Commerzbank AG · XETR:CBK
Commerzbank — Investor Presentation (September 2016)
34 slides from Commerzbank's investor presentation, Sep 30, 2016
Slide 1: Commerzbank 4.0
Commerzbank 4.0 Strictly confidential Frankfurt/Main | 30 September 2016 1
Slide 2: Agenda
Agenda 1 We have made Commerzbank more stable – and less risky 2 We will rebuild the Bank, to boost profitability 3 We will concentrate our customer business in two strong segments 4 We will leverage our success in retail business for small business customers as well 5 We will focus on our main stre
Slide 3: We have made Commerzbank more stable – and less risky
We have made Commerzbank more stable – and less risky 636 533 Balance sheet Total assets down by 16% -16% (€bn) FY 2012 H1 2016 160 63 Risk €97bn Reduction of non-core assets -61% (€bn) FY 2012 FY 2015 23 18 Capital CET 1 capital increased by 28% +28% (€bn) FY 2012 H1 2016 Frankfurt/Main | 30 Septem
Slide 4: Banks are facing major challenges
Banks are facing major challenges 1 2 Interest rate environment Regulation The low interest rate environment is Regulatory initiatives and further expanded burdening the entire banking sector – compliance requirements involve with no relief in sight further investments for banks Mounting pressure on
Slide 5: Commerzbank 4.0: a strategic programme with three cornerstones
Commerzbank 4.0: a strategic programme with three cornerstones We will focus on businesses where Focussed we have clear competitive 1 business model advantages, discontinuing non-core activities Higher Digital We will transform the Bank into a profitability and 2 enhanced enterprise digital enterpri
Slide 6: Commerzbank will have two strong customer segments going forward
Commerzbank will have two strong customer segments going forward PC Private and › Private Customers, Small Business Customers, Small Business Comdirect, Commerz Real, M Bank CEE Customers MSB Corporate › All corporate clients, institutional clients, Corporate Clients Finance and FICC CM Separation/R
Slide 7: Private Customers: successful business model in the challenging German market
Private Customers: successful business model in the challenging German market › Private Customers business is already profitable (>20% RoTE), and growing › Profit contribution has tripled since 2012 (FY 2015: €701 million) › One million net new customers by the end of 2016 accomplished › Pan-German
Slide 8: Private Customers: faster growth combining digital platform with modern branch formats
Private Customers: achieving faster growth by combining digital platform strategy with modern branch formats Digital and personal › Multi-channel bank "One" is the IT platform for all channels and all customers City branch City branch › Two branch formats provide for broad market coverage at approxi
Slide 9: Private Customers: accelerated growth through attractive products and partnerships
Private Customers: accelerated growth through attractive products and partnerships Digital and personal › Digital instalment loans: high-margin product on @ own platform and on the Bank's own loan book › Digital asset management: Robo Advice and Digital asset digital asset management via Comdirect m
Slide 10: Small Business Customers: growth through regional proximity and digital advantage
Small Business Customers: growth through regional proximity and digital advantage Digital and personal › Competitive advantages by combining the strengths of PC (efficiency) and MSB (loans) › Digital offers and strong nationwide presence – Customers have 24/7 access to small business customers offer
Slide 11: Corporate Clients: focus on core business – integration of investment bank
Corporate 2 Clients: focus on core business – integration of investment bank Market leader in Germany Mittelstandsbank Leading Trade Finance offering International presence Unrivalled sector expertise Corporates & Markets Leading provider of hedging products for corporate clients Debt House No. 1 Im
Slide 12: Corporate Clients: growth in international Trade Finance business
Corporate Clients: growth in international Trade Finance business 2016 2020 › Foreign trade financing was the purpose for › Investment in digitalisation will enhance which the Bank was founded in 1870 efficiency and extend the service offer › Commerzbank finances more than 30% of › Acquiring clients
Slide 13: Corporate Clients: sector expertise as a lever for growth
Corporate Clients: sector expertise as a lever for growth Expanding the sector-based approach Automotive & Transport › Broad client base in focus sectors More than 4,000 clients › Strong market penetration, including a large number of world market leaders and “hidden Chemicals & Pharma champions” Mo
Slide 14: Corporate Clients: leading lender
Corporate Clients: leading lender 2016 2020 › Leading lender for German corporate clients › Leveraging strong market position in – partner to the Mittelstand, up to capital Germany for growth in European core market capability markets › Intelligent mix of traditional credit products › High quality a
Slide 15: Focus on Corporate Client products
Focus on Corporate Client products Product offering today Future product offering › Credit › Credit › Trade Finance › Trade Finance MSB Corporate Clients › Structured Finance › Structured Finance › Cash Management › Cash Management Advisory › Corporate Advisory & DCM › Corporate Financing › Corporat
Slide 16: Our evolution into a digital enterprise
Our evolution into a digital enterprise 2016 2020 Reduction of complexity Target: 80% of all relevant processes are digital Frankfurt/Main | 30 September 2016 16
Slide 17: Digital Campus as engine of transformation
Digital Campus as engine of transformation E2E: Management Board responsibility Business and IT experts working together in one place All experts will commit 100% of their capacity Priority for internal resources Agile working methods Shortening of implementation cycle Digital transformation “Fail f
Slide 18: FTE reduction as a consequence of digitalisation and reduction of complexity
FTE reduction as a consequence of digitalisation and reduction of complexity FTE reduction until 2020 9,600 2,300 7,300 Gross reduction Growth Net reduction Frankfurt/Main | 30 September 2016 18
Slide 19: Simulation H1 2016 of new customer segments
Simulation H1 2016 of new customer segments Revenues 2.4 PC Private and LLP 0.1 Small 116 Business Costs 1.8 38 Customers CEE Operating €bn 0.6 RWA Assets result Revenues 2.0 MSB 263 LLP 0.1 Corporate 108 Clients Costs 1.3 CM Operating €bn Exit 0.5 RWA Assets result O&C O&C unchanged ACR ACR unchang
Slide 20: Specific growth measures and significant cost savings lead to CIR <66% and RoTE >6%
Specific growth measures and significant cost savings lead to CIR <66% and RoTE >6% 11.3 Upside 9.8- 9.0 10.3 Revenues €bn 20161) 2020 Costs 7.1 6.5 <66% CIR 79% (~60% Upside) >6% RoTE 3% (>8% Upside) 1) Based on analysts’ consensus as of 15 August 2016 Frankfurt/Main | 30 September 2016 20
Slide 21: Substantial revenue increase from growth – revenues >€9.8bn in 2020
Substantial revenue increase from growth – revenues >€9.8bn in 2020 even in current interest rate environment Ongoing negative interest rate 1 environment anticipated – upside case if rates increase 11.3 Upside ACR run-down and reduction of 1.0 2 trading activities 9.0 1.1- 0.3- 1.4 0.5 0.1 0.5 Grow
Slide 22: Specific growth and pricing measures compensate for adverse interest rate effects
Specific growth and pricing measures compensate for adverse effects from current interest rate environment In current rate environment 3M-Euribor (avg. p.a. in %) › Expected gross revenue decline under current interest rate conditions by 2020: ~€300m vs. 2016 2016 2017 2018 2019 2020 › Revenue loss
Slide 23: Substantial additional revenues from new client segments
Substantial additional revenues from new client segments Revenues 2017-2020 Private and Small › Private Customers €450-550m Business €1.1-1.4bn › Small Business Customers €350-450m Customers › M Bank €300-400m › Customer growth and pricing €185-270m Corporate Clients €0.3-0.5bn › Trade Finance €40-6
Slide 24: Significant cost savings through digitalisation and reduction of complexity
Significant cost savings through digitalisation and reduction of complexity Inflation, regulatory costs, and 1 depreciation €1.1bn Cost reduction through run-down 7.6 2 ACR and reduction of trading activities 0.5 0.2 7.1 0.5 Savings through digitalisation and 3 0.3 automatisation of processes 6.5 0.
Slide 25: Transformation requires two years with low profitability
Transformation requires two years with low profitability 2017 2018 2019 2020 Current rates Rising rates 9.8- Revenues €bn 11.3 €bn 10.3 Costs 6.5 €bn 6.5 €bn Restructuring costs €1.1bn RoTE >6% >8% Frankfurt/Main | 30 September 2016 25
Slide 26: Group RWA remain stable – ongoing portfolio optimisation
Group RWA remain stable – ongoing portfolio optimisation Pro forma RWA Path H1 2016 (€bn) 2020 Private & Small 38 Significant growth in capital efficient lending business with private and Business small business customers Customers 102 Corporate Overall stable RWA development due to further portfoli
Slide 27: CET 1 to be at ~12% during the transition period
CET 1 to be at ~12% during the transition period >13 ~0.2 ~1.5 11.5- 0.4 0.5 >12 12.0 0.6 CET 1 ratio % 2016e Profits & Exit RWA Volatility 2018 Profits RWA 2020 capital growth growth deductions › Suspension of dividend payments to cover restructuring costs › Comfortable capital position including b
Slide 28: Transformation requires goodwill impairments in third quarter 2016
Transformation of Commerzbank 4.0 requires goodwill impairments in third quarter 2016 Expected Goodwill impact PC €1.1bn Private & €~170m Small Business €1.5bn CEE €0.2bn Customers Goodwill allocations and intangible assets in CM see full impairments of ~€170m €~530m MSB €0.6bn As a conseque
Slide 29: Outlook on third quarter 2016
Outlook on third quarter 2016 Q3 2016 We expect revenues in the third quarter to be flat compared to the preceding quarter LLPs should be significantly above the two preceding quarters in 2016 due to sustained weakness within shipping market We expect third-quarter operating profit to be lower than
Slide 30: Outlook FY 2016
Outlook FY 2016 FY 2016 Despite goodwill impairments in Q3 2016, we expect a small net profit for the full year 2016 We expect the CET 1 ratio to stand at almost 12% at year-end 2016, provided no significant market distortions occur To refinance our restructuring costs, dividend payments will be sus
Slide 31: Targets 2020 of new strategy Commerzbank 4.0
Targets 2020 of new strategy Commerzbank 4.0 Current rates Rising rates Revenues (€bn) 9.8-10.3 11.3 Costs (€bn) 6.5 6.5 CIR (%) <66 ~60 Net RoTE (%) >6 >8 CET1 (%) >13 >13 Frankfurt/Main | 30 September 2016 31
Slide 32: Take-aways
Take-aways Growth in Private and Small Business Customer segment Leveraging market-leading position in corporate clients business Evolution into a digital enterprise Sustainable transformation and profitability Sustainable business model Commerzbank becomes a better bank for clients Frankfurt/Main |
Slide 33: For more information, please contact:
For more information, please contact: Margarita Thiel Alexander Cordes Leiterin External Communications Leiter External Communications Finance & Strategy +49 69 136-46646 +49 69 136-42764 margarita.thiel@commerzbank.com alexander.cordes@commerzbank.com Karsten Swoboda Kathrin Wetzel Maurice Farrouh
Slide 34: Disclaimer
Disclaimer This presentation contains forward-looking statements. Forward-looking statements are statements that are not historical facts; they include, inter alia, statements about Commerzbank’s beliefs and expectations and the assumptions underlying them. These statements are based on plans, estim