Commerzbank Ag · XETR:CBK
Commerzbank — Q2 2022 Earnings Presentation
60 slides from Commerzbank's earnings presentation, Aug 3, 2022
Slide 1: H1 operating profit of €1.3bn – FY outlook confirmed
H1 operating profit of €1.3bn – FY outlook confirmed Analyst conference – Q2 2022 3 August 2022 Commerzbank, Manfred Knof, CEO & Bettina Orlopp, CFO, Frankfurt All figures in this presentation are subject to rounding
Slide 2: Manfred Knof, CEO
Manfred Knof CEO 3 August 2022 Commerzbank, Manfred Knof, CEO, Frankfurt 1
Slide 3: Strong H1 2022 – well prepared for challenges ahead
Strong H1 2022 – well prepared for challenges ahead Revenues (€m) 5,216 4,353 Strong customer business and rising rates lift revenues by 20% H1 2021 H1 2022 Cost reduction on track despite increasing pressure from inflation – CIR of 64% in H1 (82% in H1 2021) Operating Result (€m) 1,289 Maintaining
Slide 4: Transformation of customer business fully on track
Transformation of customer business fully on track Business model transformation PSBC Business model transformation CC Branch closures completed – target of 450 branches Already 3,000 Mittelstand customers fully transferred reached to CC’s direct bank – well on track to reach 6,000 by year-end Prepa
Slide 5: ¾ of gross 10,000 FTE reductions already locked-in
¾ of gross 10,000 FTE reductions already locked-in Gross FTE reduction ~7,700 ~2,950 ~4,750 Leavers since 01/2021 Contracted leavers / Total locked-in per Q2 2022 retirement 2022-2024 3 August 2022 Commerzbank, Manfred Knof, CEO, Frankfurt 4
Slide 6: Comprehensive ESG framework with clear SBTi targets
Comprehensive ESG framework with clear SBTi targets ESG framework SBTi targets Intermediate (2030) targets set for all 7 CO 2- Our ESG framework has been finalised and intensive sectors (reduction vs. 2020) ratified Private Cement Aviation mortgages -20% -12% -57% The ESG framework codifies our targ
Slide 7: Key take-aways
Key take-aways ✓ Delivered strong financial performance in H1 ✓ Transformation progress on track ✓ Well prepared for challenges ahead We confirm our targets of a net result > €1bn and a dividend for 2022 subject to the development of the economic environment and assuming no material additional provi
Slide 8: Bettina Orlopp, CFO
Bettina Orlopp CFO 3 August 2022 Commerzbank, Bettina Orlopp, CFO, Frankfurt 7
Slide 9: Very good profitability maintained in Q2
Very good profitability maintained in Q2 Improved operating Increase in underlying Costs of €1,570m Risk result of CET1 ratio at 13.7% result of €746m driven NII to €1,441m – up include increased -€106m by YoY higher 27% YoY compulsory underlying revenues contributions of €119m Total available TLA o
Slide 10: Strong operating performance
Strong operating performance Revenues Costs Risk result (€m) Exceptional revenue items (€m) (€m) 2,795 2,422 56 1,787 1,862 111 1,743 1,570 -87 -106 2,739 2,311 1,884 -22 -464 Q2 2021 Q1 2022 Q2 2022 Q2 2021 Q1 2022 Q2 2022 Q2 2021 Q1 2022 Q2 2022 Operating result Net result1 CET1 ratio2 (€m) (€m) (
Slide 11: Exceptional items mainly TLTRO benefit
Exceptional items mainly TLTRO benefit 2021 (€m) Revenues 2022 (€m) Revenues Hedging & valuation adjustments 67 Hedging & valuation adjustments 17 Q1 184 Q1 56 PPA Consumer Finance (PSBC) -9 PPA Consumer Finance (PSBC) -6 TLTRO benefit (O&C) 126 TLTRO benefit (O&C) 45 Hedging & valuation adjustments
Slide 12: Improved NCI YoY
Improved NCI YoY Underlying net commission income (€m) 959 972 924 896 85 860 873 101 81 90 79 78 O&C 568 530 541 mBank 495 505 497 PSBC Germany CC 320 297 309 323 341 318 -13 -12 -18 -11 -11 -9 Q1 Q2 Q3 Q4 Q1 Q2 2021 2022 Highlights Q2 NCI in PSBC Germany on same level YoY – mBank maintained good t
Slide 13: Significant growth in underlying NII
Significant growth in underlying NII Underlying net interest income (ex TLTRO) (€m) 1,441 1,362 1,211 89 1,129 1,131 1,146 400 48 85 105 63 317 223 O&C 170 180 185 mBank 493 497 590 454 443 479 PSBC Germany CC 419 404 418 447 459 454 -3 Q1 Q2 Q3 Q4 Q1 Q2 2021 2022 Highlights Q2 Continued growth in m
Slide 14: High NII potential from rising rates
High NII potential from rising rates depending on behaviour of customers and competition Scenario for change in NII vs. 2021 from EUR deposits at CC and PSBC Germany (€m) ~800 ~650 Scenario based on constant deposit volume and forward rates 1 No charging of negative rates on deposits following ECB d
Slide 15: Operating costs on track – offset by increased levies
Operating costs on track – offset by increased levies Operating expenses Compulsory contributions Total expenses (€m) (€m) (€m) One-time write-off (Q2 2021) mBank Rest of Group -5.4% / -€192m -9.7% / -€308m 3,548 3,356 200 3,173 348 475 200 2,865 246 269 +31.1% / €117m 3,000 2,881 2,727 2,596 375 49
Slide 16: Risk result: €564m management overlay still available
Risk result: €564m management overlay still available Risk result Top level adjustment (TLA) (€m) (€m) 713 -149 564 +149 -228 -106 -27 Base risk Russia related TLA usage Q2 Total Q1 2022 TLA usage Q2 2022 result defaults / release / release Highlights Q2 Russia related defaults largely covered by TL
Slide 17: Risk result of -€106m reflecting low number of defaults
Risk result of -€106m reflecting low number of defaults Risk result Risk result divisional split (€m) Risk Result (€m) Q2 2021 Q1 2022 Q2 2022 H1 2021 H1 2022 Private and Small Business Customers Germany -12 -17 -46 -43 -63 mBank -50 -55 -41 -83 -97 Corporate Clients 13 -286 -52 -39 -338 -22 Others
Slide 18: Increased operating result based on higher revenues
Increased operating result based on higher revenues Group operating result Group P&L (€m) €m Q2 2021 Q1 2022 Q2 2022 H1 2021 H1 2022 Revenues 1,862 2,795 2,422 4,353 5,216 746 Exceptional items -22 56 111 162 167 Revenues excl. exceptional items 1,884 2,739 2,311 4,192 5,049 538 544 o/w Net interest
Slide 19: PSBC: stable development of loan book and deposits
PSBC: stable development of loan book and deposits Loan and securities volumes (Germany) Deposits (Germany) (€bn | eop) (€bn | eop) 150 148 146 147 149 151 340 10 13 23 325 333 16 18 22 307 319 311 29 25 32 27 24 25 Loans Securities Priced 203 206 219 210 Above allowance 192 188 (currently not price
Slide 20: Good result of PSBC Germany
Good result of PSBC Germany Operating result PSBC Germany Segmental P&L PSBC Germany (€m) €m Q2 2021 Q1 2022 Q2 2022 H1 2021 H1 2022 377 Revenues 872 1,061 1,141 1,892 2,202 Exceptional items -74 -6 22 -83 16 291 269 Revenues excl. exceptional items 946 1,067 1,119 1,975 2,186 216 o/w Private Custom
Slide 21: mBank – strong revenues offset by government measures
mBank – strong revenues offset by government measures Operating result mBank Segmental P&L mBank (€m) €m Q2 2021 Q1 2022 Q2 2022 H1 2021 H1 2022 134 95 103 Revenues 257 408 402 566 809 40 Exceptional items 3 -1 -1 3 -2 9 Revenues excl. exceptional items 254 409 402 563 811 Risk result -50 -55 -41 -8
Slide 22: CC: increase in loan and deposit volumes
CC: increase in loan and deposit volumes Loan volume Corporates Deposits (€bn | quarterly avg. | Mittelstand and International Corporates) (€bn | quarterly avg.) International Corporates 99 96 93 94 Mittelstand 90 82 82 82 81 83 83 85 39 44 49 50 48 29 28 27 29 28 29 45 € sight deposits (priced) 21
Slide 23: CC: strong operating result
CC: strong operating result Operating result Segmental P&L CC (€m) €m Q2 2021 Q1 2022 Q2 2022 H1 2021 H1 2022 Revenues 768 926 882 1,598 1,808 325 Exceptional items 11 2 -18 28 -16 Revenues excl. exceptional items 757 925 900 1,570 1,825 241 o/w Mittelstand 431 491 471 870 962 216 o/w International
Slide 24: O&C result reflects valuation swing-back from Q1
O&C result reflects valuation swing-back from Q1 Operating result Segmental P&L O&C (€m) €m Q2 2021 Q1 2022 Q2 2022 H1 2021 H1 2022 Revenues -36 400 -3 298 397 187 157 Exceptional items 38 61 108 214 169 148 Revenues excl. exceptional items -74 339 -111 84 228 o/w Net interest income 105 89 -3 190 8
Slide 25: CET1 ratio of 13.7% and buffer to MDA of ~430bps
CET1 ratio of 13.7% and buffer to MDA of ~430bps RWA development by risk types Transition of CET1 ratio (€bn | eop) Market risk (%) Operational risk Credit risk 178 178 175 175 175 175 12 11 9 10 10 9 13.6 13.5 13.7 17 19 20 20 20 20 0.2 34 33 34 33 33 35 O&C 9.4 73 72 70 70 70 70 CC 18 19 19 18 18
Slide 26: Objectives and expectations for 2022
Objectives and expectations for 2022 We expect overall Reduction of We expect a risk We expect We expect revenues to operating result around a CET1 ratio a net result of increase despite expenses on track -€700m assuming > 13% > €1bn and aim to burden from credit usage of TLA pay a dividend with hol
Slide 27: 3 August 2022 Commerzbank, Bettina Orlopp, CFO, Frankfurt
3 August 2022 Commerzbank, Bettina Orlopp, CFO, Frankfurt 26
Slide 28: Appendix
Appendix 2022 strategy KPIs 28 Commerzbank Group P&L tables Commerzbank financials at a glance 41 Commerzbank Group 51 German economy 29 Key figures Commerzbank share 42 Private and Small-Business Customers 52 Russia, Covid and risk related Loan and deposit volumes 43 mBank 53 information Corporate
Slide 29: 2022 strategy KPIs
2022 strategy KPIs KPI Q4 2020 YE 2021 Q2 2022 Target 2022 Domestic locations (#) ~800 ~550 450 450 Active digital banking users (%) 66 70 70 71 PSBC Loan and securities volumes (GER | €bn) 290 340 311 360 Net FTE reduction1 vs. YE 2020 (#) - 1,728 1,766 3,000 International locations exited (#) - 6
Slide 30: German economy 2022 – energy shock?
German economy 2022 – energy shock? DAX Current development Our expectation for 2022/23 (avg. p.a.) The outlook for the German economy depends largely on The German economy probably grew only slightly in the 15,021 whether Russian natural gas deliveries are stopped and first half of the year. This i
Slide 31: Russia net exposure reduced by 45% since February
Russia net exposure reduced by 45% since 18 February Russia exposure Net exposure (€m) 18 Feb 2022 29 Apr 2022 15 Jul 2022 Group exposure net of ECA and cash Corporates 621 580 398 held at Commerzbank reduced to €1bn – thereof at Eurasija 392 374 182 Additionally, Eurasija holds domestic Banks 528 7
Slide 32: Overall exposure and risk provisions nearly unchanged
Overall exposure and risk provisions nearly unchanged Exposure1 Risk provisions (€bn | excluding mBank) (€m | excluding mBank) 384 384 2,992 2,917 382 380 2,667 2,683 3 374 3 375 4 2,566 2,475 3 713 564 3 3 495 495 523 23 24 27 496 23 24 28 1,403 1,528 1,482 1,413 1,370 1,479 357 348 355 348 349 353
Slide 33: Chemicals & plastic
Chemicals & plastic Share of 1.3% of overall portfolio by sub-portfolios 0.6 Basic chemistry ● Basic industry (Basic, agricultural chemicals/fertilisers or industrial gases) (€bn) affected. Gas serves as a raw material/primary energy source in the production 1.0 Specialty chemicals 2.5 process. Gas-
Slide 34: Energy & utility
Energy & utility Share of 2.7% of overall portfolio by sub-portfolios 0.3 ● Utilities sector worldwide: As part of the critical infrastructure, the utilities (€bn) 0.4 Utility sector is fundamentally stable, albeit strongly affected by the erratic price 3.3 Municipal utility developments of fossil f
Slide 35: Construction & paper
Construction & paper Share of 1.1% of overall portfolio by sub-portfolios ● Construction sector: Manufacturers of energy-intensive products such as 0.8 (€bn) Construction cement, bricks, ceramics and glass are particularly affected by a lack of natural gas and/or oil. As the large companies in the i
Slide 36: Automotive
Automotive Share of 2.5% of overall portfolio by sub-portfolios ● Car parts suppliers (54% EaD) and OEM (38% EaD) with dominant EaD share. 0.5 Car parts supplier (€bn) 0.5 83% of the portfolio consists of customers with Investment grade ratings Automotive OEM ● So far robust sector with good crisis
Slide 37: Mechanical engineering
Mechanical engineering Share of 1.7% of overall portfolio by sub-portfolios 0.5 Machinery in general ● The top 10 customers account for around 20% of the EaD volume (€bn) 1.0 Wholesale machinery ● Overall stable sector due to internationalisation and very high diversification Machinery tools within
Slide 38: Residential mortgage business and property prices
Residential mortgage business and property prices German residential properties Overall mortgage portfolio (index values) ● In Q2 slightly declining mortgage volume ● Due to risk-oriented selection very 200 with unchanged risk quality: low risk density (RD) − 12/17: EaD €75.2bn – RD 9bps ● As a cons
Slide 39: Development of renewable energy portfolio
Development of renewable energy portfolio Renewable energies (RE) Global footprint of Renewable energy portfolio project finance portfolio renewable energy financing (EaD | €bn | eop) 0.5% +42.7% 5.0 4.5 4.6 4.7 22.1% 4.1 4.2 4.2 3.8 4.0 3.5 €5.0bn 58.5% 19.0% Wind onshore Wind offshore PV 2013 2014
Slide 40: Good start for sustainable products in 2022
Good start for sustainable products in 2022 Advisory products Loan products (no balance sheet impact, €bn) (with balance sheet impact, €bn) Corporate Clients Sustainable products ● Accompanied ESG bond transactions ● Renewable energy loan portfolio** (€bn) (e.g. green and social bonds)* ● Sustainabi
Slide 41: Above-average ESG ratings prove that we are on the right track
Above-average ESG ratings prove that we are on the right track CCC B BB BBB A AA AAA Severe High Medium Low Negligible D- D D+ C- C C+ B- B B+ A- A A+ 10 9 8 7 6 5 4 3 2 1 E D C B A ESG Risk Rating ESG Corporate Rating ESG QualityScores Climate Change Rating ESG Rating ● Commerzbank is at ● Rated in
Slide 42: Commerzbank financials at a glance
Commerzbank financials at a glance Group Q2 2021 Q1 2022 Q2 2022 H1 2021 H1 2022 Total revenues €m 1,862 2,795 2,422 4,353 5,216 Risk result €m -87 -464 -106 -235 -570 Personnel expenses €m 862 859 825 1,716 1,684 Administrative expenses (excl. depreciation) €m 422 376 395 814 771 Depreciation €m 42
Slide 43: Key figures Commerzbank share
Key figures Commerzbank share Figures per share (€) 0.9 1.0 0.5 FY 2020 FY 2021 H1 2022 0.2 Number of shares issued (m) 1,252.40 1,252.40 1,252.40 -0.2 Market capitalisation (€bn) 6.6 8.4 8.4 Net asset value per share (€) 19.801 20.48 21.23 Low/high Xetra intraday prices (€) 2.80/6.83 4.70/7.19 5.17
Slide 44: Loan and deposit development
Loan and deposit development PSBC Corporate Clients (€bn | monthly average) (€bn | monthly average) 180 182 146 147 93 95 92 89 Mar 22 Jun 22 Mar 22 Jun 22 Loan volume Deposit volume Loan volume Deposit volume Highlights Loan growth in PSBC driven by residential mortgage business and Stable loan vol
Slide 45: Comfortable fulfilment of RWA and LRE MREL requirements
Comfortable fulfilment of RWA and LRE MREL requirements MREL Requirements and M-MDA ● Commerzbank received a new MREL requirement on 31 May 20221 ● Based on data as of 31 March 2022, Commerzbank fulfils its new MREL RWA requirement of 22.97% plus the combined buffer requirement (CBR) of 3.77% with a
Slide 46: Commerzbank's current MDA
Commerzbank’s current MDA Distance to MDA based on SREP requirement Highlights (transitional) for Q2 2022 (%) 429bps distance to MDA based on Q2 2022 CET1 ratio of 13.72% and SREP requirement for 2022 429bps 13.72 Further regulatory comments: ● AT1 and Tier 2 shortfall of 4bps mainly due to phase-ou
Slide 47: Capital markets funding – €3.5bn issued in challenging market environment
Capital markets funding – €3.5bn issued in challenging market environment Funding structure1 Highlights Group issuance activities H1 2022 (as of 30 June 2022) (€bn | nominal values) ● €1bn 10-year mortgage-Pfandbrief benchmark transaction Subordinated debt ● €1.5bn 5-year mortgage-Pfandbrief benchma
Slide 48: Rating overview Commerzbank
Rating overview Commerzbank As of 3 August 2022 Last rating events Bank Ratings S&P Moody’s Moody's: Counterparty Rating/Assessment1 A- A1/ A1 (cr) • In June, Moody's downgraded Deposit Rating2 BBB+ stable A1 stable Commerzbank's issuer credit rating/ Issuer Credit Rating (long-term debt) BBB+ stabl
Slide 49: IAS 19: Development of pension obligations
IAS 19: Development of pension obligations Cumulated actuarial gains and losses Explanation (€m) The IAS19 discount rate increased significantly versus year-end 2021, mostly due to rising market swap rates. This produced a significant decrease in present-valued pension obligations (DBO) 1.3 1.3 1.3
Slide 50: FX impact on CET1 ratio
FX impact on CET1 ratio QoQ change in FX capital position Explanation Nearly no impact on CET1 ratio1: Higher FX driven credit 146.2 risk RWA is mostly offset by the increasing effect of 4.3 currency translation reserve 1.5 11.6 +499 Increase in credit risk RWA from FX effects, mainly due to Other +
Slide 51: Group equity composition
Group equity composition Capital Capital Capital P&L P&L Ratios Q1 2022 Q2 2022 Q2 2022 Q2 2022 EoP EoP Average Q1 2022 Q2 2022 €bn €bn €bn €m €m % Common equity tier 1 capital 23.7 24.0 24.0 1 Operating Result 544 746 → Op. RoCET 12.4% DTA 0.8 0.5 Minority interests 0.4 0.4 Prudent Valuation 0.4 0.
Slide 52: Commerzbank Group
Commerzbank Group Q1 Q2 H1 Q3 Q4 FY Q1 Q2 H1 €m 2021 2021 2021 2021 2021 2021 2022 2022 2022 Total underlying revenues 2,308 1,884 4,192 2,015 1,864 8,071 2,739 2,311 5,049 Exceptional items 184 -22 162 -9 235 388 56 111 167 Total revenues 2,492 1,862 4,353 2,006 2,099 8,459 2,795 2,422 5,216 o/w Ne
Slide 53: Private and Small-Business Customers
Private and Small-Business Customers Q1 Q2 H1 Q3 Q4 FY Q1 Q2 H1 €m 2021 2021 2021 2021 2021 2021 2022 2022 2022 Total underlying revenues 1,338 1,200 2,538 1,220 950 4,708 1,476 1,521 2,997 Exceptional items -9 -71 -80 -43 109 -14 -7 21 14 Total revenues 1,329 1,130 2,458 1,177 1,059 4,694 1,468 1,5
Slide 54: mBank | Part of segment Private and Small-Business Customers
mBank | Part of segment Private and Small-Business Customers Q1 Q2 H1 Q3 Q4 FY Q1 Q2 H1 €m 2021 2021 2021 2021 2021 2021 2022 2022 2022 Total underlying revenues 309 254 563 223 -99 687 409 402 811 Exceptional items - 3 3 -2 - 1 -1 -1 -2 Total revenues 309 257 566 220 -99 688 408 402 809 o/w Net int
Slide 55: Corporate Clients
Corporate Clients Q1 Q2 H1 Q3 Q4 FY Q1 Q2 H1 €m 2021 2021 2021 2021 2021 2021 2022 2022 2022 Total underlying revenues 813 757 1,570 761 782 3,113 925 900 1,825 Exceptional items 17 11 28 15 12 56 2 -18 -16 Total revenues 829 768 1,598 776 795 3,168 926 882 1,808 o/w Net interest income 427 412 840
Slide 56: Others & Consolidation
Others & Consolidation Q1 Q2 H1 Q3 Q4 FY Q1 Q2 H1 €m 2021 2021 2021 2021 2021 2021 2022 2022 2022 Total underlying revenues 158 -74 84 35 132 251 339 -111 228 Exceptional items 176 38 214 19 114 346 61 108 169 Total revenues 334 -36 298 53 246 597 400 -3 397 o/w Net interest income 211 147 358 63 14
Slide 57: Commerzbank Group | Exceptional revenue items
Commerzbank Group | Exceptional revenue items Q1 Q2 H1 Q3 Q4 FY Q1 Q2 H1 €m 2021 2021 2021 2021 2021 2021 2022 2022 2022 Exceptional Revenue Items 184 -22 162 -9 235 388 56 111 167 o/w Net interest income 125 42 167 -24 89 232 39 37 75 o/w Net commission income -8 -8 -16 16 - - - - - o/w Net fair va
Slide 58: Glossary – Key ratios
Glossary – Key ratios Key Ratio Abbreviation Calculated for Numerator Denominator Private and Small Business Group Others & Consolidation Customers and Corporate Clients CIR (excl. compulsory Group as well as segments Cost/income ratio (excl. compulsory contributions) (%) Operating expenses Total re
Slide 59: For more information, please contact our IR team
For more information, please contact our IR team Investors and Financial Analysts Rating Agency Relations Patricia Novak Michael H. Klein Christoph Wortig Ansgar Herkert P: +49 69 136 46442 P: +49 69 136 24522 M: patricia.novak@ Head of Investor Relations Head of IR Communications M: michael.klein@
Slide 60: Disclaimer
Disclaimer This presentation contains forward-looking statements. Forward- In addition, this presentation contains financial and other information looking statements are statements that are not historical facts; they which has been derived from publicly available information disclosed include, inter