Commerzbank Ag · XETR:CBK
Commerzbank — Q2 2014 Earnings Presentation
42 slides from Commerzbank's earnings presentation, Aug 7, 2014
Slide 1: Growing business volumes in Core Bank – original 2016 NCA target already achieved
Growing business volumes in Core Bank – original 2016 NCA target of €93bn already achieved Analyst conference – Q2 2014 results Stephan Engels | CFO | Frankfurt | 07 August 2014
Slide 2: Key Financial Facts Q2 2014
Key Financial Facts Q2 2014 Group operating result of €257m in Q2 2014 leads to €581m for H1 2014 exceeding H1 2013 by 8%. Core bank with 3% revenue increase q-o-q. Growing business volumes in PC and MSB underpin strategic progress. Group net result of €100m for Q2 2014 leads to €300m in H1 2014 com
Slide 3: Key financial figures at a glance
Key financial figures at a glance Q2 2014 vs. Q1 2014 H1 2014 vs. H1 2013 €m 496 Op. result 1,011 936 Financial 440 Result 324 257 Core Bank 538 581 200 300 100 Op. result Group Net Result1) -58 Q1 2014 Q2 2014 H1 2013 H1 2014 €bn 136 EaD in NCA 102 92 92 Q1 2014 Q2 2014 H1 2013 H1 2014 % fully phas
Slide 4: Group operating result affected by CRE portfolio sales
Group operating result affected by CRE portfolio sales Quarterly transition Effect from sales of CRE portfolios in Spain, Operating result, €m Portugal and Japan 154 131 19 71 324 328 157 257 200 74 100 Operating Operating Revenues 2) LLP 2) Costs 2) Operating CRE portfolio Operating Tax, Net result
Slide 5: Almost stable total expenses for the 6th consecutive quarter
Almost stable total expenses for the 6th consecutive quarter Costs €m 2013 2014 1,724 1,699 1,686 1,688 1,698 1,727 1,022 969 972 926 976 950 702 730 714 762 722 777 Q1 Q2 Q3 Q4 Q1 Q2 ∑ 6,797 ∑ 3,425 Personnel expenses Operating expenses Q2 2014 vs. Q1 2014 ► Total expenses almost at level Q1 2014 ▲
Slide 6: Low LLPs supported by €112m release from CRE portfolio sales
Low LLPs supported by €112m release from CRE portfolio sales Provisions for loan losses €m 2013 2014 537 492 451 347 243 267 317 257 238 65 175 134 249 190 192 92 134 104 Q1 Q2 Q3 Q4 Q1 Q2 ∑ 1,747 ∑ 495 Core Bank NCA Q2 2014 vs. Q1 2014 ▲ LLP in CRE supported by asset run down as well as by releases
Slide 7: Core Bank: Revenue increase of 3% q-o-q
Core Bank: Revenue increase of 3% q-o-q Quarterly transition Operating result, €m -11% 550 496 61 88 461 440 418 29 375 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Revenues LLP Costs Q2 2014 Ø equity (€ bn) 16.8 Ø equity (€ bn) 19.2 Ø equity (€ bn) 19.2 Op. RoE (%) 11.0 Op. RoE (%) 10.3 Op. RoE (%) 9.2
Slide 8: Private Customers: Growing business volumes evidence the strategic progress
Private Customers: Growing business volumes evidence the strategic progress Quarterly transition Operating result, €m +3% 112 115 12 29 20 69 60 54 41 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Revenues LLP Costs Q2 2014 Ø equity (€ bn) 3.9 Ø equity (€ bn) 4.0 Ø equity (€ bn) 4.0 Op. RoE (%) 5.5 Op. Ro
Slide 9: PC divisional split
PC divisional split Filialbank – Revenues before LLP Commerz Real – Revenues before LLP €m €m 725 734 722 ▲ Growth of new mortgage loan volume to €2.7bn exceeds strong ▲ Stable revenues from ongoing Q1 2014 (+18% q-o-q) business ▲ Assets in premium and managed ► Q1 2014 revenues supported accounts i
Slide 10: Mittelstandsbank: Growth in loan volume and revenues
Mittelstandsbank: Growth in loan volume and revenues Quarterly transition Operating result, €m -21% 349 337 325 23 85 267 8 215 221 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Revenues LLP Costs Q2 2014 Ø equity (€ bn) 5.9 Ø equity (€ bn) 6.6 Ø equity (€ bn) 6.9 Op. RoE (%) 14.6 Op. RoE (%) 20.4 Op. RoE
Slide 11: MSB divisional split
MSB divisional split Mittelstand Germany – Revenues before LLP Großkunden & International – Revenues before LLP €m €m 389 371 ▲ Increase in loan volume at 353 ▲ Further growth of loan volume stable margins at stable margins 241 251 205 ▲ Higher client activities from ► Declining revenues from capita
Slide 12: Central & Eastern Europe: Continued growth in mBank leads to record revenues
Central & Eastern Europe: Continued growth in mBank leads to record revenues Quarterly transition Operating result, €m -14% 98 10 17 84 75 7 65 66 54 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Revenues LLP Costs Q2 2014 Ø equity (€ bn) 1.7 Ø equity (€ bn) 1.6 Ø equity (€ bn) 1.6 Op. RoE (%) 13.0 Op. Ro
Slide 13: Corporates & Markets: Profiting from a diversified business model
Corporates & Markets: Profiting from a diversified business model across asset classes Quarterly transition Reported Result excl. OCS Operating result excl. OCS and net CVA/DVA1), €m result and net CVA/DVA1) 274 -5% 231 204 194 18 4 12 110 98 2) Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Revenues LLP C
Slide 14: Corporates & Markets divisional split
Corporates & Markets divisional split Corporate Finance – Revenues before LLPs EMC – Revenues before LLPs €m €m ▲ Good performance in Bonds and Loans business driven by 220 ▲ Strong demand for off-the- increased client activity 186 shelf and tailor-made 175 154 equity derivatives products 133 131 ▲
Slide 15: Core Bank: Higher LLPs in line with expectations – NPL ratio 1.6%
Core Bank: Higher LLPs in line with expectations – NPL ratio at good level of 1.6% LLP split €m +1% +85% ▲ Risk density in Core Bank stable below 30bp – very good Addition to provisions 190 192 27 16 portfolio quality in PC PC 104 ▲ Default portfolio unchanged despite growing business 147 142 MSB 36
Slide 16: NCA: Operating result Q2 2014 includes burden from CRE portfolio sales
NCA: Operating result Q2 2014 includes burden from CRE portfolio sales Quarterly transition Operating result, €m Effect from sales of CRE portfolios in Spain, Portugal and Japan -6% -86 43 10 -172 101 123 -183 -272 -328 -387 1) Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 CRE Revenues 1) LLP Costs 1) Q2
Slide 17: NCA: Q2 portfolio reduction of €10bn
NCA: Q2 Portfolio reduction of €10bn equally reflects current run-down and CRE sales – EaD of € 92bn already below original target for 2016 LLP €m -81% ▲ CRE: Net LLP releases due to portfolio sales in Spain and Portugal 347 Ship Finance1) 110 -51% ►Ship Finance1): LLPs as expected CRE 134 65 Public
Slide 18: New EaD target of €~20bn for CRE and Ship Finance
New 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 Q2 2014 €bn as of Q2 2014 CRE CRE (NPL) PF (mainly (lower risk) liquid assets)2) 3.7 Ship Finance (NPL)
Slide 19: Higher risk cluster CRE reduced to less than €1bn
Higher risk cluster CRE reduced to less than €1bn after portfolio transactions EaD-Development over time €bn as of Q2 2014 Run-down since Q3 2012 CRE 0.6 higher risk 11.7 8.6 4.1 -95% Ship Finance1) 4.2 3.4 3.1 2.9 -31% higher risk CRE 9.2 7.5 5.3 4.7 -49% med. risk Ship Finance1) 5.7 4.3 3.5 3.2 -4
Slide 20: Common Equity Tier 1 ratio fully phased-in increased to 9.4%
Common Equity Tier 1 ratio fully phased-in increased to 9.4% RWA €bn 218 217 › Business growth in Core Bank leads to higher credit RWA › RWA decrease of €3.4bn due to portfolio sales in CRE Q1 2014 Q2 2014 B3 fully 9.4 phased-in 9.0 % › Inclusion of H1 2014 earnings › Improvements in capital reserve
Slide 21: Leverage ratio well above regulatory threshold
Leverage ratio well above regulatory threshold Total assets CRD4 Leverage ratio €bn % LR under phase-in 4.0 4.1 4.1 +1% 637 574 583 Q2 2013 Q1 2014 Q2 20141) LR under fully phased-in 3.2 3.3 3.3 Q2 2013 Q1 2014 Q2 2014 Q2 2013 Q1 2014 Q2 20141) 1) Includes net profit of H1 2014 Stephan Engels | CFO
Slide 22: Outlook 2014
Outlook 2014 We keep on growing business volumes in the Core Bank with special focus on loan volumes in PC and MSB We confirm our cost guidance for 2014 of max €7.0bn We update our forecasted LLP to stay well below 2013 We focus our value preserving asset run-down in NCA on CRE and Ship Finance1) wi
Slide 23: Appendix
Appendix Stephan Engels | CFO | Frankfurt | 07 August 2014 23
Slide 24: German economy 2014/2015 – Economy defies politics (as yet)
German economy 2014/2015 – Economy defies politics (as yet) Current development Our expectation for 2014/2015 Reasons for outperformance › German economy has taken a › Despite the set-back in Q2 we expect › No bubble in the housing market. breather. Real GDP probably the upswing to continue. › Low l
Slide 25: Hedging & Valuation Adjustments
Hedging & Valuation Adjustments €m Q1 13 Q2 13 Q3 13 Q4 13 FY 13 Q1 14 Q2 14 OCS & PC 0 -0 0 -0 -0 -0 0 Net CVA/DVA OCS & MSB -0 -34 13 21 -1 2 14 Net CVA/DVA OCS & CEE - -7 6 -1 -2 -0 -1 Net CVA/DVA OCS & C&M 41 -20 -25 68 64 12 -8 Net CVA/DVA OCS & O&C 41 -25 -29 -29 -42 -11 -4 Net CVA/DVA Core OC
Slide 26: NCA: Diversified portfolio
NCA: Diversified portfolio EaD (incl. NPL) per 30 June 2014, in €bn GER USA IT POR Rest Sum Commercial Performing 12.4 0.1 1.4 1.1 5.8 20.8 EaD RWA Real Estate NPL3) 2.2 0.3 0.5 0.0 0.7 3.7 24.5 14.9 Sum 14.6 0.4 1.9 1.1 6.5 24.5 GER USA IT ES POR Rest Sum FI 2.8 0.4 0.2 2.5 0.2 4.6 10.8 Public Sove
Slide 27: NCA: Higher risk cluster CRE reduced to less than €1bn
NCA: Higher risk cluster CRE reduced to less than €1bn after sale of portfolios in Spain and Japan Cluster Commercial Real Estate1) Q2/14 Q4/13 Ship Finance2) Q2/14 Q4/13 EaD in €bn EaD in €bn • Bulk Carrier (Capesize/VLOC) 0.8 higher 0.6 4.3 • Container < 2,000 TEU 0.4 2.9 3.1 • Hungary 0.3 risk (3
Slide 28: Default portfolios CRE and Ship Finance as of 30 June 2014
Default portfolios CRE and Ship Finance1) as of 30 June 2014 30 June 2014 (31 Dec 2013) 31 Dec 2012 Default portfolio CRE by country | €m Total Germany US Total Default volume 3,663 (5,662) 2,201 (2,371) 257 (283) 7,643 Loan loss provisions 967 (1,882) 604 (662) 53 (55) 2,672 GLLP 75 (119) 27 (30) 2
Slide 29: Default Portfolio (30 June 2014)
Default Portfolio (30 June 2014) Default portfolio and coverage ratios by segment €m – excluding /including GLLP Group1 12,917 89% / 96% 12,342 5,225 6,276 841 Private Customers 822 82% / 97% 795 268/404/124 M ittelstandsbank 2,646 72% / 82% 2,179 1,462 /437/ 280 Central & Eastern Europe 1,187 96% /
Slide 30: Commerzbank financials at a glance
Commerzbank financials at a glance Group Q2 2013 H1 2013 Q1 2014 Q2 2014 H1 2014 Operating result (€m) 74 538 324 257 581 Net result (€m)1) 40 -58 200 100 300 Core tier 1 ratio B 2.5 (2013) / CET 1 B 3 (2014) in (%) 12.1 12.1 11.3 11.7 2) 11.7 2) 2) 2) CET 1 ratio B 3 fully phased in (%) n/a n/a 9.0
Slide 31: Commerzbank Group
Commerzbank Group Q1 Q2 Q3 Q4 Q1 Q2 in € m % yoy % qoq 2013 2013 2013 2013 2014 2014 Total Revenues 2,455 2,310 2,281 2,229 2,260 2,241 -3.0 -0.8 o/w Total net interest and net trading income 1,671 1,618 1,409 1,381 1,538 1,426 -11.9 -7.3 o/w Net commission income 844 805 784 773 815 782 -2.9 -4.0 o
Slide 32: Core Bank
Core Bank Q1 Q2 Q3 Q4 Q1 Q2 in € m % yoy % qoq 2013 2013 2013 2013 2014 2014 Total Revenues 2,284 2,254 2,227 2,151 2,216 2,277 1.0 2.8 o/w Total net interest and net trading income 1,544 1,413 1,385 1,268 1,417 1,497 5.9 5.6 o/w Net commission income 825 787 778 757 810 777 -1.3 -4.1 o/w Other inco
Slide 33: Private Customers
Private Customers Q1 Q2 Q3 Q4 Q1 Q2 in € m % yoy % qoq 2013 2013 2013 2013 2014 2014 Total Revenues 858 839 825 827 874 845 0.7 -3.3 o/w Total net interest and net trading income 431 444 452 446 450 480 8.1 6.7 o/w Net commission income 427 390 379 365 407 362 -7.2 -11.1 o/w Other income - 5 -6 16 1
Slide 34: Mittelstandsbank
Mittelstandsbank Q1 Q2 Q3 Q4 Q1 Q2 in € m % yoy % qoq 2013 2013 2013 2013 2014 2014 Total Revenues 727 695 790 705 716 739 6.3 3.2 o/w Total net interest and net trading income 457 405 458 441 440 463 14.3 5.2 o/w Net commission income 280 272 264 250 274 264 -2.9 -3.6 o/w Other income -10 18 68 14
Slide 35: Central & Eastern Europe
Central & Eastern Europe Q1 Q2 Q3 Q4 Q1 Q2 in € m % yoy % qoq 2013 2013 2013 2013 2014 2014 Total Revenues 185 195 212 216 224 234 20.0 4.5 o/w Total net interest and net trading income 129 130 147 145 156 175 34.6 12.2 o/w Net commission income 44 50 49 55 57 59 18.0 3.5 o/w Other income 12 15 16 1
Slide 36: Corporates & Markets
Corporates & Markets Q1 Q2 Q3 Q4 Q1 Q2 in € m % yoy % qoq 2013 2013 2013 2013 2014 2014 Total Revenues 584 569 460 466 543 505 -11.2 -7.0 o/w Total net interest and net trading income 504 415 299 345 466 405 -2.4 -13.1 o/w Net commission income 83 93 91 100 76 101 8.6 32.9 o/w Other income -3 61 70
Slide 37: Non-Core Assets
Non-Core Assets Q1 Q2 Q3 Q4 Q1 Q2 in € m % yoy % qoq 2013 2013 2013 2013 2014 2014 Total Revenues 171 56 54 78 44 -36 >-100 >-100 o/w Total net interest and net trading income 127 205 24 113 121 -71 >-100 >-100 o/w Net commission income 19 18 6 16 5 5 -72.2 - o/w Other income 25 -167 24 -51 -82 30 >
Slide 38: Others & Consolidation
Others & Consolidation Q1 Q2 Q3 Q4 Q1 Q2 in € m % yoy % qoq 2013 2013 2013 2013 2014 2014 Total Revenues -70 -44 -60 -63 -141 -46 -4.5 67.4 o/w Total net interest and net trading income 23 19 29 -109 -95 -26 >-100 72.6 o/w Net commission income -9 -18 -5 -13 -4 -9 50.0 >-100 o/w Other income -84 -45
Slide 39: Group equity definitions
Group equity definitions Capital Capital Capital Q1 2014 Q2 2014 YTD Jun 2014 End of End of Average €bn Period Period 1) Subscribed capital 1.1 1.1 Capital reserve 15.9 15.9 Retained earnings 10.5 10.4 Currency translation reserve -0.2 -0.1 Revaluation reserve -1.1 -1.0 Cash flow hedges -0.3 -0.3 Co
Slide 40: 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 (PC € 28.8bn, MSB € 63.3bn, CEE € 13.3bn, C&M € 38.0bn, O&C € 19.2bn, NCA € 57.0bn) by a ratio of 9% › In addition aver
Slide 41: 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 42: 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