Commerzbank AG · XETR:CBK
Commerzbank — FY2005 Earnings Presentation
41 slides from Commerzbank's earnings presentation, Feb 15, 2006
Slide 1: Analyst Conference
Analyst Conference Preliminary figures 2005 February 15, 2006 Dr. Eric Strutz Chief Financial Officer
Slide 2: Highlights of 2005
Preliminary figures 2005 Highlights of 2005 Q4 `05 vs Q4 `04 FY 2005 vs 2004 Operating profit, in € m 466 2.8 fold 1,717 +70% Net profit, in € m 333 3.6 fold 1,165 3.2 fold Net ROE, in % 13.41 +9.4pps 12.4 +8.4pps CIR, in % 1 annualized 73.0 -3.8pps ü 67.1 -3.8pps ü 1. Commerzbank produced one of it
Slide 3: Significant quarter-on-quarter increase in net interest income
Preliminary figures 2005 Significant quarter-on-quarter increase in net interest income Net interest income in € m • Strong results of Eurohypo 847 833 806 • Higher contribution of 771 consolidated companies in 741 747 719 721 FY 2005 • Interest spread up by 10 bps to 2.86% +11.5% • Weak Treasury re
Slide 4: Loan loss provisions at lowest level for the last six years
Preliminary figures 2005 Loan loss provisions at lowest level for the last six years Loan loss provisions 1,267 Net LLP1 in € m 1,084 in bps 822 74 836 66 598 52 566 46 34 33 2000 2001 2002 2003 2004 2005 1 as a proportion of total lending Development of loan loss coverage ratio In excess in € bn 7.
Slide 5: Strong upward trend in commission income
Preliminary figures 2005 Strong upward trend in commission income Commission income in € m • Notable y-o-y increase in 645 security transactions and 597 593 599 570 578 asset management 557 526 • Strong in syndicated business, especially in Q4 +13.2% • Contribution from Mittelstand grew continually
Slide 6: Trading profit: Excellent performance in favourable markets
Preliminary figures 2005 Trading profit: Excellent performance in favourable markets Trading profit • C&M repositioning is in € m 319 paying off -5 288 • Strong client-related -26 250 business led to more 314 228 -11 -33 sustainable earnings’ 173 stream -42 262 • Q4: Trading profit 134 -31 2.1 fold
Slide 7: Revaluation reserves at record level
Preliminary figures 2005 Revaluation reserves at record level Revaluation reserve Major participations of in € bn Commerzbank as of Dec 31, 2005 2.0 1.8 1.6 ≥ 10% KEB 1.5 1.4 1.3 1.2 1.0 < 10% Linde 1 - 5% Generali Mediobanca ThyssenKrupp Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2004 2005 • Sale of Banca Intesa in Q
Slide 8: Operating costs affected by special charges in Q4
Preliminary figures 2005 Operating costs affected by special charges in Q4 Operating expenses in € m • Operating costs (excluding special 1,370 charges) grew less than 1% • Other expenses decreased by 3.4% 1,159 193 1,112 1,136 1,086 1,107 1,088 1,097 • Pro-active reduction of actuarial gap 97 92 11
Slide 9: Development of operating expenses 2005 versus 2004
Preliminary figures 2005 Development of operating expenses 2005 versus 2004 in € m 2004 4,493 • Cost reduction C&M -151 • Revaluation • General performance bonus 320 • Additional pension costs • LTP / LTI • Net effect others 2005 4,662 8/40
Slide 10: Steady enhancement of underlying business
Preliminary figures 2005 Steady enhancement of underlying business Operating profit in € m 2.234 1.717 16.8 1.011 9.41 559 9.9 441 192 4.9 3.4 1.6 Operating ROE, in % 2000 2001 2002 2003 2004 2005 Net ROE², in % 11.8 0.9 -2.6 -22.3 4.0 12.4 CIR, in % 65.2 81.1 77.3 73.3 70.9 67.1 1 excluding €1,216m
Slide 11: Significant swing in net profit y-o-y
Preliminary figures 2005 Significant swing in net profit y-o-y Net profit 395 • Strong underlying business, in € m 333 revenue-related cost management and capital 262 246 240 management led to high net 175 profit 0.66 0.53 • 2005 EPS tripled to €1.93 92 0.44 0.41 0.41 0.30 • Dividend of €0.50 per sh
Slide 12: Achievements
Preliminary figures 2005 Achievements We promised ... … and delivered Net ROE in % 8.0 12.4 ü Net profit, in € m 750 1,165 ü Operating profit, in € m 1,250 1,717 ü … and we are slightly ahead of targets Adj. operating profit1, in € m 1,458 Adj. after-tax profit1, in € m 906 Adj. net ROE1, in % 9.6 ü
Slide 13: Solid capital base and strong Tier I ratio
Preliminary figures 2005 Solid capital base and strong Tier I ratio Risk-weighted assets Change in core capital in € bn in € m 1,336 12,161 150 148 147 837 146 10,484 -331 143 143 -186 138 140 141 -117 First-time consolidation Retained earnings Increased stake in Increased stake in 8.1 Capital incre
Slide 14: Substantial increase in Mittelstand, C&M, Mortgage Banks
Preliminary figures 2005 Substantial increase in Mittelstand, C&M, Mortgage Banks Operating profit in € m Private & Business Customers Asset Management Mittelstand 134 99 103 103 81 73 84 80 70 69 68 49 53 46 46 50 36 42 37 40 17 20 18 23 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q
Slide 15: PBC: Personnel expenses impact operating result
Preliminary figures 2005 PBC: Personnel expenses impact operating result … Operating profit Abridged P&L in € m in € m Q4 `04 Q4 `05 FY 2004 FY 2005 -12.7% Interest income 283 294 1,137 1,124 99 81 73 84 80 LLP -76 -67 -213 -205 70 69 49 Commission income 258 262 1,010 1,065 Other operating income 2
Slide 16: … still sound underlying business
Preliminary figures 2005 … still sound underlying business Development of operating profit in € m Reconciliation 1. Treasury prepayments 323 2. Higher refinancing costs of ~ -100 ~ 60 282 participations Personnel expenses 3. Higher pension costs 4. Bonuses Investments FY 2004 ∆ Reconciliation Improv
Slide 17: Asset Management achieved 9% higher commission income in 2005
Preliminary figures 2005 Asset Management achieved 9% higher commission income in 2005 Operating profit Abridged P&L in € m in € m Q4 `04 Q4 `05 FY 2004 FY 2005 -32.2% Commission income 135 170 529 575 Trading profit 2 3 8 9 53 46 46 36 42 37 AfS result 5 8 13 16 17 20 Other operating income -1 -3 2
Slide 18: Mittelstand: Operating profit tripled in 2005
Preliminary figures 2005 Mittelstand: Operating profit tripled in 2005 Operating profit Abridged P&L in € m in € m Q4 `04 Q4 `05 FY 2004 FY 2005 134 Interest income 304 306 1,152 1,193 3.1 fold 103 103 LLP -103 -57 -555 -394 68 50 40 Commission income 99 167 403 568 18 23 Trading profit 15 23 43 75
Slide 19: International Corporate Banking benefits from LLP reversals
Preliminary figures 2005 International Corporate Banking benefits from LLP reversals Operating profit Abridged P&L in € m in € m Q4 `04 Q4 `05 FY 2004 FY 2005 -3.9% 143 Interest income 74 88 301 294 115 84 80 LLP 48 87 12 69 67 45 45 31 Commission income 34 40 155 153 Trading profit 10 5 32 15 Q1 Q2
Slide 20: Very satisfying progress in Corporates & Markets
Preliminary figures 2005 Very satisfying progress in Corporates & Markets Operating profit in € m Abridged P&L 149 in € m Q4 `04 Q4 `05 FY 2004 FY 2005 99 Interest income 35 43 190 187 82 86 LLP -18 3 -29 -3 Commission income 42 16 152 69 -38 -39 -55 -147 Trading profit 115 217 567 758 Q1 Q2 Q3 Q4 Q
Slide 21: Excellent year for Mortgage Banks
Preliminary figures 2005 Excellent year for Mortgage Banks Operating profit Abridged P&L in € m in € m Q4 `04 Q4 `05 FY 2004 FY 2005 2.5 fold Interest income 88 155 233 528 90 98 93 LLP -36 -6 -51 -33 69 38 47 29 25 Trading profit -32 -38 -110 -130 AfS result 52 12 126 73 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 200
Slide 22: Others & Consolidation: Driven by disposals and impairment
Preliminary figures 2005 Others & Consolidation: Driven by disposals and impairment Operating profit Abridged P&L in € m153 168 in € m Q4 `04 Q4 `05 FY 2004 FY 2005 Interest income -38 -47 7 -144 25 7 Trading profit -8 6 -4 -23 AfS result 32 193 170 553 -81 -92 -70 -59 Other operating income -16 -2
Slide 23: Main benefits of Eurohypo transaction
Preliminary figures 2005 Main benefits of Eurohypo transaction • Reinforce Commerzbank’s position as the leading German commercial bank 1. Strong business fit • Broaden exposure in the recovering German real estate market (No. 1 with market share of 22%) • Increasing and more stable earnings • Signi
Slide 24: Milestones of Eurohypo integration
Preliminary figures 2005 Milestones of Eurohypo integration 2005 2006 Nov Dec Jan Feb Mar Apr May Jun Jul Aug Increase Complete Finalize Increase Finalize stake stock taking preliminary stake to detailed to 49% concept 98.04% concept Taking stock Launch hybrid capital Start integration Integration o
Slide 25: Consolidating Eurohypo
Preliminary figures 2005 Consolidating Eurohypo CBK`s share in 31.84% 48.91% 48.91% 48.91% 98.04% 98.04% 98.04% EHY capital 2005 2006 Jan 1 Dec 15 Dec 31 Mar 31 Apr 1 Dec 31 All balance sheet items of EHY are EHY is measured according to the equity Balance shown in Commerzbank`s method and is shown
Slide 26: Capital increase was well received by investors
Preliminary figures 2005 Capital increase was well received by investors CBK share price performance: Nov 10, 2005 – Feb 8, 2006 EPS 2 1.93 in € in € 30 0.61 0,50 1 0,25 28 2004 2005 26 Dividend per share 1 recommended Shares outstanding Nov 17, 2005 in m 656.8 24 • Announcement of acquisition of 59
Slide 27: Commerzbank’s challenges in 2006
Preliminary figures 2005 Commerzbank’s challenges in 2006 • Strengthening position as the leading German commercial bank 1. Market positioning • Playing an active part in consolidating the German banking market • Completion of acquisition 2. Additional shareholder Eurohypo • Successful integration v
Slide 28: Confident for 2006
Preliminary figures 2005 Confident for 2006 Net ROE targets 2006e 2005 > 10.0% 2004 9.6%1 Above our long-term cost 4.0% capital (~10%) Above our current cost of capital Major step towards our current cost of capital 1 excl. participations and impairments 27/40
Slide 29: Appendix
Preliminary figures 2005 Appendix 28/40
Slide 30: Financial Calendar 2006
Preliminary figures 2005 Financial Calendar 2006 February 27 Start of roadshow on hybrid capital By March 31 Acquisition of 2nd tranche of Eurohypo May 4 Q1 2006 Telephone Conference May 17 Annual General Meeting August 9 Q2 2006 Conference September 21 Investors‘ Day Early November Q3 2006 Telephon
Slide 31: Profitability analysis FY 2005
Preliminary figures 2005 Profitability analysis FY 2005 Private & International Asset Corporates Mortgage Others & Business Mittelstand Corporate Management & Markets Banks Consolidation Customers Banking Operating profit (€ m) 282 120 408 299 212 350 46 Regulatory capital (€ m) 1,891 537 3,028 1,38
Slide 32: Commerzbank Group
Preliminary figures 2005 Commerzbank Group in € m Q1 `04 Q2 `04 Q3 `04 Q4 `04 FY 2004 Q1 `05 Q2 `05 Q3 `05 Q4 `05 FY 2005 Interest income 741 806 719 747 3,013 721 847 771 833 3,172 LLP -238 -214 -199 -185 -836 -198 -177 -151 -40 -566 Commission income 597 557 526 570 2,250 578 593 599 645 2,415 Hed
Slide 33: Private & Business Customers
Preliminary figures 2005 Private & Business Customers in € m Q1 `04 Q2 `04 Q3 `04 Q4 `04 FY 2004 Q1 `05 Q2 `05 Q3 `05 Q4 `05 FY 2005 Interest income 284 283 287 283 1,137 274 269 287 294 1,124 LLP -39 -46 -52 -76 -213 -46 -46 -46 -67 -205 Commission income 272 256 224 258 1,010 264 272 267 262 1,065
Slide 34: Asset Management
Preliminary figures 2005 Asset Management in € m Q1 `04 Q2 `04 Q3 `04 Q4 `04 FY 2004 Q1 `05 Q2 `05 Q3 `05 Q4 `05 FY 2005 Interest income -3 -2 -3 1 -7 4 -1 -7 -6 -10 LLP 0 0 0 0 0 0 0 0 0 0 Commission income 141 129 124 135 529 127 133 145 170 575 Hedge result 1 0 0 0 1 0 0 1 -1 0 Trading profit 2 2
Slide 35: Mittelstand
Preliminary figures 2005 Mittelstand in € m Q1 `04 Q2 `04 Q3 `04 Q4 `04 FY 2004 Q1 `05 Q2 `05 Q3 `05 Q4 `05 FY 2005 Interest income 269 296 283 304 1,152 280 307 300 306 1,193 LLP -151 -151 -150 -103 -555 -118 -115 -104 -57 -394 Commission income 104 92 108 99 403 124 134 143 167 568 Hedge result 0
Slide 36: International Corporate Banking
Preliminary figures 2005 International Corporate Banking in € m Q1 `04 Q2 `04 Q3 `04 Q4 `04 FY 2004 Q1 `05 Q2 `05 Q3 `05 Q4 `05 FY 2005 Interest income 81 84 62 74 301 64 67 75 88 294 LLP -36 -5 5 48 12 -19 -8 9 87 69 Commission income 37 43 41 34 155 38 40 35 40 153 Hedge result 0 0 0 0 0 -2 2 0 5
Slide 37: Corporates & Markets
Preliminary figures 2005 Corporates & Markets in € m Q1 `04 Q2 `04 Q3 `04 Q4 `04 FY 2004 Q1 `05 Q2 `05 Q3 `05 Q4 `05 FY 2005 Interest income 58 47 50 35 190 49 52 43 43 187 LLP -7 -7 3 -18 -29 -7 -1 2 3 -3 Commission income 44 34 32 42 152 27 15 11 16 69 Hedge result 0 0 0 0 0 0 0 0 -1 -1 Trading pr
Slide 38: Mortgage Banks
Preliminary figures 2005 Mortgage Banks in € m Q1 `04 Q2 `04 Q3 `04 Q4 `04 FY 2004 Q1 `05 Q2 `05 Q3 `05 Q4 `05 FY 2005 Interest income 59 43 43 88 233 96 138 139 155 528 LLP -5 -5 -5 -36 -51 -8 -7 -12 -6 -33 Commission income -2 -4 -3 -3 -12 -2 -2 -3 -5 -12 Hedge result 0 -6 9 1 4 -8 -6 -6 -4 -24 Tr
Slide 39: Others & Consolidation
Preliminary figures 2005 Others & Consolidation in € m Q1 `04 Q2 `04 Q3 `04 Q4 `04 FY 2004 Q1 `05 Q2 `05 Q3 `05 Q4 `05 FY 2005 Interest income -7 55 -3 -38 7 -46 15 -66 -47 -144 LLP 0 0 0 0 0 0 0 0 0 0 Commission income 1 7 0 5 13 0 1 1 -5 -3 Hedge result 3 -5 5 -2 1 -2 -1 0 1 -2 Trading profit -8 2
Slide 40: For more information, please contact: Commerzbank Investor Relations
For more information, please contact: Sandra Büschken Commerzbank Investor Relations P: +49 69 136 23617 M: sandra.bueschken@commerzbank.com Jürgen Ackermann Ute Heiserer-Jäckel Head of Investor Relations P: +49 69 136 41874 P: +49 69 136 22338 M: ute.heiserer-jaeckel@commerzbank.com M: juergen.acke
Slide 41: Disclaimer
Preliminary figures 2005 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 relia