Quarterly report 2010 INTERIM MANAGEMENT REPORT 19

Transcription

1 Quarterly report 2010 INTERIM MANAGEMENT REPORT 19

2 > Key figures of comdirect bank group 1 st quarter Change in % comdirect group as of Customers number 2,143,051 2,079, Custody accounts number 1,411,533 1,415, Executed orders number 3,635,596 3,552, Total assets under custody in million 37,556 29, of which: portfolio volume in million 28,217 19, of which: deposit volume in million 9,338 9, comdirect business-to-customer (B2C)* business line as of Customers number 1,454,071 1,368, Custody accounts number 722, , Current accounts number 559, , Tagesgeld PLUS ( call money plus ) accounts number 985, , Advisory customers number 55,223 48, Executed orders number 1,877,059 1,747, Average order activity per custody account (annualised) number Order volume per executed order in 4,811 4, Total assets under custody in million 23,501 18, of which: portfolio volume in million 14,195 9, of which: deposit volume in million 9,307 9, Credit volume in million comdirect business-to-business (B2B)* business line as of Customers/Custody accounts number 688, , Executed orders number 1,758,537 1,804, Total assets under custody in million 14,055 10, Earnings ratios Net commission income in thousand 38,791 34, Net interest income before provisions in thousand 23,973 32, Administrative expenses in thousand 48,625 52, Pre-tax profit in thousand 21,182 17, Net profit in thousand 15,682 12, Earnings per share in Balance sheet key figures as of Balance sheet total in million 10,057 10, Equity in million Equity ratio 1) in % Regulatory indicators under Basel II 2) as of Risk weighted assets 3) in million Eligible amount for operational risks in million Core capital in million Own funds for solvency purposes in million Own funds ratio 4) in % Relative ratios Return on equity (annualised) 5) in % Cost/income ratio in % Employees figures as of Employees number 1,160 1, Employees full-time basis number 1, , *) B2C: comdirect bank AG and comdirect private finance AG; B2B: ebase GmbH, excluding contributions from branch customers of Commerzbank AG 1) Equity ratio = Equity (excluding revaluation reserve) / balance sheet total 2) These figures are calculated on the basis of internal calculations; publication is voluntary and based on national implementation conversion and the figures are not reported to the Supervisory Authority 3) Risk weighted assets in accordance with Section 10c of the German Banking Act (KWG) (intragroup receivables are zero weighted) 4) Own funds ratio = own funds for solvency purposes / (risk weighted assets x eligible amounts for operational risks) 5) Return on equity = pre-tax profit / average equity (excluding revaluation reserve) in the reporting period

3 FOREWORD 1 > Foreword With a strong quarterly result of 21.2m, the comdirect group has started off well in financial year The rise of around one fifth on the previous year demonstrates once again the bank s particular earnings power even in times when any positive impetus is largely absent from the market. At the same time, comdirect remained on its growth course. The permanent low in the market interest rate has naturally left its mark on net interest income, and ongoing restraint in stock exchange trading severely limited net commission income. Against this backdrop, we secured the rise in profit by realising price gains in Treasury and above all through continued cost discipline. Michael Mandel CEO of comdirect bank comdirect exercised restraint in marketing especially. Nonetheless, the number of customers remained virtually stable compared to the 2009 year-end and in direct business with modern investors (B2C business line) even recorded a rise thanks to the complus programme. The key growth driver was our current account with satisfaction guarantee, which has been in the market for exactly one year and was introduced as part of complus. Its performance has been impressive: since its launch, we have increased the number of current accounts by almost 100 thousand. The new account is very actively used and generally opened in conjunction with a Tagesgeld PLUS ( call money plus ) account. There are also cross-selling effects relating to the custody account. In the first quarter of 2010 alone, there were around 25 thousand more current accounts, almost the same number of additional Tagesgeld PLUS accounts and 3 thousand more custody accounts. As a result of higher product penetration, we are honouring our claim to be the main bank for more and more customers. The fact that complus is working is also reflected in brokerage. The portfolio holdings of our B2C customers increased by more than 5bn year-on-year and not just as a result of price gains. Our customers used deposits for securities investments again in the first quarter. Despite these transfers into securities investments, the deposit volume increased by more than 200m in the first quarter of Raising the interest rates on the Tagesgeld PLUS account when interest rates were at an historic low led to a considerable rise in new investments.

4 2 Results increased, growth continued, strategy underway: the first quarter stands for success on three fronts. Establishment of our new advisory models is proceeding to schedule. With regard to Baufinanzierung PLUS building finance advice, we improved its regional presence, extended the number of financing partners and increased the volume of finance placed. Anlageberatung PLUS investment advice service is being actively marketed among our existing customers in particular, and over 500 customers are now using the service. We have made good progress in reducing the number of comdirect private finance offices and will be closing the remaining 14 offices by mid Regardless of this, we will continue to offer Baufinanzierung PLUS via selected offices in the future. Developments at ebase complete the positive picture for the comdirect group in the first quarter of The higher funds volume led to a significant rise in net commission income. After just a few weeks, the new custody account model, which links the ebase Depot account with a settlement account, is already proving to be an important and appropriate measure for establishing B2B-type banking products and therefore forms part of ebase s progress towards becoming the leading B2B direct bank. This development is flanked by the restructuring in Sales that has already been carried out, as well as measures to cut costs. These include reducing the number of posts and agreement on the planned scope has already been reached with the Works Council of ebase. Overall, the first quarter of 2010 has been a success on three fronts: the improved results, growth in customer assets and products, and the implementation of our strategy in both business lines as planned. Following this good start, we have the long-term targets for the number of customers and assets under custody in our sights, along with the increase in profit we aim to achieve this year, although this is contingent on certain market expectations. Sincerely yours, Michael Mandel CEO of comdirect bank

5 INTERIM MANAGEMENT REPORT 3 > Interim management report as of 31 March 2010 Realignment of business lines ebase (European Bank for Fund Services GmbH) was acquired in the previous year and included in the scope of consolidation of the comdirect group with retrospective effect as of 1 January This necessitated a realignment of the business lines. The B2C business line comprises the comdirect online and comdirect offline segments last reported separately in the quarterly report as of 31 March 2009 and therefore corresponds to the comdirect bank Group prior to the acquisition of ebase. The B2B business line comprises the activities of ebase. As of the second quarter, the interim reports for the reporting year will be directly comparable with those of the previous year. Value-driven strategy The comdirect group is pursuing a dual brand strategy. As before, the comdirect brand stands for direct business with demanding private investors (B2C business line). ebase is our brand for business with B2B partners financial services providers, asset managers, insurance companies and investment companies and their end customers (B2B business line). Our overriding aims are to further improve the product spectrum and accessibility of our Customer Services, extend our market leadership in online securities business and gain market share in banking. In addition, we aim to leverage the earnings and cost synergies already identified through cooperation between comdirect and ebase over the next few years, as well as optimise our IT architecture. Together, these measures will make it quicker and easier for customers to access our extended range of products and services. As a result, we are vigorously continuing the pro cess we have started to become the main bank for our customers. We intend to increase the number of customers to 3 million and assets under custody to 50bn by the end of Strategy in the B2C business line In the B2C business line, our growth is shaped by the complus programme, which was launched in the previous year. The programme, which runs until the end of 2013, comprises the further development of our well-positioned products and services, direct contact with individual customer groups, optimisation of the IT platform and efficiency improvements in Customer Services, as well as independent and transparent advisory models for investments and building finance. Following the further expansion of our direct bank-type advisory models, we started the process of withdrawing the local advisory services we had been offering via comdirect private finance offices. This does not affect advisory services for Baufinanzierung PLUS in selected locations. Strategy in the B2B business line Through ebase we intend to become the leading B2B direct bank throughout Germany. The key elements of the strategy for the B2B business line comprise strengthening the organisation of the Sales division and increasing the number of personnel, expanding the customer base and enhancing the existing product range that focuses primarily on fund custody account solutions with B2B-type banking products, as well as extending the offering of partner-specific services either through co-branding or white labelling. Measures have also been taken to increase efficiency and cut costs. Market environment The initial economic data points to muted growth in the global economy in the first quarter of In the EU, the debt crisis in some euro countries is likely to curb growth as are the ongoing correction in the property market and weak investment demand against the backdrop of inadequate production capacity utilisation. Unlike the previous year, there are no state incentives to stimulate private consumption. Compared with the fourth quarter of 2009, bank economists at Commerzbank are forecasting growth of only 0.1% for the eurozone and 0.1% for Germany. After what is expected to be a strong second quarter, the pace of the recovery is expected to slow again somewhat over the rest of the year. In light of the economic risks and continuing low inflation in the first quarter of 2010, the European Central Bank kept the key lending rate on hold for the time being at 1.0%. There was corres pondingly little movement in the money market. Threemonth EURIBOR, which is decisive for the investment of our customer deposits, stood on average at 0.66% during the quarter under review (previous year: 2.01%). In the bond markets, credit spreads for bank debt securities increased again slightly after the downward trend in This was in response to plans for tighter regulation of the financial sector for example the special levy and the debt crisis in the public sector. While the market conditions for banking remain restrained, the situation in brokerage has brightened somewhat. The German equity market started 2010 with a price slide, but made up these losses in full as of mid-february. The German leading index, the DAX, closed the quarter at 6,154 points and was therefore up 3.3% on the end of 2009 (5,957 points). As in the previous year, the DAX volatility index, which shows the anticipated range of

6 4 fluctuation, continued to decline. Nonetheless, there was a slight upturn in securities trading in the first quarter and the number of trades in the spot market rose by 8.2%. The trading volume attributable to equities increased by around 18.9%, largely as a result of price gains, while for ETFs the volume was up by as much as 34.2%. Development of certificates trading in the first two months of the year was comparatively moderate; turnover of investment products on the Stuttgart (EUWAX) and Frankfurt (Scoach) exchanges rose by 4.9%, while leveraged products were up only 1.3% on the previous year. In the B2C business line, there was a slight increase in the number of customers. In brokerage, the number of trades and the portfolio volume rose considerably, and in banking the deposit volume increased again after the downward trend in the previous year. This was due to improved terms and conditions for the Tagesgeld PLUS account as well as the great customer response to our current account (see page 8). Number of customers of comdirect group (in thousand) In funds business, according to the statistics from the BVI (Bundesverband Investment und Asset Management), equity funds were among the winners along with mixed funds and open-ended property funds. Overall, at 7.9bn, the net funds inflow in the first two months of the year significantly exceeded the figure for the previous year of 4.6bn ,451 1,368 1,454 The willingness to take out building finance decreased slightly in the first quarter of The Building Sentiment Index published by us dropped to points in March compared with points in January. Many potential customers are delaying financing decisions because of the economic situation and prices in the metropolitan regions. Number of orders on German stock exchanges (in million) Customers B2B Customers B2C In the B2B business line, the portfolio volume also rose in the first three months of the year, despite the decline in the number of custody accounts We more than offset the market-related decline in net interest income with higher net commission income, income from realising price gains in Treasury and the reduction of administrative expenses. This good quarterly result shows that the comdirect group can again build on its broad market positioning and flexible cost base in the current year. Q4 09 Q1 09 Q1 10 Source: Deutsche Börse AG Other stock exchanges Business performance and earnings situation at the comdirect group Overall assessment of business performance and earnings situation Despite the negative market environment, the comdirect group was able to continue the successful development of the previous year in the first quarter of FFM XETRA Business performance At 2.14 million, the number of customers in the comdirect group was slightly down on the 2009 year-end (2.15 million). This was essentially due to the closure of custody accounts on maturity of capital-building payments (VL contracts) in the B2B business line. In contrast, the number of customers rose by 3,351 to 1.45 million in the B2C business line. The further increase in product penetration is also pleasing. The number of custody accounts, current accounts and Tagesgeld PLUS accounts rose by a total of around 53 thousand and consequently increased significantly faster than the number of customers in the segment. However, there was a notable decline in organic growth compared with the first quarter of This was due to the reduced number of marketing campaigns.

7 INTERIM MANAGEMENT REPORT 5 The rise in assets under custody of 1.98bn, or 5.6%, to 37.56bn, stemmed on the one hand from net fund inflows relating to existing customers, partly due to monthly savings instalments for money and securities savings plans and from price effects on the other. The portfolio volume of 28.22bn (end 2009: 26.46bn) was attributable to 1.41 million (end 2009: 1.42 million) custody accounts. Total assets under custody of comdirect group (in billion) Based on the pre-tax profit and average equity in the reporting period (excluding revaluation reserve), the annualised return on equity equals 17.3% (previous year: 14.5%). After tax, the net profit for the period amounts to 15.7m (previous year: 12.7m). Earnings per share therefore stand at 0.11 (previous year: 0.09). Earnings per share (in ) Portfolio volume Deposit volume Q4 09 Q1 09 Q1 10 Earnings situation With pre-tax profit of 21.2m, the comdirect group outperformed the previous year s figure ( 17.8m) by 19.2%. Earnings of 69.9m in total were slightly down on the previous year ( 71.0m). The sharp decline in net interest income and other operating income was largely compensated by the positive result from financial investments and the rise in net commission income. Earnings were countered by administrative expenses of 48.6m (previous year: 52.7m). The reduction in costs is attributable in full to the B2C business line and stems from the measures implemented in the various departments of the bank at the start of Earnings per customer fell on an annualised basis by 4.1% to (previous year: 135.6). However, the decrease in expenses per customer was more significant, down from to 90.6 per customer. The cost/income ratio improved from 74.3% in the previous year to 69.6%. Pre-tax profit of comdirect group (in million) Holistic view of earnings in banking In banking, the comdirect group s business model is based on reinvesting customer deposits in the money and capital markets (see page 11). The Treasury department actively manages the portfolio of investments. Depending on the situation in the market, there can at times be opposing trends in net interest income, the result from financial investments, trading result and result from hedge accounting, and consequently these are to be viewed as a whole. In the first quarter of 2010, the persistently low market interest rates curbed the interest margin in deposit business, but conversely opened up opportunities to realise profits on the sale of fixed-income securities. Around two thirds of the decline in net interest income was therefore offset by the positive trend in the result from financial investments. Together, the above earnings components totalled 30.0m in the reporting period (previous year: 31.1m). This corresponded to 43.0% (previous year: 42.2%) of the comdirect group s total earnings The revaluation reserve reflects changes in the value of the portfolio resulting from market price fluctuations. This position is reported directly under equity after tax; these changes in value are also a component of the comprehensive income of the comdirect group. After a virtually balanced overall result in the previous year ( 1.3m), which was due to a negative change in the revaluation reserve, comprehensive income of 30.4m is reported this time. Q4 09 Q1 09 Q1 10

8 6 Net interest income At 24.0m, net interest income before provisions did not match the previous year s figure of 32.6m, achieved in a different interest rate environment. The decline of 26.6% was largely margin-related, with the lower deposit volume compared with the previous year also playing a part. Net commission income and net interest income before provisions (in million) After provisions, net interest income amounts to 23.9m (previous year: 32.2m) Result from financial investments The Treasury department of the comdirect group again sold selected bonds in the first quarter of 2010, realising price gains in the current market environment. At 6.1m, the result from financial investments was considerably higher than the negative result in the previous year of 1.7m, which was affected by valuation adjustments in the special funds. New investments related to capital market securities issued by Commerzbank or its subsidiaries. Trading result and result from hedge accounting The trading result and result from hedge accounting amounted in each case to zero. The positive trading result in the previous year ( 0.7m) stemmed from the income contribution from an interest rate swap which was terminated in the third quarter of Net commission income The 12.5% increase in net commission income to 38.8m (previous year: 34.5m) is primarily attributable to higher order commission. This related mainly to the rise in sales follow-up commission: as a result of the higher funds volume, this was significantly up on the previous year. To a lesser extent, the B2C business also benefited from the higher number of trades and order volumes (see page 7). The front-end loads included in order commission exceeded the previous year s figure. This was due to the fact that new funds business in the first quarter of 2009 was adversely affected by the extraordinary impact of the withholding tax and the financial market crisis. Furthermore, we also collected higher commission on portfolio holdings in the B2B business line. In contrast, other commission generated by advisory activities was down on the previous year due to the curtailed business of comdirect private finance. Q4 09 Q1 09 Q1 10 Net commission income Net interest income before provisions Other operating result The other operating result amounted to 1.0m. The high figure of 4.9m in the previous year was dominated by extraordinary effects from the reversal of provisions and accruals as well as the refund of special contributions by ebase to the Entschädigungseinrichtung der Wertpapierhandelsunternehmen (EdW Compensatory Fund of Securities Trading Companies), (see page 11). Furthermore, the income generated in the previous year by passing on costs to the independent advisers of comdirect private finance no longer applied due to withdrawal from the offices. Administrative expenses The moderate decline in total income was countered by a significant reduction in administrative expenses. At 48.6m, these were down 7.8% on the previous year s figure ( 52.7m). The main reason for this is the consistent limitation of other administrative expenses in the B2C business line; the comparative figure for the previous year was characterised by higher marketing and communication expenses. Moreover, higher expenses for external services were incurred in the first quarter of A greater proportion of these services, especially IT, are now carried out internally. Overall, other administrative expenses of the com direct group reduced by 13.1% to 29.9m (previous year: 34.4m). The other administrative expenses relating to the withdrawal from local advisory services through comdirect private finance including for premature termination of leases were covered in full by a provision recognised in the previous year. At 15.4m, personnel expenses were almost on a par with the previous year s figure ( 15.1m). Savings achieved through efficiency improvements in Customer Services were offset by cost increases relating to the expansion of the new advisory models and insourcing IT services.

9 INTERIM MANAGEMENT REPORT 7 Depreciation remained low at 3.3m (previous year: 3.2m) and was essentially attributable to scheduled depreciation of internally generated and purchased software. Administrative expenses (in million) We continued our proven formats for securities savers and fund investors. Our FondsDiamanten fund offering comprising 20 selected funds with above-average valuations was updated, using strict selection criteria. The minimum order value was halved in 2009, and consequently portfolios based on investment recommendations relating to the FondsDiamanten offering can now be ordered from just 2,000 upwards. Customer demand increased notably with regard to our fund of the month campaign, which enabled investors to invest for example in an open-ended property fund and an equity fund focusing on emerging markets with no front-end load Q4 09 Q1 09 Q1 10 B2C business line Depreciation Other administrative expenses Personnel expenses In February 2010, we added more than 500 funds for wealthy clients to our extensive fund universe comprising over 10,000 investment products. For these funds, the issuer requires a considerably higher minimum investment than the usual 500. These funds are therefore particularly suitable for households with larger available investment volumes. With the corresponding start investment, these can frequently utilise the advantage of lower settlement costs and resultant management fees to generate a better net return. comdirect bank continued its profitable growth course in direct business with modern investors. Although the number of customers rose only slightly in the first quarter of 2010, product penetration levels improved for the current account, Tagesgeld PLUS and custody account. Good progress was also made with regard to expanding the new Anlageberatung PLUS investment advice service. Business development in brokerage In the brokerage field of competence, we achieved pleasing growth compared with the previous year. The number of trades rose in line with the market trend. Developments in brokerage In the first quarter of 2010, we carried out three no-fee campaigns enabling traders to execute OTC trading for reverse convertible bonds as well as investment and leveraged index certificates via our LiveTrading platform with no fees. The order fees in these campaigns were paid by the product providers. Our cooperation partners were Bank Vontobel, Morgan Stanley and UBS. The number of trading partners in LiveTrading was increased to 27 and our traders now have access to all major providers. Since the second half of January, for a period of more than three months, investors have been able to transfer their securities held at other banks to the comdirect group and thereby secure themselves a cash bonus of 1% of the fund volume transferred (maximum 250). By pooling their securities at comdirect bank, investors not only secure the bonus but also numerous other benefits including simple income/loss offsetting as well as the use of a fee-free second custody account. Securities trading comdirect customers were once again more active traders in the first quarter of More orders relating to equities and certificates in particular were placed than in the first quarter of 2009, which was adversely affected by market turbulence in the wake of the financial market crisis. In total, the number of orders executed climbed 7.4% to 1.88 million (previous year: 1.75 million). At the same time, the higher price level led to a disproportionate rise in securities turnover, which increased by 23.6% to 9.03bn (previous year: 7.30bn). This produces a volume per executed order of 4,811 (previous year: 4,181).

10 8 Executed orders B2C (in million) Business development in banking In the banking field of competence, despite the ongoing adverse interest rate environment, we halted the decline in deposits of recent quarters and recorded slight growth once more. This was especially attributable to more attractive interest rates on the Tagesgeld PLUS account. The number of current accounts and Tagesgeld PLUS accounts continued to increase. Number of Tagesgeld PLUS accounts and current accounts (in thousand) Q4 09 Q1 09 Q Portfolio volume The increase in portfolio holdings of 7.9%, or 1.04bn, to 14.19bn (end 2009: 13.16bn) is due to net investments by our customers and price effects. With regard to the funds volume, the rise is partly attributable to the successful custody account transfer campaign as well as the higher volume in securitiesbased savings plans. This reflected the considerable expansion of the range of funds and ETFs eligible for inclusion in savings plans in October Portfolio volume B2C (in billion) The portfolio volume was attributable to thousand (end 2009: thousand) custody accounts. The slight rise of 0.5% is due to new customers gained during custody account transfer campaigns as well as cross-selling effects in connection with the current account and Tagesgeld PLUS account Tagesgeld PLUS accounts Current accounts Developments in banking In banking, the most important measure was the lift in the deposit interest rate for the Tagesgeld PLUS account to 2.1% p. a. New and existing customers benefited from this rate on investments up to 5,000. The rise, which was carried out on 9 March 2010, generated higher growth in deposits in Tagesgeld PLUS accounts and the money savings plan based on this account. This confirms just how attractive these interest rates are in the current market environment. The security features, in particular, were enhanced for our highly popular current account with satisfaction guarantee. Since February 2010, customers have been able to buy premium security software from one of the leading antivirus programme providers at a discounted price. This software comprehensively protects customers from viruses and Trojans when banking and shopping online. The switch to credit cards with an EMV-compliant chip continued as planned in the first quarter of Of the around 30 million chip errors on debit and credit cards in Germany in January this year, none related to comdirect bank cards. The launch of the Verified by Visa additional authentication procedure for online purchases originally scheduled for summer will already be implemented at the end of April The technical measures required for this have been completed. After a one-off registration in the customer log-in section (Persönlicher Bereich) of the bank s website, customers are password-protected during online payments using their com direct Visa card.

11 INTERIM MANAGEMENT REPORT 9 Deposit business Although the appeal of interest-bearing investments remained limited, we achieved a slight rise in the deposit volume of 2.5% to 9.31bn (end 2009: 9.08bn). Of this, 5.817bn was attributable to the Tagesgeld PLUS account, which recorded stronger growth than the deposit volume overall. The number of Tagesgeld PLUS accounts climbed 2.5% to thousand (end 2009: thousand). The volume of fixed-term deposits declined somewhat, while moderate growth was reported for medium to long-term deposits in time deposit accounts. Here, the new tenyear time deposit account, which offers an attractive interest rate of 4.0% (as of 31 March 2010), also achieved pleasing inflows. Deposit volume B2C (in billion) Despite restricted spending on marketing, there was strong demand for our current account with satisfaction guarantee, which is unique in the German market. Compared with the level at the end of 2009 (533.9 thousand), the number of accounts increased by 4.7% to thousand. As payment of the 50 start bonus is dependent on a minimum number of transactions, there was a notable increase on average in both the deposit volume and the level of activity. Lending and placement business The volume of loans to private customers stood at 187.3m at the end of the quarter (end 2009: 176.1m). Overdrafts on current accounts rose slightly, while the volume of loans to purchase securities dipped somewhat. comdirect bank acts as an intermediary for building finance and consumer loans. Both offerings therefore had no impact on the lending volume. Business development in advice The Anlageberatung PLUS concept, with its non-commission based pricing, systematic portfolio management using straightforward investment products and individual and direct advice, was well received by the bank s customers. There was also a high level of approval from the industry and consumer protection agencies. In the first quarter, the focus was on establishing the business model and gaining initial experience by addressing a broad customer base. A large portion of the pilot customers who tested the offering free of charge before its launch decided to continue to use the service. As of 31 March 2010, a total of more than 500 customers had already opted for this new benchmark in investment advice. The building finance advice service Baufinanzierung PLUS continued the stable development of 2009 in the quarter under review. Although the market was still dominated by a reluctance to spend, the volume of building finance placed by telephone and in selected offices increased year-on-year by around 70% to 80m. The number of financing partners rose from 90 to over 100, with a particular focus on extending the regional presence. One major success was our immediate third place ranking as a building finance intermediary (for 90% financing of purchase price) in the Best Building Finance Provider 2009 accolades awarded at the start of the year by Frankfurt s FMH-Finanzberatung. The award is based on a full-year evaluation of the interest rates of 74 banks and honours consistently outstanding services and terms and conditions. Our city report on Berlin, Frankfurt/ Main, Hamburg and Munich published in January as well as two representative surveys and the Building Finance Sentiment Index, which is updated every two months, were widely reported in the press. The withdrawal from local advisory services through the offices of comdirect private finance is set to be complete by mid In the first quarter of the year, the number of offices fell from 17 to 14. As a result of the curtailment of business activities, net commission income generated by comdirect private finance decreased considerably. Expenses for the closure of individual offices were covered in full by the restructuring provision of 4.5m recognised in the previous year.

12 10 Earnings situation in the B2C business line At 19.2m, pre-tax profit in the B2C business line was up 22.1% on the previous year s figure ( 15.7m). Earnings of 59.8m (previous year: 61.0m) and administrative expenses of 40.6m (previous year: 44.9m) produce a considerably improved cost/ income ratio of 67.9% (previous year: 73.5%). The earnings components relating to the comdirect group s deposit business net interest income, trading result and result from financial investments stem almost completely from the B2C business line. For further details, please see the explanation of these items at comdirect group level (see page 6). At 29.1m, net commission income exceeded the previous year s figure ( 25.9m) by 12.3%. Higher sales follow-up commission as a result of the increased funds volume was the most important earnings driver. To a lesser extent, the higher number of executed orders also had an effect. Commission income from the advisory business declined as a result of the withdrawal from local advisory services through comdirect private finance offices. The reduction in administrative expenses of 9.5% to 40.6m (previous year: 44.9m) in part reflects our restraint in marketing. In addition, communication and consulting expenses were also considerably down on the previous year. At 0.8m, the other operating result was below the previous year s figure ( 3.5m), which was due in part to the reversal of provisions and accruals. B2B business line Business development in the B2B business line In a persistently difficult market environment, which was also characterised by ongoing consolidation and adjustment of business models on the part of B2B partners, ebase made a good start to financial year 2010 and increased net commission income. The number of sales partner organisations rose slightly and new partnerships were initiated in the main market segments through consistent key account management. On the product side, the focus was on the market launch of a new custody account model including B2B-type banking products. Following the realignment of Marketing and Sales at the start of the year, ebase is in a position to concentrate even more on cultivating the market and supporting its sales partners. Once negotiations with the Works Council on the reduction in the number of posts were concluded (see page 13), ebase began implementing the agreed measures in order to exploit cost synergies. Developments in the B2B business line Following the realignment of Marketing and Sales, product management, sales controlling and marketing were amalgamated to form one division. This created the organisational framework required for cultivating the market more intensively in defined customer segments and extending the customer base two key measures on the road to becoming the leading B2B direct bank. Major progress was made in expanding the product spectrum to include B2B-type banking solutions in the first quarter. The overriding aim is to provide B2B partners with tailored products, which they in turn can use to comprehensively manage their customers liquidity. In this way, they remain involved in the liquidity cycle of the end customers, even in phases when investors are refraining from investing in securities and parking their financial assets in deposit accounts. The new ebase custody account, ebase Depot flex, which links the ebase Depot custody account with a settlement account, is the central product for establishing a new custody account model. All fund transactions for the investment custody account can be carried out directly and easily via the settlement account. This enables end customers to implement their individual investment decisions more easily. There are two variants of the new product flex Select, which permits a maximum of two positions per custody account, and flex Standard, which in combination with the classic ebase custody account enables investors to hold up to 99 investment funds in one custody account. In addition to the flexible call money account, ebase has been offering a fixed-term deposit account since January For investment sums from 5 thousand to 50 thousand, this account offers an attractive interest rate of 1.45% p. a. Interest of 0.5% applies to the full amount of investment sums exceeding 50 thousand (as of 31 March 2010). Together, the call money and fixed-deposit accounts offer a flexible and partner/customer-oriented solution for the investment of freed-up resources. End customers money is invested safely and with interest until a decision is made as to the next steps in investment planning. Custody accounts and portfolio volume The number of custody accounts declined slightly in the first quarter. After thousand at the 2009 year-end, the number of accounts stood at thousand as of the end of March The moderate fall was attributable almost in full to the partner custody account variant maintained for an investment company. However, more than one third of this comprised comparatively low-margin custody accounts for capital-building payments (VL contracts). Due to the capital-building payments falling due, this

13 INTERIM MANAGEMENT REPORT 11 effect is usually evident in a first quarter. Compared with the previous year, however, the decline in the number of custody accounts was limited. At 14.02bn, the portfolio volume was up 5.4% on the level at year-end 2009 ( 13.30bn). By comparison with the end of the first quarter of 2009 ( 10.44bn), assets under custody have risen by more than a third in terms of volume. The increase was mainly due to price effects. To a certain extend, it also reflected net inflows from end customers, including as a result of scheduled securities savings. Portfolio volume B2B (in billion) The decrease in net interest income before provisions from 129 thousand to 63 thousand stemmed from lower interest income from securities due to the changed market environment. At 0.2m, the other operating result was significantly down on the previous year s figure of 1.4m. This included a non-recurring effect of 1.2m from the refund of special contributions to the Entschädigungseinrichtung der Wertpapierhandelsunternehmen (EdW Compensatory Fund of Securities Trading Companies) as a result of administrative court decisions. Total income in the business line remained virtually stable at 10.0m (previous year: 10.0m) while administrative expenses were slightly higher at 8.0m (previous year: 7.9m). The segment s cost/income ratio therefore rose slightly to 79.8% (previous year: 79.1%). The pre-tax profit of 2.0m was down only 2.6% on the previous year s figure ( 2.1m) which was influenced by the non-recurring effect. Financial situation and assets of the comdirect group Accounts and deposit volume The new ebase Depot flex custody account solution was very well received by B2B partners and end customers, as demonstrated by the fact that the number of settlement accounts already totalled 18.5 thousand as of 31 March Moreover, further sales partners created the contractual basis for switching from the classic ebase custody account to the new product. The declared aim is to establish the new custody account model nationwide in as many customer relationships as possible. With regard to call money accounts, ebase continued its moderate growth course. After 5.9 thousand accounts at the end of 2009, by the end of the first quarter of 2010, the number of accounts already totalled 6.7 thousand. The fixed-term deposit account is still in the product launch phase. This is to be actively marketed via sales partner mailings, conferences, print material and the internet. Earnings situation in the B2B business line Compared with the first quarter of 2009, the earnings situation has improved considerably. Net commission income climbed 13.2% to 9.7m (previous year: 8.6m). This was mainly due to higher sales follow-up commission as a result of the significantly higher portfolio volume. In contrast, the slight fall in custody account fees resulting from the reduced number of custody accounts had little effect. In the first quarter of 2010, we also implemented our conservative and risk-aware Treasury strategy consistently and continued to pursue the investment strategy we had adjusted in the previous year. The proportion of fixed-term deposits reduced slightly in favour of largely collateralised securities investments. Balance sheet structure of the comdirect group As a result of modest growth in the deposit volume, the consolidated balance sheet increased by 2.8% to 10.06bn compared with the 2009 year-end ( 9.79bn). On the assets side, claims on banks of 5.18bn were up 8.7% on the level at the end of 2009 ( 4.76bn). The volume of financial investments barely changed in the first quarter, amounting to 4.43bn as of 31 March 2010 (end 2009: 4.48bn). There were no issuer or debtor defaults. The slight fall in claims on customers to 204.9m (end 2009: 206.2m) reflects lower utilisation of loans to purchase securities and a simultaneous increase in overdrafts on current accounts. The cash reserve decreased to 185.8m (end 2009: 282.8m). The liabilities side is essentially dominated by the deposits of private customers. These increased by 2.4% to 9.34bn (end 2009: 9.12bn). At 49.8m, provisions were virtually on a par with the level at the 2009 year-end ( 49.6m). Equity rose from 533.4m at the end of 2009 to 563.8m as a result of the net profit for the period, as well as the positive change in the revaluation reserve.

14 12 Cash flow statement of the comdirect group As in the previous year ( 189.7m), the cash flow from operating activities of 96.7m was primarily influenced by the movement in the deposit volume as well as the investment of customer deposits via Treasury. Our restraint on the investment side is reflected in the cash flow from investment activities, which at 0.3m is significantly down on the previous year ( 2.8m). As the dividend distribution falls in the second quarter, the cash flow from financing activities amounted to zero as it had in the first quarter of The share Data and key figures of the share Q 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 80.53% Commerzbank AG 1) 19.47% Free float The comdirect share price climbed 12.7% to 7.45 in the quarter under review, outperforming the SDAX (+9.8%) and the DAXsector Financial Services Performance Index ( 1.3%). With average daily turnover in units of 77.0 thousand, trading in the shares was considerably more active than in the first quarter of Investor Relations focused on the well-attended Analysts Conference on 18 February 2010 as well as our participation in the German Corporate Governance Conference hosted by Cheuvreux in Frankfurt/Main and our participation in the LBBW German Conference in London. We also conducted numerous telephone calls with investors and analysts. Key figures Q Average daily turnover in units XETRA 65,505 Opening quotation XETRA ( ) 6.60 Highest price XETRA ( ) 2) 7.45 Lowest price XETRA ( ) 2) 6.60 Closing quotation XETRA ( ) 7.45 Market capitalisation ( ) Frankfurt 8,110 Other stock exchanges 3,397 1,052.1m 77,012 The annual report 2009 was published in both printed form and as an interactive online version on 22 March The Analysts Conference was broadcast live and a recording of the conference is available on our website. Earnings per share ) Indirectly 2) Daily closing quotation Development of comdirect share price to (in ) 6.61 Jan Feb March 7.45 comdirect share SDAX DAXsector Financial Services Performance Index Employees As of 31 March 2010, at 1,160, the number of employees was up slightly compared with the 2009 year-end (1,155). On a full-time basis, the comdirect group employed 1,033.6 staff members as of the reporting date (end 2009: 1,029.2). The modest rise reflects the implementation of our complus programme. As a result of the new advisory models, the number of building finance and investment advisers increased in particular. Source: Bloomberg; Indices normalised to the comdirect share price as of year-end 2009

15 INTERIM MANAGEMENT REPORT 13 Number of employees of comdirect group business line B2C business line B2B in inflation in January and February 2010, the European Central Bank is expected to maintain its policy of cheap money for the time being. Due to the strong influence that changes on money and capital markets have on the earnings situation, as in previous years we will not announce our profit target for the comdirect group in 2010 until publication of our half-year report We intend to continue our profitable growth course beyond Once complus has been concluded to schedule and the B2B strategy has been implemented, pre-tax profit is set to range from 150m to 170m in At the end of the first quarter, 908 staff members were employed in the B2C business line (end 2009: 897), while 252 employees (end 2009: 258) were employed in the B2B business line. The negotiations with the ebase Works Council that commenced at the end of 2009 were completed in the first quarter of Around 41 full-time posts are to be cut by the end of Risk and opportunities report The risk position of the comdirect group is essentially unchanged compared with the presentation in the 2009 annual report. The same applies to the opportunities of the group. The risk report can be found on pages 66 to 73 of the annual report and the opportunities report on pages 74 to 75, while note 61 regarding the risk reporting on financial instruments is on pages 128 to 131. Outlook After the successful first quarter of 2010, we confirm the statements relating to the overall bank strategy and the expected economic framework parameters as well as the expected business situation, earnings, financial situation and assets made in the outlook section of the 2009 Group management report (pages 76 to 78 of the annual report). The comdirect group has satisfied all the corporate strategic and operating requirements to further increase the result in the current financial year. However, success is also dependent on certain market conditions being in place. In the first quarter of 2010, there was a slight upturn in order activity, but expectations of a moderate rise in market interest rates have so far not been confirmed. Given the new concerns regarding the economy and a declining trend In the B2C business line, we will continue the complus programme. In brokerage, from the end of April 2010 we are offering new customers our JubiläumsDepot ( anniversary custody account ) in honour of the bank s fifteenth anniversary. For a period of six months, half the order fees will apply to trades, and a bonus paid for fund purchases or transfers of over 10 thousand. Furthermore, we have made the offering for fund investors even more attractive, and have considerably increased the start bonuses on selected custody accounts for example. In cooperation with selected partners, we are offering a flat fee of 3.90 per order for certificate investors over a period of six months. In banking, the online functionalities of the current account with satisfaction guarantee are to be further improved as early as the second quarter of the year. This will include an even more user-friendly account switching service and easy transaction search function. In advice, we are concentrating on establishing Anlageberatung PLUS and further expanding our building finance advice service. The reduction in the number of comdirect private finance offices is to be completed by mid-2010 as scheduled. In the B2B business line, efforts will focus on intensively cultivating target markets through the realigned organisation in Sales. In addition, ebase is working on expanding the offering in banking and brokerage. This will centre on extending the range of account products and enhancing the appeal of existing custody account and savings models. In the second half of the year, customers should be able to access ETFs from other renowned issuers as well. Plans for the second half of the year also include optimising the charging process for B2B partners. The charging process is to be better aligned to partners business models through increased transparency and prompt, automated billing. Supplementary report No major events or developments of special significance have occurred since the reporting date of 31 March 2010.