> comdirect bank AG Nine-month report 2014

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1 > comdirect bank AG Nine-month report 2014

2 > Key figures of comdirect group Change in % Customers, assets under custody and key products comdirect group* Customers number 2,849,746 2,825, Custody accounts number 1,699,536 1,697, Total assets under custody in million 57,403 55, of which: portfolio volume in million 43,455 41, of which: deposit volume in million 13,949 13, business-to-customer (B2C) business line Customers number 1,867,181 1,823, Custody accounts number 862, , Current accounts number 1,111,667 1,043, Tagesgeld PLUS ( daily money plus ) accounts number 1,511,824 1,461, Total assets under custody in million 33,779 31, of which: portfolio volume in million 19,980 18, of which: deposit volume in million 13,799 13, Credit volume in million business-to-business (B2B) business line Customers number 982,565 1,001, Custody accounts number 837, , Total assets under custody in million 23,625 23, of which: portfolio volume in million 23,475 23, of which: deposit volume in million Orders and order volume Q1-Q3 Q1-Q3 Executed orders number 14,453,833 13,898, of which: B2C number 8,018,054 7,488, of which: B2B number 6,435,779 6,410, Average order activity per custody account (B2C annualised) number Order volume per executed order (B2C) 1) in 5,379 5, Earnings ratios Q1-Q3 Q1-Q3 Net commission income in thousand 142, , Net interest income before provisions for possible loan losses in thousand 109, , Administrative expenses in thousand 196, , Pre-tax profit in thousand 64,944 66, Net profit in thousand 47,817 48, Earnings per share in Return on equity before tax (annualised) 2) in % Cost/income ratio in % Balance sheet key figures Balance sheet total in million 14,654 14, Equity in million Equity ratio 3) in % Regulatory indicators under CRR/CRD IV 4) Risk weighted assets 5) in million Eligible amount for operational risks in million Core capital in million Own funds for solvency purposes in million Own funds ratio 6) in % 46, Employees figures Employees number 1,269 1, Employees full-time basis number 1, , *) B2C: comdirect bank AG; B2B: ebase GmbH 1) Excluding CFD trades 2) Pre-tax profit/average equity (excluding revaluation reserves) in the reporting period 3) Equity (excluding revaluation reserves)/balance sheet total 4) These figures are calculated on the basis of internal calculations; publication is voluntary and based on national and European implementation rules and the figures are not reported to the Supervisory Authority 5) Risk weighted assets in accordance with Section 113 paragraph 6 CRR (intragroup receivables are zero weighted) 6) Own funds for solvency purposes/(risk weighted assets x eligible amounts for operational risks)

3 FOREWORD 1 Dear Shareholders, comdirect is clearly a growth stock but for us, size alone has no merit. Our investments are aimed at anchoring the comdirect brand in trading, investing and banking even more firmly with customers, and our growth is precisely targeted to those areas that offer the greatest benefit to customers, be it in personal financial management or easy access to our Better financial investments tool. As a result, we have not only grown in size, but also in stature and significance. Increased customer loyalty, very strong satisfaction scores and not least the high level of customer activity demonstrate that the continual improvement in our offering is paying off. This has made our business model even more resilient, as the interim results attained by the comdirect group at the end of the first nine months impressively reflect. The portfolio volume increased slightly once again in the third quarter despite the recent sharp drop in prices. The number of trades substantially outstripped the respective figure for 2013, even though trading on the German spot market declined overall. Another factor that helped our earnings reach a new record of 261.3m was the high level of activity by our customers in trading and investing, which went against the market trend. Administrative expenses were up by around 9m on the previous year since a bigger bank needs more employees and more infrastructure, plus there are tighter regulatory requirements to meet. In addition, we have invested a greater amount in future growth areas than in the previous year. Nevertheless, at 64.9m, pre-tax profit nearly matched the previous year s figure, because although we increased our expenses, our spending on growth in earlier years paid off on the earnings side. comdirect shares therefore stand for good growth and earnings prospects. As before, we aim to achieve pre-tax profit of 75m for Our goals up to 2017 remain ambitious. We intend to strengthen our position as the market leader in online brokerage, significantly increase our market share in current accounts and at the same time establish the bank as the leading provider for online asset accumulation. We made all three of these a priority during the year. With professional trading platform ProTrader, com direct expanded its services for the trading community in the first quarter. This was followed in the second quarter by our Better financial investments investment assistant, which facilitates access to an attractive and high quality securities portfolio at low cost via a transparent investment process.

4 2 During the past quarter, the focus has primarily centred on growth in the number of current accounts, which rose by nearly 70 thousand in the first nine months. In the remaining months of the year, we will continually propel growth in all of these areas, as well as in B2B direct banking, where ebase is expanding its customer relationships primarily through its partnerspecific Managed Depot custody account solutions. Our product initiatives in B2C and B2B banking show investors how they can manage their finances more prudently and make more out of their money. By continually extending our range of securities and savings plans, offering attractive flat fees and ever better tools, we have helped establish a strong securities culture among our customer base. We believe our Better financial investments tool will convince considerably more bank customers that asset accumulation via securities is the superior alternative to a savings account paying barely any interest. We see the promotion of securities investments as both a company and a social issue. After all, a national economy can only invest what has been saved, which is why financial investments have to be made more attractive again. The provisioning gap will also widen in old age if savings are eroded by inflation. We want to make savers aware of these circumstances. Our measures here include the publication of our Factbook Equities, which won the prestigious Red Dot Award for its impressive presentation of this complex topic. Sincerely yours, Dr Thorsten Reitmeyer

5 INTERIM MANAGEMENT REPORT 3 > Foundations of the comdirect group The comdirect group implemented its growth-oriented strategy, which is explained in detail in the 2013 annual report, as planned in the first nine months of We have thus moved closer to our main goals: In direct banking, we expanded our market share in terms of customer numbers and deposit volumes, including through a further performance improvement for our current account. As a result of the Better financial investments tool and other product innovations, comdirect is well on the way to establishing itself as a leading online institution for investments and asset accumulation. In terms of the number of trades and portfolio volumes, we extended our position as the market leader in online brokerage. In the B2B business line, ebase expanded its customer relationships, primarily through partner-specific variants of its Managed Depot custody account solutions. In addition to the existing locations in Quickborn near Hamburg (registered office), Aschheim near Munich (ebase) and the building finance offices in Berlin, Frankfurt/Main, Hamburg and Munich, comdirect opened a new IT office in Rostock in the third quarter. Initially comprising six members, the team here works in cooperation with colleagues in Quickborn to develop and test new technologies for online banking; the facility is set to be expanded. Furthermore, the detailed presentation of the business model, structure and management in the 2013 annual report continues to apply. > Market and economic review Macroeconomic framework conditions Economic development in Europe has failed to meet expectations in the year-to-date. According to Eurostat, the statistical office of the European Union, growth stagnated in the 18 countries in the eurozone in the second quarter, after only marginal growth in the first three months of the year. The uncertainty caused by the crisis in Ukraine exacerbated this situation in the third quarter, while the weak euro had not yet had any far-reaching positive impact on the export industry. Economists at Commerzbank do not expect any upturn in the foreign trade sector before the end of the year. In addition to the Ukraine crisis, the major risks are slowing demand from the emerging economies as well as the severe imbalances and differing economic trends in the eurozone. Framework conditions for brokerage Feeble economic data and heightened uncertainty led to substantial price corrections and rising volatility in the European equity markets in the third quarter of The further cut in the base rate by the ECB and announcement of a programme to buy up to 800bn of asset backed securities (ABS) and Pfandbriefe triggered just a shortlived rally. As of 30 September, the DAX stood at 9,474 points and was thus 0.8% lower than at the close of 2013.

6 4 In spite of the increased volatility, there was only a modest rise in trading activity on German stock exchanges. In terms of value, the volume of trading in the German spot market (XETRA, Frankfurt and Tradegate) was up 5.5% year-on-year. Despite bigger trading volumes (+6.6%), equities recorded a fall in the number of trades of 17.6% compared with the previous year. The volume of exchange traded funds (ETF), exchange traded commodities (ETC) and notes (ETN) increased by 11.2%, while the number of trades decreased by 18.3%. In derivatives trading (Euwax and Frankfurt stock exchange), stock exchange turnover was on par with the previous year. Number of orders Deutsche Börse* shares traded (in billion) Q2 14 Q3 14 9M 13 9M 14 ETF/ETC/ETN Equities Demand for retail funds was restrained by comparison with the previous year. The retail funds included Source: Deutsche Börse AG * XETRA, Frankfurt and Tradegate in BVI statistics posted inflows of 27.6bn in the first eight months of 2014, up 5.8bn on the same period in Mixed funds and bond funds were particularly popular, while equity funds posted net outflows. The ebase fund barometer, which still stood at 110 points in January, fell to 73.5 points in September, thus reflecting below-average trading activity by fund advisers at ebase's partners compared with the previous year. Framework conditions for banking In the face of persistent growth risks, the ECB cut the refinancing rate to 0.05% on 4 September. At 0.25% on average over the first nine months, three-month EURIBOR remained slightly above the previous year's figure (0.21%) but stood at only 0.08% on 30 September following a significant fall. Yields on European government bonds fell again in the wake of the ECB s measures, particularly for short-dated paper. Interest rates on 10-year German government bonds recently hit a record low of less than 1%. In the first nine months, the yield in comdirect s Treasury portfolio was at a similar level to the same period in This therefore continued to severely limit interest income. Framework conditions for advice The framework conditions for Baufinanzierung PLUS were again dominated by sustained low mortgage interest rates in combination with high property prices and restricted supply in major conurbations. comdirect s Building Finance Sentiment Index, which is calculated in conjunction with opinion research institute Forsa, remained high at points in August (December 2013: points). A value greater than 100 indicates a high level of willingness to take out building finance loans. Industry and regulatory framework conditions The focus remains centred on the uniform European bank resolution mechanism (Single Resolution Mechanism SRM) and Deposit Guarantee Scheme Directive as well as the Markets in Financial Instruments Directive (MiFID II), which are to be transposed into national law by 2016 (see half-year report). A study by accountants KPMG showed that between 2010 and 2013, the direct costs for implementing new regulations stood at approximately 3.8bn in Germany alone. For the years 2013 to 2015, direct costs are expected to amount to 4.8bn. At the same time, the industry is under increased pressure to innovate. Large companies such as Apple, Google and PayPal are entering the market with innovative models and ideas for mobile payment systems amongst others, and established banks have to find a response to these. In addition, rising costs are promoting the trend towards cooperations, which benefits B2B banks, such as ebase, in particular.

7 INTERIM MANAGEMENT REPORT 5 Number of customers of comdirect group (in thousand) Total assets under custody of comdirect group (in billion) 1,009 1, ,790 1,824 1, Customers B2B Customers B2C Deposit volume Portfolio volume Business performance and earnings situation at the comdirect group Overall assessment of the economic situation The comdirect group posted strong earnings growth again in the third quarter. At the end of the first nine months, earnings are at a record level. comdirect is closer to achieving its overall pre-tax profit target for 2014 of 75m, despite higher administrative expenses, which reflect the bank s growth as well as higher regulatory costs. Moreover, nine months into the year, the comdirect group is on track to fulfil the expectations relating to the other key performance indicators set out in the 2013 outlook report. Net interest income increased marginally year-on-year as a result of the continuing expansion of deposits and adjustment of deposit interest rates. Net commission income also rose again because of increased customer activity, and comdirect outperformed the market with a sharp upturn in the number of trades. The rise in deposits is primarily attributable to sustained growth in the number of customers in the B2C business line. In net terms, nearly 70 thousand current accounts were opened in the first nine months. Assets under custody increased by around 2.4bn in the same period. Business performance As of 30 September 2014, the comdirect group had a total of 2,849.7 thousand customers. In the B2C business line, the number of customers increased by 43.6 thousand to 1,867.2 thousand (year-end 2013: 1,823.6 thousand). At the same time, the total number of custody accounts, current accounts and Tagesgeld PLUS accounts in the B2C business line climbed by thousand or 4.2%. The rise in the annualised figure for order activity per custody account to 12.6 versus the first nine months of 2013 (12.2) indicates a high level of customer activity in the period under review. The B2B business line once again recorded a slight fall in the number of customers in the third quarter to thousand. The decline of 2.3 thousand customers compared with the level in the middle of the year is attributable to the modest downturn in the number of custody accounts taken over from investment companies in earlier years. The decrease in the number of intermediaries stemming from the amendment of IFA legislation in accordance with Section 34f of the Trade Regulation (GewO) also had an impact. The increase in assets under custody in the comdirect group in the first nine months of 2014 of 4.3% to 57.40bn (end 2013: 55.05bn) was primarily due to the rise in the portfolio volume. At a new record level of 43.46bn, this was up 4.5% on year-end 2013 ( 41.58bn). The portfolio volume rose by 0.26bn in the third quarter, mainly as a result of net fund inflows. The deposit volume totalled 13.95bn (end 2013: 13.47bn) and thus also registered a small upturn, which was primarily attributable to the increased number of current and Tagesgeld PLUS accounts.

8 6 Pre-tax profit of comdirect group (in million) Earnings after tax per share (in ) Q2 14 Q3 14 9M 13 9M 14 Q2 14 Q3 14 9M 13 9M 14 Earnings situation Record earnings in the first nine months of the year were countered by higher administrative expenses. Consequently, at 64.9m pre-tax profit did not quite match the previous year s level ( 66.0m). The result for the third quarter fell 1.8m short of the respective figure for 2013 ( 23.1m). In the preceding quarters, the favourable trading environment (first quarter) and a positive non-recurring effect (second quarter) had ensured a modest rise in the result. Income climbed by 2.7% to 261.3m year-on-year, while administrative expenses went up by 4.8% to 196.4m. The cost/income ratio thus rose from 73.7% in the first nine months of 2013 to 75.2%. Based on the pre-tax profit and the average equity in the reporting period (excluding the revaluation reserves), the return on equity amounted to 16.5% (previous year: 16.8%). The comdirect group s net profit for the period after tax stood at 47.8m (previous year: 48.6m), which equates to earnings per share of 0.34 (previous year 0.34). Net interest income and provisions before possible loan losses At 37.8m, net interest income before provisions for possible loan losses in the period July to September outstripped the previous year s figure ( 36.0m) by 4.2%. This primarily reflected the adjustment in customer interest rates as well as the increased deposit volume. Net interest income before provisions for possible loan losses climbed by 4.9% year-on-year to 109.1m (previous year: 104.0m). Provisions for possible loan losses amounted to 0.4m in the third quarter, roughly on a par with the previous year ( 0.3m). Over the nine month period, charges to the provision for possible loan losses were virtually balanced at 0.1m (previous year: 0.8m). This resulted from the partial reversal of existing provisions and provisions for possible loan losses in the second quarter. This was due to the regular validation and adjustment of the parameters used to recognise portfolio loan loss provisions in lending to customers. After provisions for possible loan losses, net interest income for the comdirect group stands at 109.2m (previous year: 103.2m). Result from financial investments The result from financial investments amounting to 3.1m is essentially attributable to the selective disposal of securities. The previous year s high figure of 9.1m was due to the reallocation within the special fund portfolio which was carried out in response to changed market conditions at the time. Result from hedge accounting and trading result As of 30 September, comdirect held interest rate swaps with a nominal volume totalling 38.1m (end 2013: 83.1m) to hedge interest rate-related changes in the market value of several bonds with the same volume and same maturity. In addition, we used forward rate agreements to a small extent to manage the interest book in the period under review. Their nominal volume was reduced in full in the second quarter (end 2013: 650.0m).

9 INTERIM MANAGEMENT REPORT 7 Net commission income and net interest income (in million) Administrative expenses (in million) Q Q3 14 9M 13 9M 14 Net interest income before provisions for possible loan losses Net commission income Q Q3 14 9M M 14 Depreciation Other administrative expenses Personnel expenses As a consequence of the above, the result from hedge accounting to be disclosed for the reporting period amounted to 6 thousand (previous year: 8 thousand) and the trading result to 76 thousand (previous year: 152 thousand). Net commission income At 142.5m in the first nine months, net commission income was up on the previous year s figure ( 139.3m). The rise of 2.3% results in particular from the increased number of trades in the B2C business line. Once again in the third quarter, net commission income topped the previous year ( 46.5m) at 47.1m. Custody account fees and sales follow-up commission from funds business remained largely stable year-on-year. Commission income from payment transactions was on a par with the respective figure for 2013, while the advisory business registered slender growth. Other operating result The other operating result increased from 1.7m in the first nine months of 2013 to 6.5m. This was due to a non-recurring effect amounting to 4.5m from the reversal of a provision for VAT related obligations for several years in the second quarter. At 1.1m, the figure normalised again in the third quarter and was primarily attributable to the reversal of various provisions. Administrative expenses The rise in administrative expenses to 196.4m (previous year: 187.5m) reflects the bank s continuous growth as well as investments in the product and services portfolio. Stricter regulatory requirements additionally had an impact. At 56.6m, personnel expenses were up by 5.6% on the previous year s figure ( 53.6m) due to the rise in the number of employees and salary adjustments. Other administrative expenses, which include marketing, communication and consulting expenses as well as expenses for external services among other costs, climbed 4.5% to 126.3m (previous year: 120.9m). In addition to rising costs resulting from the growing size of the bank and regulatory requirements, the increase also reflects somewhat higher marketing expenses. At 13.5m, the level of depreciation remained at a similarly moderate level to the previous year ( 13.1m).

10 8 Executed orders B2C (in million) Portfolio volume B2C (in billion) Q2 14 Q3 14 9M 13 9M B2C business line Business development in brokerage Through the continual expansion of its information and guidance formats, comdirect is enabling its customers to make their own investment decisions online. In the third quarter, we extended the Better financial investments investment assistant, which we launched in the second quarter, for instance by adding a savings plan function. This allows investors to choose between a one-off investment starting at 3,000 or a savings plan with a minimum investment of 100. The investment frequency, sum and term can be adjusted on a flexible basis at any time. We also simplified the process for fund and ETF orders in the personalised section of the website: These can now be traded directly via the domestic order page in the same way as equities, derivatives and fixed-income securities. The order process automatically adjusts to the different trading options for the individual funds. Securities trading In the third quarter, comdirect customers were once again very active in securities trading in a comparatively volatile environment. The Brokerage Index, which is calculated monthly, shows a distinctly above-average level of trading in equities and funds in particular, while a significant downturn in demand was recently seen for fixed-income paper. In the first nine months of 2014, 8.02 million orders were executed, which is a rise of 7.1% on the previous year (7.49 million). The number of orders per custody account (on annualised basis) climbed to 12.6 (previous year: 12.2). Securities turnover totalled 33.44bn, corresponding to a decrease versus the previous year ( 34.68bn) of 3.6%. Portfolio volume Despite recent substantial price corrections in the equity markets, the portfolio volume in the B2C business line rose by 1.42bn in the first nine months. This is primarily due to net fund inflows amounting to 0.9bn. As of 30 September 2014, the portfolio volume reached a new record high of 19.98bn (end 2013: 18.56bn). The number of custody accounts increased in the first nine months by 2.6% to thousand (end 2013: thousand). Business development in banking Deposit business Compared with the end of 2013 (1,043.2 thousand), the number of current accounts rose by 68.5 thousand to 1,111.7 thousand. At 26.5 thousand, the increase in the third quarter was especially strong. At the same time, the number of Tagesgeld PLUS accounts, usually opened in conjunction with the current account, rose to 1,511.8 thousand (end 2013: 1,461.5 thousand).

11 INTERIM MANAGEMENT REPORT 9 Deposit volume B2C (in billion) Number of current accounts and Tagesgeld PLUS accounts (in thousand) 1, , , , , , Tagesgeld PLUS accounts Current accounts The deposit volume climbed in the third quarter by 0.14bn to 13.80bn (end 2013: 13.33bn). We registered inflows in current accounts in particular. As of 30 September 2014, 93.9% (end 2013: 92.6%) of liabilities to customers in the B2C business line were attributable to deposits due on demand. Lending business The volume of utilisation of loans against securities and draws on overdraft facilities by private customers amounted to 184m, up by 15.7% on year-end 2013 ( 159m). The volume of loans against securities increased by 16.6% due to somewhat greater utilisation of settlement accounts for securities investments. The volume of overdrafts was significantly over the figure at year-end comdirect acts as an intermediary for building finance and consumer loans. Both offerings therefore had no impact on the bank s lending volume. Business development in advice Despite persistently high property prices, favourable interest rates once again fostered strong demand for our Baufinanzierung PLUS advice service. However, growth is being hampered by the limited supply of attractive property. At 449m, the volume of building finance placed was however significantly higher than the figure for the previous year ( 373m). As of 30 September, our Anlageberatung PLUS investment advice service was being used by more than 2,900 customers (end 2013: around 2,660 customers). Assets under advice totalled 269m (end 2013: 227m). Earnings situation in the B2C business line With 56.7m, the B2C business line achieved a slightly lower result in the first nine months of 2014 than in the previous year ( 58.5m). Owing to higher expenses, the cost/income ratio rose from 73.8% to 74.6%. The earnings components related to the comdirect group s deposit business net interest income, trading result, result from financial investments and the result from hedge accounting stem mainly from the B2C business line and are thus explained at group level (see page 6). Net commission income climbed by 2.5% to 105.4m (previous year: 102.9m), mainly as a result of the increased number of trades. At 166.5, administrative expenses exceeded the figure for the previous year ( 158.7m) by 4.9%. Both personnel expenses and other administrative expenses went up. The other operating result rose to 5.8m (previous year: 1.3m) as a consequence of the situation at group level outlined above.

12 10 B2B business line Business development ebase intensified activities in its target segment of banks. The service offering for small and medium-sized banks was defined on the basis of an extensive market survey. As of the fourth quarter, active marketing of these services is a key priority. Total assets under custody B2B (in billion) ebase launched a new website to meet the growing demands of sales partners and customers. With separate areas for partners and end customers, the content and information is tailored in line with the target group. The facility to open a custody account with a digital signature is another new feature. This enables networked cooperation partners to use their own software to carry out all of the investment custody account opening procedure electronically, including via tablet or smartphone. Plans are in place to successively expand the process to other products and forms. Custody account customers and portfolio volume The number of customers at ebase declined by 1.9% to thousand in the period under review. The cancellations primarily affected custody accounts for capital-building payments following expiry of the corresponding VL contracts; however this effect related almost exclusively to the first quarter. Custody account portfolios that have been taken over via migrations are subject to a natural downturn and also declined slightly. In the second and third quarter, the downturn in customers was significantly curbed by the upswing in new business. The number of custody account customers decreased by 2.3% in the first nine months of 2014 to thousand (end 2013: thousand). Nevertheless, the portfolio volume increased to 23.48bn (end 2013: 23.02bn). The rise of 0.24bn in the third quarter was primarily attributable to price effects. Accounts and deposit volume At 149m, the deposit volume was slightly higher than at the end of 2013 ( 140m). Most of the deposit volume was attributable to the settlement accounts linked with the custody account (Flex account). At the moment, these accounts are still primarily being used for buying and selling transactions in funds business, but are also available to accept inflows from expiring insurance policies and as a fully fledged online-type account for payment trans actions. Earnings situation in the B2B business line At 8.2m, pre-tax profit in the B2B business line considerably outstripped the respective figure for 2013 ( 7.5m). The cost/income ratio improved to 78.5% (previous year: 79.4%). Net commission income climbed by 1.9% to 37.1m, essentially due to the higher funds volume compared with the first nine months of 2013 and resultant sales follow-up commission. Original net interest income from investments increased to 380 thousand (previous year: 359 thousand). As a result of interest effects from pension provisions, net interest income amounted to -192 thousand overall. The rise in administrative expenses to 29.9m (previous year: 28.8m) was mainly attributable to the increase in personnel expenses and higher depreciation on investments in new products in the previous year. Investments in the course of implementing regulatory issues additionally had an impact.

13 INTERIM MANAGEMENT REPORT 11 Financial situation and assets of the comdirect group The Treasury department of comdirect bank ensures adequate cash holdings at all times and manages the liquidity and interest rate risk in particular. By investing customer deposits in the money and capital markets, the comdirect group achieves a positive interest margin. Here the bank once again carried out a significant share of the investments with companies in the Commerzbank Group in the period under review. Claims on Commerzbank AG and selected other subsidiaries in the Commerzbank Group as well as the securities of these companies are comprehensively collateralised via a general assignment agreement. There are also five special funds that are included in the comdirect group s accounts. Derivative financial instruments are used to a small extent to hedge interest rate risks from bonds and for interest book management in the Treasury portfolio. Investments Investments totalled 8.9m in the first nine months of 2014 (previous year: 10.4m). The balance sheet additions in the B2C business line amounting to 5.9m were attributable to continued investment in the IT infrastructure as well as further development of the web presence. In the B2B business line, the investment volume of 3.0m related to the further development of custody account software among other factors. Balance sheet total As a result of the increased deposit volume, the balance sheet total of the comdirect group as of 30 September 2014 was up by 491.1m to 14.65bn compared with year-end 2013 ( 14.16bn). Assets Claims on banks, which essentially relate to promissory notes and fixed-term deposits, increased by 17.7% compared with the end of 2013 ( 9.05bn) to 10.65bn. The volume of financial investments barely changed and stood at 3.73bn (end 2013: 3.57bn). This line item mainly comprises bonds and Pfandbriefe. Compared with the level on 31 December 2013 ( 1,292.8m), the cash reserve reduced to 2.3m. Almost all of this amount relates to the credit balance at Deutsche Bundesbank. Financing Around 95% of the financing side of the balance sheet comprises the deposits of private customers. Liabilities to customers rose accordingly 13.97bn (end 2013: 13.49bn). Liabilities to banks, which reflect the balances of the current clearing accounts at Commerzbank, amounted to 5.4m (end 2013: 2.1m). As of 30 September, the derivatives used for hedging showed a negative fair value of 0.6m overall (end 2013: 2.6m). Provisions stood at 46.2m and were therefore on a par with the previous year ( 45.5m). These mainly reflected the impact of actuarial effects on pension provisions. Other liabilities amounting to 48.0m (end 2013: 62.8m) primarily comprise trade accounts payable. Equity amounted to 575.2m (end 2013: 551.6m). The revaluation reserves included in this figure increased by 30.4m compared with the end of 2013 as a result of the movement in market interest rates.

14 12 Cash flow statement Due to the comdirect group s business model, the cash flow from operating activities is predominantly influenced by the development of customer deposits and their reinvestment. In the reporting period, it amounted to 1,230.8m (previous year: 473.4m). The cash reserve reported as of 31 December 2013 was thus reduced as part of operational liquidity management. The cash flow from investment activities stood at 8.9m (previous year: 10.4m). The dividend distribution in May 2014 resulted in a cash flow from financing activities of 50.8m (previous year: 62.1m). Non-financial performance indicators Relationships with customers comdirect bank measures the quality of its customer relationships by means of regular customer surveys in Customer Services and independent customer satisfaction analyses. As a central indicator of customer satisfaction and loyalty in the B2C business line, the net promoter score (NPS) is ascertained annually and published in the annual report. In addition to customer satisfaction, brand awareness and likeability are key competitive factors, especially in the B2C business line. The results attained in performance comparisons and other accolades also contribute to these. In the third quarter, comdirect won the Customer Innovation Award 2014 in the Finance category for its Better financial investments investment assistant. The Deutsche Institut für Service-Qualität (German Institute for Service Quality DISQ), the DUB business magazine and Goethe University Frankfurt give the award to companies that increase customer benefit and satisfaction by means of new products. The jury particularly lauded the tool s easy and customer-friendly operation as well as the low costs. comdirect also garnered awards in the third quarter for its customer and press communications. The Factbook Aktie (Factbook Equities) that comdirect developed in conjunction with the Handelsblatt Research Institute won the prestigious Red Dot Design Award: Communication Design 2014 in the Publishing & Print Media category. The underlying data comes from multiple securities studies carried out by comdirect bank as well as other surveys. The factbook and all of the studies are available to download from the press section of our website. The web app for the customer magazine compass, which was launched a year ago, gained silver in the Best of Corporate Publishing (BCP) Awards in the Best Crossmedia Solution category. The web app won gold in the FOX AWARDS for pioneering media concepts across all industries. The compass app provides online information on finance and the economy in a comprehensible and enjoyable manner. The articles are supplemented by videos, photo slideshows, surveys and graphics. The content is updated weekly and the app attracts 18,000 unique users on average a month. Personnel The number of employees increased to 1,269 in the first nine months of 2014 (end 2013: 1,233). In the B2C business line, the number climbed to 1,027 (end 2013: 988 employees); six members of staff were taken on at the new IT office in Rostock. Furthermore, two IT specialists-to-be, six bankers-to-be and two dual study programme students commenced their training with comdirect in August. In the B2B business line, the number of employees dropped to 242 (end 2013: 245 employees). Number of employees of comdirect group 1, Through focused measures for staff, executive and team development, as well as active employer branding, the comdirect group is positioning itself as an attractive and responsible employer. This is also reflected by our renewed distinction as a fair employer by the Fair Company Initiative of careers and business magazine Karriere Business line B2B Business line B2C

15 INTERIM MANAGEMENT REPORT 13 Capital market relations The price of comdirect shares dropped by 1.5% versus the level at the end of December 2013 and closed at 8.18 on 30 September The shares strengthened by 8.0% in the third quarter. The SDAX climbed by 0.9% in the first nine months of the year, while our sector index, DAXsector Financial Services Performance Index, was up by 9.0%. At 56.4 thousand on average, the number of units traded per day was below the corresponding figure for 2013 (73.8 thousand). The market capitalisation amounted to 1,155m (as of end September 2014). In the third quarter, comdirect presented the company at roadshows in Frankfurt and London. Data and key figures of the share 9M 2014 Data German securities code no ISIN code DE Stock exchange code COM Reuters: CDBG.DE Bloomberg: COM GR Stock exchange segment SDAX Number of shares issued 141,220,815 no-par-value shares Designated sponsor Commerzbank AG Shareholder structure 81.13% Commerzbank AG 1) 18.87% Free float Key figures 9M 2014 Average daily turnover XETRA in units Frankfurt Tradegate Other stock exchanges OTC Opening quotation XETRA ( ) 8.49 Highest price XETRA ( ) 2) 8.87 Lowest price XETRA ( ) 2) 7.57 Closing quotation XETRA ( ) ,417 3,059 7,142 5,784 9,949 56,350 Market capitalisation ( ) 1,155m Earnings per share 0,34 Total shareholder return 2.9% Dividend yield 3) 4.3% 1) Indirectly 2) Daily closing quotation 3) Based on the dividend paid for financial year 2013 and closing quotation at year-end comdirect share price performance to (in ) comdirect share January February March April May June Source: Bloomberg; indices normalised to the comdirect share price as of year-end 2013 July August September SDAX DAXsector Financial Services Performance Index Supplementary report No major events or developments of special significance have occurred since the reporting date of 30 September 2014.

16 14 > Outlook, risk and opportunity report In the period under review, the economic framework conditions have essentially developed in line with the assumptions indicated in the outlook report of the 2013 group management report (pages 38 to 39 of the financial report). Market interest rates in the eurozone are set to stay low. The ongoing fragile state of the economy and low inflation, as well as the announcement of bond buying by the ECB, are resulting in low yields in the bond markets. Equity markets made a weak start to the fourth quarter. Growing fears of a recession in Germany and a resurgence of the financial market crisis in the eurozone may lead to intermittent setbacks and increased volatility. After the strong performance in the first nine months of the year, we are standing by the expectations outlined in the 2013 outlook report. By the end of 2014, the number of orders in the B2C business line should still outstrip the previous year s figure. Development in assets under management heavily depends on how prices develop going forward. There is a possibility that net fund inflows for the year as a whole may be overcompensated in a downturn. Pre-tax profit for the comdirect group, which was down slightly year-on-year at the end of the first nine months, is set to reach 75m for the year as a whole. Higher spending on growth is planned for the fourth quarter compared with the past three months. On the earnings side, we still expect a slight upturn in net commission income. According to current forecasts, net interest income before provisions for possible loan losses should surpass the previous year s level. In the B2C business line, growth in the number of customers is set to be sustained in the remaining months of the year and will continue to be driven primarily by the current account. To lower the remaining hurdles when opening an account, in October comdirect introduced a proof of identity procedure using video telephony. Prior to this, the process had to be carried out by staff at the local post office. Plans are in place to gradually introduce online proof of identity procedures for daily money accounts and custody accounts by December, as well as the facility to complete the identification process using mobile devices. In the B2B business line, marketing remains centred on the partner-specific white label variants of the Managed Depot custody account. In addition to asset managers, the product is set to be increasingly offered to small and medium-sized banks in the fourth quarter as well. The position of the comdirect group in terms of risk and opportunity is essentially unchanged compared with the presentation in the 2013 annual report. The risk and opportunity report can be found on pages 40 to 52 of the financial report, while note (58) regarding the risk reporting of financial instruments is on pages 104 to 108. The comdirect group has enough of a risk buffer to certainly withstand even lengthy weak market phases. From today s perspective, there are no realistic risks in evidence that could threaten the continued existence of the comdirect group.

17 INTERIM FINANCIAL STATEMENTS 15 > Income statement Income statement of comdirect group according to IFRS thousand 1.1. to to Interest income 148, ,658 49,317 54,651 Interest expenses 39,385 58,641 11,479 18,345 Net interest income before provisions for possible loan losses 109, ,017 37,838 36,306 Provisions for possible loan losses Net interest income after provisions for possible loan losses 109, ,206 37,407 36,032 Commission income 246, ,580 82,208 79,510 Commission expenses 103,970 98,300 35,069 33,007 Net commission income 142, ,280 47,139 46,503 Result from hedge accounting Trading result Result from financial investments 3,111 9, Administrative expenses 196, ,513 64,908 60,197 Other operating result 6,530 1,740 1, Pre-tax profit 64,944 66,021 21,216 23,062 Taxes on income 17,127 17,431 5,768 6,302 Net profit 47,817 48,590 15,448 16,760 Undiluted/diluted earnings per share 1.1. to to Net profit (in thousand) 47,817 48,590 15,448 16,760 Average number of ordinary shares (number) 141,220, ,220, ,220, ,220,815 Undiluted/diluted earnings per share (in ) > Statement of comprehensive income Statement of comprehensive income of comdirect group according to IFRS thousand 1.1. to to Net profit 47,817 48,590 15,448 16,760 Items which cannot be reclassified to the income statement Change in actuarial gains/losses recognised in equity 3, , Items which can be reclassified to the income statement Changes in the revaluation reserves after tax 30,440 30,210 11,274 2,772 Comprehensive income 74,378 19,296 25,518 14,037 Net profit and comprehensive income for the reporting period are attributable in full to the shareholders of comdirect bank AG.

18 16 > Balance sheet Balance sheet of comdirect group according to IFRS Assets thousand as of as of Cash reserve 2,269 1,292,775 Claims on banks 10,648,604 9,048,745 Claims on customers 216, ,866 Trading assets Financial investments 3,726,020 3,572,484 Intangible assets 26,414 30,383 Fixed assets 11,039 11,687 Current income tax assets 5,668 6,667 Deferred income tax assets 0 3,149 Other assets 16,998 6,931 Total assets 14,653,891 14,162,837 Liabilities and equity thousand as of as of Liabilities to banks 5,362 2,132 Liabilities to customers 13,967,131 13,487,874 Negative fair values from derivative hedging instruments 615 2,563 Trading liabilities Provisions 46,150 45,502 Current income tax liabilities 7,869 9,900 Deferred income tax liabilities 3,123 0 Other liabilities 48,008 62,813 Equity 575, ,613 Subscribed capital 141, ,221 Capital reserve 223, ,296 Retained earnings 110, ,020 Revaluation reserves 52,677 22,237 Consolidated profit ,839 Net profit 1.1. to ,817 Total liabilities and equity 14,653,891 14,162,837

19 INTERIM FINANCIAL STATEMENTS 17 > Statement of changes in equity thousand Subscribed Capital Retained Revaluation Group Total capital reserve earnings reserves 1) result Equity as of , , ,618 55,519 62, ,791 Net profit from 1.1. to ,534 60,534 Change in actuarial gains/losses recognised in equity Change in the revaluation reserves 33,282 33,282 Comprehensive income ,282 60,534 27,960 Profit distributions 62,137 62,137 Allocation to reserves/ transfer from reserves 9,695 9,695 0 Equity as of / , , ,020 22,237 50, ,613 Net profit from 1.1. to ,817 47,817 Change in actuarial gains/losses recognised in equity 3,879 3,879 Change in the revaluation reserves 30,440 30,440 Comprehensive income from 1.1. to ,879 30,440 47,817 74,378 Profit distributions 50,839 50,839 Equity as of , , ,141 52,677 47, ,152 1) Pursuant to IAS 39 thousand Subscribed Capital Retained Revaluation Group Total capital reserve earnings reserves 1) result Equity as of , , ,618 55,519 62, ,791 Net profit from 1.1. to ,590 48,590 Change in actuarial gains/losses recognised in equity Change in the revaluation reserves 30,210 30,210 Comprehensive income from 1.1. to ,210 48,590 19,296 Profit distributions 62,137 62,137 Equity as of , , ,534 25,309 48, ,950 1) Pursuant to IAS 39 In financial year 2014, dividends amounting to 50,839 thousand (previous year 62,137 thousand) were distributed to the shareholders of com direct bank AG. This corresponds to 0.36 (previous year 0.44) per share. In financial year 2014, comdirect did not make use of either the existing authorisations of the annual general meeting to purchase own shares for the purpose of securities trading pursuant to Section 71 (1) No. 7 German Stock Corporation Act (AktG) or of the resolutions of the annual general meeting authorising the purchase of own shares pursuant to Section 71 (1) No. 8 German Stock Corporation Act (AktG) for purposes other than securities trading.

20 18 > Cash flow statement thousand Cash and cash equivalents as of ,292, ,760 Cash flow from operating activities 1,230, ,426 Cash flow from investment activities 8,881 10,410 Cash flow from financing activities 50,839 62,137 Cash and cash equivalents as of , ,639 Cash and cash equivalents correspond to the balance sheet item cash reserve and include cash on hand and balances held at central banks. The cash flow from operating activities is essentially determined by the taking in of customer deposits and their reinvestment in the money and capital markets. The cash flow from investment activities results from the acquisition and disposal of tangible and intangible assets. The cash flow from financing activities stems from the dividend distribution by comdirect bank AG to its shareholders. The cash flow statement is of minor importance for the comdirect group. It does not replace liquidity and financial planning, nor is it used as a management tool. It provides no information about the actual liquidity situation, which in principle is dependent on the operating business and not on cash on hand or the credit balance with the central bank. > Notes Administrative expenses thousand 1.1. to to Personnel expenses 56,621 53,592 19,566 18,392 Other administrative expenses 126, ,868 40,780 37,350 Marketing expenses 41,620 39,200 13,404 11,052 Communication expenses 6,286 8,464 2,109 2,147 Consulting expenses 12,786 10,836 4,664 3,828 Expenses for external services 33,199 30,788 10,758 10,194 Sundry administrative expenses 32,427 31,580 9,845 10,129 Depreciation of office furniture and equipment and intangible assets 13,505 13,053 4,562 4,455 Total 196, ,513 64,908 60,197

21 INTERIM FINANCIAL STATEMENTS 19 Segment reporting by business line thousand 1.1. to B2C B2B Consolidation comdirect group total Net interest income before provisions for possible loan losses 109, ,089 Provisions for possible loan losses Net interest income after provisions for possible loan losses 109, ,166 Net commission income 105,443 37, ,499 Result from hedge accounting Trading result Result from financial investments 2, ,111 Administrative expenses 166,539 29, ,444 Other operating result 5, ,530 Pre-tax profit 56,726 8, ,944 Segment investments 5,896 2,989 8,885 Segment depreciation 10,260 3,245 13,505 Cost/income ratio 74.6% 78.5% 75.2% Segment income 278, ,944 of which external income 278, ,710 of which inter-segmental income Segment expenses 222, ,726 thousand 1.7. to B2C B2B Consolidation comdirect group total Net interest income before provisions for possible loan losses 37, ,838 Provisions for possible loan losses Net interest income after provisions for possible loan losses 37, ,407 Net commission income 34,809 12, ,139 Result from hedge accounting Trading result Result from financial investments Administrative expenses 54,947 9, ,908 Other operating result ,089 Pre-tax profit 18,579 2, ,216 Segment investments 1,967 1,038 3,005 Segment depreciation 3,490 1,072 4,562 Cost/income ratio 74.3% 79.1% 75.0% Segment income 90,139 43,749 of which external income 90,135 43,673 of which inter-segmental income 4 76 Segment expenses 71,560 41,112

22 20 Segment reporting by business line thousand 1.1. to B2C B2B Consolidation comdirect group total Net interest income before provisions for possible loan losses 104, ,017 Provisions for possible loan losses Net interest income after provisions for possible loan losses 103, ,206 Net commission income 102,915 36, ,280 Result from hedge accounting Trading result Result from financial investments 9, ,148 Administrative expenses 158,709 28, ,513 Other operating result 1, ,740 Pre-tax profit 58,547 7, ,021 Segment investments 6,702 3,733 10,435 Segment depreciation 10,095 2,958 13,053 Cost/income ratio 72.8% 79.4% 73.7% Segment income 291, ,922 of which external income 291, ,823 of which inter-segmental income 0 99 Segment expenses 232, ,448 thousand 1.7. to B2C B2B Consolidation comdirect group total Net interest income before provisions for possible loan losses 36, ,306 Provisions for possible loan losses Net interest income after provisions for possible loan losses 36, ,032 Net commission income 34,252 12, ,503 Result from hedge accounting Trading result Result from financial investments Administrative expenses 50,513 9, ,197 Other operating result Pre-tax profit 20,391 2, ,062 Segment investments 2,180 1,826 4,006 Segment depreciation 3, ,455 Cost/income ratio 71.0% 78.4% 72.1% Segment income 94,658 41,692 of which external income 94,667 41,652 of which inter-segmental income 9 40 Segment expenses 74,267 39,021

23 INTERIM FINANCIAL STATEMENTS 21 The management focuses on two business lines: Business to Customer (B2C) and Business to Business (B2B). The segmentation carried out reflects the internal reporting of the comdirect group and corresponds to the management approach. The respective customer groups in particular constitute the main delimitation feature of the business segments. The B2C business segment comprises the activities of comdirect bank AG. These relate to services in brokerage, banking and advice in direct business with modern investors. The activities in the B2B business segment are carried out via ebase GmbH. Through its B2B partners, ebase offers comprehensive and tailored solutions for asset accumulation and investments. The figures for the B2B business segment were derived from the internal reporting of ebase GmbH and correspond to the contributions of ebase GmbH included in the income statement of the comdirect group. In the B2B business segment, interest income of 198 thousand (previous year: 78 thousand) was achieved as part of Treasury investments in the B2B business segment. The corresponding level of interest expenses was recorded in the B2C business segment. In both segments, segment assets and segment liabilities are not relevant management indicators within the meaning of IFRS 8 and are therefore not shown in the table.

24 22 Income statement of comdirect group according to IFRS on a quarterly comparison thousand Q1 Q2 Q3 Q4 Q1 Q2 Q3 Interest income 54,078 53,929 54,651 52,157 49,514 49,643 49,317 Interest expenses 20,602 19,694 18,345 17,533 14,399 13,507 11,479 Net interest income before provisions for possible loan losses 33,476 34,235 36,306 34,624 35,115 36,136 37,838 Provisions for possible loan losses Net interest income after provisions for possible loan losses 33,382 33,792 36,032 34,006 34,854 36,905 37,407 Commission income 78,063 80,007 79,510 85,768 86,406 77,855 82,208 Commission expenses 32,050 33,243 33,007 36,718 34,833 34,068 35,069 Net commission income 46,013 46,764 46,503 49,050 51,573 43,787 47,139 Result from hedge accounting Trading result Result from financial investments 7,296 1, , Administrative expenses 63,751 63,565 60,197 72,353 64,808 66,728 64,908 Personnel expenses 17,231 17,969 18,392 19,810 18,211 18,844 19,566 Other administrative expenses 42,307 41,211 37,350 47,794 42,212 43,326 40,780 Marketing expenses 15,606 12,542 11,052 20,124 12,276 15,940 13,404 Communication expenses 1,805 4,512 2,147 3,507 1,965 2,212 2,109 Consulting expenses 3,396 3,612 3,828 3,526 3,962 4,160 4,664 Expenses for external services 9,903 10,691 10,194 10,487 11,548 10,893 10,758 Sundry administrative expenses 11,597 9,854 10,129 10,150 12,461 10,121 9,845 Depreciation of office furniture and equipment and intangible assets 4,213 4,385 4,455 4,749 4,385 4,558 4,562 Other operating result , ,674 1,089 Pre-tax profit 23,669 19,290 23,062 14,011 24,129 19,599 21,216 Taxes on income 6,315 4,814 6,302 2,067 6,254 5,105 5,768 Net profit 17,354 14,476 16,760 11,944 17,875 14,494 15,448

25 INTERIM FINANCIAL STATEMENTS 23 Fair value of financial instruments The table below shows the fair values of balance sheet items compared with their book values. In accordance with IFRS 13, the fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. thousand Fair value Book value Loans and receivables Cash reserve 2,269 1,292,775 2,269 1,292,775 Claims on banks 10,876,139 9,189,230 10,648,604 9,048,745 Claims on customers 216, , , ,866 Total 11,095,287 10,671,871 10,867,752 10,531,386 Available for sale financial assets Financial investments 3,726,020 3,572,484 3,726,020 3,572,484 Total 3,726,020 3,572,484 3,726,020 3,572,484 Liabilities measured at amortised cost Liabilities to banks 5,362 2,132 5,362 2,132 Liabilities to customers 14,008,921 13,514,505 13,967,131 13,487,874 Total 14,014,283 13,516,637 13,972,493 13,490,006 Other Trading assets Negative fair values from derivative hedging instruments 615 2, ,563 Trading liabilities Total 1,096 3,153 1,096 3,153 With regard to the financial instruments in the line items other assets and other liabilities, the book value is equivalent to their fair value. Except for financial investments, the above-stated fair values are to be exclusively allocated to valuation level 2. Allocation of fair values of financial investments is presented in the fair value hierarchy.

26 24 Fair value hierarchy The table below shows all financial instruments reported in the balance sheet at fair value. It also breaks fair values down into three levels: Level 1: Prices quoted in active markets (not adjusted) for identical assets or liabilities. Level 2: Exemplary prices calculated with the exception of the quoted prices included in Level 1, which can be observed for assets or liabilities either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: Exemplary prices calculated for assets or liabilities, which are not based on observable market data (non-observable input data). thousand Total Level 1 Level 2 Level 3 Available for sale financial assets Financial investments 3,726,020 2,662,435 1,063,585 0 Other Trading assets Negative fair values from derivative hedging instruments Trading liabilities Total 3,727,116 2,662,435 1,064,681 0 thousand Total Level 1 Level 2 Level 3 Available for sale financial assets Financial investments 3,572,484 2,208,815 1,363,669 0 Other Trading assets Negative fair values from derivative hedging instruments 2, ,563 0 Trading liabilities Total 3,575,637 2,208,815 1,366,822 0 In the reporting period, securities with a fair value of 82m were reclassified from level 1 into level 2 as no quoted market prices were available. Conversely, securities with a fair value of 50m were reclassified from level 2 into level 1 as an active market is assumed due to increased market activity.

27 INTERIM FINANCIAL STATEMENTS 25 > Accounting standards and other information Accounting standards The interim financial statements of the comdirect group as of 30 September 2014 were prepared pursuant to Section 37x (3) in conjunction with Section 37w (2) (3) and Section 37y No. 2 of the German Securities Trading Act (WpHG) in accordance with International Accounting Standard 34 (IAS 34) approved and published by the International Accounting Standards Board (IASB). The same measurement and calculation methods were applied as for the financial statements of the comdirect group as of 31 December The rules to be applied for the first time in the reporting period had no impact on the consolidated financial statements. The calculation of commission income in the funds business was adjusted retrospectively in financial year The respective figures for prior periods were adjusted accordingly and thus differ from those in the interim report as of 30 September Consolidated companies There were no changes in the comdirect group s scope of consolidation during the reporting period. Notes to the financial statements The interim management report contains details of the earnings situation and assets of the comdirect group as well as information regarding the macroeconomic environment. Statement of comprehensive income The table shows the other comprehensive income for the period after tax. The following breakdown indicates the tax amounts included. Other comprehensive income for the period thousand Before tax Tax After tax 1 January to 30 September 2014 Actuarial gains and losses 5,319 1,440 3,879 Change in the revaluation reserves 41,096 10,656 30,440 Other comprehensive income for the period 35,777 9,216 26,561 1 January to 30 September 2013 Actuarial gains and losses 1, Change in the revaluation reserves 39,994 9,784 30,210 Other comprehensive income for the period 38,749 9,455 29,294 Other comprehensive income for the period thousand Before tax Tax After tax 1 July to 30 September 2014 Actuarial gains and losses 1, ,204 Change in the revaluation reserves 14,788 3,514 11,274 Other comprehensive income for the period 13,134 3,064 10,070 1 July to 30 September 2013 Actuarial gains and losses Change in the revaluation reserves 3,920 1,148 2,772 Other comprehensive income for the period 3,853 1,130 2,723

28 26 Result from hedge accounting and trading result As of the reporting date, interest rate swaps with a nominal volume totalling 38.1m (end 2013: 83.1m) were held to hedge interest rate-related changes in the market value of several bonds with the same volume and same maturity. Where these instruments meet the requirements of IAS 39, hedge accounting is applied (micro fair value hedges). In addition, comdirect uses forward rate agreements to manage the interest book. As of the reporting date, no forward rate agreements were held (end 2013: nominal volume 650.0m). As of the reporting date, the above produced a result from hedge accounting of 6 thousand (previous year: 8 thousand) and a trading result of 76 thousand (previous year: 152 thousand). Measurement of financial instruments The fair value is measured at a financial instrument price determined on an active market (level 1 valuation hierarchy). For debt instruments, these are primarily transaction prices and quotations on the interbank market. For equity instruments, the fair value is measured using market prices, and for fund units, the fund s net asset value is used. If no quoted prices for identical or similar financial instruments are available, valuation models that use market data as parameters to the greatest extent possible are used to determine the fair value (level 2 valuation hierarchy). The comdirect group primarily uses the discounted cash flow method. Discounting is performed at interest rates and credit spreads observable on the market. The interest rates have been transferred generally from the 3-month swap curve. The instrument or issuer-specific credit spreads are determined using, for example, the Pfandbrief curve or highly liquid bonds of an issuer. If current verifiable market data is insufficient for valuation with valuation models, unobservable inputs are also to be applied. These initial inputs may contain data that, in the form of approximate values, is determined on the basis of historical data, among other factors (level 3 valuation hierarchy). No instruments are currently allocated to this category at the comdirect group. Transfers between hierarchical levels are always reported as of the last day of the relevant quarter. Further information on the valuation hierarchies may be found in the tables in the notes section. Asset impairments The result from financial investments in the current financial year includes impairment losses of 375 thousand (previous year: 288 thousand). Of this figure, 205 thousand was attributable to the third quarter (previous year: 0 thousand). Provisions for possible loan losses In the balance sheet, the provisions for possible loan losses are deducted from the respective receivables. The provisions for possible loan losses amounting to 2,217 thousand (31 December 2013: 2,311 thousand) relate in full to claims on customers. Provisions were also recognised for risks relating to unutilised credit lines of 4,108 thousand (31 December 2013: 4,780 thousand). In each case, the decreases are based on experience adjustments to the individual parameters used in retail lending.

29 INTERIM FINANCIAL STATEMENTS 27 Related party disclosures The parent company of comdirect bank AG is Commerz Bankenholding Nova GmbH, Frankfurt/Main. The ultimate parent company is Commerzbank AG. comdirect bank AG uses services provided by Commerzbank AG through a general agreement effective as of 1 January 1999, as well as through service level agreements concluded separately on this basis. On 6 August 2007, a master agreement was concluded with Commerzbank AG which supersedes the existing general agreement. The individual contracts concluded under the general agreement remain in place until expiry of their respective term. New individual contracts will be concluded based on this master agreement. As part of its money and capital market transactions, comdirect bank AG consigns investment activities to Commerzbank AG and its affiliated companies. These transactions are collateralised in return for payment under an assignment agreement. For placement activities for the benefit of ebase GmbH, Commerzbank AG receives sales and sales follow-up commission. As part of its processing and management services for custody accounts, ebase GmbH procures support services from Commerzbank AG. During the reporting period, there were financial relations with related natural persons (members of the Board of Managing Directors and the Supervisory Board and members of their immediate family), including through the use of products of comdirect group as part of the normal product and service offering. All products and services were carried out at normal third party terms and conditions and are of secondary importance for the company. The related parties did not accrue any unjustified advantage from their position with the comdirect group, nor did the comdirect group suffer any financial losses. For further information, please see note (26) in our financial report for financial year Quickborn, 27 October 2014 The Board of Managing Directors Dr Thorsten Reitmeyer Holger Hohrein Martina Palte