Commerzbank Ag · XETR:CBK
Commerzbank — Q2 2010 Earnings Presentation
48 slides from Commerzbank's earnings presentation, Aug 5, 2010
Slide 1: Commerzbank is set to return to operating profitability in 2010
Commerzbank is set to return to operating profitability in 2010 Q2 2010 results - Analyst conference Eric Strutz CFO Frankfurt August 5th, 2010
Slide 2: Positive Q2 again despite investments in integration and de-risking
Positive Q2 again despite investments in integration and de-risking Operating profit above € 1bn in H1 2010 Core Bank continues to be profitable: Mittelstandsbank main profit contributor Lower risk provisioning as a result of successful restructuring and strong economy Further progress in pro-active
Slide 3: Tier 1 ratio well above the target range
Tier 1 ratio well above the target range Total Assets RWA Tier 1 ratio in € bn in € bn in % Increase by end of June due to RWAs end of June influenced by Ongoing solid ratio m-t-m effects in derivatives rating migration and FX effects -14% +3.7ppt 1,046 10.8 2) 10.5 898 844 Target -14% 7.1 range 338
Slide 4: Q2 2010 – Core bank continues to be profitable
Q2 2010 – Core bank continues to be profitable Commerzbank Core Bank Optimization Downsizing Corporates & Private Customers Mittelstandsbank CEE ABF PRU Markets Operating profit1) Operating profit in € m in € m 399 217 94 1202) 525 97 -126 2) -198 -250 -242 Q2 2009 Q2 2010 Q2 2009 Q2 2010 Q2 2009 Q2
Slide 5: Integration progress
Integration progress Cost synergies Integration charges Personnel reduction End of June 2010 >40% of Integration charges 2010 due 2/3 of overall reduction planned synergy targets to higher IT investments contracted achieved above plan Reduction of staff faster than Forecast 2010 at €1.1bn Announced
Slide 6: Commerzbank with a solid operating profit of €243m in Q2 2010
Commerzbank with a solid operating profit of €243m in Q2 2010 Q2 2010 Q1 2010 vs Q1 2010 Q2 2009 vs Q2 2009 H1 2010 H1 2009* Revenues in € m 3,110 3,624 -514 3,033 +77 6,734 5,363 thereof net interest income in € m 1,859 1,888 -29 1,838 +21 3,747 3,530 thereof commission income in € m 884 983 -99 94
Slide 7: Stable and sound net interest income level
Stable and sound net interest income level Net interest income NII in Q2 2010 marginally up y-o-y and in € m slightly down q-o-q 80 * - q-o-q: One-off effect in Q1 €75m from non-payment of coupons from profit related hybrids and Genussscheine 1,692 1,838 1,769 1,890 1,888 1,859 - y-o-y: Δ exit units
Slide 8: Commission income impacted by high uncertainty in the financial markets
Commission income impacted by high uncertainty in the financial markets Commission income Commission income down 7% y-o-y and in € m 10% q-o-q Exit units detract €36m on y-o-y base PC missed €50m in reluctant securities transactions q-o-q 51 * MSB and CM with less syndication businesses 947 953 972
Slide 9: Positive trading profit despite difficult market conditions
Positive trading profit despite difficult market conditions Trading profit Trading profit significantly higher than in in € m Q2 2009, but more than halved vs. strong first quarter – in line with overall industry trend 850 FIC revenues were impacted by difficult 659 market conditions and substantial
Slide 10: Net investment income
Net investment income Net investment income Positive contribution in Q2 2010 in € m Realized gains from equity disposals (Generali and Heidelberger Zement) but also in PRU Positive effects offset by charges for further de-risking (Public Finance -€153m) 386 172 60 -54 -87 -119 Σ 417 Q1 Q2 Q3 Q4 Q1 Q
Slide 11: Loan loss provisions reflecting the successful workout and improved economic conditions
Loan loss provisions reflecting the successful workout and improved economic conditions Loan loss provisions Proceeding improvement in the core in € m bank towards normalized levels ABF continues to be difficult CRE Banking with €287m in Q2 2010 2010 full year expectation is reduced to ≤ €3bn, mainl
Slide 12: Cost base influenced by investments into integration
Cost base influenced by investments into integration Operating expenses Personnel Operating expenses on Q1 level in € m Other Expenses 1,013 1,075 - Including €148m integration Depreciation expenses 140 Personnel expenses down 168 * 13% y-o-y and 3% q-o-q Lower personnel cost were counterbalanced by
Slide 13: Clean cost base Q2 2009 vs. Q2 2010
Clean cost base Q2 2009 vs. Q2 2010 in € m 2,263 2,228 38 41 -4.8% 148 2,184 2,080 Operating Integration Exit units Operating Operating Integration Operating expenses charges expenses expenses charges expenses Q2 09 Q2 09 Q2 10 Q2 10 (as reported) (clean) (clean) (as reported) Eric Strutz CFO Fr
Slide 14: Operating profit and Net profit
Operating profit and Net profit Operating profit & Net profit Operating profit of €243m in Q2 2010 in € m Further restructuring efforts in ABF (CommerzReal) caused dedicated restructuring costs of €33m 771 708 243 352 Tax credit of €151m 122 -223 Net profit of €352m -595 -864 -761 -1,055 H1 2010 EPS
Slide 15: MSB is main profit contributor
MSB is main profit contributor Operating profit, in € m Private Customers Mittelstandsbank Central & Eastern Europe 383 319 301 125 42 61 47 20 58 78 8 20 29 6 -62 -87 -42 -203 Q1 Q2 Q3 Q4 Q4 Q1 Q1 Q2 Q2 Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Q1 Q1 Q2 Q2 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q2 2009 2010 2009 2010 2009 2010 Corpor
Slide 16: Private Customers affected by weak commissions and deposit margin
Private Customers affected by weak commissions and deposit margin Operating profit Main P&L items in € m in € m Q2`09 Q1`10 Q2`10 H1`09 H1`10 Net interest income 553 497 492 1,106 989 42 61 47 29 20 Risk provisioning -54 -66 -70 -104 -136 20 Commission income 539 546 492 1,049 1,038 Trading profit -
Slide 17: MSB delivered one of its best quarterly result ever
MSB delivered one of its best quarterly result ever Operating profit Main P&L items in € m 383 in € m Q2`09 Q1`10 Q2`10 H1`09 H1`10 319 301 Net interest income 541 515 550 1,088 1,065 125 58 78 Risk provisioning -236 -161 -94 -326 -255 Commission income 211 256 210 449 466 Trading profit -42 6 62 -3
Slide 18: CEE: Profit contribution from BRE Bank offset by Bank Forum
CEE: Profit contribution from BRE Bank offset by Bank Forum Operating profit Main P&L items in € m in € m Q2`09 Q1`10 Q2`10 H1`09 H1`10 Net interest income 162 159 161 326 320 8 Risk provisioning -202 -94 -92 -375 -186 6 Commission income 46 47 53 77 100 -62 -42 -87 Trading profit 19 18 20 48 38 -20
Slide 19: C&M with positive result despite difficult market conditions
C&M with positive result despite difficult market conditions Operating profit Main P&L items in € m 340 in € m Q2`09 Q1`10 Q2`10 H1`09 H1`10 Net interest income 195 212 205 373 417 114 44 Risk provisioning 33 19 1 -221 20 -2 Commission income 91 76 63 171 139 -92 Trading profit 186 449 188 760 637 -
Slide 20: ABF suffered from high LLPs and de-risking in Public Finance
ABF suffered from high LLPs and de-risking in Public Finance Operating profit Main P&L items in € m in € m Q2`09 Q1`10 Q2`10 H1`09 H1`10 168 Net interest income 328 296 319 586 615 Risk provisioning -359 -325 -354 -566 -679 -135 -86 -198 Commission income 75 88 80 138 168 -250 Trading profit -73 -4
Slide 21: PRU with solid operating result
PRU with solid operating result Operating profit Main P&L items in € m 504 162 94 in € m Q2`09 Q1`10 Q2`10 H1`09 H1`10 Net interest income 65 23 10 137 33 Risk provisioning -169 -22 -28 -240 -50 Commission income 1 -3 7 12 4 -242 -300 Trading profit 24 282 56 -1,235 338 -1,415 Net investment income
Slide 22: Significantly improved risk profile of ABS portfolio
Significantly improved risk profile of ABS portfolio Risk Exposure Details in € bn AAA AA A BBB Non IG Total m-d-r* Risk Exposure m-d-r* RMBS 5.8 34% Write-back potential €11.1 bn 19% CMBS 0.5 32% Neutral €3.9 bn 14% CDO 7.6 40% (+/-€25m P&L) Other ABS 3.7 16% Impairments €2.6 bn 69% likely/possible
Slide 23: Others & Consolidation
Others & Consolidation Operating profit Main P&L items in € m 309 in € m Q2`09 Q1`10 Q2`10 H1`09 H1`10 Net interest income -6 186 122 -86 308 120 19 Risk provisioning -6 5 -2 -5 3 Commission income -16 -27 -21 -99 -48 -146 -126 Trading profit -40 94 -27 -185 67 -218 Net investment income 314 -14 81
Slide 24: Germany is the economic engine in the Eurozone
Germany is the economic engine in the Eurozone Status quo 2010 2011 – 2012 German economy most promising › Germany recovering strongly from › Recovery will go on, no double dip in EMU collapse after Lehman default neither in the US nor in EMU/Germany Stable economic situation › Germany is profiting
Slide 25: Commerzbank is set to return to operating profitability in 2010
Commerzbank is set to return to operating profitability in 2010 German economy continues to improve, strong export industry Risk provisioning likely to be ≤ €3bn in 2010 PRU expected to be positive in 2010 De-risking further in focus, taking advantage of opportunities for risk-reduction Commerzbank
Slide 26: Appendix 1: Segmental reporting
Appendix 1: Segmental reporting Eric Strutz CFO Frankfurt August 5th, 2010 25
Slide 27: Commerzbank Group
Commerzbank Group Q1 Q2 6M Q3 Q4 Q1 Q2 6M in € m 2009 2009 2009 2009 2009 2010 2010 2010 Net interest income 1,692 1,838 3,530 1,769 1,890 1,888 1,859 3,747 Provision for possible loan losses -844 -993 -1,837 -1,053 -1,324 -644 -639 -1,283 Net interest income after provisioning 848 845 1,693 716 566
Slide 28: Private Customers
Private Customers Q1 2009 Q2 2009 H1 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 H1 2010 in € m Net interest income 553 553 1,106 529 534 497 492 989 Provision for possible loan losses -50 -54 -104 -70 -72 -66 -70 -136 Net interest income after provisioning 503 499 1,002 459 462 431 422 853 Net commission
Slide 29: Mittelstandsbank
Mittelstandsbank Q1 2009 Q2 2009 H1 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 H1 2010 in € m Net interest income 547 541 1,088 502 557 515 550 1,065 Provision for possible loan losses -90 -236 -326 -330 -298 -161 -94 -255 Net interest income after provisioning 457 305 762 172 259 354 456 810 Net commissi
Slide 30: Central and Eastern Europe
Central and Eastern Europe Q1 2009 Q2 2009 H1 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 H1 2010 in € m Net interest income 164 162 326 161 178 159 161 320 Provision for possible loan losses -173 -202 -375 -141 -296 -94 -92 -186 Net interest income after provisioning -9 -40 -49 20 -118 65 69 134 Net commi
Slide 31: Corporates & Markets
Corporates & Markets Q1 2009 Q2 2009 H1 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 H1 2010 in € m Net interest income 178 195 373 264 142 212 205 417 Provision for possible loan losses -254 33 -221 -43 -25 19 1 20 Net interest income after provisioning -76 228 152 221 117 231 206 437 Net commission income
Slide 32: Asset Based Finance
Asset Based Finance Q1 2009 Q2 2009 H1 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 H1 2010 in € m Net interest income 258 328 586 247 264 296 319 615 Provision for possible loan losses -207 -359 -566 -371 -651 -325 -354 -679 Net interest income after provisioning 51 -31 20 -124 -387 -29 -35 -64 Net commiss
Slide 33: Portfolio Restructuring Unit
Portfolio Restructuring Unit Q1 2009 Q2 2009 H1 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 H1 2010 in € m Net interest income 72 65 137 52 64 23 10 33 Provision for possible loan losses -71 -169 -240 -98 11 -22 -28 -50 Net interest income after provisioning 1 -104 -103 -46 75 1 -18 -17 Net commission inco
Slide 34: Others & Consolidation
Others & Consolidation Q1 2009 Q2 2009 H1 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 H1 2010 in € m Net interest income -80 -6 -86 14 151 186 122 308 Provision for possible loan losses 1 -6 -5 0 7 5 -2 3 Net interest income after provisioning -79 -12 -91 14 158 191 120 311 Net commission income -83 -16 -9
Slide 35: Group equity definitions
Group equity definitions Reconciliation of equity definitions Equity basis for RoE Equity definitions in € m Jun 10 Subscribed capital 3,063 Capital reserve 1,331 Retained earnings 7,956 Silent participation SoFFin 17,178 Reserve from currency translation -126 P&L 1,060 Basis for RoE on net profit I
Slide 36: Balance Sheet Leverage Ratio
Balance Sheet Leverage Ratio (in € m) 31.12.2009 30.06.2010 Equity 26,577 27,901 Total Assets 844,103 898,217 Derivatives netting -6,352 -6,586 Trading assets / liabilities netting -193,004 -236,766 Deferred taxes netting -2,586 -2,200 Other assets / liabilities netting -7,893 -13,082 Total Adjusted
Slide 37: Over 80% of 2010 funding plan completed
Over 80% of 2010 funding plan completed in € bn Updated Funding Commerzbank has lowered its Funding plan ~ 48 33 - 36 plan funding plan 2010 to €12-15 bn due to reduced refinancing needs 12 - 15 11/3 /3 15 Main drivers are accelerated 2/3 reduction of non-core activities as 2/3 well as lower tha
Slide 38: Funding base broadened in challenging markets
Funding base broadened in challenging markets Unsecured Funding January – July 2010: €4.3 bn Covered Bonds January – July 2010: €6.9 bn in € bn in € bn Lettres de Gage Unsecured Jumbo Mortgage 0.75 Benchmarks Pfandbriefe 1.0 1.5 (incl. Taps) Public Sector Private 1.1 1.7 Avg. Pfandbriefe Avg. Placem
Slide 39: Appendix 2: Portfolio Restructuring Unit (PRU) & Leveraged Acquisition Finance (LAF)
Appendix 2: Portfolio Restructuring Unit (PRU) & Leveraged Acquisition Finance (LAF) Eric Strutz CFO Frankfurt August 5th, 2010 38
Slide 40: PRU Structured Credit by Business Segment - June 2010
PRU Structured Credit by Business Segment - June 2010 Breakdown by asset and rating classes Details Caused by the market turbulences due to the European AAA 26% sovereign crisis, spreads widened again and also volatility came back into the markets, with an impact especially on AA 17% senior tranches
Slide 41: CDA and Counterparty Risk from Monolines
CDA and Counterparty Risk from Monolines Development of Counterparty Default Adjustments (CDA)1) Net Counterparty Risk from Monolines in € m As of 06/2010 in € bn CDA Total CDA-Other CDA-Monolines CDA Change (positive figure = loss) CDA CDA ratio for Monoline 2,377 in 2010 positions at 46% YTD: 627
Slide 42: Leveraged Acquisition Finance (LAF)
Leveraged Acquisition Finance (LAF) Overall portfolio Portfolio details* As of June 2010 In H1 2010 the portfolio was characterised by the funding of Exposure at Default in € bn new transactions as well as by amendments and prepayments of existing transactions. The LAF market has gathered momentum;
Slide 43: Appendix 3: Risk figures
Appendix 3: Risk figures Eric Strutz CFO Frankfurt August 5th, 2010 42
Slide 44: Default Portfolio – Continued high coverage ratio
Default Portfolio – Continued high coverage ratio excl. / incl. GLLP Group 1 22,087 as of June 2010 82% / 90% 19,783 in € m 9,201 8,879 1,703 PC 1,967 83% / 96% 1,888 692/ 936/ 260 M SB 4,082 78% / 88% 3,572 2,256 937 379 CEE 2,336 92% / 100% 2,339 1,269 / 874/196 C&M 2,664 33% / 40% 1,071 819/ 54/
Slide 45: Loan to Value figures in the CRE business
Loan to Value figures in the CRE business as of June 2010 Loan to Value – UK 1 Loan to Value – Spain 1 (December 2009) stratified representation stratified representation EaD UK EaD Spain total total > 100% 4% (5% ) > 100% 1% (1% ) € 8 bn € 5 bn 80% –100% 6% (8% ) 80% –100% 4% (4% ) 60% –80% 15% (15
Slide 46: Risk provisions
Risk provisions Specific loan loss provisions ≥ € 10 m Other cases ≥€10m ≥€20m ≥€50m Indiviual cases <€10m <€20m <€50m ≥€10m total Number Number Number Number Net Net Net Net Net Net of of of of Year RP total RP total RP total RP total RP total RP total commit- commit- commit- commit- in € m in € m
Slide 47: For more information, please contact Commerzbank´s IR team
For more information, please contact Commerzbank´s IR team: Jürgen Ackermann (Head of Investor Relations) [email protected] P: +49 69 136 22338 www.ir.commerzbank.com M: [email protected] Equity IR Financial Reporting / Fixed Income Strategic Research Michael H. Klein (Head of Equit
Slide 48: 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 representations or