Commerzbank Presentation

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1 Commerzbank Presentation Morgan Stanley Conference London, March 24, 2006 Nicholas Teller Member of the Board of Managing Directors

2 Highlights of 2005 FY 2005 targets results vs 2004 Operating profit, in m 1,250 1, % Net profit, in m 750 1, fold Net ROE, in % pps CIR, in % pps 1. Commerzbank with one of its best-ever operating results 2. Delivered on ROE and CIR targets 3. Increased overall earnings quality 4. Acquisition of Eurohypo 1

3 Commerzbank s path to stability and growth Progressing: Stability and focused growth Restored: Corporate financial strength ( ) Management changes implemented Costs cut rigidly Liquidity prudently managed Capital base strengthened Regained: Improved core business ( ) Significantly de-risked loan portfolio and VaR Non-core participations sold Restored profitability in PBC Major turnaround in Mittelstand De-risked Corporates & Markets, significant turnaround Strong stand-alone position Active consolidator in the German banking market Enhancing profitability in all divisions at low volatility levels Increasing capital efficiency and strength Continuing tight cost management Focus on regions and products with competitive strengths Focus on investments for internal and external growth 2

4 Steady enhancement of underlying business Operating profit in m 2,234 1,717 1, Operating ROE, in % Net ROE², in % CIR, in % excluding 1,216m comdirect IPO gains 2 calculated on net profit 3

5 Steady enhancement of underlying business Net interest income in m 3,581 3,133 3,172 Commission income in m 2,415 2,267 2,250 2,120 2,136 3, % 2, % Net interest income and commission income vs operating expenses 111% 119% % 99% 108% 85% Commerzbank/EHY pro forma Commerzbank 4

6 Significantly reduced trading volatility Trading profit in m Trading: VaR substantially reduced (Principle I 1 ) in m 1, % % Dec 03 Dec 04 Dec % confidence interval, 10-day holding period Up to 90 % of trading profit driven by Corporates & Markets, of which 90% is client based trading 5

7 Costs under control Operating revenues and expenses in m 6,296 5, ,347 5, ,070 4, ,504 4, ,379 4, AREP Operating costs grew by 1% y-o-y excluding special charges due to revaluation of Asian real estate property (AREP) Higher expenses due to performance-related compensation Pro-active reduction of actuarial gap CIR improved to 67.1% Total revenues Cost income ratio, in % Continuing focus on revenue-related cost management 6

8 Significant swing in net profit Net profit in m 1,342 1, EPS tripled to 1.93 Doubling of dividend to 0.50 per share (recommended) Higher retained earnings due to EHY acquisition (Pay-out ratio of ~25%) Tax rate 2005: 24.3% , : Low tax rate due to EHY Earnings per share in 7

9 Loan loss provisions at lowest level for the last six years Loan loss provisions in m 1,267 1,084 Net LLP ratio 1, in bps as a proportion of total lending Development of loan loss coverage ratio in bn In excess NPL Cumulative LLP Country LLP and general provisions Collateral % 119.6% NPL significantly reduced Less bulky: 20 biggest substandard loans reduced from 6.6bn in 2002 to currently roughly 1.5bn Higher portfolio quality leads to lower uncovered risk 8

10 Strong capital ratios no utilization of hybrid capital so far Capital ratios of Commerzbank Group in m 18,250 17, ,257 10, , , Expected development of Tier I ratio > 6.3% March 31, 2006e 1 > 6.5% Dec 31, 2006e % Dec 31, 2007e 1 post Eurohypo closing and hybrid capital issuance, including interim profits for Q Own funds Core Capital (Tier I) Own fund ratio Tier I ratio (including market risk position) 9

11 Revaluation reserve at record level despite disposals in 2005 Revaluation reserve in m 1,240 1,600 1,995 Bonds Net result on investments and security portfolio in m 647 Available for sale result securities Equities Net result on participations Major participations (as of Dec 31, 2005) Major disposals in 2005 > 10% KEB 2 < 10% Linde 1-5% Generali Mediobanca ThyssenKrupp Unibanco MAN HeidelbergerDruck Banca Intesa 2 disposal of 8.1% of KEB in Feb 2006, remaining stake above 6% 1 excluding net results of refinancing and dividend 10

12 Substantial increase in Mittelstand, C&M, Mortgage Banks Operating profit in m Private & Business Customers % Asset Management Mittelstand % 29.6% in % FY 2005 in % FY 2005 in % FY 2005 ROE ROE ROE CIR CIR CIR 56.2 International Corporate Banking Corporates & Markets Mortgage Banks % 17.8% 9.8% in % FY in % FY 2005 in % FY ROE CIR ROE CIR ROE CIR 11.1 Equity allocation within Group 1 operating ROE 11

13 The past: Restructuring ahead of plan The securities division of Corporates & Markets Targets (securities division only) Status 1. Significant reduction of cost base (- 294m by 2007) Target Cost reduction ahead of plan Full effect expected in Reduction of front office staff by 1/3 (from 1,275 to ~ 800) 09/ Target Target already achieved in 2Q Major reduction of VaR 2 (Target level ~ 9m) Significant reduction achieved Current VaR at target 09/ Target Reduction of capital allocation by 4. Target achieved in 4Q2005 ~30% (from 1,191m to 844m) 09/ Target 5. Max revenue attrition of 8% Revenues 2005 were above 2004 level 1 Annualised based on 9/ Overnight, 97.5% Target 12

14 The future: C&M 2007 targets realistic and achievable Regulatory capital and operating profit, in m 1,818 1,600 20% Revenues: Benefits expected form the Eurohypo acquisition. In addition, continued development of the derivatives platform across asset classes, start of commodities trading, credit trading turnaround and additional relationship management integration synergies should lead to increased revenues Costs: 12% Regulatory capital Operating profit RoE Further costs savings are expected to be realised in 2006, full effect of restructuring expected in 2007 Regulatory capital: Capital is expected to be reduced by a further ~ 220m, mainly through a CLO which will most likely come to the market in

15 Commerzbank post acquisition of Eurohypo: the pre-eminent commercial bank in Germany No. 1 Commercial real estate bank - market share increased from 17 to 22% No. 1 Public sector financing in combination with Essenhyp No. 2 Residential real estate financing - market share doubled to 6% No. 2 German bank by total assets and profit before taxes (2004) No. 2 Mittelstandsbank Germany No. 3 Retail bank with 5m customers Source: Commerzbank Research 14 No. 1 CMBS originator International No. 1 Jumbo Pfandbriefe Europe (together with Essenhyp 26% market share) Top 5 Real estate banking in USA Leading position in securitization and syndication in Europe No. 10 CEE bank with BRE and strong presence in Moscow, Prague and Budapest

16 Main benefits of Eurohypo transaction 1. Strong business fit Reinforce Commerzbank s position as the leading German commercial bank Broaden exposure in the recovering German real estate market (No. 1 with market share of 22%) Increasing and more stable earnings 2. Additional shareholder Substantial value value creation Significant EPS and ROE accretion starting in 2006 Growing dividends in following years Benefit from German economic recovery Value-enhancing with identified synergies High tax benefits 3. Integration process Integration teams making good progress some projects almost finalized Working on joint credit processing Synergies of up to 130m seem feasible 15

17 Schedule of Eurohypo integration Nov Dec Jan Feb Mar Apr May Jun Jul Aug Increase stake to 49% Finalize preliminary concept Increase stake to 98.04% Finalize detailed concept Organizational review Kick-off project teams Launch hybrid capital Prepare integration Start integration process Implementation Integration of EHY Nov 17, `05 Announcement of acquisition Capital increase Feb 15, `06 Analyst conference: Preliminary figures 2005 Disclosure of schedule for EHY integration May 4, `06 Analyst conference: Q1 figures CBK (based on current segment reporting) Details of integration concept and synergy potential Aug 9, `06 Analyst conference: Q2 figures of combined entity New segment reporting 16

18 Commerzbank s challenges in Additional Eurohypo shareholder value Strengthening our divisions Capital management Completion of acquisition Successful integration Realizing synergy potential on a combined basis Keeping strong momentum in Mittelstand and Corporates & Markets Profitability enhancement in International Corporate Banking Hybrid capital issue Strengthening Tier I ratio: tax loss carry-forward utilization, securitisations, increased retained earnings, active portfolio management 4. Market positioning Expanding position as the leading German commercial bank Playing an active part in consolidating the German banking market 17

19 Confident for the future Net ROE targets 2010e 2006e > 15.0% 2005 > 10.0% 9.6% 1 Above our long-term cost capital (~10%) Above our current cost of capital 1 excl. participations and impairments 18

20 Appendix 19

21 Commerzbank Group in m Q1 `04 Q2 `04 Q3 `04 Q4 `04 FY 2004 Q1 `05 Q2 `05 Q3 `05 Q4 `05 FY Interest income LLP Commission income Hedge result Trading profit AfS result Other operating income Total revenues Operating expenses Operating profit Restructuring expenses Goodwill Pre tax profit , , , , ,539 1,531 1,109 1,325 5,504 1,648 1,379 1,516 1,836 6,379 1,112 1,136 1,086 1,159 4,493 1,107 1,088 1,097 1,370 4, , , ,680 Average equity 10,207 10,219 10,276 10,330 10,258 10,097 10,073 9,755 11,015 10,235 Operating ROE (in %) CIR (in %) Commerzbank Group preliminary figures FY 2005

22 Eurohypo in m Q1 `04 Q2 `04 Q3 `04 Q4 `04 FY 2004 Q1 `05 Q2 `05 Q3 `05 Q4 `05 FY Interest income , ,378 LLP Commission income Hedge result Trading profit AfS result Other operating income Total revenues , ,195 Operating expenses Operating profit Restructuring expenses Goodwill Pre tax profit Average equity 5,265 5,359 5,429 5,430 5,336 5,458 5,593 5,726 5,742 5, Operating ROE (in %) CIR (in %) Eurohypo Group preliminary figures FY 2005

23 Commerzbank Group Eurohypo Group Balance Sheet, in m 31-Dec Dec-04 Change (%) Balance Sheet, in m 31-Dec Dec-04 Change (%) Assets Assets Claims on banks 86,203 86, % Claims on banks 25,831 24, % Claims on customers 153, , % Claims on customers 149, , % Assets held for dealing purposes 100, , % Financial investments 51,621 37, % Investments and securities portfolio 86,241 72, % Trading assets 4,712 5, % Others 18,422 13, % Others 2,761 3, % Total Assets 444, , % Total Assets 234, , % Liabilities Liabilities Liabilities to banks 129, , % Liabilities to banks 45,564 36, % Liabilities to customers 102, , % Liabilities to customers 37,416 38, % Securitized liabilities 96,920 87, % Liabilities in certificate form 126, , % Liabilities from dealing activities 74,999 80, % Subordinated liabilities 2,737 2, % Subordinated liabilities 8,143 8, % Profit participation certificates % Hybrid capital Hybrid capital % Equity 13,650 11, % Capital and reserves 6,152 5, % Others 18,403 17, % Others 14,335 14, % Total Liabilities 444, , % Total Liabilities 234, , % 22 1 Commerzbank Group preliminary figures FY Eurohypo Group preliminary figures FY 2005

24 Financial Calendar 2006 February 27 By March 31 Start of roadshow on hybrid capital Acquisition of 2 nd tranche of Eurohypo May 4 Q Telephone Conference May 17 Annual General Meeting August 9 Q Conference September 21 Early November Investors Day Q Telephone Conference 23

25 For more information, please contact: Commerzbank Investor Relations Jürgen Ackermann Head of Investor Relations P: M: Sandra Büschken P: M: Ute Heiserer-Jäckel P: M: Simone Nuxoll P: M:

26 Disclaimer / 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 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 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