Commerzbank Ag · XETR:CBK
Commerzbank — FY2018 Earnings Presentation
47 slides from Commerzbank's earnings presentation, Feb 14, 2019
Slide 1: Successful first half of Commerzbank 4.0 – net result of €865m
Commerzbank 4.0 simple – digital – efficient Successful first half of Commerzbank 4.0 – net result of €865m Analyst conference – Q4 2018 / FY 2018 preliminary and unaudited results Stephan Engels | CFO | Frankfurt | 14 February 2019 All figures in this presentation are subject to rounding
Slide 2: Growth on the back of successful strategy implementation
Commerzbank 4.0 simple – digital – efficient Growth on the back of successful strategy implementation Commerzbank 4.0 drives… ... business model transformation … … and growth in core segments based on high quality balance sheet Simple PSBC PSBC › We will focus on businesses in two › Consumer Finance
Slide 3: Significant progress in digitalisation – roll out of new delivery model
Commerzbank 4.0 simple – digital – efficient Significant progress in digitalisation – roll out of new delivery model Digitalising our core processes – our roadmap to a digital enterprise Achieved digitalisation ratio 75% 80% Target ratio 2020 2019 59% 48% Campus 2.0 2018 36% 2017 Digital Campus 2016
Slide 4: Sound and robust compliance framework established
Commerzbank 4.0 simple – digital – efficient Sound and robust compliance framework established – Commerzbank recognised as reliable partner Initiatives to strengthen Compliance 2015 2016 2017 2018 2019 2020 › Stringent implementation of the “Three Lines of Defense” model and a culture of integrity N
Slide 5: Full year operating profit of €1.2bn and net result of €865m
Commerzbank 4.0 simple – digital – efficient Full year operating profit of €1.2bn and net result of €865m Highlights 2018 Improved underlying revenues and benign risk result › FY underlying revenues increased by 5% vs. 2017 › Q4 underlying revenues remain stable vs. Q3 despite challenging markets ›
Slide 6: Exceptional revenue items
Commerzbank 4.0 simple – digital – efficient Exceptional revenue items 2017 Revenues 2018 Revenues (€m) (€m) › Hedging & valuation adjustments -24 › Hedging & valuation adjustments 108 108 › 1 Q1 Polish group insurance business (PSBC) 52 › PPA Consumer Finance (PSBC) -27 › Hedging & valuation adjust
Slide 7: Key financial figures at a glance
Commerzbank 4.0 simple – digital – efficient Key financial figures at a glance Group Financial Results Group Capital2 Exceptional Revenue Items Operating result B3 CET1 ratio fully phased-in (€m) 1,245 (%) 1,149 13.3 12.9 557 1,323 592 -78 FY 2017 FY 2018 01 Jan 18 31 Dec 18 Net result1 Leverage rat
Slide 8: Revenues and operating results of Commerzbank divisions
Commerzbank 4.0 simple – digital – efficient Revenues and operating results of Commerzbank divisions Private and Small Business Customers Corporate Clients (€m) (€m) 4,823 4,803 3,613 210 3,451 Exceptional Revenue Items 29 4,613 4,847 3,584 3,495 Revenues Revenues -44 -43 FY 2017 FY 2018 FY 2017 FY
Slide 9: Operating result with substantially increased revenue quality
Commerzbank 4.0 simple – digital – efficient Operating result with substantially increased revenue quality Group operating result Group P&L (€m) in €m Q4 2017 Q3 2018 Q4 2018 FY 2017 FY 2018 609 Revenues 2,105 2,140 2,035 8,764 8,570 Exceptional items -60 18 -115 557 -78 Revenues excl. exceptional i
Slide 10: Positive trajectory of NII throughout 2018 – reflecting growth in PSBC and CC
Commerzbank 4.0 simple – digital – efficient Positive trajectory of NII throughout 2018 – reflecting growth in PSBC and CC Net Interest Income (excluding exceptional items) (€m) 1,243 1,254 1,207 105 80 1,124 94 ACR/O&C 57 466 486 444 CC 425 PSBC 643 668 672 688 Q1 18 Q2 18 Q3 18 Q4 18 Loans and dep
Slide 11: Cost development in line with FY guidance
Commerzbank 4.0 simple – digital – efficient Cost development in line with FY guidance 2017 vs. 2018 cost transition based on restatement as of Jan 15, 2019 Personnel expenses (€m) Operating expenses 25 16 49 6,879 6,834 66 13 3,441 3,493 3,438 3,341 2017 Costs of Regulatory & Compulsory Cost Other
Slide 12: Further cost savings through increased efficiency and FTE reductions
Commerzbank 4.0 simple – digital – efficient Further cost savings through increased efficiency and FTE reductions Drivers of cost development (€bn) 7.1 0.2 6.9 0.2 0.2 6.5 0.1 0.1 2017 EMC disposal 2018 FTE reduction Efficiencies new Other cost Cost inflation 2020 IT delivery model management and gr
Slide 13: Continued low risk result
Commerzbank 4.0 simple – digital – efficient Continued low risk result Risk Result in €m Risk Result (Provisions for loan losses in 2017) Risk Result divisional splitQ3 2018 Q4 2017 Q4 2018 FY 2017 FY 2018 Private and Small Business Customers -24 -69 -49 -154 -233 (€m) Corporate Clients -172 -60 -71
Slide 14: Private and Small Business Customers: net new customer acquisition on target
Commerzbank 4.0 simple – digital – efficient Private and Small Business Customers: net new customer acquisition on target – lower securities volume due to weak Q4 markets Net new customers (GER) Assets under Control (GER) Targets Loans (m cumulative) (€bn eop) Deposits Securities +1.0m +18bn +46bn 2
Slide 15: Private and Small Business Customers: underlying revenue growth in 2018
Commerzbank 4.0 simple – digital – efficient Private and Small Business Customers: underlying revenue growth in 2018 Operating result Segmental P&L (€m) 380 in €m Q4 2017 Q3 2018 Q4 2018 FY 2017 FY 2018 Revenues 1,188 1,204 1,163 4,823 4,803 o/w Private Customers 598 610 581 2,243 2,392 o/w Small Bu
Slide 16: Corporate Clients: Further customer growth and increased loan volume
Commerzbank 4.0 simple – digital – efficient Corporate Clients: Further customer growth and increased loan volume Net new customers Revenues/RWA1 Loan Volume Corporates2 (k cumulative) (%) (€bn) +3bn +1.1k +30bp +20bp +3.5k >10.0 4.2 +7bn >85 >9.4 8.9 >83 82 3.9 3.9 +4.1k 3.8 3.7 78 5.4 75 1.3 2016
Slide 17: Corporate Clients: solid result considering ongoing margin pressure
Commerzbank 4.0 simple – digital – efficient Corporate Clients: solid result considering ongoing margin pressure Operating result Segmental P&L (€m) in €m Q4 2017 Q3 2018 Q4 2018 FY 2017 FY 2018 Revenues 893 865 808 3,613 3,451 o/w Mittelstand 463 456 449 1,864 1,766 o/w International Corporates 215
Slide 18: Asset & Capital Recovery: operating result driven by valuation effects
Commerzbank 4.0 simple – digital – efficient Asset & Capital Recovery: operating result driven by valuation effects Operating result Segmental P&L (€m) 60 in €m Q4 2017 Q3 2018 Q4 2018 FY 2017 FY 2018 16 14 Revenues 24 28 -20 170 114 Revenues excl. exceptional items 54 2 22 75 103 Risk result (2017:
Slide 19: Capital ratio of 12.9% due to growth and increased capital deductions
Commerzbank 4.0 simple – digital – efficient Capital ratio of 12.9% due to growth and increased capital deductions RWA development by RWA classification Transition of CET1 ratio (€bn eop) (%) 178 180 171 12 12 13 21 Market Risk 22 21 Operational Risk 13.3 2 13.2 Pro forma IFRS 9 effect 0.1 Credit Ri
Slide 20: Objectives and expectations for 2019
Commerzbank 4.0 simple – digital – efficient Objectives and expectations for 2019 2019 – Outlook We continue our growth strategy and expect higher underlying revenues We target a cost base below €6.8bn We expect a Risk Result not below €550m We plan to maintain a dividend at level comparable to 2018
Slide 21: We continue with the implementation of Commerzbank 4.0 – Strategic outlook towards 2020
Commerzbank 4.0 simple – digital – efficient We continue with the implementation of Commerzbank 4.0 – Strategic outlook towards 2020 We pursue our strategy based on a simplified business model and high quality balance sheet We continue our growth strategy in a challenging macro environment – targeti
Slide 22: simple – digital – efficient
Commerzbank 4.0 simple – digital – efficient Commerzbank 4.0 simple – digital – efficient Stephan Engels | CFO | Frankfurt | 14 February 2019 21
Slide 23: Appendix
Commerzbank 4.0 simple – digital – efficient Appendix Commerzbank Group P&L Tables Commerzbank financials at a glance 24 Commerzbank Group 36 Key figures Commerzbank share 25 Private and Small Business Customers 37 Key execution indicators 26 Corporate Clients 38 Digitalisation progress 27 Asset & C
Slide 24: German economy 2019 – ongoing upswing
Commerzbank 4.0 simple – digital – efficient German economy 2019 – ongoing upswing › In the course of 2018 the German economy significantly lost momentum, and the ongoing downward trend of the sentiment indicators signals that this soft DAX (avg. p.a.) patch is not yet over. 12,272 12,431 11,800 Cur
Slide 25: Commerzbank financials at a glance
Commerzbank 4.0 simple – digital – efficient Commerzbank financials at a glance Group Q4 2017 Q3 2018 Q4 2018 FY 2017 FY 2018 Operating result (€m) 122 346 240 1,149 1,245 Net result (€m) 75 218 113 128 865 CET1 ratio Basel 3 fully phased-in (%)¹ 14.1 13.2 12.9 14.1 12.9 Total assets (€bn) 452 493 4
Slide 26: Key figures Commerzbank share
Commerzbank 4.0 simple – digital – efficient Key figures Commerzbank share Figures per share Operating result per share (€) EPS 1.1 1.0 0.9 0.7 0.2 0.1 FY 2016 FY 2017 FY 2018 ytd as of 31 Dec 2016 31 Dec 2017 31 Dec 2018 Number of shares issued (in m) 1,252.4 1,252.4 1,252.4 Market capitalisation (
Slide 27: Key Execution Indicators
Commerzbank 4.0 simple – digital – efficient Key Execution Indicators 2016 2018 Target 2019 Target 2020 2.0 Net new customers 1.5 1.0 (GER)1 (m cumulated) 0.1 +0.9 >390 >400 PSBC Assets under Control 382 (GER) 336 (€bn eop) +46 Growth 8.9 >9.4 >10.0 Net new customers2 +7.6 (k cumulated) 1.3 CC >85 8
Slide 28: Digitalisation progress in Commerzbank 4.0
Commerzbank 4.0 simple – digital – efficient Digitalisation progress in Commerzbank 4.0 Digitalisation of end-to-end processes in Digital Campus Master Journeys Payment Transactions / Trade Finance Loans Asset Management 2019 2019 2020 Accounts Accounts & Credit Securities Credit SME & CLM Retail CL
Slide 29: Continuing loan and deposit growth
Commerzbank 4.0 simple – digital – efficient Continuing loan and deposit growth PSBC Loan volume Corporate Clients Loan volume (€bn) Deposit volume (€bn) Deposit volume 141 145 112 115 98 97 83 83 Sep-18 Dec-18 Sep-18 Dec-18 Highlights › Loan growth in Private and Small Business Customers mainly dri
Slide 30: Significant NII potential in scenario of rising interest rates
Commerzbank 4.0 simple – digital – efficient Significant NII potential in scenario of rising interest rates 100 bp parallel up-shift in rates yield curve Scenario impact on NII (as of 31 December 2018, in %) (€m) 900-1,000 2.0 1.5 500-550 1.0 0.5 0.0 -0.5 0Y 2Y 4Y 6Y 8Y 10Y Year 1 Year 4 Highlights
Slide 31: Capital markets funding activities
Commerzbank 4.0 simple – digital – efficient Capital markets funding activities Funding structure1 Group Funding activities 20182 (as of 31 December 2018) Subordinated debt Subordinated debt Other Senior Unsecured 0.7bn 14% 0.6bn Pfandbriefe Promissory notes 12% Non-Preferred senior 1.5bn 4.0bn ~€67
Slide 32: Rating overview Commerzbank
Commerzbank 4.0 simple – digital – efficient Rating overview Commerzbank As of 14 February 2019 Bank Ratings S&P Moody’s Fitch Scope Counterparty Rating/ Assessment1 A A1/ A1 (cr) A- (dcr) - Deposit Rating2 A- negative A1 stable A- - Issuer Credit Rating (long-term debt) A- negative A1 stable BBB+ s
Slide 33: IAS 19: Development of pension obligations
Commerzbank 4.0 simple – digital – efficient IAS 19: Development of pension obligations Pension obligations (gross) Cumulated actuarial gains and losses Discount rate in %2 (€m) Cumulated OCI effect1 3.9 2.3 2.6 1.8 1.9 1.9 -713 -1,279 -1,067 -1,300 -1,446 -1,586 -7,175 -8,547 -9,201 -9,421 -9,2273
Slide 34: Strengthening of USD with net negative impact on capital ratio
Commerzbank 4.0 simple – digital – efficient Strengthening of USD with net negative impact on capital ratio QoQ Change in FX capital position 146.7 9.7 Other 10.4 -85 FX rates 09/18 12/18 GBP 11.5 -62 -5 PLN EUR/ GBP 0.887 0.895 USD 26.4 -13 EUR/ PLN 4.277 4.301 EUR +309 +10 EUR/ USD 1.158 1.145 88.
Slide 35: Residential mortgage business vs. property prices
Commerzbank 4.0 simple – digital – efficient Residential mortgage business vs. property prices German residential properties HAM Overall mortgage portfolio COL FRA › Growing mortgage volume with a very good risk quality: BER – 12/15: EaD €62.6bn – RD 12bp MUC 300 Germany – 12/16: EaD €66.8bn – RD 10
Slide 36: Leading German provider of Renewable Energy Project Finance
Commerzbank 4.0 simple – digital – efficient We are a leading German provider of Renewable Energy Project Finance funding and will become Germany’s most sustainable commercial bank Renewable Energy Project Finance Portfolio Portfolio Breakdown (Exposure at Default, €bn end of period) 1% +20% 19% 3.5
Slide 37: Commerzbank Group
Commerzbank 4.0 simple – digital – efficient Commerzbank Group Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY €m 2017 2017 2017 2017 2017 2018 2018 2018 2018 2018 Total clean revenues 2,160 1,956 1,926 2,165 8,208 2,216 2,160 2,122 2,151 8,648 Exceptional items 108 8 502 -60 557 1 18 18 -115 -78 Total revenues 2,268
Slide 38: Private and Small Business Customers
Commerzbank 4.0 simple – digital – efficient Private and Small Business Customers Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY €m 2017 2017 2017 2017 2017 2018 2018 2018 2018 2018 Total clean revenues 1,165 1,108 1,123 1,216 4,613 1,211 1,225 1,226 1,185 4,847 Exceptional items - 1 237 -29 210 25 -25 -22 -23 -44 T
Slide 39: Corporate Clients
Commerzbank 4.0 simple – digital – efficient Corporate Clients Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY €m 2017 2017 2017 2017 2017 2018 2018 2018 2018 2018 Total clean revenues 953 853 882 896 3,584 872 916 850 857 3,495 Exceptional items 32 -8 9 -3 29 -1 -8 15 -49 -43 Total revenues 985 845 891 893 3,613 871
Slide 40: Asset & Capital Recovery
Commerzbank 4.0 simple – digital – efficient Asset & Capital Recovery Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY €m 2017 2017 2017 2017 2017 2018 2018 2018 2018 2018 Total clean revenues 24 22 -25 54 75 68 10 2 22 103 Exceptional items 91 16 18 -29 96 -23 52 26 -43 12 Total revenues 115 39 -7 24 170 45 62 28 -20
Slide 41: Others & Consolidation
Commerzbank 4.0 simple – digital – efficient Others & Consolidation Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY €m 2017 2017 2017 2017 2017 2018 2018 2018 2018 2018 Total clean revenues 18 -28 -54 -1 -65 65 9 43 86 204 Exceptional items -15 -1 238 1 222 - - -1 -1 -2 Total revenues 3 -29 184 - 158 66 8 43 85 202 o
Slide 42: mBank
Commerzbank 4.0 simple – digital – efficient mBank Part of Segment Private and Small Business Customers Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY €m 2017 2017 2017 2017 2017 2018 2018 2018 2018 2018 Total clean revenues 241 243 254 260 998 253 265 265 257 1,040 Exceptional items - - - - - 52 - - -1 52 Total rev
Slide 43: Exceptional Revenue Items – Commerzbank Group
Commerzbank 4.0 simple – digital – efficient Commerzbank Group Exceptional Revenue Items Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY €m 2017 2017 2017 2017 2017 2018 2018 2018 2018 2018 Exceptional Revenue Item s 108 8 502 -60 557 1 18 18 -115 -78 o/w Net interest income -9 -5 -24 -37 -75 -26 -17 -20 -17 -80 o/w
Slide 44: Group equity composition
Commerzbank 4.0 simple – digital – efficient Group equity composition Capital Capital Capital Ratios Ratios Ratio Q3 2018 Q4 2018 Q4 2018 Q4 2018 FY 2018 FY 2018 End of period End of period Average €bn €bn €bn % % % Common equity tier 1 B3 capital 23.5 23.2 23.4 1 Op. RoCET 4.1% 5.4% CET1 ratio 12
Slide 45: Glossary – Capital Allocation / RoE, RoTE & RoCET1 Calculation
Commerzbank 4.0 simple – digital – efficient Glossary – Capital Allocation / RoE, RoTE & RoCET1 Calculation › Amount of average capital allocated to business segments is calculated by multiplying the segments current YtD average RWA (PSBC €39.6bn, CC €92.8bn, O&C €27.2bn, ACR €14.5bn) by a ratio of
Slide 46: For more information, please contact Commerzbank's IR team
Commerzbank 4.0 simple – digital – efficient For more information, please contact Commerzbank’s IR team Christoph Wortig (Head of Investor Relations) P: +49 69 136 52668 Mail: ir@commerzbank.com M: christoph.wortig@commerzbank.com www.ir.commerzbank.com Ansgar Herkert (Head of IR Communications) P:
Slide 47: Disclaimer
Commerzbank 4.0 simple – digital – efficient 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 the