Commerzbank Ag · XETR:CBK
Commerzbank — Investor Day (September 2006)
30 slides from Commerzbank's investor day presentation, Sep 21, 2006
Slide 1: Investors' Day: Commerzbank Corporates & Markets: A customer-focused strategy
Investors‘ Day Commerzbank Corporates & Markets: A customer-focused strategy Frankfurt, September 21, 2006 Nicholas Teller Member of the Board of Managing Directors
Slide 2: Disclaimer
Disclaimer / investor relations / All presentations shown at Investors’ Day contain pro forma results for Q1 2006 and Q1-Q4 2005 to fully reflect the integration effect of Eurohypo. The pro forma results include Eurohypo results as if integrated as from January 1st, 2005 (incl. full refinancing cost
Slide 3: Segment Corporates & Markets
Segment Corporates & Markets Corporates & Markets Ü formed in 11/2004 Markets Corporates Markets MNCs former Securities Sales (until 11/2004) London Corporate Western Europe Finance & South Africa added in 2Q2006 Research USA In addition, segment reporting includes treasury units in London, Luxembou
Slide 4: Agenda
Restructuring of the former Securities 1. 2. 3. 4. Agenda 1. Restructuring of the former Securities – largely completed 2. Markets – core areas of expertise 3. Corporates – Commerzbank`s strategy 4. Outlook 4 / 29
Slide 5: Restructuring largely over - targets overachieved...
Restructuring of the former Securities 1. 2. 3. 4. Restructuring largely over - targets overachieved... Costs Front Office Staff* (pre bonus, in €m) • Cost base has been reduced • Target was already met in 1275 361 Target: ~ 270 significantly 2Q05, ever since staff • In the front office, targets wer
Slide 6: ...and revenue targets exceeded
Restructuring of the former Securities 1. 2. 3. 4. …and revenue targets exceeded Revenues (in €m) 1.000 800 600 Target: ~ 817 400 200 0 01/06 02/06 03/06 04/06 05/06 06/06 07/06 08/06 09/06 10/06 11/06 12/06 2004A 2005A 2006YTD Source: MaH Report NB: target = restructuring target 6 / 29
Slide 7: Low risk and low volatility
Restructuring of the former Securities 1. 2. 3. 4. Low risk and low volatility Development of VaR since 2004 (in €m, VaR overnight, 97.5%) VaR has been 30 significantly 25 reduced, mainly 20 through the closure of all 15 dedicated 10 proprietary 5 trading activities 30.01.04 30.07.04 30.01.05 30.07.
Slide 8: Strong growth of sales driven revenues
Restructuring of the former Securities 1. 2. 3. 4. Strong growth of sales driven revenues Revenue drivers of Commerzbank Markets (in €m, pre Revenue Split) 504 (77%) 378 +33% (88%) 142 (22%) 60 (14%) +137% 7 -7 (1%) 06/2005 (-2%) 06/2006 Sales & origination revenues Client-driven trading revenues Ot
Slide 9: Customer driven business
Restructuring of the former Securities 1. 2. 3. 4. Customer driven business Development of Revenue Split (average per quarter 2004 = 100) 150 125 CAGR: 26% 100 75 Av. Per 1Q/05 2Q/05 3Q/05 4Q/05 1Q/06 2Q/06 quarter 2004 • The Markets division pays a finder’s fee to the relationship management units
Slide 10: Agenda
Markets 1. 2. 3. 4. Agenda 1. Restructuring of the former Securities – largely completed 2. Markets – core areas of expertise 3. Corporates – Commerzbank`s strategy 4. Outlook 10 / 29
Slide 11: Equity Derivatives
Markets 1. 2. 3. 4. Equity Derivatives Share of Markets’ • By far our largest business line with considerable growth in the past few revenues 1H06 years. • Drivers: a very unique combination of a very good client franchise, premier pricing capabilities and diversified distribution channels, operatin
Slide 12: Interest Rates
Markets 1. 2. 3. 4. Interest Rates Share of Markets’ • Main focus: selling risk management products Revenue distribution revenues 1H06 (interest rate swaps and options) to by customer segments Commerzbank’s corporate customers, i.e. the strength of our second largest business is largely 78% 83% base
Slide 13: Corporate Finance
Markets 1. 2. 3. 4. Corporate Finance Share of Markets’ • Includes debt (bonds, syndicated loans, asset backed securities, leveraged finance) and revenues 1H06 equity products (IPOs, capital increases, squeeze outs,…). • Strongly linked to Commerzbank’s corporate client base which is served through
Slide 14: Debt and Equity Markets 2006 - Commerzbank in prominent roles
Markets 1. 2. 3. 4. Debt and Equity Markets 2006 - Commerzbank in prominent roles Equity Capital Markets ABS Bonds and Syndicated Loans Volkswagen Leasing GmbH Kapitalerhöhung EUR 1,011,000,000 EUR 600,000,000 EUR 500,000,000 mit Bezugsrecht Joint Lead Manager Joint Lead Manager Bookrunner Bookrunne
Slide 15: Foreign Exchange
Markets 1. 2. 3. 4. Foreign Exchange Share of Markets’ • Traditionally one of the strengths of Revenue distribution revenues 1H06 Commerzbank. by customer segments • Strongly linked to Commerzbank’s corporate 49% 41% 92% customer base, with a generally very good 8% market share. However, this good m
Slide 16: Cash Equities & Research
Markets 1. 2. 3. 4. Cash Equities & Research Share of Markets’ • Until the restructuring in 2004, we were offering a revenues 1H06 pan-european/global product; however, the business line failed to reach break-even due to its high cost base (trading and sales staff was reduced from 110 5% FTE to 40 F
Slide 17: Credit Trading
Markets 1. 2. 3. 4. Credit Trading Share of Markets’ • Our products range includes Pfandbriefe, CDS, revenues 1H06 Genussscheine, Jumbos, corporate bonds, credit linked notes, structured products. 5% • In 2Q2005, the business suffered from widening 95% margins in the market (=> GM); this year has se
Slide 18: Credit Portfolio Management: Integral function within Commerzbank
Markets 1. 2. 3. 4. Credit Portfolio Management: Integral function within Commerzbank credit exposure Synthetic Corporate Banking structuring CDS, CDO, CPM + bonds, loans Securisation Securitisation diversification Investment Investment Banking Books Secondary market credit exposure + counterparty r
Slide 19: Others and discontinued business
Markets 1. 2. 3. 4. Others and discontinued business Share of Markets’ • Among the other business lines, Securities Finance is the revenues 1H06 largest, followed by Local Markets, Bank Notes and Alternative Investment Strategies. 11% • Securities Finance is the repo and stock borrowing lending 89%
Slide 20: Closing the gap in fixed income products compared to peers
Markets 1. 2. 3. 4. Closing the gap in fixed income products compared to peers Revenues 2005 Coba Average of peers* #2 peer (in €m) 350 236 177 202 121 124 72 94 40 FX Rates Credit λ The Survey underlines our good position λ In Rates, we have a considerable λ In Credit, our position is the weakest.
Slide 21: Agenda
Corporates 1. 2. 3. 4. Agenda 1. Restructuring of the former Securities - largely completed 2. Markets - core areas of expertise 3. Corporates - Commerzbank‘s strategy 4. Outlook 21 / 29
Slide 22: The Western European, South African and US branches have joined Corporates & Markets
Corporates 1. 2. 3. 4. The Western European, South African and US branches have joined Corporates & Markets Revenues 1H06 9 849 Staff 76 (in €m) 57 (in FTE, as of 30.06.06) 256 22 1.625 709 465 882 Segment as Western USA Local New segment Segment as Western USA Local New segment was Europe & treasur
Slide 23: Western Europe (incl. South Africa)
Corporates 1. 2. 3. 4. Western Europe (incl. South Africa) • Excellent franchise with a long-standing tradition and a good reputation • But currently not earning its cost of capital on a sustainable basis • Therefore, a restructuring program called “Steps” has been initiated to achieve sustainable a
Slide 24: USA
Corporates 1. 2. 3. 4. USA • Well-run business with a proven track record. • Consistently earning its cost of capital. • Very cost-efficient, disciplined cost-management is reflected in a CIR < 40%. • State of the art risk management methodologies in place. • The major part of the US business is now
Slide 25: New vs. old
Corporates 1. 2. 3. 4. New vs. old Regional split of revenues Credit exposure by internal rating 5% 3% 1% 2% 12% 11% 12% 26% 25% 13% 50% 49% 3% 29% 53% 32% 38% 37% 06/2005 Rel. 06/2006 Rel. 06/2005 Rel. 06/2006 Rel. Mgmt as was Mgmt as is Mgmt as was Mgmt as is Germany London Western Europe w/o Lond
Slide 26: Multinational Corporates
Corporates 1. 2. 3. 4. Multinational Corporates • Clients: ~ 100 multinational clients, about half of Development of interest income which are German MNCs and the other half vs. commission income non-German MNCs with strong links to Germany. • Coverage through sector teams (currently Insurance, Tele
Slide 27: Economic profit: revenue generation and capital management is the key
Corporates 1. 2. 3. 4. Economic profit: revenue generation and capital management is the key Economic profit of Corporates • Economic capital reduced by € 155m in the past 12 months Gross revenues and economic profit* Economic capital in € m • In 1H05, Corporates made an in €m operating profit, but
Slide 28: Agenda
Outlook 1. 2. 3. 4. Agenda 1. Restructuring of the former Securities - largely completed 2. Markets - core areas of expertise 3. Corporates - Commerzbank‘s strategy 4. Outlook 28 / 29
Slide 29: Corporates & Markets: Outlook
Outlook 1. 2. 3. 4. Corporates & Markets: Outlook 2006 2007 2008 Revenues: Further increase in Markets (in Revenues particular by closing existing gaps), only slight increase in Corporates Expenses: slight increase in 2007 due to selected growth initiatives; slight reduction Expenses in Corporates (
Slide 30: For more information, please contact
For more information, please contact: Ute Heiserer-Jäckel P: +49 69 136 41874 Jürgen Ackermann (Head of IR) M: [email protected] P: +49 69 136 22338 M: [email protected] Simone Nuxoll P: +49 69 136 45660 Sandra Büschken (Deputy Head of IR) M: simone.nuxoll@commerzb