Commerzbank Ag · XETR:CBK
Commerzbank — Q1 2018 Earnings Presentation
44 slides from Commerzbank's earnings presentation, May 15, 2018
Slide 1: Performance and strategy implementation on track
Commerzbank 4.0 simple – digital – efficient Performance and strategy implementation on track Analyst conference – Q1 2018 results Stephan Engels | CFO | Frankfurt | 15 May 2018 All figures in this presentation are subject to rounding
Slide 2: Highlights Q1 2018
Commerzbank 4.0 simple – digital – efficient Performance and strategy implementation on track Highlights Q1 2018 Commerzbank 4.0 strategy implementation › Continued net new customers in PSBC (+73k) and CC (+1k) in Q1 – on track to reach 2018 targets › Strong new asset acquisition in PSBC and loan gr
Slide 3: Strategy execution on track
Commerzbank 4.0 simple – digital – efficient Strategy execution on track › Continued strong investments in Q1 building on successful ramp-up in 2017, Group resulting in 56% of IT investments used for digitalisation › Reduction of ~400 FTE within the first quarter Private and › Continued net new cust
Slide 4: Exceptional revenue items
Commerzbank 4.0 simple – digital – efficient Exceptional revenue items 2017 Revenues 2018 Revenues (€m) (€m) › Hedging & valuation adjustments -24 › Hedging & valuation adjustments 108 108 › 1 Q1 Polish group insurance business (PSBC) 52 › PPA Consumer Finance (PSBC) -27 Q2 › Hedging & valuation adj
Slide 5: Key financial figures at a glance
Commerzbank 4.0 simple – digital – efficient Key financial figures at a glance Group Financial Results Group Capital Operating result Exceptional Revenue Items B3 CET1 ratio fully phased-in IFRS 9 impact (€m) 330 289 (% end of period) 108 1 14.1 157 12.5 13.3 0.8 288 222 217 13.3 -60 Q1 2017 Q4 2017
Slide 6: Revenues and operating results of Commerzbank divisions
Commerzbank 4.0 simple – digital – efficient Revenues and operating results of Commerzbank divisions Private and Small Business Customers Corporate Clients (€m) (€m) 1,190 1,237 1,168 1,100 25 Exceptional Revenue Items 32 976 966 1,168 1,218 1,212 1,068 Revenues Revenues 979 967 0 -29 -3 -1 Q1 2017
Slide 7: Steady operating performance
Commerzbank 4.0 simple – digital – efficient Steady operating performance Group operating result Group P&L (€m) in €m Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 626 Revenues 2,390 2,066 2,508 2,191 2,302 Exceptional items 108 8 502 -60 1 Revenues excl. exceptional items 2,282 2,058 2,006 2,251 2,301 o/
Slide 8: Strong investments in digitalisation and higher compulsory contributions
Commerzbank 4.0 simple – digital – efficient Strong investments in digitalisation and higher compulsory contributions Cost transition Q1 2017 vs. Q1 2018 Personnel expenses (€m) Operating expenses 1,936 1,865 48 10 18 29 25 887 910 955 1,049 Q1 2017 Investments Regulatory & Compulsory Cost Other Q1
Slide 9: Low risk result (IFRS 9) reflecting benign credit environment
Commerzbank 4.0 simple – digital – efficient Low risk result (IFRS 9) reflecting benign credit environment Risk Result (Provisions for loan losses in 2017) Risk Result divisional split (€m) Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Risk Result in €m Private and Small Business Customers -33 -43 -55 -24
Slide 10: Private and Small Business Customers: continued growth
Commerzbank 4.0 simple – digital – efficient Private and Small Business Customers: continued growth Targets Loans Net new customers (GER) Assets under Control (GER) (m cumulative) (€bn eop) Deposits Securities +1.3m +24bn +38bn 2.0 >400 376 376 >385 338 111 114 +0.1m 102 1.0 +0.5m 88 91 81 0.7 0.6 1
Slide 11: Private and Small Business Customers: continued growth drives revenues
Commerzbank 4.0 simple – digital – efficient Private and Small Business Customers: continued growth drives revenues Operating result Segmental P&L (€m) in €m Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 382 Revenues 1,168 1,112 1,362 1,190 1,237 o/w Private Customers 590 521 533 598 599 o/w Small Busines
Slide 12: Corporate Clients: Corporate loan volume to complement RWA efficiency
Commerzbank 4.0 simple – digital – efficient Corporate Clients: Corporate loan volume to complement RWA efficiency Net new customers Revenues/RWA1 Loan Volume Corporates2 (k cumulative) (%) (€bn) +8bn +3.5k +20bp 10.0 +30bp 4.2 > 85 +2bn +1.1k 4.0 +4.1k 7.0 3.8 3.8 >80 6.5 3.7 5.4 77 77 75 1.3 YE YE
Slide 13: Corporate Clients: loan growth in Mittelstand – pricing headwinds
Commerzbank 4.0 simple – digital – efficient Corporate Clients: loan growth in Mittelstand – pricing headwinds from competition in attractive German market Operating result Segmental P&L (€m) in €m Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Revenues 1,100 943 969 976 966 o/w Mittelstand 473 440 437 467
Slide 14: Loan growth with target customers and optimisation of deposits
Commerzbank 4.0 simple – digital – efficient Loan growth with target customers and optimisation of deposits PSBC Loan volume Corporate Clients Loan volume (€bn) Deposit volume (€bn) Deposit volume 129 132 106 107 95 94 95 90 Dec-17 Mar-18 Dec-17 Mar-18 Highlights › Loan growth in Private and Small B
Slide 15: Asset & Capital Recovery: operating result driven by lower risk result
Commerzbank 4.0 simple – digital – efficient Asset & Capital Recovery: operating result driven by lower risk result Operating result Segmental P&L (€m) 18 in €m Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Revenues 115 39 -11 24 45 Revenues excl. exceptional items 24 22 -28 54 68 Risk result (2017: LLP)
Slide 16: RWA with increase of €1bn in Q1 2018 – following introduction of IFRS 9
Commerzbank 4.0 simple – digital – efficient RWA with increase of €1bn in Q1 2018 – following introduction of IFRS 9 RWA development by RWA classification in 2017 RWA development after introduction of IFRS 9 (€bn eop) Market Risk IAS 39 IFRS 9 Operational Risk 186 178 177 170 Credit Risk 171 169 20
Slide 17: CET1 ratio at 13.3% under new IFRS 9 regime
Commerzbank 4.0 simple – digital – efficient CET1 ratio at 13.3% under new IFRS 9 regime Transition of CET1 ratio fully phased-in (%) 14.1 0.8 13.3 13.3 0.1 0.1 YE 2017 IFRS 9 effects 01/01/2018 RWA change Capital change Q1 2018 IFRS 9 pro forma Highlights › Initial pro forma CET1 ratio of 13.3% wit
Slide 18: Objectives and expectations for 2018
Commerzbank 4.0 simple – digital – efficient Objectives and expectations for 2018 FY 2018 We focus on further growth and the execution of our strategy Commerzbank 4.0 We expect higher underlying revenues in PSBC and Corporate Clients We will manage our cost base at ~€7.0bn We expect a Risk Result un
Slide 19: simple – digital – efficient
Commerzbank 4.0 simple – digital – efficient Commerzbank 4.0 simple – digital – efficient Stephan Engels | CFO | Frankfurt | 15 May 2018 18
Slide 20: Appendix
Commerzbank 4.0 simple – digital – efficient Appendix Commerzbank Group P&L Tables Commerzbank financials at a glance 21 Commerzbank Group 33 Key figures Commerzbank share 22 Private and Small Business Customers 34 Key execution indicators 23 Corporate Clients 35 Digitalisation progress 24 Asset & C
Slide 21: German economy 2018 – ongoing upswing
Commerzbank 4.0 simple – digital – efficient German economy 2018 – ongoing upswing › The German economy has grown significantly in recent quarters. DAX › The main drivers of growth are still private consumption and investment in (avg. p.a.) buildings. In the course of 2017 even the investment in mac
Slide 22: Commerzbank financials at a glance
Commerzbank 4.0 simple – digital – efficient Commerzbank financials at a glance Group Q1 2017 Q4 2017 Q1 2018 Operating result (€m) 330 157 289 Net result (€m) 229 89 250 CET1 ratio Basel 3 fully phased-in (%) 12.5 14.1 13.3 Total assets (€bn) 490 453 470 RWA (€bn) 186 171 170 Leverage ratio (fully
Slide 23: Key figures Commerzbank share
Commerzbank 4.0 simple – digital – efficient Key figures Commerzbank share Figures per share Operating result per share (€) EPS 1.1 1.0 0.2 0.2 0.2 0.1 FY 2016 FY 2017 Q1 2018 ytd as of 31 Dec 2016 31 Dec 2017 31 Mar 2018 Number of shares issued (in m) 1,252.4 1,252.4 1,252.4 Market capitalisation (
Slide 24: Progress of key execution indicators in line with plan
Commerzbank 4.0 simple – digital – efficient Progress of key execution indicators in line with plan Net new customers (GER) Assets under Control (GER) Market share SBC1 (Wallet) Private and (m cumulated) (€bn eop) (%) 2.0 >400 8 Small 6 1.0 >385 5 Business 0.7 376 Customers Since 2018 2020 Q1 2018 2
Slide 25: Digitalisation progress in Commerzbank 4.0
Commerzbank 4.0 simple – digital – efficient Digitalisation progress in Commerzbank 4.0 Digitalisation of end-to-end processes in Digital Campus Customer Applications Master Journeys Multichannel Banking Payment Transactions/ Loans Asset App platform Trade Finance Management 2018 2018 2018 2018 2019
Slide 26: Significant NII potential in scenario of rising interest rates
Commerzbank 4.0 simple – digital – efficient Significant NII potential in scenario of rising interest rates 100 bps parallel up-shift in rates yield curve Scenario impact on NII (as of 31 December 2017, in %) (€m) 900-1,000 2.0 1.5 500-550 1.0 0.5 0.0 -0.5 0Y 2Y 4Y 6Y 8Y 10Y 0Y 2Y 4Y 6Y 8Y 10Y Year
Slide 27: Capital markets funding activities Q1 2018
Commerzbank 4.0 simple – digital – efficient Capital markets funding activities Q1 2018 Funding structure1 Group Funding activities2 (as of 31 March 2018) Q1 2018 – Notional €1.2bn Subordinated debt 14% Covered Unsecured bonds bonds €0.7bn €0.5bn Promissory notes 14% ~€65bn 50% Covered bonds Benchma
Slide 28: Rating overview Commerzbank
Commerzbank 4.0 simple – digital – efficient Rating overview Commerzbank As of 15 May 2018 Bank Ratings S&P Moody’s Fitch Scope Counterparty Rating1 A- negative A2 (cr) A- (dcr) - Deposit Rating2 A- negative A2 positive A- - Issuer Credit Rating (long-term debt) A- negative Baa1 stable BBB+ stable A
Slide 29: IAS 19: Development of pension obligations
Commerzbank 4.0 simple – digital – efficient IAS 19: Development of pension obligations Pension obligations (gross) Cumulated actuarial gains and losses Discount rate in %2 (€m) Cumulated OCI effect1 3.9 2.3 2.6 1.8 1.9 1.9 -713 -1,067 -1,279 -1,446 -1,300 -1,399 -7,175 -8,547 -9,201 -9,421 -9,364 -
Slide 30: Weakening of USD with net positive impact on capital ratio
Commerzbank 4.0 simple – digital – efficient Weakening of USD with net positive impact on capital ratio Q-o-Q Change in FX capital position 137.0 7.8 Other 10.6 GBP FX rates 12/17 03/18 10.3 +144 PLN +1 EUR/ GBP 0.887 0.875 USD -81 -19 24.4 EUR/ PLN 4.177 4.211 EUR -695 -24 EUR/ USD 1.199 1.232 83.9
Slide 31: Residential mortgage business vs. property prices
Commerzbank 4.0 simple – digital – efficient Residential mortgage business vs. property prices German residential properties HAM Overall mortgage portfolio COL FRA › Growing mortgage volume with a very good risk quality: BER – 12/15: EaD €62.6bn – RD 12bp MUC 300 Germany – 12/16: EaD €66.8bn – RD 10
Slide 32: Leading provider of Renewable Energy Project Finance and most sustainable bank
Commerzbank 4.0 simple – digital – efficient We are a leading German provider of Renewable Energy Project Finance funding and will become Germanys most sustainable commercial bank Renewable Energy Project Finance Portfolio Our evidences of success (Exposure at Default, €bn end of period) › In the vi
Slide 33: IFRS 9 impairment stages
Commerzbank 4.0 simple – digital – efficient IFRS 9 requires to recognise lifetime-ECL as a loss allowance if the risk of a default has increased significantly since initial recognition Measurement: Stage 1: 1y-ECL › Each financial instrument on initial recognition (regardless of its default risk) ›
Slide 34: Commerzbank Group
Commerzbank 4.0 simple – digital – efficient Commerzbank Group Q1 Q2 Q3 Q4 FY Q1 €m 2017 2017 2017 2017 2017 2018 Total clean revenues 2,282 2,058 2,006 2,251 8,598 2,301 Exceptional items 108 8 502 -60 557 1 Total revenues 2,390 2,066 2,508 2,191 9,154 2,302 o/w Net interest income 1,049 1,004 1,03
Slide 35: Private and Small Business Customers
Commerzbank 4.0 simple – digital – efficient Private and Small Business Customers Q1 Q2 Q3 Q4 FY Q1 €m 2017 2017 2017 2017 2017 2018 Total clean revenues 1,168 1,110 1,125 1,218 4,622 1,212 Exceptional items - 1 237 -29 210 25 Total revenues 1,168 1,112 1,362 1,190 4,832 1,237 o/w Net interest incom
Slide 36: Corporate Clients
Commerzbank 4.0 simple – digital – efficient Corporate Clients Q1 Q2 Q3 Q4 FY Q1 €m 2017 2017 2017 2017 2017 2018 Total clean revenues 1,068 951 960 979 3,958 967 Exceptional items 32 -8 9 -3 29 -1 Total revenues 1,100 943 969 976 3,987 966 o/w Net interest income 483 405 416 427 1,731 373 o/w Net c
Slide 37: Asset & Capital Recovery
Commerzbank 4.0 simple – digital – efficient Asset & Capital Recovery Q1 Q2 Q3 Q4 FY Q1 €m 2017 2017 2017 2017 2017 2018 Total clean revenues 24 22 -28 54 72 68 Exceptional items 91 16 18 -29 96 -23 Total revenues 115 39 -11 24 167 45 o/w Net interest income 34 47 27 75 183 14 o/w Net commission inc
Slide 38: Others & Consolidation
Commerzbank 4.0 simple – digital – efficient Others & Consolidation Q1 Q2 Q3 Q4 FY Q1 €m 2017 2017 2017 2017 2017 2018 Total clean revenues 22 -26 -51 - -55 53 Exceptional items -15 -1 238 1 222 - Total revenues 7 -27 187 1 168 54 o/w Net interest income -35 -22 10 -28 -75 42 o/w Net commission inco
Slide 39: mBank
Commerzbank 4.0 simple – digital – efficient mBank Part of Segment Private and Small Business Customers Q1 Q2 Q3 Q4 FY Q1 €m 2017 2017 2017 2017 2017 2018 Total clean revenues 241 243 254 260 998 253 Exceptional items - - - - - 52 Total revenues 241 243 254 261 998 305 o/w Net interest income 143 15
Slide 40: Exceptional Revenue Items
Commerzbank 4.0 simple – digital – efficient Commerzbank Group Exceptional Revenue Items Q1 Q2 Q3 Q4 FY Q1 €m 2017 2017 2017 2017 2017 2018 Exceptional Revenue Item s 108 8 502 -60 557 1 o/w Net interest income -9 -5 -24 -37 -75 -26 o/w Net fair value result 117 13 36 -23 142 -25 o/w Other income -
Slide 41: Group equity composition
Commerzbank 4.0 simple – digital – efficient Group equity composition Capital Capital Capital Ratios Ratio Q4 2017 Q1 2018 Q1 2018 Q1 2018 Q1 2018 End of period End of period Average €bn €bn €bn % % Common equity tier 1 B3 capital 24.0 22.5 22.5 * Op. RoCET: 5.2% CET1: 13.3% DTA 1.0 1.3 Deductions
Slide 42: Glossary – Capital Allocation / RoE, RoTE & RoCET1 Calculation
Commerzbank 4.0 simple – digital – efficient Glossary – Capital Allocation / RoE, RoTE & RoCET1 Calculation › Amount of average capital allocated to business segments is calculated by multiplying the segments current YTD average RWA (PSBC €38.6bn, CC €88.6bn, O&C €26.2bn, ACR €16.6bn) by a ratio of
Slide 43: For more information, please contact Commerzbank's IR team
Commerzbank 4.0 simple – digital – efficient For more information, please contact Commerzbank’s IR team Christoph Wortig (Head of Investor Relations) P: +49 69 136 52668 M: [email protected] Ansgar Herkert (Head of IR Communications) P: +49 69 136 44083 M: [email protected]
Slide 44: Disclaimer
Commerzbank 4.0 simple – digital – efficient 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 the