CheuvreuxGerman Corporate Conference
Commerzbank: Enabling future success
Dr. Eric Strutz
Chief Financial Officer
FrankfurtJanuary 17, 2005
CHART 1
Agenda
Overview Group Strategy
New Corporates & Markets Division
Financials
Where are we going?
CHART 2
2002 2003 2004
Commerzbank successfully restructured
����Restored: Corporate financial strengthRestored: Corporate financial strengthRestored: Corporate financial strengthRestored: Corporate financial strength
Loan portfolio improved Margins increasedNon-core participations soldRetail: profitability restored – play to winAM: successfully restructured – shrink to growCorporate Bank: move to the top – kicked offCosts cut further
Loan portfolio improved Margins increasedNon-core participations soldRetail: profitability restored – play to winAM: successfully restructured – shrink to growCorporate Bank: move to the top – kicked offCosts cut further
����Regained: Improved Core BusinessesRegained: Improved Core BusinessesRegained: Improved Core BusinessesRegained: Improved Core Businesses
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�
�
�
�
�
�
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�
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Management changes implementedCosts cut rigidlyLiquidity prudently managedCapital base strengthenedRisk-weighted assets reduced
Management changes implementedCosts cut rigidlyLiquidity prudently managedCapital base strengthenedRisk-weighted assets reduced
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Overview Group Strategy
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CHART 3
Strong earnings improvement in core activities –we are over-delivering on our promises Operating profit, in € m
308258
-243
53
2001 2002 2003 9m 2004
Retail banking
126
90
44
13
2001 2002 2003 9m 2004
Asset management
445355
832
453
2001 2002 2003 9m 2004
Corporate customers and institutions
-98
3
256
-2962001 2002 2003 9m 2004
Securities
Statements made by Commerzbank’s CEO Klaus-Peter Müller at AGM, May 12, 2004
Operating profit will increase by 25% in 2004
Operating profit will improve by more than 40%
Operating profit will exceed €500m
(No statement made)
Overview Group Strategy
CHART 4
� Retail Banking: grow to win programme for excellence and continued growth: products, marketing, branding, branches
� Acquisition of new business and retail customers, e.g. SchmidtBank
� Private Banking: Top 3 programme � com one – programme for the future
Comments on results
Growth strategy – Private Customers
+6%
+4%
-2%
+64%
n/a
+64%
1,522
-132
-1,202
188
0
188
1,618
-137
-1,173
308
0
308
Revenues
Loan loss prov.
Op. expenses
Operating profit
Goodwill amort. + extraord. items
Pre-tax profit
€ m€ m 9m2003 9m2004 Changein %
Retail Banking: grow to win programme results in growth and peer class profitability
Earnings� Higher net commission income (+9%) and net interest income
(+4%); (grow to win programme)� Operating expenses reduced even though SchmidtBank has been
integrated
From shrink to grow – StatusFocused growth programmes
operative ROE 13.8% 22.6%CIR 79.0% 72.5%
Equity allocation within Commerzbank Group
18%
Overview Group Strategy
CHART 5
� Net commission income up 15%� Operating expenses flat � Amortization of goodwill down from €63m to €44m � Some one-time effects in 2004� CCR/Jupiter contributing strongly
Comments on results
� Open to selective acquisitions: operational synergies, complementary products, expanded distribution
• Focused business model: asset classes, countries, distribution • Best-of-production strategy• Full leverage of synergies • Upgrade of Cominvest production & distribution
� Continuing focus on core markets and product excellence
From shrink to grow – Status
Asset Management: Higher revenues following shrink to grow
� Leverage strength and synergies of CB Asset Management Group
Further rise in profitability
+18%
n/a
+1%
+73%
-38%
n.m.
311
0
-238
73
-71
2
Revenues
Loan loss prov.
Op. expenses
Operating profit
Goodwill amort. extraord. items
Pre-tax profit
€ m 9m2003 9m2004 Changein %
367
0
-241
126
-44
82
operative ROE 14.7% 31.5%CIR 76.5% 65.7%
Equity allocation within Commerzbank Group
5%
Overview Group Strategy
CHART 6
Corporate Banking & Institutions set to benefit from customer-segment oriented organisation
� Operating profit 72% higher � Loan loss provisions 27% lower � Interest income flat due to smaller credit volume� Commission income and operating costs virtually unchanged
Comments on results
� Further customer segmentation & value-based performancemanagement
� “Move to the top”: Immediate action plan, EVA perspective
Organisational split and focused growth programme
+1%
-27%
+1%
+72%
-77%
+93%
1,854
-680
-916
258
-31
227
Revenues
Loan loss prov.
Op. expenses
Operating profit
Goodwill amort. extraord. items
Pre-tax profit
€ m 9m2003 9m2004 Changein %
1,869
-497
-927
445
-7
438
� Expansion in Central and Eastern European growth markets
� “Mittelstandsinitiative”: 4,276 new clients, productivity programme
� Split “Corporate Banking & Institutions”: “Mittelstandsbank”, “International Corporate Banking”, “Corporates and Markets”Operative ROE 6.6% 12.5%
CIR 49.4% 49.6%
Equity allocation within Commerzbank Group
46%
Overview Group Strategy
CHART 7
Securities: Rightsizing programme developed
� Income 19% lower – disappointing trading results� Operating expenses 5% lower � Restructuring expenses of €132m: pre-tax loss of €230m
Comments on results
Restructuring programme
-19%
n/a
-5%
-22%
>100%
n/a
703
0
-697
6
-34
-28
Revenues
Loan loss prov.
Op. expenses
Operating profit/loss
€ m 9m2003 9m2004 Changein %
572
-2
-668
-98
-132
-230
Restruct. exp.
Pre-tax loss � Front-office: reduction of 490 FTE
- Focusing and downsizing of CCMC, New York, close-down of ComSec, Tokyo
- Efficiency increase in other locations: reduction of FTEs and clearer focus
� Back-office: reduction of overhead and service costs (410 FTE)
- Scaling-down of non-customer-based proprietary trading
� Restructuring expenses (personnel, rental costs, IT): €132m
operative ROE 0.8% -11.1%CIR 99.1% 116.8%
Equity allocation within Commerzbank Group
12%
Overview Group Strategy
CHART 8
Agenda
Overview Group Strategy
New Corporates & Markets Division
Financials
Where are we going?
CHART 9
High earnings volatility due tonon-customer proprietary trading(dedicated proprietary-trading books)
Starting point for Commerzbank’s investment banking
Regional positioning too broad
Problem areas
Productivity gaps between locations
Stable, customer-basedbusiness:
97% of revenues in first nine months
New Corporates & Markets Division
CHART 10
Restructuring measures
490
410
900
front-office back-office total
FTE structure in front office, by location
1,275
Frankfurt 425 30
London 576 275
CCMC 118 90
ComSec 31 31
Other 125 65
reduction(approx.)
490
FTE as of 30.09.04
33%51% 50%
45%
34% 38%
12%6% 4%
10% 9% 8%
Frankfurt London New York/Tokyo Other
FTE 09/04 Income 09/04 FTE post restruct.
Reduction of FTEs: front-office, back-office, total� Trading books successfully integrated
� All portfolios valued fairly; checked by auditors� Strategic staff cuts in line with plan� Restructuring provisions evidently sufficient
New Corporates & Markets Division
CHART 11
Commerzbank’s new approach to investment-banking activities
We intend to expand in the following main products and services:� Fixed income and other debt-related products� Foreign exchange trading� Equity-related derivatives� Corporate finance and capital restructuring� Equity research, sales and trading for German clients� M&A advisory work for German corporate clients
We are completely exiting or drastically reducing:� Our dedicated proprietary trading operations� The Tokyo office and a large part of the New York office� Our pan-European equity trading operations� Most of our non-German equity research� Non-German M&A advisory� Other, small non-core businesses
New Corporates & Markets Division
CHART 12
Corporates & Markets – strategic measures
� Combination of capital-market products and core target corporatecustomers in a single division
Goal:
� Derivative products for all asset classes� Structured products� Risk-management products
� Expansion of customer-based, profitable core business of investment bank� Concentration on capital-market needs of
- Mittelstand- multinationals - private customers- institutions
� Stable, risk-reduced return
Neworganization:
Growthareas:
New Corporates & Markets Division
CHART 13
Agenda
Overview Group Strategy
New Corporates & Markets Division
Financials
Where are we going?
CHART 14
Revaluation reservein € m
pre-revaluation
post-revaluation
equities bonds
1,2131,035
1,2531,240
650
-258
-1,100
03/03 06/03 09/03 12/03 03/04 06/04 09/04 12/04
Tier I capital ratio above target; revaluation reserve increased again in Q3
7.4 7.3 7.27.07.1
7.87.7
7.3
6.7
5.9
6.0
31Mar
30Jun
30Sep
31Dec
31Mar
30Jun
30Sep
31Dec
31Mar
30Jun
30Sep
Tier I capital ratio (in %)*
target
2002 2003 2004
* incl. market risk position
Financials
CHART 15
Statement of comprehensive income for Commerzbank(in € m)
- 109
- 13223
23
- 92- 10178
- 76
Q3 2004
492Comprehensive income
78Change in cash flow hedge reserve
- 132Restructuring expenses
360Comprehensive income after restructuring expenses
- 43Increase in unrealized reserves for items shown at cost
58Change in currency translation reserve- 27Change in revaluation reserve
426After-tax profit, before restructuring expenses
9m 2004
Financials
CHART 16
Agenda
Overview Group Strategy
New Corporates & Markets Division
Financials
Where are we going?
CHART 17
927
1,321
<800850
1,084
2001 2002 2003 2004 2005p
Quality of loan portfolio continually improving
Loan-loss provisionsin € m
6,660
1,857 1,770
348 334
7,077 5,7365,506
Loan-lossprovisions
Country LLP andgeneral provision
Collateral
Non-performingloans
109.0% 117.7%
31.12.2003 30.09.2004
7,711 7,840In excess:€1,180m
252
303
238214 199
256273
Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04
Loan-loss provisionsin € m
Loan-loss cover ratio comfortablein € m
* downside worst case
In excess:€634m
****
Financials
CHART 18
2002 2003 2004 2005
�= completedWhere are we going?
Management changes implementedCosts cut rigidlyLiquidity prudently managedCapital base strengthenedRisk-weighted assets reduced
Management changes implementedCosts cut rigidlyLiquidity prudently managedCapital base strengthenedRisk-weighted assets reduced
����Restored: Corporate financial strengthRestored: Corporate financial strengthRestored: Corporate financial strengthRestored: Corporate financial strength
Loan portfolio improved Margins increasedNon-core participations soldRetail: profitability restored – play to winAM: successfully restructured – shrink to growCorporate Bank: move to the top – kicked offCosts cut further
Loan portfolio improved Margins increasedNon-core participations soldRetail: profitability restored – play to winAM: successfully restructured – shrink to growCorporate Bank: move to the top – kicked offCosts cut further
����Regained: Improved Core BusinessesRegained: Improved Core BusinessesRegained: Improved Core BusinessesRegained: Improved Core Businesses
�
�
�
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�
�
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Customer-segment oriented organisationRetail: product/customer initiatives – grow to winAsset Management – improve profitabilityCorp.Bk – customer-focused structure, move to the topSecurities – reduce volatility through rightsizingExpand Eastern Europe and string-of-pearls strategy acquisitions (e.g. SchmidtBank)
((((����)))) progressing: Stability and Focused growthprogressing: Stability and Focused growthprogressing: Stability and Focused growthprogressing: Stability and Focused growth
Where are we going?
CHART 19
BRE Bank (equity participation: 72.16%)� Plus: 880,00 retail customers, 60 branches, 30% market
penetration for large corporates� Major adjustment of participation portfolio in December� Equity base strengthened in the meantime� Positive results expected in retail banking 2005� Sharp upturn in BRE’s overall profits likely this year
SchmidtBank (Participation: 100%)� Plus: 360,00 retail customers, 70 branches,
2,000 corporate customers� Integration proceeding successfully
(to be completed by March 2005)
Extra growth: String-of-pearls acquisition strategy and expansion of already strong Eastern European platform
Participation in Eastern European growth in retail & wholesale areas: organic growth/ acquisitions
String-of-pearls acquisition strategy
Where are we going?
CHART 20
Commerzbank: Five pillars of our distribution platform
Private Clients
� Retail Banking
� Private Banking
� comdirect
Asset Management
� Asset Management
� Real Estate Fund Management
Mittelstands-bank
� Mittelstand Germany
� Central/Eastern Europe
� Leasing
International CorporateBanking
� Europe West
� USA, Asia, Africa
� FinancialInstitutions
Corporates & Markets
� 150-180 multinational andlarge corporates
� Securities
PCAM CIB
Commerzbank
Dr. Achim Kassow
Klaus M. Patig
Martin Blessing
Klaus M. Patig
Nicholas Teller
Where are we going?
CHART 21
Customer acquisition target already over-achieved after 9 months
605
451
3,000
4,276
70 98 155211
758
447
557
526
398
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Σ Target2004
New clients:4,276
New clients in 2004Corporates & Markets Clients
~150 C&M customers
Larger Corporates
Centralised relationship management
5 Large-Corporate Centres
Mittelstand clients
~51,000 clients
20 main branches / 159 locations
~650 clients
Domestic corporate client base*
Our target: 9,000 more clients by end-2006Achieved so far: 2004 increase well above plan
* as of end-2003
Where are we going?
CHART 22
We keep our promises!
RoE (after-tax) targets of Commerzbank
big step towards our current cost of capital
(current cost of capital) (long-term cost of capital)
2004 2006
> 8% > 10%
2005
Where are we going?
CHART 23
Position targeted for 2006
� Best German bank for private customers
� Number 1 Mittelstands bank
� Leading distribution platform in the middle of Europe
• > 5m retail customers
• 40% market penetration with German Mittelstand
• One of top 10 players in CEE
Commerzbank’s profile as of today Goals for 2006
Where are we going?
For more information, please contact:Commerzbank Investor Relations
Tel. +49 (69) 136 22 33 8
CHART 25Chart 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.