dr. eric strutz cfo - commerzbank agconference call dr. eric strutz cfo frankfurt august 4, 2004...

CommerzbankConference Call

Dr. Eric StrutzCFO

FrankfurtAugust 4, 2004

Chart 1Chart 1Chart 1Chart 1

Mid-2004 highlights in figures

178 160 155 150 149 141 148199205 146

6.77.3 7.4 7.7 7.8 7.3 7.1 7.05.96.0

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

RWA, in € bn Tier I ratio, in %

2002 2003

Target7%

2004

Q2 2004 Q1 2004 H1 2004 H1 2003Operating profit (€m) 403 435 838 366

Net profit (€m) 248 254 502 73

Earnings per share (€) 0.42 0.43 0.85 0.14


Successful start to integration of SchmidtBank into Commerzbank

� 347,000 retail customers

� 4,000 corporate clients� Staff of roughly 550� Balance-sheet total as of

1.6.: €3.4bn� 70 branches and 29 self-

service centres

� Commerzbank has a risk umbrella for large unexpected losses

Integration process

� In both first half and 2004 as a whole, hardly relevant for results

� Both operating income and operating expenses roughly €30m in first half of 2004

� Starting 2005, pre-tax return on equity of 10% – or more – expected

Impact on results


Net interest income strengthened profitability

705746 718

805

663662

Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04

Net interest incomein €m

Net interest income after provisioningin €m

453 443 480

591

407389

Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04

Q2 improvement in net interest income was driven by three factors:

1. Higher dividend income from ourinvestment portfolio

2. Stronger Group Treasury3. Increase in corporate business

2.762.62

2.442.34

2.392.43

31.3. 30.6. 30.9. 31.12. 31.3. 30.6.2003 2004

Average interest margin based on risk-weighted assets, in %


Quality of loan portfolio continuously improving

927

1,321

8809501,084

2001 2002 2003 31.03. 30.6.

Loan loss provisionsin €m

Loan loss provisions in €m

252303

238214 214 214

256273

Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04*** Q4 04***

*

*) excluding SchmidtBank**) including SchmidtBank

**

2004

***) expected

7,077 6,844

1,857 1,857348 352

6,846

1,683385

5,6365,5065,320

Non-performing loans CollateralCountry LLP and general provision Loan-loss provisions

107.9% 109.0% 114.6%

31.12.2002 31.12.2003 30.6.2004

7,388 7,711 7,845In excess:

€542mIn excess:

€634m In excess:€1,001m

Loan loss cover ratio seasonably on a high levelin €m


More difficult market conditions reduce income from securities

520 516

597557

591

509

Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04

Net commission incomein €m

Net result on investments and securities portfolioin €m

105

5477

181

6864

Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04

*

**

*) roughly €20m from SCH disposal **) approx. €100m from SCH disposal

231278

314

131121107

Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04

Trading profitin €m

-769-1,100

1,240 1,253 1,035650

-258

12/02 03/03 06/03 09/03 12/03 03/04 06/04

Revaluation reservein €m

pre-revaluation

post-revaluation

equities bonds


Sustained cost control supports earnings improvementin € m

Operating expenses

1,398 1,3081,179 1,141 1,078 1,113 1,104 1,128

1,2201,229

Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04

Operating profit

18154

172 194101 92

435 403

-75 32

Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04

Net profit 72 2 -129 -243 3 70 -2,305 -88 254 248


-307 -256 -329 -562 -555 -452

-2,040 -2,470-2,909 -2,706 -2,320 -2,232

1,693 1,696 1,834 1,734

9571,423 1,216 1,129

1,036 1,154

391

600 602417

509 445400

1,5231,451

245

20693

118223

H1 1999 H1 2000 H1 2001 H1 2002 H1 2003 H1 2004

H1 2004: best half since 2000

838Operating profit 3662356201,086812 € m

Total lending (€ m) 219,611 240,172 251,695 231,805 165,641 163,807DAX 5,379 6,898 6,058 4,383 3,221 4,053Rating Moody’s AA3 AA3 AA3 A1 A2 A2

S&P AA- AA- A+ A A- A-Fitch AA- AA- A+ A A- A-

Operating expenses

Loan-loss provisions

Net interest income

Net commission income

Other incomeTrading profit

*

*) adjusted by €856m generated by comdirect IPO


1021

798

223

940

823

117

Retail Banking: H1 2004 positive shareholder value achieved

Interest income stabilized in Q2

Provisioning increased slightly

Commissions down 10% in Q2, due to lower sales of securities and funds; but H1 level still 14% above previous year

Operating expenses declined somewhat, despite integration of SchmidtBank

Operating profit in H1 exceeded previous year by more than 90%

Pre-tax RoE at mid-year almost 25%

We are well on track to increase our operating profit as promised by at least 25% in 2004 as a whole

H1 04 H1 03

Total income

Operating expenses

Operating profit

€m

Share of equity tied up in Group

18%

€ m Q1 Q2 Change279 276 -1%-39 -46 +18%240 230 -4%280 253 -10%

0 0 -1 1 0%2 2 0%3 9 +200%

526 495 -6%404 394 -2%122 101 -17%

27.6% 22.6% -71.5% 72.8% -

Operative return on equityCost/income ratio in operating business

Total incomeOperating expensesOperating profit

Net result on hedge accountingTrading profitNet result on investments and securities portfolioOther operating result

Net interest income after provisioning

Net interest incomeProvision for possible loan losses



249

157

92

204

173

31

Asset Management: operating profit virtually tripled year-on-year

Concentration on core markets bearing fruit

Stronger customer demand for certificates led to slight fall in commissions and assets under management (€104.7bn)

Another small reduction in operating expenses in Q2

Operating profit, at €40m, down quarter-on-quarter, but high earnings base reconfirmed

Operating profit of €92m in H1 virtually three times higher than in previous year

Operative RoE at 34%

Our forecast of 40% higher operating profit in 2004 remains, but should be considered extremely conservative.

H1 04 H1 03

Total income

Operating expenses

Operating profit

Mio Euro


5%

€ m Q1 Q2 Change-2 -3 +50%0 0 -

-2 -3 +50%121 107 -12%

1 0 -2 2 0%1 6 -8 6 -25%

131 118 -10%79 78 -1%52 40 -23%

37.4% 30.4% -60.3% 66.1% -







€m


906

623

283

866

605

261

Corporate Customers & Institutions: significant improvement in Q2

Interest income before provisioning up 3% in Q2

Thanks to better credit quality, sharp reduction in provisioning

Interest income after provisioning in Q2 23% above previous quarter

Operating expenses under control

Operating profit 40% higher than previous quarter

Operative RoE raised to 11.8% for first six months

Cost/income ratio remains under 50%

Operating profit of €283m in H1 sees us well under way to achieving our communicated target of €500m in year as a whole.

H1 04 H1 03

Total income

Operating expenses

Operating profit

€m


47%

€m Q1 Q2 Change400 414 +3%

-194 -161 -17%206 253 +23%170 174 +2%

0 0 -13 0 -18 9 -50%22 41 +86%

429 477 +11%311 312 +0%118 165 +40%

10.0% 13.7% -49.9% 48.9% -



Net result on hedge accoutingTrading profitNet result on investments and securities portfolioOther operating result





535

462

73

541

479

62

Securities: difficult market conditions led to weaker revenues

H1 04 H1 03

Total income

Operating expenses

Operating profit

€m


12%

€ m Q1 Q2 Change4 4 -0 -2 -4 2 -50%

36 25 -31%0 0 -

312 154 -51%2 0 -0 0 -

354 181 -49%234 228 -3%120 -47 -

41.6% -14.8% -66.1% 124.6% -




Net interest income after provisionig



After an excellent start, earnings perspectives became much gloomier

€73m operating profit achieved in H1 2004, almost 18% more than in previous year

Operative ROE at mid-year 12.1%; again in double figures

Cost/income ratio at 86% in the first 6 months of 2004

The various sections performed very unevenly: Equity Derivatives, Equity Sales and Trading, Capital Markets and Securities Finance continued to register good performance. However, Credit Trading and FX Trading were weak.


Commerzbank’s three additional segmentsoperating profit in € m

117

68

6

38

73

29

2003Q1 Q2 Q3 Q4 Q1 Q2

Treasury

2004

56 55 51 5444

80

2003

Mortgage banking

2004

-246

-76

-146

-69

27

-141

2003

Others and consolidation

2004

Operative ROE boosted to above 200% in Q2 2004

Treasury with stable profitcontributions in all quarters.

Eurohypo‘s H1 results have notbeen taken into account. Atmid-year, we chose not to recognize €52m (in Q2: €32m).

Hypothekenbank in Essen and Erste Europäische Hypothekenbankproduce stable profit contributions.

In addition to the approx. €100m profit from the sale of SCH, thissegment benefitted in Q2 from the lower funding costs ofnon-strategic investments and seasonally higher dividend payments. Operating expenses were higher.

Q1 Q2 Q3 Q4 Q1 Q2

Q1 Q2 Q3 Q4 Q1 Q2


Our achievements and our goals

� Q2 figures in line with good Q1 results. We have made further progress in our two largest core business lines (Retail Banking and Corporate Banking)

� We believe our core activities possess further growth potential –through both internal and external expansion

� Additional scope for reducing loan-loss provisions � Cost discipline will be maintained� Our non-strategic participations are being reduced further

� We intend to close the gap between our present book value (€18.00) and our present share price (€13.98)


Commerzbank: the next IR events

Investors’ Day

September 22, 2004

at Commerzbank's head office

planned with all Commerzbank board members participating

Analysts’ conference call

to present the Q3 figures

November 3, 2004

held by Eric Strutz and Commerzbank team

For more information, please contact:Commerzbank Investor Relations

Tel. +49 (69) 136 22 33 8

[email protected]

dr. eric strutz cfo - commerzbank agconference call dr. eric strutz cfo frankfurt august 4, 2004...

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