Commerzbank AG · XETR:CBK
Commerzbank — Q1 2008 Earnings Presentation
34 slides from Commerzbank's earnings presentation, May 7, 2008
Slide 1: Analyst conference – Q1 2008 results
Commerzbank Analyst conference – Q1 2008 results Dr. Eric Strutz, Chief Financial Officer Frankfurt, May 7th, 2008
Slide 2: Solid Q1 performance in challenging environment
Solid Q1 performance in challenging environment Q1 2008 vs. Q1`07 vs. Q4`07 Revenues1, in € m 1,757 - 22.5% + 12.1% Operating profit, in € m 435 - 52.1% + 157.4% Operating RoE, in % 12.0 - 15.1ppts + 7.0ppts EPS, in € 0.43 - 53.8% + 38.7% 1 after LLP • Strong emphasis on growing the stable client dr
Slide 3: Net interest income w/o PFT grew by 10% year-on-year
Net interest income w/o PFT grew by 10% year-on-year Net interest income in € m 1,079 1,056 992 997 977 • All divisions apart from PFT achieved strong NII results 1,045 1,003 999 973 1,022 • Negative contribution from PFT • Deposit growth of 26% y-o-y • Planned loan volume reduction in PBC and PFT •
Slide 4: LLP guidance for 2008 unchanged at €700m
LLP guidance for 2008 unchanged at €700m Loan loss provisions in € m • Net LLP for 2008 remains at €700m (w/o Bank Forum) 175 • Q1 figure on a pro-rata basis 160 151 • Reduced LLPs in PBC due to planned reduction of loan book 107 • Ongoing low credit costs in MSB thanks to favorable German economy 6
Slide 5: Commission income maintained at a strong level
Commission income maintained at a strong level Commission income in € m 847 810 96 758 735 123 17 • Satisfactory fee income given 751 73 718 732 market turmoil and two fewer 684 688 working days in Q1 • Commission income declined by 2.5% y-o-y (like for like) • Decrease primarily due to lower securi
Slide 6: Sales & Trading sustained at good levels
Sales & Trading sustained at good levels Trading profit in € m 381 • C&M: - Solid client-business 74 in Q1 08 301 2 - Interest Rate Trading particularly strong 307 -62 - Ongoing weak Credit 299 -128 Trading -57 235 • CRE: 181 201 - No activities in US CMBS 124 173 business 73 • PFT: - Fair value adj
Slide 7: Positive and negative one-off items partially offset one another
Positive and negative one-off items partially offset one another due to active portfolio management Net investment income in € m • Impairments on: -44 306 - US Corporate CDO 225 262 portfolio - Embedded Derivatives 195 125 -221 - US RMBS Subprime 53 - Share holding in EADS -248 -123 -26 -291 • Net g
Slide 8: ABS portfolio significantly reduced and de-risked
ABS portfolio significantly reduced and de-risked ABS Portfolio – Breakdown of Products Portfolio details as of 03/08 in € bn 5.6 • ABS portfolio reduction by €9bn since Q2 2007 • More than 40% of the ABS portfolio contains 2.1 government guaranteed bonds • Trading book reduced by €400m since Q2 200
Slide 9: Disciplined cost management
Disciplined cost management Operating expenses Personnel in € m Depreciation 488 Others 756 78 • Operating costs declined by 3% year-on-year 1,360 1,399 1,324 1,283 1,322 • Personnel expenses decreased by 7% mainly due to deconsolidation of Jupiter • Other expenses up by 6% driven by growth initiati
Slide 10: Net profit satisfactory level given extraordinary market environment
Net profit satisfactory level given extraordinary market environment Operating profit & Net profit Net profit Operating profit in € m Impairments and portfolio realignment at Essen Hyp 1,075 34 749 • High profit level in the underlying business lines 291 314 520 • Op. RoE at 12.0% 216 398 908 • Q1 t
Slide 11: Strong capital position maintained
Strong capital position maintained Tier Tier 1 Capital I ratio Tier 1 target range in % • Strong capital base as Basel I Basel II competitive advantage 7.5 • Applying Basel II, RWA are down 6.8 6.9 6.9 by 11% q-o-q to €212bn 6.6 • Tier I ratio at 7.5% • Continue to prudently manage our balance sheet
Slide 12: Strong performance of stable franchise business, particular areas hit by crisis
Strong performance of stable franchise business, particular business areas negatively impacted by financial crisis Private & Business Customers Mittelstandsbank Central & Eastern Europe in € m in € m 385 in € m 100 232 145 147 189 205 200 123 104 85 67 77 64 73 59 38 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q1
Slide 13: Private & Business Customers on par with record level of Q1 2007
Private & Business Customers on par with record level of Q1 2007 Main P&L items Operating profit in € m Q1`07 Q4`07 Q1`08 in € m Net interest income 319 340 329 Risk provisioning -73 -43 -40 147 Commission income 430 374 395 145 104 85 Trading profit 1 1 -1 67 Net investment income 2 -9 -4 Operating
Slide 14: Excellent start for Mittelstand into 2008
Excellent start for Mittelstand into 2008 Main P&L items Operating profit in € m Q1`07 Q4`07 Q1`08 in € m 385 Net interest income 250 290 289 100 Risk provisioning -19 48 -11 232 Commission income 144 130 145 189 205 200 Trading profit 0 0 5 Net investment income 0 -22 -2 Operating expenses 187 207
Slide 15: CEE driven by strong and profitable expansion of BRE
CEE driven by strong and profitable expansion of BRE Main P&L items Operating profit 1 in € m Q1`07 Q4`07 Q1`08 in € m Net interest income 83 113 122 Risk provisioning -11 -19 -17 Commission income 43 42 47 123 Trading profit 21 21 34 77 64 73 59 38 Net investment income 24 1 39 Operating expenses 8
Slide 16: US business weighs down performance of Corporates & Markets
US business weighs down performance of Corporates & Markets… Main P&L items Operating profit in € m Q1`07 Q4`07 Q1`08 in € m 209 174 Net interest income 101 98 113 110 Risk provisioning -13 -55 -52 Commission income 45 44 43 7 -16 Trading profit 289 125 220 -50 Net investment income 7 -184 -120 -156
Slide 17: Client driven business except for Credit Trading fully on track
… but client driven business except for Credit Trading fully on track Performance of product lines (indexed, Q1 2007 = 100) Interest Remarkable Rates & FX revenue growth on the back 175 of strong demand from corporate 150 clients 125 Equity 100 Derivatives Stable revenues 75 from retail clients - ov
Slide 18: Satisfactory performance of CRE given lower turnover in real estate markets
Satisfactory performance of CRE given lower turnover in real estate markets Main P&L items Operating profit in € m Q1`07 Q4`07 Q1`08 in € m Net interest income 211 216 210 Risk provisioning -39 -11 -50 212 164 153 Commission income 100 122 108 141 106 Trading profit 17 -3 2 Net investment income 0 -
Slide 19: CRE portfolio is well-diversified and robust
CRE portfolio is well-diversified and robust Total CRE loans by region (as of 31/03/2008) Loan to Value (as of 31/03/2008) 1) 2) 3) (layered representation) Spain LTV Band Germany 10% > 100% 51% UK 80% - 100% 9% 60% - 80% 12% USA USA 40% - 60% 28% 6% €74.0bn 20% - 40% 30% 0% - 20% 30% Rest of Europe
Slide 20: Performance of PFT suffered from volatile market environment
Performance of PFT suffered from volatile market environment Main P&L items Operating profit in € m Q1`07 Q4`07 Q1`08 in € m Net interest income 68 -83 -57 Risk provisioning -5 20 -5 77 18 18 Commission income -6 -5 -4 Trading profit -34 -84 -83 Net investment income 79 1 17 -53 -74 -132 Operating e
Slide 21: Growing stable client business; de-risking particular business areas
Growing stable client business; de-risking particular business areas Op. RoE Q1‘07 Q1‘08 PBC 22.9% 37.4% Continuing profitable growth Mittelstand 34.4% 34.6% Stay on top CEE 40.1% 36.3% Accelerating growth momentum C&M 31.7% -8.6% De-risking US business and credit trading CRE Tightened investment 15
Slide 22: Main takeaways
Main takeaways 1. Solid Q1 performance in challenging environment 2. Strong emphasis on growing the stable client-driven business further 3. Reducing risk in business areas affected by market turmoil 4. Further strict management of risk, capital, liquidity and costs 5. Commerzbank remains on track t
Slide 23: Appendix
Appendix 1 May 7th, 2008 22
Slide 24: Commerzbank Group Quarterly results in new Group structure
Commerzbank Group Quarterly results in new Group structure Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 M io. Eur o Net interest income 1,045 1,003 999 973 1,022 Provision f or possible loan losses -160 -151 -107 -61 -175 Net interest income af ter provisioning 885 852 892 912 847 Net commission income 8
Slide 25: Private and Business Customers Quarterly results
Private and Business Customers Quarterly results in new Group structure Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 M io. Eur o Net interest income 319 318 319 340 329 Provision f or possible loan losses -73 -66 -58 -43 -40 Net interest income af ter provisioning 246 252 261 297 289 Net commission incom
Slide 26: Mittelstand Quarterly results
Mittelstand Quarterly results in new Group structure Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 M io. Eur o Net interest income 250 263 278 290 289 Provision f or possible loan losses -19 -9 48 48 -11 Net interest income af ter provisioning 231 254 326 338 278 Net commission income 144 132 239 130 145
Slide 27: Central and Eastern Europe Quarterly results
Central and Eastern Europe Quarterly results in new Group structure Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 M io. Eur o Net interest income 83 97 103 113 122 Provision f or possible loan losses -11 -16 -10 -19 -17 Net interest income af ter provisioning 72 81 93 94 105 Net commission income 43 43 44
Slide 28: Corporates & Markets Quarterly results
Corporates & Markets Quarterly results in new Group structure Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 M io. Eur o Net interest income 101 96 78 98 113 Provision f or possible loan losses -13 -10 -57 -55 -52 Net interest income af ter provisioning 88 86 21 43 61 Net commission income 45 61 36 44 43 T
Slide 29: Commercial Real Estate Quarterly results
Commercial Real Estate Quarterly results in new Group structure Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 M io. Eur o Net interest income 211 211 220 216 210 Provision f or possible loan losses -39 -39 -26 -11 -50 Net interest income af ter provisioning 172 172 194 205 160 Net commission income 100 95
Slide 30: Public Finance & Treasury Quarterly results
Public Finance & Treasury Quarterly results in new Group structure Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 M io. Eur o Net interest income 68 11 2 -83 -57 Provision f or possible loan losses -5 -7 -4 20 -5 Net interest income af ter provisioning 63 4 -2 -63 -62 Net commission income -6 -7 -6 -5 -4 T
Slide 31: Others and Consolidation Quarterly results
Others and Consolidation Quarterly results in new Group structure Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 M io. Eur o Net interest income 13 7 -1 -1 16 Provision f or possible loan losses 0 -4 0 -1 0 Net interest income af ter provisioning 13 3 -1 -2 16 Net commission income 91 54 12 28 -2 Trading p
Slide 32: Group equity definitions
Group equity definitions Reconciliation of equity definitions Equity basis for RoE Equity definitions in € m Mar 2008 Jan-Mar 2008 Subscribed capital 1,708 1,708 Capital reserve 5,709 5,709 Retained earnings 5,969 6,020 Reserve from currency translation -30 -34 Investors‘ Capital w ithout minorities
Slide 33: For more information, please contact Commerzbank's IR team
For more information, please contact Commerzbank´s IR team: Jürgen Ackermann (Head of IR) Ute Heiserer-Jäckel Karsten Swoboda P: +49 69 136 22338 P: +49 69 136 41874 P: +49 69 136 22339 M: juergen.ackermann@commerzbank.com M: ute.heiserer-jaeckel@commerzbank.com M: karsten.swoboda@commerzbank.com Sa
Slide 34: Disclaimer
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, but no representatio