analysts’ conference commerzbank€¦ · analysts’ conference commerzbank q2 2005 results dr....

Analysts’ conferenceCommerzbank

Q2 2005 results

Dr. Eric StrutzChief Financial Officer

LondonAugust 3, 2005

Chart Chart Chart Chart 1111

Earnings quality in Q2 improved significantly

Interest income (€ m) 847 1,568+ 5.1 % + 1.4 %

Commission income (€ m) 593 1,171+ 6.5 % + 1.5 %

Provisioning (€ m) 177 375- 17 % -17 %

Trading profit (€ m) 11 273- 92 % -39 %

Q2 05 vs. Q2 04 H1 05 vs. H1 04


Core figures reflect Commerzbank’s progress

Q2 05 vs. Q2 04 H1 05 vs. H1 04

* annualized

RoE (after tax, %)* 7.7 12.6

Cost/income ratio in operating business (%) 69.9 64.5

Net profit (€m) 175 570-27 %

-2.7ppt

+4.8ppt

+17%

+2.1ppt

+0.7ppt


Interest income in Q2 shows superb performance

� Operational units maintained interest income on high level

� Dividend payments, e.g. Linde, Banca Intesa

� Earnings contribution of Deutsche Schiffsbank

� Net interest income from affiliated companies such as BRE Bank and Essenhyp

Interest income of €1,568m in H1 exceeds last year’s level by 1.4%

847

721747

806

741719

Q1 Q2 Q3 Q4 Q1 Q22004 2005

Σ Σ Σ Σ 3,013 Σ Σ Σ Σ 1,568

Net interest incomein € m

5%


High loan portfolio quality permits further reduction of LLP

177198

185

214

238

199

Q1 Q2 Q3 Q4 Q1 Q2

Σ Σ Σ Σ 836 Σ Σ Σ Σ 375

Loan-loss provisionsin € m

Loan-loss cover ratioin € m

6,393 6,202

1,723 1,539

334 341

5,4075,402

2005Q1 Q2

Loan-loss provisionsCountry LLP and general provision CollateralNon-performing loans

117.5%116.7%

In excess: €1,085m

In excess: €1,066m

7,2877,459

-17%

2004 2005


Strong commission income in Q2

� Increase of €15m q-o-q � Asset management fees up� Securities transactions up� Payment transactions up

� Syndicated business down

� Due to upcoming German election, stock-exchange turnover should maintain pace

593578570557597

526

Q1 Q2 Q3 Q4 Q1 Q2

Σ Σ Σ Σ 2,250 Σ Σ Σ Σ 1,171

Commission incomein € m

+6%

2004 2005


Disappointing trading profit in Q2

2004 2005

-26-15-31-42

-5 -57

288134

173319

668

Q1 Q2 Q3 Q4 Q1 Q2

314

131

-9

103

262

Sales & TradingNet result on measurement of derivatives and fair value options (IAS 39)

11

Trading profitin € m

� Sales & Trading achieved €68m in Q2

� Tough bond markets � Losses in non-client related

prop trading

� Negative trading result in Mortgage banking (€36m) was offset by high net results on AfS and interest income

Σ Σ Σ Σ 539 Σ Σ Σ Σ 273


Revaluation reserves increased due to our equity portfolio

� €15m through disposal of remaining MAN stake in Q2

� Revaluation reserves increased by €80m q-o-q

� Disproportionately strong growth of equity portfolio

31 Mar 30 Jun 30 Sep 31 Dec 31 Mar 30 Jun

Revaluation reservesin € m

EquitiesBonds

1,253

1,0351,213

1,6001,430 1,509

+46%

2004 2005

~60%

~40%


Costs reduced further despite investments in growth areas

� Costs are well under control

� Further reduction despite investments in growth areas such as comdirectand private banking

Revenue-based expense strategy

418 436 377

97 9298

115 77 83

620 626 598 608 653 619

386395 390

Q1 Q2 Q3 Q4 Q1 Q2

Σ Σ Σ Σ 4,493 Σ Σ Σ Σ 2,195

Operating expensesin € m

1,112 1,1361,086

1,1591,107 1,088

Personnel expensesOther expensesDepreciation on fixed assets

2004 2005


Net profit up by more than 17% in the first six months

� Private & Business Customers as well as Mittelstand on a good course

� Excellent performance in Mortgage Banking

� EPS reached €0.96 in the first six months …

� … exceeding the level of full year 04 by 57%

246 240

-216

92

175

395

0.42 0.40

0.15

0.66

0.30

-0.36

Q1 Q2 Q3 Q4 Q1 Q2

Σ Σ Σ Σ 362 Σ Σ Σ Σ 570

Net profitin € m

Earnings per share in €

2004 2005

� Unsatisfactory trading result

Σ Σ Σ Σ 570

Σ Σ Σ Σ 486

+17.3


Solid balance sheet and strong Tier 1 ratio

143141140143

148146

7.1 7.0 7.5 7.2 7.07.2

31 Mar 30 Jun 30 Sep 31 Dec 31 Mar 30 Jun

Risk weighted assetsin € bn

Tier 1 ratio

Tier 1 ratioin %

Equityin € m

1,548 1,548

7,683 7,696

1,430

-1,136

395 5701,226 1,205

1,509

-1,314

150

31 Mar 30 Jun2005

11,21411,296

2004 2005

Minority interests

Consolidated profit

2004 net profit

Revaluation reserve

Capital reserve, retained earnings, reserve arising from currency translation

Subscribed capital

Measurement of cash flow hedges


� Net interest income maintained its high level� Deposit margins slightly improved from their low� Despite investing in growth areas, operating expenses

declined by €6m� In the first six months, PBC achieved more than half of

proposed 2005 target of more than €280m� Boosted stake in comdirect to 80%

Overall positive trend in Private & Business Customers

84697073

99

81

Q1 Q2 Q3 Q4 Q1 Q2

2004 2005

Operating profit in € m

Net interest income 274 269 567 543Provisioning -46 -46 -85 -92Commission income 264 272 528 536Other items -2 4 18 2Operating expenses 421 415 848 836Operating profit 69 84 180 153

Ø equity, in € m 1,882 1,880operating RoE*, in % 14.7 17.9CIR, in % 78.5 76.1

Equity allocation within Group 18.7%

Q1 2005 Q2 2005

* annualized

Abridged P&L in € m Q1 2005 Q2 2005 H1 2004 H1 2005

Σ 323 Σ 153


� Extraordinary expenses overly burdened division � Overall positive earnings trend� Operating RoE of 21% after six months

Sound underlying profit in Asset Management

Ø equity, in € m 533 513operating RoE*, in % 27.8 13.3CIR, in % 72.0 87.3

Equity allocation within Group

5.2%

17

3742

36

5346

Q1 Q2 Q3 Q4 Q1 Q2

€ m Q1 2005 Q2 2005

* annualized


Net interest income 4 -1 -5 3Provisioning - - - -Commission income 127 133 270 260Other items 1 2 24 3Operating expenses 95 117 190 212Operating profit 37 17 99 54


Σ 177 Σ 54

2004 2005


� Jump in net interest income � High earnings contribution from Dt Schiffsbank and BRE Bank � Derivatives and payment transactions (TFTS) boosted

commission income� Mittelstand division becoming core profit contributor� Operating profit in H1 higher than full year 2004

Performance in Mittelstand gathering pace

Ø equity, in € m 2,945 2,973operating RoE*, in % 9.2 13.9CIR, in % 56.1 52.8


29.3%

103

68

23

50

18

40

Q1 Q2 Q3 Q4 Q1 Q2

€ m Q1 2005 Q2 2005

* annualized

Net interest income 280 307 565 587Provisioning -118 -115 -302 -233Commission income 124 134 196 258Other items 20 21 72 41Operating expenses 238 244 473 482Operating profit 68 103 58 171



Σ 131 Σ 171

2004 2005


� Operating profit rose by 45% q-o-q� Treasury result of foreign units remained disappointing� New business lifted interest income� Further decrease in provisions, reversal of provisions in the

course of the year most likely� Operating RoE increased to 13.4%, further

improvement expected

International Corporate Banking picking up

Ø equity, in €m 1,251 1,339operating RoE*, in % 9.9 13.4CIR, in % 55.4 53.9


12.8%

4531

115

67

45

84

Q1 Q2 Q3 Q4 Q1 Q2

€ m Q1 2005 Q2 2005

* annualized

Net interest income 64 67 165 131Provisioning -19 -8 -41 -27Commission income 38 40 80 78Other items 10 8 42 18Operating expenses 62 62 117 124Operating profit 31 45 129 76



Σ 311 Σ 76

2004 2005


� Sound credit quality in multinational clients� Securities business revealed mixed picture� Credit Trading and shut-down of Special Situation Desk hit

profitability � Encouraging performance in Interest Rate Trading, Equity

Derivatives and FX Trading� Significant reduction of operating costs

Corporates & Markets suffered from tough market conditions and Special Situation Desk

Ø equity, in € m 1,832 1,848operating RoE*, in % 21.6 -11.9CIR, in % 68.0 137.5


18.3%

-55

99

-39

-147

149

-38

Q1 Q2 Q3 Q4 Q1 Q2

€ m Q1 2005 Q2 2005

* annualized

Interest income after prov. 42 51 91 93Commission income 27 15 78 42Trading profit 258 77 451 335Other items -3 0 8 -3Operating expenses 225 198 517 423Operating profit 99 -55 111 44



Σ −75 Σ 44


� Jump in interest income by €42m q-o-q� Profit contribution of Eurohypo� Negative trading result offset by high net result on AfS and

interest income …� … positive net balance rose by €18m to €115m in Q2� Operating RoE exceeded 36%

Excellent performance in Mortgage Banking

Ø equity, in €m 989 993operating RoE*, in % 27.9 36.3CIR, in % 11.5 9.3


9.8%

9069

47

2538

29

Q1 Q2 Q3 Q4 Q1 Q2

€ m Q1 2005 Q2 2005

* annualized

Interest income after prov. 88 131 92 219Trading profit -35 -36 -53 -71AfS result 36 13 57 49Other items -10 -8 -12 -18Operating expenses 10 10 17 20Operating profit 69 90 67 159



Σ 139 Σ 159

2004 2005


Main takeaways

� Earnings quality significantly improved� Private & Business Customers as well as

Mittelstand on a good course� Excellent performance in Mortgage Banking

832625

1/2 of FY 05target

H1 05

Operating profitin € m

570

375

1/2 of FY 05target

H1 05

Net resultin € m

64.569

1/2 of FY 05target

H1 05

CIRIn %

� Substantial decrease in provisions from current level of €750m likely

� After-tax RoE of 8% is within reach

� Continuing our tight grip on costs� Pursuing a revenue-based expense strategy � Expanding in areas with substantial growth

∆∆∆∆ +33%

∆∆∆∆ +52%

∆ ∆ ∆ ∆ –4.5ppt


Appendix


[€m] Q1 / 2004 Q2 / 2004 Q3 / 2004 Q4 / 2004 Q1 / 2005 Q2 / 2005Net interest income 284 283 287 283 274 269Provision for possible loan losses -39 -46 -52 -76 -46 -46Net interest income after provisioning 245 237 235 207 228 223Net commission income 272 256 224 258 264 272Net result on hedge accounting 0 0 0 0 0 0Trading profit 1 1 0 1 1 0Afs result 2 2 1 -2 0 0Other operating result 3 9 1 27 -3 4Total income 523 505 461 491 490 499Operating expenses 424 424 388 421 421 415Operating profit 99 81 73 70 69 84Regular amortization of goodwill 0 0 0 0 - -Restructuring expenses 0 0 0 0 0 0Expenses arising from special factors 0 0 0 0 0 0Pre-tax profit 99 81 73 70 69 84

Average equity 1,866 1,888 1,910 1,912 1,882 1,880Operative return on equity (%) 21.2% 17.2% 15.3% 14.6% 14.7% 17.9%Cost/income ratio (%) 75.4% 77.0% 75.6% 74.3% 78.5% 76.1%

Private and Business Customers


[€m] Q1 / 2004 Q2 / 2004 Q3 / 2004 Q4 / 2004 Q1 / 2005 Q2 / 2005Net interest income -3 -2 -3 1 4 -1Provision for possible loan losses 0 0 0 0 0 0Net interest income after provisioning -3 -2 -3 1 4 -1Net commission income 141 129 124 135 127 133Net result on hedge accounting 1 0 0 0 0 0Trading profit 2 2 2 2 2 3AfS result 1 6 1 5 1 3Other operating result 7 5 14 -1 -2 -4Total income 149 140 138 142 132 134Operating expenses 96 94 102 100 95 117Operating profit 53 46 36 42 37 17Regular amortization of goodwill 15 15 14 15 - -Restructuring expenses 0 0 0 0 0 0Expenses arising from special factors 0 0 0 0 0 0Pre-tax profit 38 31 22 27 37 17

Average equity 576 564 555 537 533 513Operative return on equity (%) 36.8% 32.6% 25.9% 31.3% 27.8% 13.3%Cost/income ratio (%) 64.4% 67.1% 73.9% 70.4% 72.0% 87.3%

Asset Management


[€m] Q1 / 2004 Q2 / 2004 Q3 / 2004 Q4 / 2004 Q1 / 2005 Q2 / 2005Net interest income 269 296 283 304 280 307Provision for possible loan losses -151 -151 -150 -103 -118 -115Net interest income after provisioning 118 145 133 201 162 192Net commission income 104 92 108 99 124 134Net result on hedge accounting 0 0 0 0 0 0Trading profit 6 10 12 15 15 17Afs result 3 1 -3 0 1 2Other operating result 20 32 22 11 4 2Total income 251 280 272 326 306 347Operating expenses 233 240 222 303 238 244Operating profit 18 40 50 23 68 103Regular amortization of goodwill 2 3 2 3 - -Restructuring expenses 0 0 0 0 0 0Expenses arising from special factors 0 0 0 0 0 0Pre-tax profit 16 37 48 20 68 103

Average equity 2,646 2,692 2,660 2,654 2.945 2.973Operative return on equity (%) 2.7% 5.9% 7.5% 3.5% 9.2% 13.9%Cost/income ratio (%) 58.0% 55.7% 52.6% 70.6% 56.1% 52.8

Mittelstand


[€ m] Q1 / 2004 Q2 / 2004 Q3 / 2004 Q4 / 2004 Q1 / 2005 Q2 / 2005Net interest income 81 84 62 74 64 67Provision for possible loan losses -36 -5 5 48 -19 -8Net interest income after provisioning 45 79 67 122 45 59Net commission income 37 43 41 34 38 40Net result on hedge accounting 0 0 0 0 -2 2Trading profit 8 4 10 10 6 -2Afs result 12 6 3 7 6 6Other operating result 3 9 2 0 0 2Total income 105 141 123 173 93 107Operating expenses 60 57 56 58 62 62Operating profit 45 84 67 115 31 45Regular amortization of goodwill 0 0 0 0 - -Restructuring expenses 0 0 0 0 0 0Expenses arising from special factors 0 0 0 0 0 0Pre-tax profit 45 84 67 115 31 45

Average equity 1,363 1,399 1,318 1,268 1,251 1,339Operative return on equity (%) 13.2% 24.0% 20.3% 36.3% 9.9% 13.4%Cost/income ratio (%) 42.6% 39.0% 47.5% 46.4% 55.4% 53.9%

International Corporate Banking


[€ m] Q1 / 2004 Q2 / 2004 Q3 / 2004 Q4 / 2004 Q1 / 2005 Q2 / 2005Net interest income 58 47 50 35 49 52Provision for possible loan losses -7 -7 3 -18 -7 -1Net interest income after provisioning 51 40 53 17 42 51Net commission income 44 34 32 42 27 15Net result on hedge accounting 0 0 0 0 0 0Trading profit 310 141 1 115 258 77Afs result 5 2 3 -12 -1 -4Other operating result 0 1 -4 -8 -2 4Total income 410 218 85 154 324 143Operating expenses 261 256 232 193 225 198Operating profit 149 -38 -147 -39 99 -55Regular amortization of goodwill 0 0 0 0 - -Restructuring expenses 0 0 132 0 0 0Expenses arising from special factors 0 0 0 0 0 0Pre-tax profit 149 -38 -279 -39 99 -55

Average equity 1,957 2,093 2,067 1,971 1,832 1,848Operative return on equity (%) 30.5% -7.3% -28.4% -7.9% 21.6% -11.9%Cost/income ratio (%) 62.6% 113.8% 282.9% 112.2% 68.0% 137.5%

Corporates & Markets


[€ m] Q1 / 2004 Q2 / 2004 Q3 / 2004 Q4 / 2004 Q1 / 2005 Q2 / 2005Net interest income 59 43 43 88 96 138Provision for possible loan losses -5 -5 -5 -36 -8 -7Net interest income after provisioning 54 38 38 52 88 131Net commission income -2 -4 -3 -3 -2 -2Net result on hedge accounting 0 -6 9 1 -8 -6Trading profit -5 -48 -25 -32 -35 -36Afs rersult -1 58 17 52 36 13Other operating result 0 0 -2 -4 0 0Total income 46 38 34 66 79 100Operating expenses 8 9 9 19 10 10Operating profit 38 29 25 47 69 90Regular amortization of goodwill 2 2 2 2 - -Restructuring expenses 0 0 0 0 0 0Expenses arising from special factors 0 0 0 0 0 0Pre-tax profit 36 27 23 45 69 90

Average equity 1,039 1,003 988 982 989 993Operative return on equity (%) 14.6% 11.6% 10.1% 19.1% 27.9% 36.3%Cost/income ratio (%) 15.7% 20.9% 23.1% 18.6% 11,5% 9.3%

Mortgage Banking


[€ m] Q1 / 2004 Q2 / 2004 Q3 / 2004 Q4 / 2004 Q1 / 2005 Q2 / 2005Net interest income -7 55 -3 -38 -46 15Provision for possible loan losses 0 0 0 0 0 0Net interest income after provisioning -7 55 -3 -38 -46 15Net commission income 1 7 0 5 0 1Net result on hedge accounting 3 -5 5 -2 -2 -1Trading profit -8 21 -9 -8 15 -48Afs result 32 105 1 32 251 64Other operating result 34 26 2 -16 6 18Total income 55 209 -4 -27 224 49Operating expenses 30 56 77 65 56 42Operating profit 25 153 -81 -92 168 7Regular amortization of goodwill 1 1 2 2 - -Restructuring expenses 0 0 0 0 0 0Expenses arising from special factors 0 0 0 0 0 0Pre-tax profit 24 152 -83 -94 168 7

Average equity 760 580 778 1,006 665 527Operative return on equity (%) - - - - - -Cost/income ratio (%) - - - - - -

Others & Consolidation

For more information, please contact:Commerzbank Investor Relations

Tel. +49 (69) 136 22 33 8

[email protected]

Chart Chart Chart Chart 27272727 Chart 18Chart 18Chart 18Chart 18

/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 orguarantees are made by Commerzbank Group with regard to the accuracy of the data. The opinions and estimates contained herein constitute our best judgement at this date and time, and are subject to change without notice. This presentation is for information purposes, it is not intended to be and should not be construed as an offer or solicitation to acquire, or dispose of any of the securities or issues mentioned in this presentation./Commerzbank AG and/or its subsidiaries and/or affiliates (herein described as Commerzbank Group) may use the information in this presentation prior to its publication to its customers. Commerzbank Group or its employees may also own or build positions or trade in any such securities, issues, and derivatives thereon and may also sell them whenever considered appropriate. Commerzbank Group may also provide banking or other advisory services to interested parties./Commerzbank Group accepts no responsibility or liability whatsoever for any expense, loss or damages arising out of, or in any way connected with, the use of all or any part of this presentation./ Copies of this document are available upon request or can be downloaded from www.commerzbank.com/aktionaere/index.html.

analysts’ conference commerzbank€¦ · analysts’ conference commerzbank q2 2005 results dr....

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