Commerzbank Ag · XETR:CBK
Commerzbank — FY2007 Earnings Presentation
35 slides from Commerzbank's earnings presentation, Feb 14, 2008
Slide 1: Analyst conference – preliminary 2007 results
Commerzbank Analyst conference – preliminary 2007 results Dr. Eric Strutz, Chief Financial Officer Frankfurt, February 14th, 2008
Slide 2: Commerzbank achieved record year despite global financials crisis
Commerzbank achieved record year despite global financials crisis 2007 vs. 2006 Q4`07 vs. Q4`06 Revenues1, in € m 7,879 + 0.3% 1,568 -23.4% Net profit, in € m 1,917 +19.5% 201 -44.0% Net RoE, in % 15.4 +1.2ppts 6.5 -6.2ppts EPS, in € 2.92 +19.7% 0.31 -42.6% 1 after LLP • Strong underlying business i
Slide 3: Strong growth in net interest income (excl. PFT)
Strong growth in net interest income (excl. PFT) Net interest income in € m • NII without PFT grew 7% y-o-y 1,060 1,050 1,045 1,003 driven by deposit growth 996 999 229 973 • Strong contribution from PBC and 831 MSB; CRE and C&M on par with previous quarters • Essen Hyp: - Ongoing weak performance i
Slide 4: Loan loss provisions remain at low levels
Loan loss provisions remain at low levels Loan loss provisions in € m 415 293 • Net LLP ratio 15 bps in 2007 - Less than 80% SLLP • LLP lowered to €61m in Q4 225 • Reversals in Mittelstand 52 160 • Default portfolio further reduced 159 151 122 by 23% y-o-y 107 79 61 Q1`06 Q2`06 Q3`06 Q4`06 Q1`07 Q2`
Slide 5: High commission income level maintained
High commission income level maintained Commission income 847 in € m 798 810 734 70 758 38 718 100 735 • CI without Jupiter and one-off 99 777 51 60 677 63 735 in Mittelstand grew by 9% 699 707 710 674 62 655 compared with 2006 615 • Significant CI increase in PBC due to business expansion; ongoing
Slide 6: Sales & Trading profits maintained in difficult markets
Sales & Trading profits maintained in difficult markets Trading profit 381 in € m 337 74 320 11 14 286 301 2 • Sales & Trading profits 48 sustained at good levels in 326 307 volatile markets 306 -96 299 -128 264 • Strong client business in 2007 168 238 -57 -Equity Derivatives [+17%] 181 201 -Interes
Slide 7: Subprime impairments lower than in Q3
Subprime impairments lower than in Q3 Net investment income in € m • Q4 result affected by subprime impairments amounting to 446 €248m -44 - €188m relates to C&M 225 262 184 306 (CDO: impaired by 90%) 91 - €60m relates to CRE 50 125 (RMBS impaired by 1/4) 53 • Active portfolio management in -248 lig
Slide 8: Continued cost discipline
Continued cost discipline Personnel Operating expenses in € m Depreciation 586 734 • Costs flat when compared to Others 79 2006, w/o Jupiter costs up by [4.8%] 1,395 1,399 1,327 1,292 1,360 1,324 1,283 • Operating expenses in Q4 are 130 on par with Q4 2006 1,190 • +€60m growth initiatives at PBC and
Slide 9: Strong operating profit excluding subprime impact
Strong operating profit excluding subprime impact Operating profit in € m • High profit level in the 44 1,075 underlying business 87 960 • Operating profit in Q4 908 affected by subprime 700 impairments of €248m 652 and reduction of non- 291 core portfolio at Essen 398 Hyp €150m 337 361 • Operating
Slide 10: Net profit at record high – targets achieved
Net profit at record high – targets achieved Net profit in € m • Net profit rose by 20% 34 against FY06 despite 768 743 subprime crisis • Net RoE at 15.4% well 609 ahead of target 216 • Tax rate of 23% in FY 279 • Minorities positive €60m 359 339 in Q4 due to losses at 285 Essen Hyp 217 201 • EPS at
Slide 11: Robust capital position
Robust capital position Tier Tier 1 Capital I ratio in % • Tier I ratio at 6.9% according to 6.9 6.9 Basel I 6.7 6.8 6.6 • Applying Basel II, Tier I is significantly above 7% • Active capital management • First-time application of German Solvency Regulation for securitizations Dec'06 M ar'07 Jun'07
Slide 12: Solid levels of liquidity
Solid levels of liquidity Liquidity ratio (Principle II) 1.19 • Maintenance of a solid liquidity 1.18 1.18 buffer • Liquidity situation pro-actively 1.15 managed • Client deposits increased by 1.12 more than €12bn Dec`06 Mar`07 Jun`07 Sep`07 Dec`07 Commerzbank with a very Principle II target range s
Slide 13: Strong underlying business in our core divisions
Strong underlying business in our core divisions Operating profit in € m 1,252 Private & Business Customers Mittelstand Corporates & Markets 814 633 418 401 306 395 13 23 20061 2007 2006 2007 2006 2007 2 2 2 Op. RoE 0.5% 16.2% Op. RoE 27.3% 39.2% Op. RoE 26.4% 1.0% excl. one-off provision Commercial
Slide 14: All business lines in PBC with strong earnings improvement in 2007
All business lines in PBC with strong earnings improvement in 2007 Main P&L items Operating profit in € m Q4`06 Q4`07 FY`06 FY`06 PF FY`07 in € m Net interest income 328 340 1,280 1,326 1,296 Risk provisioning -76 -43 -585 -600 -240 145 Commission income 324 374 1,418 1,416 1,575 137 104 85 71 67 Op
Slide 15: PBC showing growth momentum
PBC showing growth momentum Branch business comdirect cominvest Operating profit, in € m Operating profit, in € m Operating profit, in € m 186 +22% +26% 255 72 82 59 65 -107 2006 2007 2006 2007 2006 2007 excl. one-off provision of €293m Clients Deposit volume Assets under Management in m +8% in € bn
Slide 16: Mittelstand with excellent performance in 2007
Mittelstand with excellent performance in 2007 Main P&L items Operating profit in € m Q4`06 Q4`07 FY`06 FY`06 PF FY`07 in € m 458 100 Net interest income 343 403 1,274 1,264 1,477 312 Risk provisioning 46 29 -128 -128 12 266 269 259 221 Commission income 188 172 675 675 817 152 129 Operating expense
Slide 17: Domestic business as well as BRE outstandingly successful
Domestic business as well as BRE outstandingly successful Mittelstand domestic BRE Bank Operating profit, in € m Operating profit, in € m +57% 808 100 515 +66% 227 137 2006 2007 2006 2007 One-off Mittelstand Average credit and deposit volume Credit volume BRE customers in € bn Deposit volume in m 38
Slide 18: Corporates & Markets heavily impacted by US subprime losses …
Corporates & Markets heavily impacted by US subprime losses … Main P&L items Operating profit in € m Q4`06 Q4`07 FY`06 FY`06 PF FY`07 in € m Net interest income 87 98 346 338 373 188169 209 Risk provisioning 4 -55 11 11 -135 163 174 113 Commission income 62 44 198 198 186 7 Trading profit 198 125 95
Slide 19: … but underlying client business unaffected
… but underlying client business unaffected Markets Corporates Operating profit, in € m Operating profit, in € m 351 241 282 221 178 -197 2006 2007 2006 2007 Operating profit w/o subprime impairments Operating profit w/o subprime impairments Performance of product lines 2006 Subprime impact of New Y
Slide 20: US subprime exposure weighs down profit of CRE
US subprime exposure weighs down profit of CRE Main P&L items Operating profit in € m Q4`06 Q4`07 FY`06 FY`06 PF FY`07 in € m Net interest income 232 216 713 875 858 212 164 153 Risk provisioning -48 -11 -148 -185 -115 146 152 123 106 84 Commission income 111 122 293 335 411 90 49 46 Result on Finan
Slide 21: CRE with well diversified and robust portfolio – increased profit contribution of Commerz Real
CRE with well diversified and robust portfolio – increased profit contribution of Commerz Real CRE Banking CRE Asset Management Operating profit, in € m Operating profit, in € m 517 91 381 329 122 96 2006 2007 2006 2007 Pro-forma integration of Eurohypo Profit without Subprime impairments Total CRE
Slide 22: PFT is slightly positive excluding Essen Hyp’s one-off
PFT is slightly positive excluding Essen Hyp’s one-off Main P&L items Operating profit in € m Q4`06 Q4`07 FY`06 FY`06 PF FY`07 in € m Net interest income 35 -83 350 394 -2 Trading profit 24 -84 -18 -33 -161 112 77 Result on Financial Assets 51 1 93 111 148 38 44 68 18 53 Operating expenses 35 27 94
Slide 23: Successful Eurohypo PF model will be the platform for developed integrated Public Finance business
Successful Eurohypo PF model will be the platform for developed integrated Public Finance business PFT (without Essen Hyp) Essen Hyp Operating profit, in € m Operating profit, in € m 151 202 41 74 -91 -150 -241 2006 2007 2006 2007 Pro-forma integration of Eurohypo New business model in Public Financ
Slide 24: Main takeaways
Main takeaways 1. Commerzbank achieved record year despite global financial crisis 2. Strong underlying business in core divisions confirms strength of business model Early disclosure of Commerzbank’s US subprime exposure and rigorous 3. impairment 4. Comfortable capital base and strong liquidity ra
Slide 25: Appendix
Appendix 1 February 14th, 2008 24
Slide 26: Commerzbank Group Quarterly results in new Group structure
Commerzbank Group Quarterly results in new Group structure Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 - Q4 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 - Q4 2007 pr o form a pro for m a Net interest income 1,060 1,060 1,050 996 4,166 1,045 1,003 999 973 4,020 Provision f or possible loan losses -211 -225 -415 -7
Slide 27: Private and Business Customers Quarterly results in new Group structure
Private and Business Customers Quarterly results in new Group structure Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 - Q4 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 - Q4 2007 M io. Eur o pr o form a pro for m a Net interest income 334 328 336 328 1,326 319 318 319 340 1,296 Provision f or possible loan losses -7
Slide 28: Mittelstand Quarterly results in new Group structure
Mittelstand Quarterly results in new Group structure Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 - Q4 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 - Q4 2007 M io. Eur o pr o form a pro for m a Net interest income 306 287 328 343 1,264 333 360 381 403 1,477 Provision f or possible loan losses -80 -81 -13 46 -128 -
Slide 29: Corporates & Markets Quarterly results in new Group structure
Corporates & Markets Quarterly results in new Group structure Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 - Q4 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 - Q4 2007 M io. Eur o pr o form a pro for m a Net interest income 85 76 90 87 338 101 96 78 98 373 Provision f or possible loan losses -11 -9 27 4 11 -13 -10
Slide 30: Commercial Real Estate Quarterly results in new Group structure
Commercial Real Estate Quarterly results in new Group structure Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 - Q4 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 - Q4 2007 M io. Eur o pr o form a pro for m a Net interest income 212 222 209 232 875 211 211 220 216 858 Provision f or possible loan losses -41 -55 -41 -4
Slide 31: Public Finance & Treasury Quarterly results in new Group structure
Public Finance & Treasury Quarterly results in new Group structure Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 - Q4 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 - Q4 2007 M io. Eur o pr o form a pro for m a Net interest income 129 117 113 35 394 68 11 2 -83 -2 Provision f or possible loan losses -8 -8 -7 -5 -28 -
Slide 32: Others and Consolidation Quarterly results in new Group structure
Others and Consolidation Quarterly results in new Group structure Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 - Q4 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 - Q4 2007 M io. Eur o pr o form a pro for m a Net interest income -6 30 -26 -29 -31 13 7 -1 -1 18 Provision f or possible loan losses 0 0 0 0 0 0 -4 0 -1
Slide 33: Group equity definitions
Group equity definitions Reconciliation of equity definitions Equity basis for RoE Equity definitions in € m De c 2007 Jan-Dec 2007 Subscribed capital 1,708 1,707 Capital reserve 5,709 5,702 Retained earnings 4,898 5,095 Reserve from currency translation -34 -93 Investors‘ Capital w ithout minoritie
Slide 34: For more information, please contact Commerzbank´s IR team
For more information, please contact Commerzbank´s IR team: Jürgen Ackermann (Head of IR) Ute Heiserer-Jäckel Karsten Swoboda P: +49 69 136 22338 P: +49 69 136 41874 P: +49 69 136 22339 M: [email protected] M: [email protected] M: [email protected] Sa
Slide 35: Disclaimer
Disclaimer / investor relations / This presentation has been prepared and issued by Commerzbank AG. This publication is intended for professional and institutional customers. / Any information in this presentation is based on data obtained from sources considered to be reliable, but no representatio