our share, strategy and outlook

Transcription

1 52 MANAGEMENT REPORT our share, strategy and outlook Turnover in Commerzbank shares Quarterly figures, in 7 bn Last year, the level of the German Dax index was halved: from over 5,155 points at the start of 2002, the index plunged to a low of 2,519 in October a level last seen by investors in 1996, when the early signs of a major bull market were emerging. German financials in particular registered sharp price losses, in some cases falling well below their book values. In the first half of 2002, the Commerzbank share managed to shrug off the bad stock-market situation; however, it became clear by summer at the latest that sentiment would deteriorate further. The pressure on Commerzbank increased from two sides at once. Apart from the weakness of the stock market and the related decline in commissions and trading profits, the economic situation of German companies also worsened. The macroeconomic setting did not make it easy for the Bank, as the record insolvencies show. As a result, provisioning was raised further, at the expense of earnings. Analysts repeatedly reacted to the currently unattractive earnings situation and the absence of brighter prospects by downgrading our share in their reports. Nasty rumours On top of this, there were malicious speculations in some cases and apparently quite consciously placed bogus reports in the London financial press last October directed against Commerzbank but lacking any foundation whatsoever. It was claimed that the Bank had liquidity problems, that it had violated international capital standards, or had serious problems with its credit derivatives. When the situation began to develop a really dangerous momentum of its own, the Bundesbank and ultimately the German Financial Supervisory Authority (BAFin) as well intervened quite decisively, declaring that the liquidity of German banks was not in doubt nor was there cause for the banking supervisory authorities to worry; the downward plunge of our share was brought to a halt. Commerzbank s 361,000 shareholders share of capital held (as of December 31, 2002) Abroad 15.5% Institutional investors 0.8% Intesa 1.6% Mediobanca 3.7% SCH 9.9% Generali 4.0% Private investors Germany 14.0% Institutional investors 5.5% WCM 10.4% Munich Re 34.6% Private investors

2 OUR SHARE, STRATEGY AND OUTLOOK 53 Performance of the Commerzbank share Month-end figures, January 1999 = Commerzbank share CDAX (Banks) DJ Euro Stoxx Banks But what was frequently referred to as the campaign against Commerzbank did not fail to have an impact. Apart from considerable damage to its reputation evident in the share price which, at 75.04, fell to a level last seen in the 80s the Bank had to shoulder a further increase in funding costs, even though the market had calmed down again. Stable business relationships We wish to thank our customers and business associates around the world, who did not allow themselves to be put off by the nasty rumours and impressively demonstrated their loyalty towards our Bank. The year s IR highlight: Investors Day 2002 Commerzbank s Investors Day, held for the first time in 2002, marked a welcome change from all the year s negative news. Roughly 80 analysts and fund managers from Germany and elsewhere accepted the invitation to come to Frankfurt and receive information on the latest developments within the Bank, its strategy, the progress made by the cost-cutting offensive and much more besides. The positive response of the financial community, confirmed for the Bank in a large number of discussions, gives us confidence for the coming year and also shows that interest in Commerzbank remains strong. Cost-cutting offensive Commerzbank reacted to the change in market trend, resolving a series of measures which will enable the Bank to produce satisfactory results again. Direct and rapid action was possible first and foremost on the reduction of costs. Consequently, operating expenses contracted by around 7700m, or 12%, in 2002 to 75.15bn, thereby easily improving on the target of 75.5bn. Apart from the deconsolidation of Rheinhyp, the main factors here were both personnel expenses the reduction of staff by 3,400 under the 2001 cost-cutting offensive has largely been completed and non-personnel costs. The economies range from the purchase of materials to rental charges for premises and to IT projects.

3 54 MANAGEMENT REPORT The so-called cost-cutting offensive plus, resolved at the end of the first quarter of 2003, goes far beyond the measures described; its impact will be felt even in the course of Costs are to be pushed down to well below the 75bn mark. By end-2004, we expect a cost base of around 74.5bn, almost 71.5bn lower than in Five-point programme for raising efficiency Cost-cutting offensive Credit check Pricing offensive Structural und personnel measures Disposal of non-strategic interests implementation better than planned problem loans identified and solutions set in motion first positive effects through wider margins, termination of special terms and conditions Some new recruitments for key positions Interests in financial and industrial companies reduced or sold The Commerzbank share Bearer shares Reuters CBKG.DE Bloomberg CBK GR ISIN DE Capital-market communication Last year as well, we used all the available instruments to enable us to respond adequately to the increased demands for communication that meets the needs of the capital market. Apart from Investors Day 2002, these included a number of analysts meetings and events for investors, conference calls and roadshows, as well as group and individual discussions. At the same time, the number of private investors wishing to be actively included in our investor relations activities also continued to rise. We see this as an opportunity to broaden Commerzbank s shareholder base and to cater more than in the past to the demands of this target group. Primarily, we use the internet and services for this purpose. Internet Our internet re-launch last year marked a further extension and improvement in the service we provide for analysts and shareholders. With our new corporate design and under the Commerzbank slogan ideas ahead, our website is now even easier to navigate and user-friendly. We are seeking in this way not only to step up communication with our stakeholders, but also to cultivate the dialogue with our private and institutional investors. The internet will become even more important in this connection. As the figures for internet participation over the past few years reveal, the trend towards following both analysts meetings and parts of the AGM live on the screen is unbroken.

4 OUR SHARE, STRATEGY AND OUTLOOK 55 Commerzbank s 2003/2004 financial calendar May 7, 2003 Interim report as of March 31, 2003 May 30, 2003, a.m. AGM, Festhalle, Frankfurt am Main August 6, 2003 Interim report as of June 30, 2003 November 11, 2003 Interim report as of September 30, 2003 February 18, 2004 Annual results press conference 2004 May 12, 2004 Interim report as of March 31, 2004 May 12, 2004 AGM, Jahrhunderthalle, Frankfurt am Main Early August 2004 Interim report as of June 30, 2004 Early November 2004 Interim report as of September 30, 2004 All the major Commerzbank corporate news items are also available from Investor Relations on our homepage: Strategic decisions 2003 will be a decisive year for Commerzbank. In the present phase, the management has taken a clear decision to maintain the adopted course; the Bank will become even more aware of its strengths and will increase concentration on its core competencies in order to return to profitability. This is why we have stated quite unequivocally that everything, without exception, is up for scrutiny that does not help us reach our target of earning the cost of capital of around 10% in each business line. In addition to the already-described cost-cutting offensive, an overhaul of our investment portfolios is needed, for both our industrial and financial shareholdings, and the Bank s risk-weighted assets have to be kept stable, with the aim of holding the core capital ratio (Tier 1) constant at no less than 7%. Commerzbank will continue to be active in its home market, Germany, and in highly promising and especially strong-growth regions in Europe complemented by a few profitable overseas units, particularly in the United States.

5 Marienbibliothek Halle In 1552, Halle s town council had a library set up for the scholars and citizens of the town. It was modelled on Martin Luther s treatise of 1524 To the councillors of all German towns, in which he gave precise instructions for building up libraries for academic and general education purposes. In addition to editions of the Bible and commentaries on it, they should comprise works of all the contemporary areas of knowledge: philosophy, philology, mathematics, astrology, astronomy, medicine, and above all chronicles and histories... for these are extremely useful for recognizing and steering the course of the world. Today, the Marienbibliothek has around 30,000 volumes of virtually inestimable value, including roughly 600 incunabula, autographs and first editions. As the library has withstood the test of time unharmed, it represents by virtue of its very completeness a top-ranking scholarly and cultural monument. The place where the Marienbibliothek is located today is also a monument of a special kind: in 1889, it moved into a building, whose stacks for the first time consisted of a three-storey steel construction, open on all sides, making it possible to reach each book without using steps at the time, the very latest casting technique from Saarland.

6 Deutsche Akademie der Naturforscher Leopoldina Halle (Saale) The Deutsche Akademie der Naturforscher Leopoldina was founded by four physicians in Schweinfurt in 1652 and is thus Germany s oldest learned society. In 1687, it was given the title of an imperial academy and received various privileges, including complete freedom from censorship. Since 1878, it has been based in Halle (Saale). The Leopoldina has successfully defended its academic independence and international character in the face of all the upsets of more recent German history. One of the main concerns of Germany s academies of the sciences is to maintain a dialogue across national and academic boundaries. In order to strengthen this process, the Leopoldina, in conjunction with the Berlin-Brandenburg Academy of the Sciences, has established the Young Academy, whose members devote themselves to interdisciplinary scholarly discourse at the interface between scholarship and society.