Commerzbank Ag · XETR:CBK
Commerzbank — Q3 2013 Earnings Presentation
47 slides from Commerzbank's earnings presentation, Nov 7, 2013
Slide 1: NCA run-down ahead of targets - CET 1 phase-in ratio at 11.0%
NCA run-down ahead of targets - CET 1 phase-in ratio at 11.0% Analyst conference – Q3 2013 results Stephan Engels | CFO | Frankfurt | 7 November 2013
Slide 2: Group operating result of €103m in Q3 2013
Group operating result of €103m in Q3 2013 - Sale of €5bn UK CRE- portfolio completely reflected in P&L and balance sheet › Group revenues almost stable despite faster run-down in interest earning assets in NCA › Core Bank’s revenues on the same level as Q2 2013 – slight loan growth in PC and MSB bu
Slide 3: Implementation of our strategic agenda is bearing first fruits (1/2)
One year after our Investors’ Day 2012: The implementation of our strategic agenda is bearing first fruits (1/2) Our strategic agenda Private Customers – The new retail banking strategy › Record number of net new customers of ~180k ytd › New business volume in residential mortgage business exceeds €
Slide 4: Implementation of our strategic agenda is bearing first fruits (2/2)
One year after our Investors’ Day 2012: The implementation of our strategic agenda is bearing first fruits (2/2) › Despite investments and collectively agreed wage increases quarterly cost run-rate at €1.7bn in the first nine months 2013 - Costs should not exceed €7.0bn in FY 2013 Adjustment of the
Slide 5: Commerzbank financials at a glance
Commerzbank financials at a glance Group Q3 2012 Q2 2013 Q3 2013 Operating result (€m) 208 78 103 Net result (€m)1) 67 43 77 Core Tier 1 ratio B 2.5 (%) 12.2 12.1 12.7 (€bn) Total assets (€m) 676 637 593 RWA (€bn) 206 206 197 Core Bank (incl. O&C) Q3 2012 Q2 2013 Q3 2013 Operating result (€m) 685 46
Slide 6: Group operating result reflects sale of UK CRE-portfolio
Group operating result reflects sale of UK CRE-portfolio Quarterly transition, Group €m 208 103 103 13 0 78 26 77 33 45 1) 1) Operating Operating Revenues LLP Costs Operating Restructuring Pre-tax profit Tax, Net result 2) result result result expenses Minorities Q3 2012 Q2 2013 Q3 2013 Q3 2013 vs.
Slide 7: Adjusted revenues before LLP
Adjusted revenues before LLP Group Core Bank Adjusted revenues before LLP Adjusted revenues before LLP €m €m 2,702 2,434 2,322 2,345 2,277 2,206 2,262 2,684 2,581 2,486 2,544 2,370 2,354 2,325 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 NCA3) Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Adjusted revenues
Slide 8: Adjusted operating result
Adjusted operating result Group Core Bank Adjusted operating result Adjusted operating result €m €m 1,004 746 682 535 547 551 473 445 411 379 324 155 147 118 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 O pe ra t ing re s ult ( re po rt e d) 576 442 208 -40 469
Slide 9: Core Bank's revenues almost stable despite seasonal weakness
Core Bank’s revenues almost stable despite seasonal weakness in capital market related revenues Revenues Commission and Fee drivers €m €m -6% -6% -1% -2% 826 2,373 789 779 2,259 2,226 Securities & AM 274 255 252 Payment transaction & foreign business Credit business 332 320 318 Intermediary business
Slide 10: Core Bank: Balanced investment approach offset by active cost management
Core Bank: Balanced investment approach offset by active cost management Cost split Cost income ratio €m % -2% 90 90 91 0% PC 1,641 1,604 1,602 68 1) 979 947 953 C&M 60 57 58 55 50 CEE 662 42 657 649 48 46 MSB Q3 2012 Q2 2013 Q3 2013 Q3 2012 Q2 2013 Q3 2013 Pers. expenses Operating expenses Q3 2013
Slide 11: Core Bank: LLPs in line with expectation – NPL ratio below 2%
Core Bank: LLPs in line with expectation – NPL ratio remains stable below 2% LLP split €m +430% +31% Addition to provisions 249 ▲ Ongoing good portfolio quality (risk density) in Core Bank 190 31 27 106 PC ► LLP increase in Q3 2013 driven by a normalization in C&M 147 MSB after releases in Q2 2013 4
Slide 12: Private Customers: Successful client capturing strategy continued
Private Customers: Successful client capturing strategy continued Quarterly overview & transition Operating result, €m 137 69 -22% 54 35 14 42 30 25 4 6 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Revenues LLP Costs Q3 2013 Ø equity (€ bn) 4.0 Ø equity (€ bn) 3.9 Ø equity (€ bn) 4.0 Op. RoE (%)
Slide 13: PC divisional split
PC divisional split Filialbank – Revenues before LLP Commerz Real – Revenues before LLP €m ► Income below previous quarter €m 725 due to slightly lower transactions 694 701 in securities business. ▲ Increase due to higher ▲ New business in retail mortgage commission income from real lending above av
Slide 14: Mittelstandsbank: Revenues from direct customer business stable
Mittelstandsbank: Revenues from direct customer business stable, positive revenue contribution from pre-payment of a corporate loan Quarterly overview & transition Operating result, €m 488 +62% 386 395 378 349 326 1 41 216 93 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Revenues LLP Costs Q3 2013
Slide 15: MSB divisional split
MSB divisional split Mittelstand Germany – Revenues before LLP Großkunden & International – Revenues before LLP €m €m ▲ Stable revenues from direct customer business 389 ▲ Revenues from customer 376 377 ► Positive revenue contribution business stable 305 240 from pre-payment of a ▲ Increasing loan v
Slide 16: Central & Eastern Europe: Rollout of new mBank platform accomplished
Central & Eastern Europe: Rollout of new mBank banking platform already accomplished Quarterly overview & transition Operating result, €m Effect from sale of PSB 87 75 +21% 15 63 59 5 1 52 52 15 7 42 72 52 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Revenues LLP Costs Q3 2013 Ø equity (€ bn) 1.6
Slide 17: Corporates & Markets: Operating performance affected by market conditions
Corporates & Markets: Operating performance affected by unfavourable market conditions and normalised LLP Quarterly overview & transition Result excl. OCS Operating result excl. OCS and net CVA/DVA1), €m and net CVA/DVA1) -60% 273 253 230 189 104 62 110 3 69 20 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 201
Slide 18: Corporates & Markets divisional split
Corporates & Markets divisional split Corporate Finance – Revenues before LLPs EMC – Revenues before LLPs €m €m ► Stable performance in all ► Stable y-o-y revenue 221 business lines of Corporate 186 development in EMC after 158 153 Finance over the year exceptional Q2 2013 ▲ Significant q-o-q and y-
Slide 19: NCA: Successful de-risking with active portfolio run-down
NCA: Successful de-risking with active portfolio run-down ahead of targets Quarterly overview & transition Operating result, €m +30% -86 -152 11 104 -272 0 -387 -456 -448 -477 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Revenues LLP Costs Q3 2013 Ø equity (€ bn) 10.1 Ø equity (€ bn) 9.7 Ø equity
Slide 20: NCA: Significant reduction of default volume after UK CRE sale
NCA: Significant reduction of default volume after sale of the CRE UK portfolio - default volume in Shipping slightly lower than in Q4 2012 LLP €m -37% ▲ Sizable asset reduction in all NCA divisions (performing -30% book): Ship 383 347 CRE: 19% (~€9bn); Ship Finance1): 6% (~€1bn); Finance1) 160 110
Slide 21: NCA: Only €8bn of CRE and Shipping considered higher risk
NCA: Only €8bn of CRE and Shipping portfolio considered as higher risk after sale of the CRE UK portfolio 1) Cluster Commercial Real Estate Q3/13 Q4/12 Ship Finance 2) Q3/13 Q4/12 EaD in €bn EaD in €bn • Bulk Carrier (Capesize/VLOC) 1.0 • Spain 3.3 0.4 higher 4.8 10.6 • Container < 2,000 TEU 3.2 3.7
Slide 22: Optimisation of capitalisation: net capital relief of €278m ytd
Optimisation of capitalisation: Despite faster NCA run-down sizable net capital relief of €278m ytd 2013 Segment NCA, Exposure at Default (incl. NPL) €bn -57% 289 › Sizeable asset reduction in all NCA sub-segments: -22% since Investors’ Day and -18% ytd 2013 Public Finance 160 (incl. PFI) -22% › Act
Slide 23: Basel 2.5 Core Tier 1 ratio improved to 12.7%
Basel 2.5 Core Tier 1 ratio improved to 12.7% Total assets RWA Core Tier 1 capital & ratio €bn €bn €bn › Total assets below €600bn for the › RWA significantly lower due to run- › Higher capital ratios in line with first time since integration of down NCA lower RWA Dresdner Bank -12% -7% 12.2% 12.1%
Slide 24: Basel III CET 1 comfortably above 9% under phase-in
Basel III CET 1 comfortably above 9% under phase-in Basel 2.5 CT 1 and Basel III CET 1 ratios % Pro-forma 12.7 1.7 11.0 Capital deductions 2.4 for Shortfall & 8.6 Securitisations Prudent Valuation Revaluation reserve DTA deduction Minority interests Basel 2.5 Basel III Basel III CET 1 Fully Basel II
Slide 25: CRD4 Leverage ratio of 4.1% under phase-in
CRD4 Leverage ratio of 4.1% under phase-in and 3.2% fully phased-in - LtD-ratio below 100% Total Assets Total Liabilities & Equity Leverage ratio €bn €bn % CRD4 leverage ratio: 593 593 LtD-ratio 4.1 98.0% 3.2 251 256 30 Sep 2013 30 Sep 2013 phased-in fully phased-in 233 215 Numerator: › Tier 1 phase
Slide 26: Commerzbank issues Pfandbriefe to reduce funding costs
Commerzbank issues Pfandbriefe to reduce funding costs and diversify funding structure Capital market funding history & outlook Senior Unsecured €bn › Focus on private placements › €1.9bn senior unsecured funding until Q3 2013 Subordinated Bond › USD 1.0bn lower Tier 2 (144a/Reg S) in Q3 2013 21 Cov
Slide 27: Outlook
Outlook Unchanged outlook: ongoing asset reduction and low interest rates expected to keep pressure on revenues in Q4 2013 LLP are expected to be higher than in FY 2012 due to accelerated NCA run-down and normalisation of LLP in Core Bank We continue with our strict cost management whereby investmen
Slide 28: Appendix: Segment reporting
Appendix: Segment reporting Stephan Engels | CFO | Frankfurt | 7 November 2013 28
Slide 29: German economy 2013 – Fighting to stay on track
German economy 2013 – Fighting to stay on track Current development Our expectation for 2013-2014 Reasons for outperformance › German economy has grown again › The increase of leading indicators › No bubble in the housing market in 2013 H1. Sentiment indicators points to an ongoing recovery in H2. ›
Slide 30: Significant items affecting group revenues and net income
Significant items affecting group revenues and net income Group revenues €m Items Q1 2012 Q2 2012 Q3 2012 9M 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 9M 2013 Notes M emo: Rev. bef. LLP (reported) 2,578 2,578 2,370 7,526 2,349 2,460 2,314 2,281 7,055 Booked in: Sale of PSB 15 7 0 22 0 0 0 0 0 CEE OCS -15
Slide 31: Full focus on implementation of our strategic agenda
Full focus on implementation of our strategic agenda Segment Target Target 2016 Progress towards target in Q31) Revenues per customer +10% Net new customers 1 million PC Assets under control >€300bn Net promoter score >30% Revenue growth +4% p.a. Growth in international revenues +8% p.a. MSB >50% Cr
Slide 32: Full focus on implementation of our strategic agenda
Full focus on implementation of our strategic agenda Segment Target Target 2016 Progress towards target in Q31) Revenue growth +5% p.a. CEE Loan to deposit ratio 115% Revenue growth +4% p.a. C&M Front-to-back cost efficiency €150m p.a. Maintain capital efficiency Maintain despite Basel III 1) Simpli
Slide 33: NCA: Diversified portfolio with large parts being German risk
NCA: Diversified portfolio with large parts being German risk EaD (incl. NPL) as of 30 Sep 2013, in €bn Performing 39.4 NPL Commercial 6.1 Real Estate 17.1 33.3 1.0 2.0 8.5 3.3 1.4 Sum CRE GER USA IT ES POR Rest 68.4 21.5 Public Finance 8.0 (incl. PFI¹) 9.0 5.5 23.3 1.1 Sum PF GER USA IT ES POR Rest
Slide 34: NCA: Diversified portfolio of mainly long term assets
NCA: Diversified portfolio of mainly long term assets EaD (incl. NPL) per 30 Sep 2013, in €bn GER USA IT ES POR Rest Sum Commercial Performing 17.1 1.0 2.0 3.3 1.4 8.5 33.3 EaD RWA LLP Real Estate NPL3) 2.5 0.4 0.1 1.7 0.3 1.1 6.1 39.4 23.8 0.4 Sum 19.6 1.4 2.1 5.0 1.7 9.6 39.4 GER USA IT ES POR Res
Slide 35: Default portfolios CRE and Ship Finance as of 30 Sep 2013
Default portfolios CRE and Ship Finance1) as of 30 Sep 2013 30 Sep 2013 (30 June 2013) 31 Dec 2012 Default portfolio CRE by country | €m Total Germany Spain US Total Default volume 6,057 (7,136) 2,496 (2,368) 1,716 (1,700) 365 (409) 7,643 Loan loss provisions 2,135 (2,522) 682 (666) 737 (735) 72 (85
Slide 36: Commerzbank Group
Commerzbank Group Q1 Q2 Q3 9M Q4 Q1 Q2 Q3 9M in € m % yoy % qoq 2012 2012 2012 2012 2012 2013 2013 2013 2013 Net interest income 1,694 1,784 1,281 4,759 1,728 1,356 1,629 1,483 4,468 15.8 -9.0 Provisions for loan losses -212 -404 -430 -1,046 -614 -267 -537 -492 -1,296 -14.4 8.4 Net interest income a
Slide 37: Core Bank
Core Bank Q1 Q2 Q3 9M Q4 Q1 Q2 Q3 9M in € m % yoy % qoq 2012 2012 2012 2012 2012 2013 2013 2013 2013 Net interest income 1,474 1,597 1,155 4,226 1,520 1,186 1,447 1,424 4,057 23.3 -1.6 Provisions for loan losses -18 -116 -47 -181 -102 -92 -190 -249 -531 -429.8 -31.1 Net interest income after provisi
Slide 38: Private Customers
Private Customers Q1 Q2 Q3 9M Q4 Q1 Q2 Q3 9M in € m % yoy % qoq 2012 2012 2012 2012 2012 2013 2013 2013 2013 Net interest income 471 448 447 1,366 460 430 444 451 1,325 0.9 1.6 Provisions for loan losses -8 -26 -45 -79 -16 -35 -27 -31 -93 31.1 -14.8 Net interest income after provisions 463 422 402 1
Slide 39: Mittelstandsbank
Mittelstandsbank Q1 Q2 Q3 9M Q4 Q1 Q2 Q3 9M in € m % yoy % qoq 2012 2012 2012 2012 2012 2013 2013 2013 2013 Net interest income 542 487 468 1,497 457 457 432 426 1,315 -9.0 -1.4 Provisions for loan losses 35 -32 9 12 -42 -78 -147 -106 -331 -1,277.8 27.9 Net interest income after provisions 577 455 4
Slide 40: Central & Eastern Europe
Central & Eastern Europe Q1 Q2 Q3 9M Q4 Q1 Q2 Q3 9M in € m % yoy % qoq 2012 2012 2012 2012 2012 2013 2013 2013 2013 Net interest income 124 126 129 379 129 103 99 111 313 -14.0 12.1 Provisions for loan losses -18 -35 -28 -81 -24 -6 -36 -41 -83 -46.4 -13.9 Net interest income after provisions 106 91
Slide 41: Corporates & Markets
Corporates & Markets Q1 Q2 Q3 9M Q4 Q1 Q2 Q3 9M in € m % yoy % qoq 2012 2012 2012 2012 2012 2013 2013 2013 2013 Net interest income 295 535 -23 807 440 196 553 381 1,130 1,756.5 -31.1 Provisions for loan losses -27 -23 17 -33 -19 26 19 -43 2 -352.9 -326.3 Net interest income after provisions 268 512
Slide 42: Non-Core Assets
Non-Core Assets Q1 Q2 Q3 9M Q4 Q1 Q2 Q3 9M in € m % yoy % qoq 2012 2012 2012 2012 2012 2013 2013 2013 2013 Net interest income 184 157 126 467 208 170 182 59 411 -53.2 -67.6 Provisions for loan losses -178 -301 -383 -862 -512 -175 -347 -243 -765 36.6 30.0 Net interest income after provisions 6 -144
Slide 43: Portfolio Restructuring Unit
Portfolio Restructuring Unit Q1 Q2 Q3 9M Q4 Q1 Q2 Q3 9M in € m % yoy % qoq 2012 2012 2012 2012 2012 2013 2013 2013 2013 Net interest income 36 30 - 66 - - - - - - - Provisions for loan losses -16 13 - -3 - - - - - - - Net interest income after provisions 20 43 - 63 - - - - - - - Net commission incom
Slide 44: Others & Consolidation
Others & Consolidation Q1 Q2 Q3 9M Q4 Q1 Q2 Q3 9M in € m % yoy % qoq 2012 2012 2012 2012 2012 2013 2013 2013 2013 Net interest income 42 1 134 177 34 - -81 55 -26 -59.0 167.9 Provisions for loan losses - - - - -1 1 1 -28 -26 - -2,900.0 Net interest income after provisions 42 1 134 177 33 1 -80 27 -5
Slide 45: Group equity definitions
Group equity definitions Reconciliation of equity definitions Equity basis for RoE Reconciliation of equity definitions Q3 2013 9M Equity definitions in €m End of Period Average Subscribed capital 1,139 2,959 Capital reserve 15,938 12,860 Retained earnings 10,700 10,838 Silent participations SoFFin
Slide 46: 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] Jürgen Ackermann (Europe / US) Ute Heiserer-Jäckel (Retail Investors) P: +49 69 136 22338 P: +49 69 136 4
Slide 47: Disclaimer
Disclaimer Investor Relations This presentation contains forward-looking statements. Forward-looking statements are statements that are not historical facts; they include statements about Commerzbank’s beliefs and expectations and the assumptions underlying them. These statements are based on plans,