48: Commerzbank Group | Exceptional Revenue Items
Commerzbank Group | Exceptional Revenue Items Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY €m 2019 2019 2019 2019 2019 2020 2020 2020 2020 2020 Exceptional Revenue Item s -34 34 13 11 24 -173 -5 -63 -19 -260 o/w Net interest income -22 -16 -17 -17 -72 -2 -17 -1 -4 -23 o/w Net fair value result 18 30 -83 32 -4 -160
Slide 49: Glossary – Key Ratios
Glossary – Key Ratios Key Ratio Abbreviation Calculated for Numerator Denominator Private and Small Business Group Others & Consolidation Customers and Corporate Clients CIR (excl. compulsory Group as well as segments Cost/income ratio (excl. compulsory contributions) (%) Operating expenses Total re
Slide 50: For more information, please contact our IR team
For more information, please contact our IR team Investors and Financial Analysts Christoph Wortig Ansgar Herkert Michael H. Klein Dirk Bartsch Head of Investor Relations Head of IR Communications P: +49 69 136 24522 Head of Strategic IR / Rating P: +49 69 136 52668 P: +49 69 136 44083 M: michael.kl
Slide 51: Disclaimer
Disclaimer This presentation contains forward-looking statements. Forward- In addition, this presentation contains financial and other information looking statements are statements that are not historical facts; they which has been derived from publicly available information disclosed include, inter