Commerzbank Ag · XETR:CBK
Commerzbank — FY2014 Earnings Presentation
48 slides from Commerzbank's earnings presentation, Feb 12, 2015
Slide 1: Strategy execution since 2012 well under way in a demanding environment
Strategy execution since 2012 well under way in a demanding environment Analyst conference – Q4 2014 / FY 2014 preliminary and unaudited results Stephan Engels | CFO | Frankfurt | 12 February 2015
Slide 2: We have made significant progress in the execution of our strategy
We have made significant progress in the execution of our strategy... Achievements since Investors’ Day 2012 › Net new customers ~532,000 › Domestic lending +15%-pts › Customer trust increased higher than market › Direct banking capability Privat- Private Mittelstands- Mittelstands- › Continued inte
Slide 3: Economic environment since 2012 has generated significant headwinds
... though the economic environment since 2012 has generated significant headwinds Bund yield curves 2014 vs. 2012 % 1.5 Besides lower than expected GDP growth Year end 2012 and increased regulatory requirements, especially the lower and flattened yield 1.0 curve with negative impact on the bank Yea
Slide 4: Summary FY 2014
Summary FY 2014 Significantly improved 2014 Group operating result up 40% to €~1.0bn Group net result at €602m up from €81m in 2013 – net result German GAAP €282m after €166m Stable Core Bank revenues and operating result despite headwinds Significant growth in loan volume outperforming the market €
Slide 5: Key financial figures at a glance
Key financial figures at a glance Financial result EaD in NCA €m 1,804 1,808 €bn at year end 66 Operating Public 52 Core Bank Finance Operating 1,022 CRE 36 Group Ship 731 Net result1) 602 Finance3) 20 14 12 81 FY 2013 FY 2014 FY 2013 FY 2014 B3 CET1 fully phased-in Leverage Ratio fully phased-in %
Slide 6: Operating result of Commerzbank divisions at a glance
Operating result of Commerzbank divisions at a glance Private Customers Mittelstandsbank Central & Eastern Europe €m €m €m 1,217 1,110 420 364 224 260 FY 2013 FY 2014 FY 2013 FY 2014 FY 2013 FY 2014 Corporates & Markets Others & Consolidation NCA €m €m €m 777 675 -567 -786 -868 -1,073 FY 2013 FY 201
Slide 7: Group operating result of ~€1.0bn
Group operating result of ~€1.0bn Full year transition, Group €m +40% 129 1,022 961 61 603 731 359 183 602 NCA (-177) Net legal provisions (-222) 81 Operating Revenues LLP Costs Operating Restructuring Pre-tax- Tax, Net result Net result result result Expenses profit Minorities FY 20141) FY 20131) F
Slide 8: Cost target 2014 achieved
Cost target 2014 achieved – efficiency gains enable investments for strategy and regulatory Costs, Group €m 6,797 6,926 3,889 3,843 1,724 1,699 1,686 1,688 1,698 1,727 1,722 1,779 1,022 969 972 926 976 950 959 958 2,908 3,083 702 730 714 762 722 777 763 821 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY 2013 FY 2014 20
Slide 9: LLPs of €1,144m better than expected
LLPs of €1,144m better than expected Provisions for loan losses, Group €m 1,747 537 1,144 492 1,082 451 347 243 341 308 654 267 317 238 257 65 251 204 175 134 249 665 190 134 192 490 92 104 90 104 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY 2013 FY 2014 2013 2014 NCA Core Bank FY 2014 vs. FY 2013 ▲ Core Bank benefit
Slide 10: Common Equity Tier 1 ratio fully phased-in increased to 9.5%
In 2014 Common Equity Tier 1 ratio fully phased-in increased to 9.5% B3 RWA (phase-in) €bn 216 215 17 17 Almost flat RWAs reflect run-down in NCA (€17bn) and growth in the Core Bank (€17bn) Q4 20131) Core Bank NCA Q4 2014 B3 fully 9.5 phased-in 0.2 % 9.0 0.3 Organic build up of €0.9bn additional cap
Slide 11: Leverage ratio further improved to 3.7% fully phased-in
Leverage ratio further improved to 3.7% fully phased-in Total assets and LR exposure transition Leverage ratio after revised CRD4/CRR rules1) €bn as of Q4 2014 % 596 LR under phase-in Current CRD4/CRR Revised rules1) 4.6 558 4.3 4.2 550 552 7 60 44 3 Q4 2013 Q3 2014 Q4 20142) LR under fully phased-i
Slide 12: Core Bank in 2014 with increased results in PC, MSB and CEE
Core Bank in 2014 with increased results in PC, MSB and CEE Revenues €bn Strategy is paying off – revenue increase of 2% and PC 8.9 8.9 almost doubling of operating result 3.3 3.4 PC MSB 2.9 2.9 Operating result increased by 10% – higher recurring CEE MSB 0.8 0.9 customer revenues replaced one-off g
Slide 13: Core Bank: Q4 quarterly transition
Core Bank: Increased NCI in PC and MSB could not compensate for additional burdens from valuations and legal provisions Quarterly transition Operating result, €m -53% 593 550 495 461 440 418 235 375 14 64 280 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Revenues LLP Costs Q4 2014 Ø equity
Slide 14: Private Customers: Growth story continues
Private Customers: Growth story continues – slight drop in revenues only due to legal provisions Quarterly transition Operating result, €m -40% 121 112 115 32 5 69 22 72 60 54 41 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Revenues LLP Costs Q4 2014 Ø equity (€ bn) 4.0 Ø equity (€ bn) 3.
Slide 15: PC divisional split
PC divisional split Filialbank – Revenues before LLP Commerz Real – Revenues before LLP €m €m ► Revenue decline q-o-q due to 742 709 legal provisions 696 ▲ Sustainable growth in loan ► Stable operating revenues and volume of €1.3bn q-o-q and growth in new business €3.0bn y-o-y activities ▲ Ratio of
Slide 16: Mittelstandsbank: Further loan growth and stable revenues
Mittelstandsbank: Further loan growth and stable revenues – LLPs increased but remain at a moderate level Quarterly transition Operating result, €m -31% 348 363 325 338 23 267 71 249 215 222 20 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Revenues LLP Costs Q4 2014 Ø equity (€ bn) 6.2 Ø e
Slide 17: MSB divisional split
MSB divisional split Mittelstand Germany – Revenues before LLP Großkunden & International – Revenues before LLP €m €m 382 375 360 ► Revenues from customer business stable due to higher 233 237 234 ▲ Stable revenues thanks to higher NII from loans and NCI from net commission income from cash manageme
Slide 18: Central & Eastern Europe: Record result 2014 in mBank
Central & Eastern Europe: Record result 2014 in mBank Quarterly transition Operating result, €m -4% 98 93 84 89 75 15 10 1 65 66 54 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Revenues LLP Costs Q4 2014 Ø equity (€ bn) 1.6 Ø equity (€ bn) 1.6 Ø equity (€ bn) 1.6 Op. RoE (%) 16.5 Op. RoE
Slide 19: Corporates & Markets: Q4 2014 operating result at level of Q3
Corporates & Markets: Q4 2014 operating result at level of Q3 2014 Reported Result excl. OCS Quarterly transition result and net CVA/DVA1) Operating result excl. OCS and net CVA/DVA1), €m 274 231 202 +1% 193 148 41 38 150 110 1 98 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Revenues 2) L
Slide 20: Corporates & Markets divisional split
Corporates & Markets divisional split Corporate Finance – Revenues before LLPs EMC – Revenues before LLPs (excl. CVA/DVA1)) €m €m ▲ ECM remains strong and ▲ Highest FY revenue level significantly improved y-o-y ever 185 but lower q-o-q after 152 ► Q4 2014 performance flat 146 exceptional Q3 2014 118
Slide 21: Core Bank: LLPs benefit from robust German economy
Core Bank: LLPs benefit from robust German economy and high quality of loan book LLP split €m -22% ▲ LLPs in Q4 2014 below Q4 2013 in almost all segments. Addition to provisions +16% 134 C&M again with releases 15 104 PC 11 ▲ Default portfolio reduced by €0.4bn in 2014 despite overall 90 MSB 139 107
Slide 22: NCA with significant further asset run-down of 28% in 2014
NCA with significant further asset run-down of 28% in the course of 2014 2013 2014 Lower risk Medium risk Higher risk NPL €bn 6 Strong run-down in 2014 supported by €5.1bn capital 3 accretive portfolio sales in Spain, Portugal and Japan 1 CRE 4 €10.4bn run-down based on maturities and early €36bn -4
Slide 23: NCA: Q4 2014 with improved operating result
NCA: Q4 2014 with improved operating result – further organic asset run-down of €4bn EaD Quarterly transition Operating result, €m +27% -86 -171 47 7 -183 -182 14 -272 -250 -328 -387 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Revenues LLP Costs Q4 2014 Ø equity (€ bn) 8.9 Ø equity (€ bn
Slide 24: NCA: LLP reduction driven by CRE portfolio
NCA: LLP reduction driven by CRE portfolio LLP €m -35% ▲ Substantially improved LLPs in CRE also on a y-o-y basis (2014 with €73m including releases of €112m from 317 -19% portfolio sales after €491m in 2013) 254 177 206 ► Higher Q4 2014 LLPs in Ship Finance1) include LLPs of Ship Finance1) €39m due
Slide 25: NCA: Focus risk cluster with reduction of 61% in EaD
NCA: Focus risk cluster with reduction of 61% in EaD since Q3 2012 EaD-Development over time €bn as of Q4 2014 Run-down since Q3 2012 CRE 0.6 0.6 higher risk 11.7 4.3 -95% 2.6 2.5 Ship Finance1) 4.2 3.1 -40% higher risk CRE 9.2 6.3 4.3 3.8 -59% med. risk Ship Finance1) 5.7 3.7 3.5 3.3 -42% med. risk
Slide 26: Financial Outlook 2015
Financial Outlook 2015 Despite the challenging environment we aim to grow revenues and market share in the Core Bank We aim to maintain our cost base stable at ~€7.0bn covering strategic investments, regulatory requirements and European bank levy by ongoing efficiency measures We expect Loan Loss Pr
Slide 27: Targets 2016
Targets 2016 We strive to meet our targets for the Core Bank to reach a post tax RoE >10% and a CIR of ~60% though the economic environment has generated significant headwinds We maintain our target to reach a Basel III CET1 ratio fully phased-in >10% however we do not expect a linear development We
Slide 28: Appendix
Appendix Stephan Engels | CFO | Frankfurt | 12 February 2015 28
Slide 29: German economy 2015 – Economy defies politics (as yet)
German economy 2015 – Economy defies politics (as yet) Current development Our expectation for 2015 Reasons for outperformance › German economy has overcome its › The recovery will go on this year as the › No bubble in the housing market. temporary weakness. In Q4 the oil price and the weak Euro wil
Slide 30: Commerzbank financials at a glance
Commerzbank financials at a glance Group Q4 2013 Q3 2014 Q4 2014 FY 2013 FY 2014 Operating result (€m) 90 343 98 731 1,022 Net result (€m)1) 64 225 77 81 602 2) CET 1 Basel 3 (%) 11.6 3) 11.8 11.8 11.63) 11.8 2) CET 1 ratio B 3 fully phased in (%) 9.0 9.6 9.5 9.0 9.5 Total assets (€bn) 550 596 558 5
Slide 31: Hedging & Valuation adjustments
Hedging & Valuation adjustments €m Q1 13 Q2 13 Q3 13 Q4 13 FY 13 Q1 14 Q2 14 Q3 14 Q4 14 FY 14 OCS & PC 0 -0 0 -0 -0 -0 0 -0 0 0 Net CVA/DVA OCS & MSB -0 -34 13 21 -1 2 14 -6 -7 3 Net CVA/DVA OCS & CEE - -7 6 -1 -2 -0 -1 -0 -0 -2 Net CVA/DVA OCS & C&M 41 -20 -25 68 64 12 -8 9 -31 -19 Net CVA/DVA OCS
Slide 32: EaD target of €~20bn for CRE and Ship Finance
EaD target of €~20bn for CRE and Ship Finance1) – Public Finance with held-to-maturity strategy EaD volume of Public Finance portfolio EaD volume of CRE and Ship Finance1) portfolios €bn as of Q4 2014 €bn as of Q4 2014 CRE CRE (NPL) PF (mainly (lower risk) liquid assets)2) 3.3 Ship Finance (NPL)1) 2
Slide 33: NCA: Diversified portfolio
NCA: Diversified portfolio EaD (incl. NPL) per 31 December 2014, in €bn GER USA IT POR Rest Sum Commercial Performing 10.1 0.1 1.0 0.9 4.5 16.7 EaD RWA Real Estate NPL3) 1.8 0.3 0.1 0.2 0.9 3.3 20.0 12.9 Sum 11.9 0.4 1.1 1.1 5.4 20.0 GER USA IT ES POR Rest Sum FI 2.5 0.5 0.2 2.5 0.1 3.5 9.3 Public S
Slide 34: NCA: Higher risk clusters significantly reduced in 2014
NCA: Higher risk clusters significantly reduced in 2014 Cluster Commercial Real Estate1) Q4/14 Q4/13 Ship Finance2) Q4/14 Q4/13 EaD in €bn EaD in €bn • Bulk Carrier (Capesize/VLOC) 0.9 higher 0.6 4.3 • Container < 2,000 TEU 0.2 2.5 3.1 • Hungary 0.2 risk (4%) (14%) • Container 2,000 – 4,000 TEU 0.6
Slide 35: Default portfolios CRE and Ship Finance
Default portfolios CRE and Ship Finance1) as of 31 December 2014 31 December 2014 (31 Dec 2013) 31 Dec 2012 Default portfolio CRE by country | €m Total Germany US Total Default volume 3,335 (5,662) 1,796 (2,371) 283 (283) 7,643 Loan loss provisions 900 (1,882) 508 (662) 59 (55) 2,672 GLLP 80 (119) 1
Slide 36: Default Portfolio (31 December 2014)
Default Portfolio (31 December 2014) Default portfolio and coverage ratios by segment €m – excluding / including GLLP Group1 11,843 90% / 97% 11,493 5,145 5,526 822 Private Customers 754 82% / 97% 732 258/361/113 M ittelstandsbank 2,583 72% / 83% 2,146 1,429/441/ 276 Central & Eastern Europe 1,212 1
Slide 37: Commerzbank Group
Commerzbank Group Q1 Q2 Q3 Q4 12M Q1 Q2 Q3 Q4 12M in € m % yoy % qoq 2013 2013 2013 2013 2013 2014 2014 2014 2014 2014 Total Revenues 2,455 2,310 2,281 2,229 9,275 2,260 2,241 2,406 2,185 9,092 -2.0 -9.2 o/w Total net interest and net trading income 1,671 1,618 1,409 1,381 6,079 1,538 1,426 1,595 1,
Slide 38: Core Bank
Core Bank Q1 Q2 Q3 Q4 12M Q1 Q2 Q3 Q4 12M in € m % yoy % qoq 2013 2013 2013 2013 2013 2014 2014 2014 2014 2014 Total Revenues 2,284 2,254 2,227 2,151 8,916 2,215 2,278 2,326 2,091 8,910 -2.8 -10.1 o/w Total net interest and net trading income 1,544 1,413 1,385 1,268 5,610 1,416 1,497 1,507 1,352 5,7
Slide 39: Private Customers
Private Customers Q1 Q2 Q3 Q4 12M Q1 Q2 Q3 Q4 12M in € m % yoy % qoq 2013 2013 2013 2013 2013 2014 2014 2014 2014 2014 Total Revenues 858 839 825 827 3,349 874 845 865 833 3,417 0.7 -3.7 o/w Total net interest and net trading income 431 444 452 446 1,773 450 480 467 466 1,863 4.5 -0.2 o/w Net commis
Slide 40: Mittelstandsbank
Mittelstandsbank Q1 Q2 Q3 Q4 12M Q1 Q2 Q3 Q4 12M in € m % yoy % qoq 2013 2013 2013 2013 2013 2014 2014 2014 2014 2014 Total Revenues 727 695 789 706 2,917 716 739 742 719 2,916 1.8 -3.1 o/w Total net interest and net trading income 457 405 457 441 1,760 440 463 447 435 1,785 -1.4 -2.7 o/w Net commis
Slide 41: Central & Eastern Europe
Central & Eastern Europe Q1 Q2 Q3 Q4 12M Q1 Q2 Q3 Q4 12M in € m % yoy % qoq 2013 2013 2013 2013 2013 2014 2014 2014 2014 2014 Total Revenues 185 195 212 216 808 224 234 240 225 923 4.2 -6.3 o/w Total net interest and net trading income 129 130 147 145 551 156 175 179 161 671 11.0 -10.1 o/w Net commi
Slide 42: Corporates & Markets
Corporates & Markets Q1 Q2 Q3 Q4 12M Q1 Q2 Q3 Q4 12M in € m % yoy % qoq 2013 2013 2013 2013 2013 2014 2014 2014 2014 2014 Total Revenues 584 570 459 466 2,079 541 503 484 443 1,971 -4.9 -8.5 o/w Total net interest and net trading income 504 415 299 345 1,563 464 403 368 325 1,560 -5.8 -11.7 o/w Net
Slide 43: Non-Core Assets
Non-Core Assets Q1 Q2 Q3 Q4 12M Q1 Q2 Q3 Q4 12M in € m % yoy % qoq 2013 2013 2013 2013 2013 2014 2014 2014 2014 2014 Total Revenues 171 56 54 78 359 45 -37 80 94 182 20.5 17.5 o/w Total net interest and net trading income 127 205 24 113 469 122 -71 88 89 228 -21.2 1.1 o/w Net commission income 19 18
Slide 44: Others & Consolidation
Others & Consolidation Q1 Q2 Q3 Q4 12M Q1 Q2 Q3 Q4 12M in € m % yoy % qoq 2013 2013 2013 2013 2013 2014 2014 2014 2014 2014 Total Revenues -70 -45 -58 -64 -237 -140 -43 -5 -129 -317 >-100 >-100 o/w Total net interest and net trading income 23 19 30 -109 -37 -94 -24 46 -35 -107 67.9 >-100 o/w Net com
Slide 45: Group equity composition
Group equity composition Capital Capital Capital Q3 2014 Q4 2014 FY 2014 End of End of Average €bn Period Period Subscribed capital 1.1 1.1 Capital reserve 15.9 15.9 Retained earnings 10.3 10.1 Currency translation reserve -0.0 -0.2 Revaluation reserve -0.9 -1.0 Cash flow hedges -0.3 -0.2 Consolidat
Slide 46: Glossary - Capital Allocation / RoE Calculation
Glossary - Capital Allocation / RoE Calculation › Amount of average capital allocated to business segments is calculated by multiplying the segments current YTD average Basel 3 RWA (phase-in) (PC € 28.5bn, MSB € 65.5bn, CEE € 13.5bn, C&M € 36.8bn, O&C € 20.9bn, NCA (€52.5bn) by a ratio of 9% › In ad
Slide 47: For more information, please contact Commerzbank's IR team
For more information, please contact Commerzbank’s IR team: Tanja Birkholz (Head of Investor Relations / Executive Management Board Member) P: +49 69 136 23854 M: [email protected] Christoph Wortig (Head of IR Communications) P: +49 69 136 52668 M: [email protected] Insti
Slide 48: Disclaimer
Disclaimer Investor Relations 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 ba