Commerzbank Investors meetings

Transcription

1 Commerzbank Investors meetings Klaus-Peter Müller CEO UK & Ireland September 6-8, 2004

2 Chart 1 Commerzbank: 2004 key messages K K K K Marked progress of German banking, but performance remains sub- European as well as dependent on overall German economic situation Commerzbank: Q2 net profit stabilized at Q1 level, improvement vs previous year despite one time gain differential ( 100m 04, 60m 03) Core activities with improvements - Retail: profitability compares well with European peers - Asset Management: significant improvement, earnings accretive - Corporate: performance progress, very conservative provisioning - Securities: volatile, rightsizing analysis underway - Continued disposals of non-strategic interests Sustained profit improvement will also be passed on to shareholders through dividend

3 Chart 2 German banks: marked RoE progress based on LLP/cost improvement, income growth still small... Change in operating profit (H1 04 vs. 03 in m) Change in operating income (H1 04 vs. 03 in %)** +105% Change pre LLP s 2, % 10.2% 6.2% 9.4% +295% +224% 1, Commerzbank HVB Deutsche Bank H1/03 H1/04 H1/03 H1/04 H1/03 H1/04 * H1/03 H1/04 Dresdner Bank 3.1% 2.3% 1.7% Commerzbank HVB Deutsche Bank * -4.4% Dresdner Bank RoE H1/ 2004 *** Change of operating expenses (H1 04 vs. 03 in %) +4.6% n.a. +8.8% +9.4% 10.4% 11.7% H1 04 vs. H1 03 in %points 63.4% 64.8% 73.8% 80.2% 1.2% CIR 3.1% 5.2% -3.8% -2.7% * Commerzbank HVB Deutsche Bank Dresdner Bank -8.0% Commerzbank HVB* Deutsche Bank Dresdner Bank * H1/03 net of Norisbank, Bankhaus BethmannMaffei, Bank v. Ernst ** Operating income: net interest income after net change LLP s + net commission income + hedge result + trading profit *** RoE post tax, annualized, calculation based on financial equity

4 ...but sub-european profitability, valuation and revenue momentum Chart 3 European Banks: RoE vs. Price to Book Development of operating income ** price to book H HypoVereinsbank Deutsche Bank D SCH BBVA Commerzbank Société Générale Barclays PLC BNP Paribas HSBC Lloyds TSB ING Credit Suisse Group UBS ABN Amro 150% 140% 130% 120% 110% 100% 90% German banks European banks Commerzbank 0.0 0% 5% 10% 15% 20% 25% 30% 80% Q1/2003 Q2/2003 Q3/2003 Q4/2003 Q1/2004 Q2/2004 RoE 2004e* Constant currencies * RoE calculation based on financial equity (note: different accounting standards) ** Operating income: net interest income after change net LLP s + net commission income + hedge result + trading profit

5 Chart 4 Commerzbank s dependence macroeconomic factors H1 operating income* vs. DAX at mid-year H1 net interest income (before provisioning) vs. Eonia Eonia 5.0% operating income m DAX DAX interest income m % 3.0% 2.0% 1.0% Eonia % * Net interest income before provisioning, net commission income, trading profit

6 Chart 5 Commerzbank s dependence on macroeconomic factors almost a regression Operating income* vs. DAX H1 net interest income (before provisioning) vs. Eonia operating income m interest income m DAX EONIA 1.5% 2.5% 3.5% 4.5% * Net interest income before provisioning, net commission income, trading profit

7 Chart 6 Mid-2004 highlights in figures Q Q H H Operating profit ( m) x Net profit ( m) x Earnings per share ( ) x Target 7% RWA, in bn Tier I ratio, in % Mar 30 Jun 30 Sep 31 Dec 31 Mar 30 Jun 30 Sep 31 Dec 31 Mar 30 Jun

8 Chart 7 Net interest income strengthened profitability Net interest income in m 1, % gross / +19.5% net 1, ,523 1,071 H1 03 H2 03 H1 04 Change in net interest income before provisioning (in %, H1/04 vs. H1/03) LLP s Net after provisioning H1 improvement in net interest income inter alia due to the following factors: Lower refinancing costs (revaluation) Stable funding models Improving corporate business / lower risk provisioning needs Average interest margin based on interest-bearing risk-weighted assets, in % 5.0% % -4.2% % Commerzbank HVB* Deutsche Dresdner Bank Bank * H1/03 net of Norisbank, Bankhaus BethmannMaffei, Bank v. Ernst

9 Chart 8 Quality of loan portfolio continually improving Loan-loss provisions in m 927 1,321 1, * 880** Loan-loss provisions in m 252 *) excluding SchmidtBank **) including SchmidtBank Loan loss cover ratio comfortable in m In excess: 542m 107.9% 109.0% 114.6% 5,320 5,506 5,636 6,846 7,077 6, ,683 1,857 1, Non-performing loans Collateral Country LLP and general provision 256 7,388 In excess: 634m 238 In excess: 7,711 1,001m 7,845 Loan-loss provisions 214 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04

10 Commission income on track, trading profit volatile and below previous year Net commission income in m +11.4% 1,036 1,100 1,154 Trading profit in m -12.6% Chart H1 03 H2 03 H1 04 Change in net commission income (in %) H1/04 vs. H1/ % 9.9% H1 03 H2 03 H1 04 Change in trading income (in %) H1/04 vs. H1/03 4.2% Commerzbank HVB* 3.7% Deutsche Bank 1.6% Dresdner Bank -8.6% -12.6% Commerzbank HVB* Deutsche Bank -16.0% Dresdner Bank * H1/03 net of Norisbank, Bankhaus BethmannMaffei, Bank v. Ernst

11 Further disposals of participations, positive revaluation reserve Chart 10 Deutsche Börse (market placement) Erste Bank (market placement) Unibanco partial sale (global offering) comdirect free float increased through partial sale (accel. bookbuilding) Quarters 2003 I II III IV I II 2004 Crédit Agricole (accel. bookbuilding) Buderus sold to Bosch KEB partially sold to Lone Star T-Online sold to Telekom SCH sale in Q1 and Q2 Net result on investments and securities portfolio 181** in m * Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 *) roughly 20m from SCH disposal **) approx. 100m from SCH disposal Revaluation reserve in m pre-revaluation 650 1,240 1,253 1, post-revaluation ,100 12/02 03/03 06/03 09/03 12/03 03/04 06/04 equities bonds

12 Sustained cost control supports earnings improvement in m Operating expenses and number of staff 1,398 38,665 38,017 1,308 37,176 1,229 36,566 1,220 35,384 33,850 1,179 1,141 33,327 32,377 32,349 1,078 1,113 1,104 32,706 1,128 Chart 11 *) of which roughly 550 from SchmidtBank **) of which: 28m from SchmidtBank integration * ** Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Operating profit Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Net profit ,

13 Chart 12 H1 2004: best half since 2000 Operating profit 366 Other income Trading profit Net commission income 1, m 93 * ,423 1,216 1, ,036 1,154 Net interest income 1,696 1,834 1,734 1,451 1,523 Loan-loss provisions Operating expenses -2,470-2,909-2,706-2,320-2,232 H H H H H Total lending ( m) 240, , , , ,807 DAX 6,898 6,058 4,383 3,221 4,053 Rating Moody s AA3 AA3 A1 A2 A2 S&P AA- A+ A A- A- Fitch AA- A+ A A- A- *) adjusted by 856m generated by comdirect IPO

14 Chart 13 Analysts 2004/2005 forecasts for Commerzbank* forecast in 9/03 forecast in 8/04 forecast in 8/04 ROE (pre-tax) 5-6% 8-9% % C/I ratio <69% 67-69% 65-70% Costs < 4.5bn bn bn Pre-tax profit m 1,000-1,310m 1,100-1,380m Actual share price *) based on 12 large investment brokers

15 Net interest income (before provisioning): Commerzbank s seasonality Chart 14 Annual net interest income per quarter % Average , (without 2000) 25% % Q1 Q2 Q3 Q4

16 Chart 15 Performance in Retail & Corporate Banking operating profit, in m Retail Banking Corporate Banking Q1 Q2 Q3 Q4 Q1 Q2

17 Retail Banking: H positive shareholder value Chart 16 m Q1 Q2 Change Value driver analysis comparison of H1 04 with H1 03, in m 74% 3% 78 revenues without LLP 3 LLP reduction 23% 100% 25 cost reduction 106 operating profit Net interest income Provision for possible loan losses Net interest income after provisioning Net commission income Net result on hedge accounting Trading profit Net result on investments and securities portfolio Other operating result Total income Operating expenses Operating profit Operative return on equity Cost/income ratio in operating business % % % % % 2 2 0% % % % % 27.6% 22.6% % 72.8% - Operating profit in H1 exceeded previous year by more than 90% m H1 04 H1 03 Pre-tax RoE at mid-year almost 25% Total income We are well on track to increase our operating profit as promised by at least 25% in 2004 as a whole Operating expenses Operating profit Share of equity tied up in Group 18%

18 Asset Management: operating profit virtually tripled year-on-year Value driver analysis comparison of H1 04 with H1 03, in m 74% 45 26% 16 Concentration on core markets bearing fruit Operating profit of 92m in H1 virtually three times higher than in previous year Operative RoE at 34% 100% 61 revenues cost reduction operating profit Our forecast of 40% higher operating profit in 2004 remains and should be considered conservative. Net interest income Provision for possible loan losses Net interest income after provisioning Net commission income Net result on hedge accounting Trading profit Net result on investments and securities portfolio Other operating result Total income Operating expenses Operating profit Operative Mio return Euro on equity Cost/income ratio in operating business Total income Operating expenses Operating profit Chart 17 m Q1 Q2 Change m % % % % % % % % 37.4% 30.4% % 66.1% - H1 04 H1 03 Share of equity tied up in Group 5%

19 Corporate Customers & Institutions: improvement in Q2 Value driver analysis comparison of H1 04 with H1 03, in m -66 revenues without LLP 106 LLP reduction -18 cost reduction 22 operating profit Chart 18 m Q1 Q2 Change Net interest income Provision for possible loan losses Net interest income after provisioning Net commission income Net result on hedge accouting Trading profit Net result on investments and securities portfolio Other operating result Total income Operating expenses Operating profit Operative return on equity Cost/income ratio in operating business % % % % % % % % % 10.0% 13.7% % 48.9% - Operative RoE raised to 11.8% for first six months Cost/income ratio remains under 50% Operating profit of 283m in H1 sees us under way to achieving our target of 500m in 2004 as a whole. m Total income Operating expenses Operating profit H1 04 H1 03 Share of equity tied up in Group 47%

20 Securities: Structural analysis for rightsizing under way Value driver analysis comparison of H104 with H103, in m -6 revenues cost reduction operating profit Operative RoE at mid-year 12.1%; Cost/income ratio at 86% in H1 04 Rightsizing analysis (example): Conceptual Global Europe CEE Domestic Fortune 500 Large Companies500 SME s 500 Fixed Income/Cash Mgmt Opportunistic Coverage For Discussion Focus M&A Advisory Equity m Total income Operating expenses Operating profit Chart 19 m Q1 Q2 Change Net interest income Provision for possible loan losses Net interest income after provisionig Net commission income Net result on hedge accounting Trading profit Net result on investments and securities portfolio Other operating result Total income Operating expenses Operating profit Operative return on equity Cost/income ratio in operating business % % % % % % -14.8% % 124.6% - H1 04 H1 03 Share of equity tied up in Group 12%

21 Commerzbank s three additional segments operating profit in m Treasury Q1 Q2 Q3 Q4 Q1 Q Operative RoE boosted to above 200% in Q Treasury with stable profit contributions in all quarters. Mortgage Banks Q1 Q2 Q3 Q4 Q1 Q Eurohypo s H1 results have not been taken into account. At mid-year, we chose not to recognize 52m (in Q2: 32m). Hypothekenbank in Essen and Erste Europäische Hypothekenbank produce stable profit contributions Chart 20 Others and consolidation Q1 Q2 Q3 Q4 Q1 Q2 In addition to the approx. 100m profit from the sale of SCH, this segment benefitted in Q2 from the lower funding costs of non-strategic investments and seasonally higher dividend payments. Operating expenses were higher.

22 Chart 21 Our achievements and our goals K K K K K Q2 figures in line with Q1 results. Continued progress in our two largest core business lines, Retail Banking and Corporate Banking Evaluation of optimal size of Securities addressed Conservative provisioning with additional potential Cost discipline to be maintained Non-strategic participations under continuous review Intention: to close the gap between present book value (ca. 18) and present share price (ca. 13)

23 Chart 22 Successful start to integration of SchmidtBank into Commerzbank Integration process 347,000 retail customers 4,000 corporate clients Staff of roughly 550 Balance-sheet total as of June 1: 3.4bn 70 branches and 29 self-service centres Commerzbank has a risk umbrella for large unexpected losses Impact on results 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

24 Chart 23 Retail Banking: deposit margin growing again 1.60 margin in % of overall lending volume (incl. loan commissions) 1.60 margin in % of overall customers deposits in % in % Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 in % EONIA monthly average 1.5 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04

25 Chart 24 Corporate Banking: back to better margins in Germany 1.60 margin in % of overall lending volume (incl. loan commissions) margin in % of overall customers deposits Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q EONIA monthly average 3.0 in % Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04

26 Chart 25 /investor relations/ This report has been prepared and issued by Commerzbank AG. This publication is intended for professional and institutional customers. / Any information in this report is based on data obtained from sources considered to be reliable, but no representations or guarantees 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 report 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 report. / Commerzbank AG and/or its subsidiaries and/or affiliates (herein described as Commerzbank Group) may use the information in this report 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 report. Additional note to readers in the following countries: / United States: Commerzbank Capital Markets Corporation (a wholly owned subsidiary of Commerzbank AG) is a U.S. registered brokerdealer and has accepted responsibility for the distribution of this report in the United States under applicable requirements. Any transaction by U.S. persons must be effected with Commerzbank Capital Markets Corporation. / Japan: This report is distributed by CommerzSecurities (Japan) Co. Ltd. / Italy: You should contact Commerzbank AG, Frankfurt, if you wish to use our services to effect a transaction in any of the securities mentioned in this publication. / Hong Kong: This report is being distributed in Hong Kong to investors who fall within section 3(1) of the Securities Ordinance (Cap 333) by Commerzbank AG Hong Kong Branch. / UK: This report is distributed by Commerzbank AG which is regulated by the FSA for the conduct of investment business in the UK for distribution to its professional and business customers. Commerzbank AG is a member of the London Stock Exchange. / 2004 No part of this report may be reproduced or distributed in any manner without the permission of Commerzbank Group.

27 For more information, please contact: Commerzbank Investor Relations Tel. +49 (69) ir@commerzbank.com