Commerzbank AG · XETR:CBK
Commerzbank — Cheuvreux German Corporate Conference 2011
48 slides from Commerzbank's conference presentation, Jan 19, 2011
Slide 1: Commerzbank – on track for sustainable profitability
Commerzbank – on track for sustainable profitability Cheuvreux German Corporate Conference 2011 Eric Strutz CFO Frankfurt January 19th, 2011
Slide 2: Key highlights
Key highlights No. 1 for Germany’s Mittelstand and second largest German retail bank > Market leader for mid-sized German companies > Second largest retail bank with 11 million German private clients and 1,200 German branches (post integration), top position in Wealth Management and online brokerage
Slide 3: Commerzbank with a solid operating profit of €116m in Q3 2010
Commerzbank with a solid operating profit of €116m in Q3 2010 In € m Q3 2010 Q2 2010 1) Q3 2009 1) 9M 2010 1) 9M 2009 * 1) Revenues before LLP 2,922 3,110 3,439 9,656 8,802 Provisions for loan losses -621 -639 -1,053 -1,904 -2,890 Operating expenses 2,185 2,228 2,264 6,622 6,608 Operating profit / l
Slide 4: Lower LLPs in the Core Bank, ongoing high risk charges in ABF
Lower LLPs in the Core Bank, ongoing high risk charges in ABF Provisions for loan losses LLPs in Core Bank benefited from in € m write-backs -34% Core Bank ABF continues to be a burden Non-core Bank 2,890 - No relief in US and Spanish portfolios 2010 full year expectation further 1,615 1,904 reduced
Slide 5: Integration progress on schedule
Integration progress on schedule Key milestone in Q3: successful software harmonization Cost synergies Integration charges Personnel reduction End of September 2010 >45% Integration charges above 80% of overall reduction of total synergy target of plan in 2010 due to higher IT contracted (>6.900 FTE
Slide 6: Cost base influenced by investments into integration, adjusted operating expenses down 4.4%
Cost base influenced by investments into integration, adjusted operating expenses down 4.4% in € m 168 144 6,622 6,608 87 229 415 6,403 -4.4% 6,120 Operating First 12 Integration Exit units Operating Operating Integration Exit units Operating expenses days charges expenses expenses charges expenses
Slide 7: Net profit supported by tax credit in foreign locations
Net profit supported by tax credit in foreign locations Operating profit/loss & Net profit/loss Operating profit of €116m in Q3 2010 in € m 1,130 1,173 Tax credit of €19m in foreign locations Post-tax profit of €135m 9m 2010 EPS of €0.99 Revised financial outlook for Eurohypo will result in signific
Slide 8: Q3 2010 – Core Bank with continued profitability
Q3 2010 – Core Bank with continued profitability Commerzbank Core Bank Optimization Downsizing Portfolio Central & Eastern Corporates & Asset Based Private Customers Mittelstandsbank Restructuring Europe Markets Finance Unit Operating profit/loss1) Operating profit/loss in € m in € m 570 1,298 -1,15
Slide 9: Private Customers – integration well under way
Private Customers – integration well under way Key achievements Operating profit › Operating profit achieved - notwithstanding in € m restructuring › Stable number of 11 million customers › Strong market position across all sub-segments 72 143 › Brand migration successfully completed 9M 2009 9M 2010
Slide 10: Mittelstandsbank – main profit driver
Mittelstandsbank – main profit driver Key achievements Operating profit MSB impressively resilient during the crisis and in € m consistently delivering strong results Leading SME franchise in Germany with densest branch 1,147 network 506 Stable client base Significant reduction of concentration risk
Slide 11: Mittelstandsbank – leading market position after integration of Dresdner Bank
Mittelstandsbank – leading market position after integration of Dresdner Bank Small Caps Mid Caps Large Caps (turnover € 2.5-12.5m) (turnover € 12.5 - 250m) (turnover > € 250m) ~18-20% ~11% ~12% ~6% ~7% Market share ~4% 2008 2010 2008 2010 2008 2010 Number of ~28,000 ~29,000 ~1,400 client groups Def
Slide 12: Central & Eastern Europe – demanding environment
Central & Eastern Europe – demanding environment Key achievements Operating profit in € m Strong underlying performance of BRE Bank Portfolio restructuring at Bank Forum in progress More than 4 million customers; 360,000 new customers since January 2010 (+ 10%) -18 -191 Value drivers 9M 2009 9M 2010
Slide 13: Corporates & Markets – “the German investment bank”
Corporates & Markets – “the German investment bank” Key achievements Operating profit › Client centric business model implemented, product provider in € m for Group’s franchise › Significantly improved risk profile and reduced earnings 554 volatility › Top German Equity, FIC & Corporate Finance hous
Slide 14: Asset Based Finance – successful downsizing and de-risking
Asset Based Finance – successful downsizing and de-risking Key achievements Operating profit in € m › ABF division vigorously restructured and refocused since 2008 › Asset volume and risk reduced despite extremely challenging conditions -161 -738 › Integration of Ship Finance activities 9M 2009 9M 2
Slide 15: Further reduction of CRE and Public Finance portfolios
Further reduction of CRE and Public Finance portfolios CRE new business volume (Assets in € bn)1) Public Finance new business volume (Assets in € bn)2) 37 20 14 3 4 4 ~0 ~0 2007 2008 2009 Ytd 2010 2007 2008 2009 Ytd 2010 CRE portfolio development (EaD in € bn)1) Public Finance portfolio development
Slide 16: Portfolio Restructuring Unit – value maximization
Portfolio Restructuring Unit – value maximization Key achievements Operating profit in € m › Balance sheet reduction by more than 50% since Dec 2009 570 › Actively managed and downsized structured credit -1,153 portfolio – in line with value maximization › Solid performance with €570m operating prof
Slide 17: Tier 1 ratio further improved
Tier 1 ratio further improved Total Assets RWA Basel II - Tier 1 ratio in € bn in € bn in % Decrease by end of September Ongoing active management in Further improved due to m-t-m effects in derivatives reducing RWA -19% +4.1ppt 1,046 11.2 3) 10.8 2) Core Tier 1 898 9.9% 848 Core Tier 1 -17% 7.1 tar
Slide 18: Commerzbank’s next steps
Commerzbank’s next steps Targets for 2010 exceeded Targets for 2011 Longer-term targets (2012 roadmap) Profitable core bank Private Customers > €4 bn Group operating profit H1 integration pre regulatory effects under stable MSB continues to contribute market conditions significantly to overall group
Slide 19: Impact of Basel III RWA effects under control
Impact of Basel III RWA effects under control – active management compensates regulatory effects Target capital ratios Basel III impact on Commerzbank RWA impact from regulatory changes of ~€75 bn expected, thereof ~€8 bn capital neutral Core Tier 1 ~€ 30bn of potential RWA increase from Basel III h
Slide 20: Germany is the economic engine of the Eurozone
Germany is the economic engine of the Eurozone Status quo 2010 2011 – 2012 expectation Germany: the largest and most › Germany recovering strongly from › Recovery will continue, no double dip dynamic economy in the Eurozone financial crisis expected in the US or in the Eurozone Stable economic situa
Slide 21: Wide range of options for payback of SoFFin funds
Wide range of options for payback of SoFFin funds Capital overview (€m) Sep, 30th 2010 Core equity 1 13,169 Retained Capital Silent Participations 17,178 earnings increase Investors’ capital ex MI 30,347 Minority interests (IFRS) 2 773 Deductions 3 -3,477 Sale of Capital Tier 1 hybrid capital 3,774
Slide 22: Commerzbank expects full year 2010 net profit of more than € 1bn
Commerzbank expects full year 2010 net profit of more than € 1bn Commerzbank benefiting from the strong German economy Main focus areas 2011: > PC – H1 Integration, H2 reaping the synergies of a lower cost base > MSB – set to grow by leveraging strong market leader position > Risk reduction – furthe
Slide 23: Outlook – Commerzbank is well on track to achieve its 2012 goals
Outlook – Commerzbank is well on track to achieve its 2012 goals Measures Main P&L items Targets 2010 vs. 2009 2012 vs. 2010 Enhanced Operating I Revenues Profit profitability >€4bn II Synergy Operating CIR realization expenses <40% III Risk LLP reduction Net RoE Net RoE >12% Eric Strutz CFO Fra
Slide 24: Appendix
Appendix Eric Strutz CFO Frankfurt January 19th, 2011 23
Slide 25: Commerzbank Group
Commerzbank Group Q1 Q2 Q3 9M Q4 Q1 Q2 Q3 9M in € m 2009 2009 2009 2009 2009 2010 2010 2010 2010 Net interest income 1,692 1,838 1,769 5,299 1,890 1,888 1,859 1,628 5,375 Provisions for loan losses -844 -993 -1,053 -2,890 -1,324 -644 -639 -621 -1,904 Net interest income after provisions 848 845 716
Slide 26: Private Customers
Private Customers Q1 2009 Q2 2009 Q3 2009 9M 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 9M 2010 in € m Net interest income 551 551 527 1,629 533 496 491 506 1,493 Provisions for loan losses -50 -54 -70 -174 -72 -66 -70 -64 -200 Net interest income after provisions 501 497 457 1,455 461 430 421 442 1,293 N
Slide 27: Mittelstandsbank
Mittelstandsbank Q1 2009 Q2 2009 Q3 2009 9M 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 9M 2010 in € m Net interest income 547 542 503 1,592 556 518 554 496 1,568 Provisions for loan losses -90 -236 -330 -656 -298 -161 -94 78 -177 Net interest income after provisions 457 306 173 936 258 357 460 574 1,391 N
Slide 28: Central and Eastern Europe
Central and Eastern Europe Q1 2009 Q2 2009 Q3 2009 9M 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 9M 2010 in € m Net interest income 164 163 160 487 178 159 161 164 484 Provisions for loan losses -173 -202 -141 -516 -296 -94 -92 -127 -313 Net interest income after provisions -9 -39 19 -29 -118 65 69 37 171
Slide 29: Corporates & Markets
Corporates & Markets Q1 2009 Q2 2009 Q3 2009 9M 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 9M 2010 in € m Net interest income 177 196 263 636 144 212 204 133 549 Provisions for loan losses -254 33 -43 -264 -25 19 1 -17 3 Net interest income after provisions -77 229 220 372 119 231 205 116 552 Net commissi
Slide 30: Asset Based Finance
Asset Based Finance Q1 2009 Q2 2009 Q3 2009 9M 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 9M 2010 in € m Net interest income 259 328 249 836 265 297 320 274 891 Provisions for loan losses -207 -359 -371 -937 -651 -325 -354 -493 -1,172 Net interest income after provisions 52 -31 -122 -101 -386 -28 -34 -219
Slide 31: Portfolio Restructuring Unit
Portfolio Restructuring Unit Q1 2009 Q2 2009 Q3 2009 9M 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 9M 2010 in € m Net interest income 72 65 52 189 63 23 10 29 62 Provisions for loan losses -71 -169 -98 -338 11 -22 -28 -2 -52 Net interest income after provisions 1 -104 -46 -149 74 1 -18 27 10 Net commissio
Slide 32: Others & Consolidation
Others & Consolidation Q1 2009 Q2 2009 Q3 2009 9M 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 9M 2010 in € m Net interest income -78 -7 15 -70 151 183 119 26 328 Provisions for loan losses 1 -6 0 -5 7 5 -2 4 7 Net interest income after provisions -77 -13 15 -75 158 188 117 30 335 Net commission income -83
Slide 33: Group equity definitions
Group equity definitions Reconciliation of equity definitions Equity basis for RoE Equity definitions in € m Sep 2010 Subscribed capital 3,063 Capital reserve 1,312 Retained earnings 7,948 Silent participations SoFFin/Allianz 17,178 Currency translation reserve -327 Consolidated P&L 1,173 Investors‘
Slide 34: Balance Sheet Leverage Ratio
Balance Sheet Leverage Ratio (in € m) 31.12.2009 30.09.2010 Equity 26,577 28,074 Total Assets 844,103 848,313 Derivatives netting -6,352 -6,029 Trading assets / liabilities netting -193,004 -226,925 Deferred taxes netting -2,586 -1,780 Other assets / liabilities netting -7,893 -6,017 Total Adjusted
Slide 35: 2010 funding needs fulfilled by end of Q3
2010 funding needs fulfilled by end of Q3 in € bn 2010 Funding Funding › Funding needs 2010 fulfilled with total plan plan capital markets issuance of €14.1 bn ~ 48 33 - 36 12 - 15 15 11/3 /3 › Funding supported through strong retail and private placement franchise 2/3 2/3 › Successful 10 year unsec
Slide 36: Average maturity of unsecured issues lengthened in 2010
Average maturity of unsecured issues lengthened in 2010 Unsecured Funding Jan. – Sep. 2010: €6.5 bn Covered Bonds Jan. – Sep. 2010: €7.6 bn in € bn in € bn Lettres de Gage Unsecured Jumbo Mortgage 0.75 Benchmarks Pfandbriefe 2.0 Public Sector 1.7 (incl. Taps) Pfandbriefe Private 1.2 Placements 2.3 A
Slide 37: 2011 funding plan: maturing debt exceeds planned new issuance
2011 funding plan: maturing debt exceeds planned new issuance Unsecured Covered Bonds Focus on maturity extension Mortgage and public sector Pfandbriefe as well as Lettres Diversification targets (USD Unsecured de Gage issued by Eurohypo issuance programme in ~ 50% preparation) Reduced funding needs
Slide 38: PRU Structured Credit by Business Segment - Sept 2010
PRU Structured Credit by Business Segment - Sept 2010 Breakdown by asset and rating classes Details & Outlook Continue exits focussing increasingly on lower grade product AAA 24% if liquidity returns Overall the bank expects write-ups over the residual life of AA 16% these assets, with future writed
Slide 39: CDA and Counterparty Risk from Monolines
CDA and Counterparty Risk from Monolines Development of Counterparty Default Adjustments (CDA)1) Net Counterparty Risk from Monolines in € m As of 09/2010 in € bn CDA Total CDA-Other CDA-Monolines CDA Change (positive figure = loss) CDA CDA ratio for Monoline in 2010 positions at 46% YTD: 1,848 616
Slide 40: Leveraged Acquisition Finance (LAF)
Leveraged Acquisition Finance (LAF) Overall portfolio Portfolio details* As of Sept. 2010 In Q1-Q3 2010 the portfolio was characterized by prepayments Exposure at Default in € bn and amendments of existing transactions as well as by the funding of new transactions. The LAF market has gathered moment
Slide 41: Default Portfolio (as of Sep. 30th, 2010)
Default Portfolio (as of Sep. 30th, 2010) Default portfolio and coverage ratios by segment €m – exclusive /inclusive GLLP Group 1 21,889 85%/91% 19,928 9,007 9,522 1,399 PC 1,891 83%/96% 1,816 678 /894/244 MSB 3,762 77%/86% 3,217 2,040 849 328 CEE 2,332 97%/105% 2,439 1,340/921/178 C&M 2,389 36%/43%
Slide 42: Loan to Value figures in the CRE business (as of Sep. 30th, 2010)
Loan to Value figures in the CRE business (as of Sep. 30th, 2010) Loan to Value – UK 1 Loan to Value – Spain 1 stratified representation stratified representation EaD UK EaD Spain total total > 100 % 3 % (5 %) > 100 % 1 % (1 %) €8bn €5bn 80 % – 100 % 5 % (8 %) 80 % – 100 % 4 % (4 %) 60 % – 80 % 12 %
Slide 43: Risk provisions
Risk provisions Specific provisions for loan losses ≥ € 10 m Individual Other cases ≥€ 10m ≥€ 20m ≥€ 50m cases <€ 10m <€ 20m <€ 50m ≥€10m total Net Net Number Net Number Net Number Net Number Net LLP LLP LLP of LLP of LLP of LLP of total total total commit- total commit- total commit- total commit-
Slide 44: Eric Strutz CFO Frankfurt January 19th, 2011
Eric Strutz CFO Frankfurt January 19th, 2011 43
Slide 45: Eric Strutz CFO Frankfurt January 19th, 2011
Eric Strutz CFO Frankfurt January 19th, 2011 44
Slide 46: Eric Strutz CFO Frankfurt January 19th, 2011
Eric Strutz CFO Frankfurt January 19th, 2011 45
Slide 47: For more information, please contact Commerzbank´s IR team
For more information, please contact Commerzbank´s IR team: Jürgen Ackermann (Head of Investor Relations) ir@commerzbank.com P: +49 69 136 22338 www.ir.commerzbank.com M: juergen.ackermann@commerzbank.com Equity IR Financial Reporting / Fixed Income Strategic Research Michael H. Klein (Head of Equit
Slide 48: Disclaimer
Disclaimer Investor Relations This presentation contains forward-looking statements. Forward-looking statements are statements that are not historical facts; they include statements about Commerzbank’s beliefs and expectations and the assumptions underlying them. These statements are based on plans,
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