Commerzbank Ag · XETR:CBK
Commerzbank — Debt Investor Presentation (February 2017)
54 slides from Commerzbank's debt investor presentation, Feb 21, 2017
Slide 1: Commerzbank 4.0 and Q4 2016 / FY 2016 preliminary and unaudited results
Commerzbank 4.0 and Q4 2016 / FY 2016 preliminary and unaudited results Credit and Strategy Update for Fixed Income Investors GM – Treasury | Singapore | 21 February 2017
Slide 2: Disclaimer
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 them. These statements are based on plans, estim
Slide 3: Commerzbank: a competent partner for private and corporate customers with a strong core franchise
Commerzbank: a competent partner for private and corporate customers with a strong core franchise Key figures group Private & Small Business Customers Corporate Clients as of Dec. 2016 › Continuous business growth above the market › Sustained leading market position in › >12 million customers with >
Slide 4: Agenda
Agenda 1 Commerzbank strategy 4.0 page 4 2 Commerzbank Q4 2016 results page 13 3 Commerzbank Asia page 29 4 Commerzbank capital and funding page 33 Appendix GM - Treasury | Singapore | 21 February 2017 3
Slide 5: We have made Commerzbank more stable – and less risky
We have made Commerzbank more stable – and less risky 636 533 Balance sheet Total assets down by 16% -16% (€bn) FY 2012 H1 2016 160 63 Risk €97 bn reduction of non-core assets -61% (€bn) FY 2012 FY 2015 23 18 Capital CET1 capital increased by 28% +28% (€bn) FY 2012 H1 2016 GM - Treasury | Singapore
Slide 6: Commerzbank 4.0 – a strategic programme with three cornerstones
Commerzbank 4.0 – a strategic programme with three cornerstones We will focus on businesses where Focussed business model we have clear competitive 1 advantages, discontinuing non-core activities Higher Digital enterprise We will transform the Bank into a profitability, and 2 digital enterprise enha
Slide 7: Commerzbank will have two strong customer segments going forward
Commerzbank will have two strong customer segments going forward PC Private and › Private Customers, Small Business Customers, Small Business comdirect, Commerz Real, mBank CEE Customers MSB Corporate › All corporate clients, institutional clients, Clients Corporate Finance and FICC C&M Separation/
Slide 8: Private Customers: successful business model in the challenging German market
Private Customers: successful business model in the challenging German market › Private Customers business is already profitable (> 20% RoTE), and growing › Profit contribution has tripled since 2012 (FY 2015: €701m) › One million net new customers by the end of 2016 accomplished Target: 2 million n
Slide 9: Corporate Clients: focus on core business – integration of investment bank
Corporate 2 Clients: focus on core business – integration of investment bank Persistent market leadership in German corporate banking Mittelstandsbank Financing more than 30% of German foreign trade Strong international presence Leverage of unrivalled sector expertise Corporates & Leading provider o
Slide 10: Our evolution into a digital enterprise
Our evolution into a digital enterprise 2016 2020 Reduction of complexity Target: 80% of all relevant processes are digital GM - Treasury | Singapore | 21 February 2017 9
Slide 11: Digital Campus as engine of transformation
Digital Campus as engine of transformation E2E: Management Board responsibility Business and IT experts working together in one place All experts will commit 100% of their capacity Priority for internal resources Agile working methods Shortening of implementation cycle Digital transformation 'Fail f
Slide 12: Targets 2020 of new strategy Commerzbank 4.0
Targets 2020 of new strategy Commerzbank 4.0 Current rates Rising rates Revenues (€bn) 9.8-10.3 11.3 Costs (€bn) 6.5 6.5 CIR (%) <66 ~60 Net RoTE (%) >6 >8 CET1 (%) >13 >13 GM - Treasury | Singapore | 21 February 2017 11
Slide 13: Agenda
Agenda 1 Commerzbank strategy 4.0 page 4 2 Commerzbank Q4 2016 results page 13 3 Commerzbank Asia page 29 4 Commerzbank capital and funding page 33 Appendix GM - Treasury | Singapore | 21 February 2017 12
Slide 14: Solid performance and strengthened capital in 2016 – Execution of Commerzbank 4.0 started
Solid performance and strengthened capital in 2016 – Execution of Commerzbank 4.0 started Strategy execution Commerzbank 4.0 kicked off › Management structures and steering systems in place › Execution started according to plan › Roadmap and milestones for 2017 defined Solid operating performance at
Slide 15: First achievements Commerzbank 4.0 – key milestones in 2017
First achievements Commerzbank 4.0 – key milestones in 2017 Achievements Key milestones 2017 Management set up in place Reduce complexity to enable efficiency gains › Negotiate workers council agreement › Segmental and management structure › Fully integrated client approach in CC implemented in gove
Slide 16: Strong background in digital initiatives serves as enabler for Commerzbank 4.0
Strong background in digital initiatives serves as enabler for Commerzbank 4.0 Private and Small Business Customers Other Digital Initiatives › Fully digital account transfer service › Newly set up digital agency “Neugelb” including online account opening in less with the core competencies in web 1
Slide 17: Strategy execution management alongside key execution indicators
Strategy execution management alongside key execution indicators Net new customers (GER) Assets under control (GER) Market share SBC (Wallet) Private and (m) 2.0 (€bn) (%) 8 Small >345 >400 6 338 5 0.5 Business 0.1 Customers Q4 2016 2017 2020 2016 2017 2020 2016 2017 2020 1 Net new customers Revenue
Slide 18: Key financial figures at a glance
Key financial figures at a glance Group Financial Result (€m) Group Capital (% end of period) Operating result B3 CET1 ratio fully phased-in 1,942 12.0 12.3 1,399 9.3 689 2014 2015 2016 2014 2015 2016 Net result1) 1,084 Leverage ratio fully phased-in 4.8 4.5 3.6 266 279 2014 2015 2016 2014 2015 2016
Slide 19: Operating result of Commerzbank divisions in new structure
Operating result of Commerzbank divisions in new structure Private and Small Business Customers (€m) Corporate Clients (€m) Op.RoTE 21.6% 25.3% Op.RoTE 12.4% 10.1% CIR 74.9% 75.1% CIR 62.7% 66.9% 1,695 1,287 1,051 1,079 RWA €39bn €36bn RWA €106bn €105bn Assets €112bn €119bn Assets €259bn €211bn 2015
Slide 20: Solid operating performance in 2016
Solid operating performance in 2016 Group Operating result (€m) Group P&L in € m Q4 2015 Q3 2016 Q4 2016 FY 2015 FY 2016 Revenues 2,240 2,437 2,399 9,795 9,399 679 LLP -112 -275 -290 -696 -900 Costs 1,744 1,733 1,772 7,157 7,100 427 452 429 Operating result 384 429 337 1,942 1,399 384 351 Impairment
Slide 21: Expenses stable – fully compensating additional external burdens
Expenses stable – fully compensating additional external burdens Transition costs 2015 vs. 2016 (€m) Personnel expenses Operating expenses 7,157 93 32 168 25 62 7,100 100 3,724 3,900 3,257 3,376 FY 2015 Investments Regulatory & Banking Other Cost Variable FY 2016 & Growth Compliance tax & DGS1) mana
Slide 22: Loan loss provisions well below €1.0bn
Loan loss provisions well below €1.0bn Provisions for loan losses, Group (€m) LLP divisional split in € m Q4 2015 Q3 2016 Q4 2016 FY 2015 FY 2016 Private and Small Business Customers 12 40 14 167 119 280 290 275 Corporate Clients 51 87 -30 108 185 Asset & Capital Recovery 50 147 307 361 599 187 Othe
Slide 23: Sound risk profile with NPL ratio of only 1.6%
Sound risk profile with NPL ratio of only 1.6% NPL in Group (€bn) Cost of Risk2) in Group (bp) 7.1 7.5 6.9 21 19 16 YE 2015 9M 2016 YE 2016 FY 2015 9M 2016 FY 2016 PSBC 2.0 1.8 1.7 PSBC 12 9 9 CC 2.9 3.5 3.4 CC 5 15 9 O&C 0.1 0.0 0.0 O&C 7 - - ACR 2.2 2.2 1.8 ACR 192 226 380 NPL ratio1) Group 1.6% 1
Slide 24: 2016 with net burden of €212m from negative interest rate environment
2016 with net burden of €212m from negative interest rate environment NII analysis in former segment PC (€m) NII analysis in former segment MSB (€m) Change in NII due 84 Change in NII due 77 62 to loan volumes to loan volumes -19 Change in NII due -133 Change in NII due to deposit margins -96 -181 t
Slide 25: Significant NII potential in scenario of rising interest rates
Significant NII potential in scenario of rising interest rates Scenario: 100bp parallel up-shift in rates yield curve (%) Scenario impact on NII (€m) 16 January 2017 900-1,000 2.0 1.5 500-550 1.0 0.5 0.0 -0.5 Year 1 Year 4 0Y 2Y 4Y 6Y 8Y 10-15Y Highlights › Year 1 effect of €500-550m driven by short
Slide 26: Effective portfolio management leads to lower RWA
Effective portfolio management leads to lower RWA RWA (B3 fully phased-in) development by RWA classification (€bn) -7bn 222 214 213 22 197 195 198 195 190 20 20 23 23 22 17 18 19 21 20 21 22 24 24 24 Market Risk Operational Risk 176 171 171 159 Credit Risk 154 155 150 146 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 201
Slide 27: CET1 ratio increased to 12.3%
CET1 ratio increased to 12.3% Regulatory capital (CET1 B3 fully phased-in) transition (€bn) 12.0% 11.8% 12.3% 23.7 23.4 23.0 0.2 0.0 0.0 0.1 0.3 Regulatory Capital Regulatory Capital Net profit Actuarial Currency Revaluation reserve Others Regulatory Capital Q4 2015 Q3 2016 gains/losses translation
Slide 28: Objectives and expectations for 2017
Objectives and expectations for 2017 We will further strengthen our market position and focus on the execution of Commerzbank 4.0 We keep our CET1 ratio stable ≥12% balancing out investments, P&L incl. restructuring costs, capital and RWA We keep our cost base stable and book the first part of restr
Slide 29: Agenda
Agenda 1 Commerzbank strategy 4.0 page 4 2 Commerzbank Q4 2016 results page 13 3 Commerzbank Asia page 29 4 Commerzbank capital and funding page 33 Appendix GM - Treasury | Singapore | 21 February 2017 28
Slide 30: Commerzbank in Asia
Commerzbank in Asia GM - Treasury | Singapore | 21 February 2017 29
Slide 31: Commerzbank Asia: Comprehensive Product Expertise
Commerzbank Asia : Comprehensive Product Expertise Short-term Overdrafts and (multicurrency) Loans Working Capital Facilities Investment and Acquisition Financing Corporate Finance & Corporate Finance: Investment Banking Syndicated Loans, Schuldschein/ Private Placements, Bonds, Commercial Paper, Me
Slide 32: Commerzbank Asia: Advising and financing of investments into Europe – selected transactions
Commerzbank Asia: Advising and financing of investments into Europe – selected transactions › Financing of ChemChina’s purchase of › Financing of XIO Group’s buyout of Compo Pirelli Expert from Triton Partners Pirelli & C.S.p.A. – Acquisition of Italian tyre manufacturer – Acquisition of a German sp
Slide 33: Agenda
Agenda 1 Commerzbank strategy 4.0 page 4 2 Commerzbank Q4 2016 results page 13 3 Commerzbank Asia page 29 4 Commerzbank capital and funding page 33 Appendix GM - Treasury | Singapore | 21 February 2017 32
Slide 34: Capital markets funding activities (full year 2016)
Capital markets funding activities (full year 2016) Issuance strategy in capital markets Capital market funding structure as of 31 December 20161) Promissory notes › Commerzbank uses covered bonds and senior unsecured 15% instruments for funding purposes › Funding via private placements and public t
Slide 35: German insolvency law protects depositors and operational liabilities
German insolvency law protects depositors and operational liabilities › European Bank Recovery and Resolution Directive Bail-in hierarchy effective 1 January 20171) (“BRRD”) and resulting German legislation is intended to prevent use of taxpayers’ money in the event of a Non bail-in eligible claims
Slide 36: Balanced capital markets maturity profile
Balanced capital markets maturity profile Total outstanding and maturities1) (in Euro bn) Highlights › Outstanding capital markets volume end of 2016 of app. EUR 73bn › Well balanced profile of funding products › Manageable maturity profile GM - Treasury | Singapore | 21 February 2017 1) Source: bal
Slide 37: Total Capital – Tier 2
Total Capital – Tier 2 Total Capital1) (%) Tier 2 roll-off profile2) EUR bn 5.7bn 16.9% Tier 2 3.0% (phase-in) (5.7bn) CET1 YE 2016 YE 2017 YE 2018 YE 2019 YE 2020 13.9% (phase-in) (26.5bn) › Increase of capital efficiency via replacement of amortizing Tier 2 instruments. › New Euro Tier 2 benchmark
Slide 38: Rating overview Commerzbank
Rating overview Commerzbank As of 09 February 2017 1) Bank Ratings Counterparty Credit Rating2) BBB+ CW positive A2 A- - Stand-alone Rating (financial strength) bbb+ baa3 bbb+ - Short-term debt A-2 CW positive P-1 F2 S-1 Product Ratings (unsecured issuances) ”Preferred” senior unsecured debt BBB+ CW
Slide 39: New SGD Tier 2 Transaction – Terms for Discussion Purposes
New SGD Tier 2 Transaction – Terms for Discussion Purposes Issuer Commerzbank Aktiengesellschaft Issuer Counterparty A2 / BBB+ Credit Watch Positive / A- Ratings (M/S/F) Instrument Dated Subordinated (Tier 2) Callable Fixed-to-Fixed Resettable Notes Maturity / Issuer Call 10NC5 Direct, unsecured, un
Slide 40: Appendix
Appendix GM - Treasury | Singapore | 21 February 2017 39
Slide 41: German economy 2017 – ongoing moderate growth ahead
German economy 2017 – ongoing moderate growth ahead Current development Our expectation for 2017 Risks in the long-run › After a slowdown during the summer › Sentiment of firms have improved further. › Export oriented German economy would growth of the German economy Therefore recovery will continue
Slide 42: Private and Small Business Customers: Continuous business growth above the market
Private and Small Business Customers: Continuous business growth above the market Operating result (€m) Segmental P&L in € m Q4 2015 Q3 2016 Q4 2016 FY 2015 FY 2016 Revenues 1,190 1,215 1,177 4,845 4,819 334 o/w Private Customers 572 599 593 2,518 2,402 295 277 272 o/w Small Business Customers 202 1
Slide 43: Private and Small Business Customers: 1m net new customers since 2012
Private and Small Business Customers: 1m net new customers since 2012 – further 137k already contributing to 2m target for 2020 Customers GER (m) Assets under control GER (€bn) Deposits Securities Loans Targets >300 >400 +1.0 +2.0 14.1 >400 338 >345 297 12.6 266 102 12.2 89 11.6 0.1 81 81 11.0 60 70
Slide 44: Corporate Clients: Strong position in Mittelstand
Corporate Clients: Strong position in Mittelstand – burdens from negative interest rates and challenging markets Operating result2) (€m) Segmental P&L in € m Q4 2015 Q3 2016 Q4 2016 FY 2015 FY 2016 Revenues 2) 1,120 1,017 1,083 4,730 4,273 597 o/w Mittelstand 460 465 506 1,981 1,963 o/w Internationa
Slide 45: Corporate Clients: Leverage strong domestic market position while focussing on RWA-efficiency
Corporate Clients: Leverage strong domestic market position while focussing on RWA-efficiency Growth Efficiency (€bn) Share of corporate clients (%) 60 LtD ratio ~100% RWA-efficiency 50 4.2% 2020 Trade Finance 101.5 96.9 104 Europe 40 Customer & Services growth 30 3.7% 2017 20 3.8 10 3.7% 0 12.5 - 5
Slide 46: Asset & Capital Recovery: Gain on sale of Heta exposure offset by higher risk provisioning
Asset & Capital Recovery: Gain on sale of Heta exposure offset by higher risk provisioning for shipping portfolio Operating result (€m) Segmental P&L in € m Q4 2015 Q3 2016 Q4 2016 FY 2015 FY 2016 Revenues 14 72 183 76 213 52 LLP -50 -147 -307 -361 -599 Costs 31 33 31 181 128 Operating result -67 -1
Slide 47: Commerzbank financials at a glance
Commerzbank financials at a glance Group Q4 2015 Q3 2016 Q4 2016 FY 2015 FY 2016 Operating result (€m) 384 429 337 1,942 1,399 1) Net result (€m) 193 -288 183 1,084 279 CET1 ratio B3 phase-in (%) 13.8 13.6 13.9 13.8 13.9 CET1 ratio B3 fully phased-in (%) 12.0 11.8 12.3 12.0 12.3 Total assets (€bn) 5
Slide 48: Change in revaluation reserve due to changes in Italian credit spread
Change in revaluation reserve due to changes in Italian credit spread Movement of revaluation reserve due to changes in the credit spread of Italian sovereign bonds (€m) Revaluation reserve - impact of Italy in Bp Credit spread – Italian sovereign bonds 119 76 89 112 107 128 -718 -798 -929 -883 -895
Slide 49: Sustainable ship market recovery not yet in sight
Sustainable ship market recovery not yet in sight Fleet Index (%) Charter Rate Index (%) 200 191 100 180 169 80 160 144 59 140 60 120 40 29 100 20 11 80 60 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 2009 2010 2011 2012 2013 2014 2015 2016 Bulker Fleet Tank Fleet Container Fleet Bulker
Slide 50: ACR Ship Finance portfolio as of 31 December 2016
ACR Ship Finance portfolio as of 31 December 2016 31 December 2016 (31 Dec 2015) Performing portfolio SF by ship type | €m Total Container Tanker Bulker Exposure at Default 3,511 (4,965) 1,116 (1,858) 875 (1,106) 912 (1,233) Expected Loss 288 (389) 85 (227) 12 (12) 121 (89) Risk Density 820 (783) 76
Slide 51: Commerzbank Group
Commerzbank Group Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY % Q4 % Q4 €m 2015 2015 2015 2015 2015 2016 2016 2016 2016 2016 vs Q4 vs Q3 Total Revenues 2,794 2,444 2,317 2,240 9,795 2,323 2,240 2,437 2,399 9,399 7.1 -1.6 o/w Total net interest and net trading income 1,986 1,496 1,469 1,270 6,221 1,343 1,272 1,505
Slide 52: Specific growth and pricing measures compensate for adverse effects from current interest rate environment
Specific growth and pricing measures compensate for adverse effects from current interest rate environment In current rate environment 3M-Euribor (avg. p.a. in %) › Expected gross revenue decline under current interest rate conditions by 2020: ~€300m vs. 2016 2016 2017 2018 2019 2020 › Revenue loss
Slide 53: Transformation requires two years with low profitability
Transformation requires two years with low profitability 2017 2018 2019 2020 Current rates Rising rates 9.8- Revenues €bn 11.3 €bn 10.3 Costs 6.5 €bn 6.5 €bn Restructuring costs €1.1bn RoTE >6% >8% GM - Treasury | Singapore | 21 February 2017 52
Slide 54: For more information, please contact Commerzbank's IR team
For more information, please contact Commerzbank’s IR team IR contact Christoph Wortig (Head of Investor Relations) P: +49 69 136 52668 M: [email protected] Institutional Investors and Financial Analysts Retail Investors Michael H. Klein Simone Nuxoll P: +49 69 136 24522 P: +49 69 136
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