Commerzbank Conference Call

Transcription

1 Commerzbank Conference Call Dr. Eric Strutz CFO Frankfurt August 4, 2004

2 Chart 1 Mid-2004 highlights in figures Q Q H H Operating profit ( m) Net profit ( m) Earnings per share ( ) Target 7% RWA, in bn Tier I ratio, in % Mar 30 Jun 30 Sep 31 Dec 31 Mar 30 Jun 30 Sep 31 Dec 31 Mar 30 Jun

3 Chart 2 Successful start to integration of SchmidtBank into Commerzbank Integration process 347,000 retail customers 4,000 corporate clients Staff of roughly 550 Balance-sheet total as of 1.6.: 3.4bn 70 branches and 29 selfservice centres Commerzbank has a risk umbrella for large unexpected losses Impact on results In both first half and 2004 as a whole, hardly relevant for results Both operating income and operating expenses roughly 30m in first half of 2004 Starting 2005, pre-tax return on equity of 10% or more expected

4 Chart 3 Net interest income strengthened profitability Net interest income Q2 improvement in net interest income was driven by three factors: 1. Higher dividend income from our investment portfolio 2. Stronger Group Treasury 3. Increase in corporate business Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Net interest income after provisioning Average interest margin based on risk-weighted assets, in % Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q

5 Chart 4 Quality of loan portfolio continuously improving Loan loss provisions 927 1,321 1, * 880 ** Loan loss provisions *) excluding SchmidtBank **) including SchmidtBank Loan loss cover ratio seasonably on a high level In excess: 542m 107.9% 109.0% 114.6% 5,320 5,506 5,636 6,846 7,077 6, ,683 1,857 1, Non-performing loans Collateral Country LLP and general provision 238 7,388 In excess: 634m In excess: 7,711 1,001m 7, Loan-loss provisions Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04*** Q4 04*** ***) expected

6 Chart 5 More difficult market conditions reduce income from securities Net commission income Trading profit Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Net result on investments and securities portfolio 181** * Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 *) roughly 20m from SCH disposal **) approx. 100m from SCH disposal Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Revaluation reserve pre-revaluation 650 1,240 1,253 1, post-revaluation ,100 12/02 03/03 06/03 09/03 12/03 03/04 06/04 equities bonds

7 Chart 6 Sustained cost control supports earnings improvement in m Operating expenses 1,398 1,308 1,229 1,220 1,179 1,141 1,078 1,113 1,104 1,128 Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Operating profit Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Net profit ,

8 Chart 7 H1 2004: best half since 2000 Operating profit , m Other income Trading profit Net commission income * ,423 1, , , ,154 Net interest income 1,693 1,696 1,834 1,734 1,451 1,523 Loan-loss provisions Operating expenses -2,040-2,470-2,909-2,706-2,320-2,232 H H H H H H Total lending ( m) 219, , , , , ,807 DAX 5,379 6,898 6,058 4,383 3,221 4,053 Rating Moody s AA3 AA3 AA3 A1 A2 A2 S&P AA- AA- A+ A A- A- Fitch AA- AA- A+ A A- A- *) adjusted by 856m generated by comdirect IPO

9 Chart 8 Retail Banking: H positive shareholder value achieved Interest income stabilized in Q2 Provisioning increased slightly Commissions down 10% in Q2, due to lower sales of securities and funds; but H1 level still 14% above previous year Operating expenses declined somewhat, despite integration of SchmidtBank Operating profit in H1 exceeded previous year by more than 90% m Q1 Q2 Change Net interest income Provision for possible loan losses Net interest income after provisioning Net commission income Net result on hedge accounting Trading profit Net result on investments and securities portfolio Other operating result Total income Operating expenses Operating profit Operative return on equity Cost/income ratio in operating business m % % % % % 2 2 0% % % % % 27.6% 22.6% % 72.8% - H1 04 H1 03 Pre-tax RoE at mid-year almost 25% We are well on track to increase our operating profit as promised by at least 25% in 2004 as a whole Total income Operating expenses Operating profit Share of equity tied up in Group 18%

10 Chart 9 Asset Management: operating profit virtually tripled year-on-year Concentration on core markets bearing fruit Stronger customer demand for certificates led to slight fall in commissions and assets under management ( 104.7bn) Another small reduction in operating expenses in Q2 Operating profit, at 40m, down quarteron-quarter, but high earnings base reconfirmed Operating profit of 92m in H1 virtually three times higher than in previous year Operative RoE at 34% Our forecast of 40% higher operating profit in 2004 remains, but should be considered extremely conservative. m Q1 Q2 Change Net interest income Provision for possible loan losses Net interest income after provisioning Net commission income Net result on hedge accounting Trading profit Net result on investments and securities portfolio Other operating result Total income Operating expenses Operating profit Operative Mio return Euro on equity Cost/income ratio in operating business m Total income Operating expenses Operating profit % % % % % % % % 37.4% 30.4% % 66.1% - H1 04 H1 03 Share of equity tied up in Group 5%

11 Chart 10 Corporate Customers & Institutions: significant improvement in Q2 Interest income before provisioning up 3% in Q2 Thanks to better credit quality, sharp reduction in provisioning Interest income after provisioning in Q2 23% above previous quarter Operating expenses under control Operating profit 40% higher than previous quarter Operative RoE raised to 11.8% for first six months m Q1 Q2 Change Net interest income Provision for possible loan losses Net interest income after provisioning Net commission income Net result on hedge accouting Trading profit Net result on investments and securities portfolio Other operating result Total income Operating expenses Operating profit Operative return on equity Cost/income ratio in operating business m % % % % % % % % % 10.0% 13.7% % 48.9% - H1 04 H1 03 Cost/income ratio remains under 50% Operating profit of 283m in H1 sees us well under way to achieving our communicated target of 500m in year as a whole. Total income Operating expenses Operating profit Share of equity tied up in Group 47%

12 Chart 11 Securities: difficult market conditions led to weaker revenues After an excellent start, earnings perspectives became much gloomier 73m operating profit achieved in H1 2004, almost 18% more than in previous year Operative ROE at mid-year 12.1%; again in double figures Cost/income ratio at 86% in the first 6 months of 2004 The various sections performed very unevenly: Equity Derivatives, Equity Sales and Trading, Capital Markets and Securities Finance continued to register good performance. However, Credit Trading and FX Trading were weak. m Q1 Q2 Change Net interest income Provision for possible loan losses Net interest income after provisionig Net commission income Net result on hedge accounting Trading profit Net result on investments and securities portfolio Other operating result Total income Operating expenses Operating profit Operative return on equity Cost/income ratio in operating business m Total income Operating expenses % % % % % % -14.8% % 124.6% - H1 04 H1 03 Operating profit Share of equity tied up in Group 12%

13 Chart 12 Commerzbank s three additional segments operating profit in m Treasury Q1 Q2 Q3 Q4 Q1 Q Operative ROE boosted to above 200% in Q Treasury with stable profit contributions in all quarters. Mortgage banking Q1 Q2 Q3 Q4 Q1 Q Eurohypo s H1 results have not been taken into account. At mid-year, we chose not to recognize 52m (in Q2: 32m). Hypothekenbank in Essen and Erste Europäische Hypothekenbank produce stable profit contributions. Others and consolidation Q1 Q2 Q3 Q4 Q1 Q In addition to the approx. 100m profit from the sale of SCH, this segment benefitted in Q2 from the lower funding costs of non-strategic investments and seasonally higher dividend payments. Operating expenses were higher.

14 Chart 13 Our achievements and our goals Q2 figures in line with good Q1 results. We have made further progress in our two largest core business lines (Retail Banking and Corporate Banking) We believe our core activities possess further growth potential through both internal and external expansion Additional scope for reducing loan-loss provisions Cost discipline will be maintained Our non-strategic participations are being reduced further We intend to close the gap between our present book value ( 18.00) and our present share price ( 13.98)

15 Chart 14 Commerzbank: the next IR events Investors Day Analysts conference call September 22, 2004 at Commerzbank's head office planned with all Commerzbank board members participating to present the Q3 figures November 3, 2004 held by Eric Strutz and Commerzbank team

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