Analysts conference Commerzbank Q1 2005 results Frankfurt May 3, 2005
Chart 1 Agenda 1. 2. 3. Corinna Linner IAS/IFRS Changes Dr. Thorsten Broecker New segment reporting Dr. Eric Strutz Q1 2005 figures
Chart 2 IAS / IFRS Changes effective 2005 Topic Application IAS 39 Distinction between Claims on banks and customers and Investments and Securities portfolio retrospective IAS 39 Fair value option retrospective IFRS 2 Staff remuneration plans retrospective IFRS 3 Goodwill impairment prospective IAS 1 Minority interests retrospective
Chart 3 IAS / IFRS changes to be implemented (1/4) Distinction between Claims on banks and customers and investments and securities portfolio (IAS 39) Till end 2004 Effective 2005 Impact on 2004 figures P&L Equity Originated by the Bank Not listed in an active market 23m moved from AfSresult disclosed under claims on banks and customers, gains or losses from disposals shown under interest income Q1 2004 to interest income Acquired in the secondary market Listed in an active market disclosed under Investments and securities portfolio, gains or losses from disposals shown under AfSresult FY 2004 22m moved from AfSresult to interest income. (as a result: income from Q2 to Q4 was 1m) Reduction of revalutation reserves by 3m Due to a revaluation from fair value to amortized cost
Chart 4 IAS / IFRS changes to be implemented (2/4) Fair value option (IAS 39) Till end 2004 Effective 2005 Impact on 2004 figures P&L Equity New rule, did not exist before. Additional measurement possibility (voluntary measurement at fair value of financial instruments which do not have to be measured according to this principle) EUcommission did not permit fair value option for financial liabilities Q1 2004 FY 2004 Slight impact of 0.2m Slight impact of 0.2m Increase of retained earnings by 1m (P&Leffect of 2003) Measurement changes: trading profit in P&L
Chart 5 IAS / IFRS changes to be implemented (3/4) Staff remuneration plans (IFRS 2) Till end 2004 Effective 2005 Impact on 2004 figures P&L Equity Formation of provisions if plan is likely to be used Recognition at fair value expenses spread across Q1 2004 Increased staff cost 8m the lifetime of a plan distinction in the balance sheet: Cash settled plans: provisions Equity settled plans: equity FY 2004 Increased staff cost 32m. After minority interest of 1m: Total P&Limpact 31m Decrease of retained earnings of 20m (P&Leffect 2003) Decrease of Retained earnings of 31m (P&Leffect 2004) Increase of Capital reserve of 6 m
Chart 6 IAS / IFRS changes to be implemented (4/4) Goodwill impairment (IFRS 3) Till end 2004 Effective 2005 Impact on 2004 figures P&L Equity Amortization of goodwill over 15 years (using straightline method) No regular amortization of goodwill after January 1, 2005 instead: impairment test at least once a year No impact No restatement, just prospective Minority interest (IAS 1) Impact on 2004 figures Till end 2004 Effective 2005 P&L Equity Shown separately from Shown within equity No impact Equity increased Equity under minority by 1,269m interests
Chart 7 Agenda 1. 2. 3. Corinna Linner IAS/IFRS Changes Dr. Thorsten Broecker New segment reporting Dr. Eric Strutz Q1 2005 figures
Chart 8 Commerzbank has altered its segment reporting New segment reporting UB PC / AM UB CIB Group structure 2004 Retail Asset Management Corporate Customers and Institutions Securities Group Treasury Mortgage Others & Consolidation Step 1 New Group structure 2005 Private and Business Customers UB PC / AM Asset Management Others & Consolidation Mittelstandsbank UB CIB International Corporate Corporates & Markets Group Treasury Mortgage Step 2 Allocation of Others & Consolidation Step 3 Allocation of Group Treasury Private and Business Customers UB PC / AM Asset Management Others & Consolidation Mittelstandsbank UB CIB International Corporate Corporates & Markets Group Investments & Others Mortgage
Chart 9 Group structure 2004 (1/2) Segments New segment reporting 2004 UB PC / AM UB CIB Retail Asset Management Corporate Customers and Institutions Securities Group Treasury Mortgage Others & Consolidation Retail Private comdirect Asset Management COMINVEST Jupiter CB Europe CCR Germany, Mittelstand, large and multinational corporates Europe USA, Asia, Africa Leasing Securities Treasury Germany Eurohypo Essenhyp EEPK Participations Consolidation Realestate fund management Financial Institutions
Chart 10 New segment reporting Group structure 2004 (2/2) Financials restated for changes in IAS / IFRS 2004 1.1.31.12.2004 [ m] Retail Asset Management Corporate Customers and Institutions Securities Group Treasury Mortgage Others & Consolidation Net interest income 1.122 8 1.604 10 206 299 220 3.013 Provision for possible loan losses 213 570 2 51 836 Net interest income after provisioning 909 8 1.034 8 206 248 220 2.177 Net commission income 1.010 449 696 116 1 12 8 2.250 Net result on hedge accounting 1 0 0 1 4 6 Trading profit 3 8 53 589 4 110 539 Net result on investments and securities portfolio 3 15 34 6 27 126 140 339 Other operating result 30 23 98 17 0 6 65 193 Total Income 1.955 488 1.915 690 229 250 23 5.504 Operating expenses 1.571 351 1.310 837 57 43 324 4.493 Operating profit 384 137 605 147 172 207 347 1.011 Regular amortization of goodwill 59 10 8 6 83 Restructuring expenses 132 132 Pretax profit 384 78 595 279 172 199 353 796 Total Average equity tied up 1.823 524 4.734 1.140 139 905 993 10.258 Operative return on equity (%) 21,1% 26,1% 12,8% 12,9% 123,7% 22,9%. 9,9% Cost/income ratio in operating business (%) 72,5% 71,9% 52,7% 121,0% 24,9% 14,3%. 70,9% Return on equity of pretax profit (%) 21,1% 14,9% 12,6% 24,5% 123,7% 22,0%. 7,8% Note: Major changes in income and expenses to published 2004 results are highlighted; Segments: average equity tied up according to KWG, Total: average equity tied up according to BIZ
Chart 11 New group structure 2005 (1/2) Reorganisation New segment reporting Step 1 UB PC / AM UB CIB Retail Asset Management Corporate Customers and Institutions Securities Group Treasury Mortgage Others & Consolidation I Retail Private comdirect Asset Management COMINVEST Jupiter CCR CB Europe Germany, Mittelstand, multinational corporates Europe USA, Asia, Africa Leasing Realestate fund management Financial Institutions Securities Treasury Germany Eurohypo Essenhyp EEPK Participations Consolidation UB PC / AM UB CIB Private and Business Customers Asset Management Others & Consolidation Mittelstandsbank International Corporate Corporates & Markets Group Treasury Mortgage II Retail Private comdirect Asset Mittelstand Management Germany Realestate Central / fund management Europe Eastern Leasing Europe West USA, Asia, Africa Financial Institutions Multinational corporates Securities London Branch Treasury Germany Eurohypo Essenhyp EEPK Participations Consolidation
Chart 12 New Group structure 2005 (2/2) Financial impact of reorganization 2004 New segment reporting Step 1 UB PC / AM UB CIB Retail Asset Management Corporate Customers and Institutions Securities Group Treasury Mortgage Others & Consolidation I Operating profit ( m) *) 384 137 605 147 172 207 347 Average equity KWG ( m) 1,823 524 4,734 1,140 139 905 993 Operating RoE (%) 21.1 26.1 12.8 12.9 123.7 22.9 Cost/income ratio (%) 72.5 71.9 52.7 121.0 24.9 14.3 UB PC / AM UB CIB Private and Business Clients Asset Management Others & Consolidation Mittelstandsbank International Corporate Corporates & Markets Group Treasury Mortgage II Operating profit ( m) 384 182 116 327 37 172 207 340 Average equity KWG ( m) 1,823 524 2,523 1,337 2,014 139 905 993 Operating RoE (%) 21.1 34.7 4.6 24.5 1.8 123.7 22.9 Cost/income ratio (%) 72.5 68.1 58.5 41,8 100.8 24.9 14.3 *) Includes IFRSchanges
Chart 13 Allocation of Others & Consolidation (1/2) Allocation of income and cost New segment reporting Step 2 UB PC / AM UB CIB Private and Business Customers Asset Management Others & Consolidation Mittelstandsbank International Corporate Corporates & Markets Group Treasury Mortgage II Funding costs for and proceeds from participations managed by segments, e.g. comdirect Reimbursement of employees bank charges Reversal of provisions Personnel expense Facility management costs Previously not allocated overhead costs Funding costs for and proceeds from group holdings Facility management, e.g. idle office space Group cost, e.g. for Boards, AGM Consolidation UB PC / AM UB CIB Private and Business Customers Asset Management Others & Consolidation Mittelstandsbank International Corporate Corporates & Markets Group Treasury Mortgage III
Chart 14 Allocation of Others & Consolidation (2/2) Financial impact New segment reporting Step 2 UB PC / AM UB CIB Private and Business Customers Asset Management Others & Consolidation Mittelstandsbank International Corporate Corporates & Markets Group Treasury Mortgage II Operating profit ( m) 384 182 116 327 37 172 207 340 Average equity KWG ( m) 1,823 524 2,523 1,337 2,014 139 905 993 Operating RoE (%) 21.1 34.7 4.6 24.5 1.8 123.7 22.9 Cost/income ratio (%) 72.5 68.1 58.5 41,8 100.8 24.9 14.3 UB PC / AM UB CIB Private and Business Customers Asset Management Others & Consolidation Mittelstandsbank International Corporate Corporates & Markets Group Treasury Mortgage III Operating profit ( m) 297 177 106 308 76 155 139 96 Average equity BIZ ( m) 1,847 558 2,614 1,334 2,021 150 1,003 731 Operating RoE (%) 16.1 31.7 4.1 23.1 3.8 103.3 13.9 Cost/income ratio (%) 76.2 68.9 59.5 43.8 105.3 27.1 19.1
Chart 15 New segment reporting Allocation of Group Treasury to other segments (1/2) Reallocation of income and cost Step 3 UB PC / AM UB CIB Private and Business Customers Asset Management Others & Consolidation Mittelstandsbank International Corporate Corporates & Markets Group Treasury Mortgage III Allocation of costs for ALM according to assets provided by segments Allocation of nonvolatible portion of trading results and associated costs according to assets provided by segments Allocation of remaining volatile portion of trading results UB PC / AM UB CIB Group Investments & Others Private and Business Customers Asset Management Others & Consolidation Mittelstandsbank International Corporate Corporates & Markets Mortgage IV
Chart 16 New segment reporting Allocation of Group Treasury to other segments (2/2) Financial impact Step 3 UB PC / AM UB CIB Private and Business Customers Asset Management Others & Consolidation Mittelstandsbank International Corporate Corporates & Markets Group Treasury Mortgage III Operating profit ( m) 297 177 106 308 76 155 139 96 Average equity BIZ ( m) 1,847 558 2,614 1,334 2,021 150 1,003 731 Operating RoE (%) 16.1 31.7 4.1 23.1 3.8 103.3 13.9 Cost/income ratio (%) 76.2 68.9 59.5 43.8 105.3 27.1 19.1 UB PC / AM UB CIB Group Investments & Others Private and Business Customers Asset Management Others & Consolidation Mittelstandsbank International Corporate Corporates & Markets Mortgage IV Operating profit ( m) 323 177 131 311 75 139 5 Average equity BIZ ( m) 1,894 558 2,663 1,337 2,022 1,003 781 Operating RoE (%) 17.1 31.7 4.9 23.3 3.7 13.9 Cost/income ratio (%) 75.6 68.9 59.3 43.6 105.1 19.1
Chart 17 17 New segment reporting 17 New group structure 2005 after allocation of Group Treasury and Others & Consolidation Detailed financials 2004 Step 1 Step 2 Step 3 1.1.31.12.2004 [ m] Private and Business Customers Asset Management Mittelstandsbank International Corporate Corporates & Markets Mortgage Others & Consolidation Net interest income 1.137 7 1.152 301 190 233 7 3.013 Provision for possible loan losses 213 555 12 29 51 836 Net interest income after provisioning 924 7 597 313 161 182 7 2.177 Net commission income 1.010 529 403 155 152 12 13 2.250 Net result on hedge accounting 1 4 1 6 Trading profit 3 8 43 32 567 110 4 539 Net result on investments and securities portfolio 3 13 1 28 2 126 170 339 Other operating result 40 25 85 14 11 6 46 193 Total Income 1.980 569 1.129 542 867 184 233 5.504 Operating expenses 1.657 392 998 231 942 45 228 4.493 Operating profit 323 177 131 311 75 139 5 1.011 Regular amortization of goodwill 59 10 8 6 83 Restructuring expenses 132 132 Pretax profit 323 118 121 311 207 131 1 796 Total Average equity tied up (BIZ) 1.894 558 2.663 1.337 2.022 1.003 781 10.258 Operative return on equity (%) 17,1% 31,7% 4,9% 23,3% 3,7% 13,9%. 9,9% Cost/income ratio in operating business (%) 75,6% 68,9% 59,3% 43,6% 105,1% 19,1%. 70,9% Return on equity of pretax profit (%) 17,1% 21,1% 4,5% 23,3% 10,2% 13,1%. 7,8%
Chart 18 Agenda 1. 2. 3. Corinna Linner IAS / IFRS Changes Dr. Thorsten Broecker New segment reporting Dr. Eric Strutz Q1 2005 results
Chart 19 Good start into 2005 Q1 04 Q1 05 2004* Target 2005 Revenues ( bn) 1.539 1.648 5.504 further up Loan loss provisions ( m) 238 198 836 < 800 Operating expenses ( bn) 1.112 1.107 4.493 Operating profit ( m) 427 541 1,011 Operating RoE (%)** 16.7 21.4 9.9 Net profit ( m) 246 395 362 RoE (after tax, %)** 10.9 16.8 4.3 Cost/income ratio in operating business (%) 62.6 60.0 70.9 Earnings per share ( ) 0.41 0.66 0.61 4.5 up up >750 > 8 < 69 substantially up * restated ** annualized
Chart 20 Net interest income stable in m 806 Profit contribution Eurohypo 741 719 747 721 Treasury below last year s level Negative impact of US$ exchangerate ( 4m) Q1 Q2 Q3 Q4 Q1 2004 2005 Average interest margin in balancesheet business ( 108bn) stable at 2.67% (Q1 2004: 2.70%)
Chart 21 High quality of Commerzbank s loan portfolio Loanloss provisions in m 927 1.321 1.084 836 < 800 2001 2002 2003 2004 2005* * expected Loanloss cover ratio comfortable in m Loanloss provisions Country LLP and general provision Collateral Nonperforming loans In excess: 1,215m 6.294 7,509 In excess: 7,459 1,066m 119.3% 116.7% 5.352 6.393 5.402 326 334 1.831 1.723 31.12.2004 31.03.2005 Loanloss provisions in m 252 303 273 256 238 214 199 185 198 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05
Chart 22 Good yearago commission income almost repeated in m 597 578 570 557 Payment transactions up 6% Syndicated business up 21% Guarantees up 12% 526 Q1 Q2 Q3 Q4 Q1 Securities transactions down 14% Asset Management fees down 4% Fewer client orders at comdirect Switch to lowermargin certificates products No oneoff in our noneuropean asset management units 2004 2005
Chart 23 Strong trading profit in Q1 2005 in m 314 262 11 Improved revenue mix after closedown of former lossmaking activities significant VaRreduction 131 319 173 9 6 103 288 134 5 15 42 31 37 Q1 Q2 Q3 Q4 Q1 2004 2005 Mortgage banking: negative impact ( 35m) was offset by high net results in AfS ( 36m) Seasonal factors have to be anticipated Back on track Net result on fair value options Trading Net result on measurement of derivatives
Chart 24 Operating expenses under control in m 32,349 32,706 33,206 32,820 32,647 Other expenses and depreciation on fixed assets declining 1,112 1,136 97 92 1,086 98 1,159 115 1,107 77 Proactive reduction of the actuarial loss implemented on a voluntary basis 395 418 390 436 377 620 626 598 608 653 Personnel costs up (+5.3% yoy) mainly driven by nonwage costs Q1 Q2 Q3 Q4 Q1 2004 2005 Continued tight cost management in 2005 Personnel expenses Depreciation on fixed assets Other expenses Staff
Chart 25 Stabilization of riskweighted assets and Tier 1 ratio Riskweighted assets in bn Tier I capital ratio (in %)* 155 150 149 141 146 148 143 140 141 7.4 7.7 7.8 7.3 7.1 7.2 7.5 7.2 Change in regulatory consolidation requirement of fund management companies (KAGs). Impact in Q1 2005: 22bp 7.0 31 Mar 30 Jun 30 Sep 31 Dec 31 Mar 30 Jun 30 Sep 31 Dec 31 Mar 31 Mar 30 Jun 30 Sep 31 Dec 31 Mar 30 Jun 30 Sep 31 Dec 31 Mar 2003 2004 2005 2003 2004 2005 * incl. market risk position, hybrid capital = 0
Chart 26 Revaluation reserves maintained at a high level Revaluation reserve in m Change in LongTermRating since January 2004 1,600 1,430 S&P Moodys Fitch 1,253 1,035 1,213 A stable A2 stable A positive Current rating A negative A2 stable Astable 03/04 06/04 09/04 12/04 * 03/05 * restated equities bonds
Chart 27 Commerzbank with a clear strategic profile Commerzbank Private & Business Customers PCAM Asset Management Mittelstandsbank CIB International Corporate Corporates & Markets #3 German Retail Bank 5m customers #1 in Online #2 in Private #5 German Asset Manager Quality leader in UK and France #2 Mittelstandsbank 16% market share in Germany s global trade 40% (S)MEs run an account with CB Top 10 player in CEE #2 German Financial Institution Group Partner for 6,000 financial institutions Successful niche strategy in USA #3 Distributor of structured products (in Germany and France) #3 in LBO Finance RoE 1 : 14.7% RoE: 27.8% RoE: 9.2% RoE: 9.9% RoE: 21.6% CIR: 78.5% CIR: 72.0% CIR: 56.1% CIR: 55.4% CIR: 68.0% 1 operating RoE Source: Q1 2005 figures
Chart 28 Core activities in different stages of development Operating profit, in m Private & Business Customers Asset Management Mittelstandsbank International Corporate Corporates & Markets 99 115 149 99 81 73 70 69 68 84 67 53 46 36 42 37 18 40 50 23 45 31 38 39 147 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 Flat profit likely in 2005. Selective investments for sustainable growth Shifting into highermargin products Profitability programme in implementation Successful niche strategy Return to profit
Chart 29 Private & Business Customers: Flat profit likely in 2005, selective investments for sustainable growth m m Q1 2004 * Q1 2005 Change Comments on Q1 2005 results Net interest income Loan loss provision Interest after prov. Commission income Result on hedge acc. Trading profit Net result on AfS Other operating result Total income 284 39 245 272 1 2 3 523 274 46 228 264 1 3 490 4% +18% 7% 3% +/0% 6% 0.6bn decline in total lending combined with an almost stable margin level has primarily led to a reduction of net interest income. Liabilities margin narrowed by 25bp, caused by initiative to gain new customers. Commerzbank AG s commission income remained stable. Reduction is merely linked to a 9m drop in commission income at comdirect. Cost increases due to the complete integration of SchmidtBank have been compensated by further efficiency improvements. At a level of nearly 15%, operating RoE on regulatory capital still exceeds current cost of capital. Operating expenses Operating profit 424 99 421 69 Ø equity (in m) 1,866 1,882 operating RoE** 21.2% 14.7% CIR 75.4% 78.5% 1% 30% Measures in 2005 Progressive implementation of our private banking and business customer strategies Concentration on highmargin products Comdirect s growth programme (comvalue) Equity allocation within Commerzbank Group 18.6% Efficiency gains via rollout of new branch format * restated ** annualized
Chart 30 Asset Management: Shifting into highermargin products m m Q1 2004* Q1 2005 Change Comments on Q1 2005 results Net interest income Loan loss provision Interest after prov. Commission income Result on hedge acc. Trading profit Net result on AfS Other operating result Total income Operating expenses Operating profit Ø equity (in m) 576 533 operating RoE** 36.8% 27.8% CIR 64.4% 72.0% Equity allocation within Commerzbank Group 3 3 141 1 2 1 7 149 96 53 4 4 127 2 1 2 132 95 37 10% +/0% +/0% 11% 1% 30% 5.3% Decline in commission income due to high oneoffs of 7m in Asian markets in Q1 2004. Other operating result in Q1 2004 benefited from payment of 10m from sale of Montgomery. Compared with Q4 2004, capital allocation expanded due to additional regulatory consolidation requirements. Pretax RoE** increased to 27.8%, supported by end of regular goodwill amortization. Measures in 2005 Efficiency increase in our German asset management units by shifting to highermargin products Ongoing product mix shift from lowmargin moneymarket assets to specialized equity funds * restated * restated ** annualized
Chart 31 Mittelstandsbank: Positive earnings trend in Germany as well as in CEE m m Q1 2004* Q1 2005 Change Comments on Q1 2005 results Net interest income Loan loss provision Interest after prov. Commission income Result on hedge acc. Trading profit Net result on AfS Other operating result Total income Operating expenses Operating profit Ø equity (in m) 2,646 2,945 operating RoE** 2.7% 9.2% CIR 58.0% 56.1% Equity allocation within Commerzbank Group 269 151 118 104 6 3 20 251 233 18 280 118 162 124 15 1 4 306 238 68 +4% 22% +37% +19% >100% 67% 80% +22% +2% >100% 29.2% Firsttime consolidation of a BRE Bank subsidiaries lifted interest income Rise in commission income partly supplied by leasing revenues (previously booked under Other operating result) Lower overall provisioning need for fiscal year possible BRE Bank s trading profit back to normal level in Q1 2005 Compared with Q4 2004, capital allocation expanded due to additional regulatory consolidation requirements (BRE subsidiaries) Measures in 2005 Sales force controlling and more precise sales targets lead to higher revenues and greater efficiency Continuing to build upon our strengths in German trade and derivatives business * restated ** annualized
Chart 32 International Corporate : Successful niche strategy m m Q1 2004* Q1 2005 Change Comments on Q1 2005 results Net interest income Loan loss provision Interest after prov. Commission income Result on hedge acc. 81 36 45 37 64 19 45 38 2 21% 47% +/0% +3% Decline in net interest income and net result on AfS mainly caused by lower treasury contribution of foreign units After a positive provisioning balance in 2004, the partial budget for 2005 of 19m was booked in Q1 Focus on investment grade loans Trading profit 8 6 25% Net result on AfS 12 6 50% Other operating result 3 Total income 105 93 11% Operating expenses Operating profit 60 45 62 31 +3% 31% Measures in 2005 Ø equity (in m) 1,363 1,251 operating RoE** 13.2% 9.9% CIR 42.6% 55.4% Concentration on valuecreating structured lending products and trade finance Weeding out lowmargin products Improving efficiency in Western Europe Equity allocation within Commerzbank Group 12.4% * restated ** annualized
Chart 33 Corporates & Markets: Repositioning in securities business showing effect m m Q1 2004* Q1 2005 Change Comments on Q1 2005 results Net interest income 58 49 16% Return to profit in Q1 2005 Loan loss provision 7 7 +/0% Margins for largevolume loans have hit their lows. Interest after prov. Commission income 51 44 42 27 18% 39% After losses in FY 2004, operating RoE recovered to reach over 21% Result on hedge acc. Trading profit 310 258 17% Net result on AfS 5 1 Other operating result 2 Total income 410 324 21% Operating expenses Operating profit 261 149 225 99 Ø equity (in m) 1,957 1,832 operating RoE** 30.5% 21.6% CIR 62.6% 68.0% 14% 34% Measures in 2005 Reductions in frontoffice staff are virtually completed. In strategic growth areas, we even plan fresh recruitments. Former lossmaking areas such as global prop trading and convertible bonds have been terminated. Equity allocation within Commerzbank Group 18.1% Equity allocation to lowmargin business to be reduced further. * restated ** annualized
Chart 34 Mortgage : Positive contribution from Eurohypo m m Q1 2004* Q1 2005 Change Comments on Q1 2005 results Net interest income Loan loss provision Interest after prov. Commission income Result on hedge acc. Trading profit Net result on AfS Other operating result Total income Operating expenses Operating profit Ø equity (in m) 1,039 989 operating RoE* 14.6% 27.9% CIR 15.7% 11.5% Equity allocation within Commerzbank Group 59 5 54 2 5 1 46 8 38 96 8 88 2 8 35 36 79 10 69 +63% +60% +63% +/0% 72% 25% +82% 9.8% Operating profit in m 38 29 25 47 69 Q1 Q2 Q3 Q4 Q1 Interest income 30m higher yearonyear thanks to full quarterly profit contribution from Eurohypo. Negative impact from trading profit was offset by AfS result => Hypo in Essen is not a trading book bank Further positive earnings performance at Hypothekenbank in Essen. Measures in 2005 Marked improvement in results expected, thanks to stable, posttax profit contributions in all four quarters from Eurohypo. * restated ** annualized
Chart 35 Others & Consolidation: Strong AfS result in Q1 m m Q1 2004* Q1 2005 Change Comments on Q1 2005 results Net interest income 7 46 Loan loss provision Interest after prov. 7 46 Commission income 1 Result on hedge acc. 3 2 Trading profit 8 15 Net result on AfS 32 251 Other operating result 34 6 Total income 55 224 Operating expenses 30 56 Operating profit 25 168 Ø equity (in m) 760 665 operating RoE** CIR Operating profit in m 153 25 168 81 92 Q1 Q2 Q3 Q4 Q1 Drop in interest income largely reflects lower treasury result. Net result on investments and securities portfolio was strongly affected by: MAN Unibanco Treasury Measures in 2005 Constantly considering disposals of nonstrategic investments Increasing overall transparency through new structure of segment reporting Equity allocation within Commerzbank Group 6.6% * restated ** annualized
Chart 36 Commerzbank s specific strength basis to build upon Leading market position in Germany s Mittelstand Private Client Business Management team Turnaround experience Complementary capabilities Financial strength Wellcapitalized balance sheet Strong Tier 1 ratio Loan portfolio quality
Chart 37 Three main challenges for 2005 Focus Value drivers 1. Enhancement of profitability in Mittelstandsbank Germany: revenues, costs and LLPs BRE Bank: turnaround and growth opportunities 2. Positioning of Corporates & Markets Improving profit in Markets division Focusing on regions and products with competitive strengths sustainable value proposition for our customers Increasing capital efficiency 3. Tight cost management Revenuerelated expense strategy
Chart 38 Commerzbank s core objectives 1. Becoming the best German Retail Bank 2. Developing into the best bank for Germany s Mittelstand 3. Building on Top 10 position in CEE 4. Becoming quality leader in products supplied to distribution platform
Chart 39 Commerzbank aims to achieve European RoE standards Return on equity (aftertax) targets 2004* 4.3% 2005 8% (current cost of capital) 2006 > 10% (longterm cost of capital) Major step towards our current cost of capital * restated
Chart 40 Appendix 1. 2. IAS/IFRS Changes New segment reporting
Chart 41 Commerzbank Group P&L as of December 31, 2004 in m restatement impact original p&l IAS 39 IAS 39 IFRS 2 (Claims) (Fair value restated p&l line option) 1 Net interest income 2.991 22 3.013 2 Provision for possible loan losses 836 836 3 Net interest income after provisioning 2.155 22 2.177 4 Net commission income 2.250 2.250 5 Net result on hedge accounting 6 6 6 Trading profit 539 0 539 7 Net result on investments and securities portfolio (afs) 361 22 339 8 Other operating result 193 193 9 Personnel expenses 2.420 32 2.452 10 Other expenses incl. current depreciation on fixed assets and other intangible assets 2.041 2.041 11 Operating expenses 4.461 32 4.493 12 Operating profit 1.043 0 32 1.011 13 Regular amortization of goodwill 83 83 14 Profit from ordinary activities before restructuring expenses 960 0 32 928 15 Restructuring expenses 132 132 16 Pretax profit 828 0 32 796 17 Taxes on income 353 353 18 Aftertax profit 475 0 32 443 19 Profit/loss attributable to minority interests 82 1 81 20 Net profit 393 0 31 362 total impact on p&l as of 31.12.2004 m 31
Chart 42 Commerzbank Group P&L as of March 31, 2004 in m restatement impact original p&l IAS 39 IAS 39 IFRS 2 (Claims) (Fair value restated p&l line option) 1 Net interest income 718 23 741 2 Provision for possible loan losses 238 238 3 Net interest income after provisioning 480 23 503 4 Net commission income 597 597 5 Net result on hedge accounting 4 4 6 Trading profit 314 0 314 7 Net result on investments and securities portfolio (afs) 77 23 54 8 Other operating result 67 67 9 Personnel expenses 612 8 620 10 Other expenses incl. current depreciation on fixed assets and other intangible assets 492 492 11 Operating expenses 1.104 8 1.112 12 Operating profit 435 0 8 427 13 Regular amortization of goodwill 20 20 14 Profit from ordinary activities before restructuring expenses 415 0 8 407 15 Restructuring expenses 16 Pretax profit 415 0 8 407 17 Taxes on income 128 128 18 Aftertax profit 287 0 8 279 19 Profit/loss attributable to minority interests 33 0 33 20 Net profit 254 0 8 246 total impact on p&l as of 1st quarter 2004 m 8
Chart 43 Commerzbank Group balance sheet as of December 31, 2004 in m restatement impact up to and incl. 31.12.2003 m IAS 39 IAS 39 IFRS 2 (Claims) (Fair value total option) capital reserve 1 1 retained earnings 1 20 19 revaluation reserve 4 4 IAS 39 IAS 39 IFRS 2 restatement impact 1.1.31.12.2004 m (Claims) (Fair value total option) capital reserve 5 5 retained earnings 31 31 revaluation reserve 1 1 IAS 39 IAS 39 IFRS 2 (Claims) (Fair value total line total restatement impact as of 31.12.2004 m option) A capital reserve 6 6 B retained earnings 1 51 50 C revaluation reserve 3 3 total impact as of 31.12.2004 3 1 45 47
Chart 44 Appendix 1. 2. IAS/IFRS Changes New segment reporting
Chart 45 Private and Business Customers Development of 2004 quarterly results [ m] Q1 / 2004 Q2 / 2004 Q3 / 2004 Q4 / 2004 Net interest income 284 283 287 283 Provision for possible loan losses 39 46 52 76 Net interest income after provisioning 245 237 235 207 Net commission income 272 256 224 258 Net result on hedge accounting 0 0 0 0 Trading profit 1 1 0 1 Net result on investments and securities portfolio 2 2 1 2 Other operating result 3 9 1 27 Total income 523 505 461 491 Operating expenses 424 424 388 421 Operating profit 99 81 73 70 Regular amortization of goodwill 0 0 0 0 Restructuring expenses 0 0 0 0 Expenses arising from special factors 0 0 0 0 Pretax profit 99 81 73 70 Average equity 1.866 1.888 1.910 1.912 Operative return on equity (%) 21,2% 17,2% 15,3% 14,6% Cost/income ratio (%) 75,4% 77,0% 75,6% 74,3%
Chart 46 Asset Management Development of 2004 quarterly results [ m] Q1 / 2004 Q2 / 2004 Q3 / 2004 Q4 / 2004 Net interest income 3 2 3 1 Provision for possible loan losses 0 0 0 0 Net interest income after provisioning 3 2 3 1 Net commission income 141 129 124 135 Net result on hedge accounting 1 0 0 0 Trading profit 2 2 2 2 Net result on investments and securities portfolio 1 6 1 5 Other operating result 7 5 14 1 Total income 149 140 138 142 Operating expenses 96 94 102 100 Operating profit 53 46 36 42 Regular amortization of goodwill 15 15 14 15 Restructuring expenses 0 0 0 0 Expenses arising from special factors 0 0 0 0 Pretax profit 38 31 22 27 Average equity 576 564 555 537 Operative return on equity (%) 36,8% 32,6% 25,9% 31,3% Cost/income ratio (%) 64,4% 67,1% 73,9% 70,4%
Chart 47 Mittelstandsbank Development of 2004 quarterly results [ m] Q1 / 2004 Q2 / 2004 Q3 / 2004 Q4 / 2004 Net interest income 269 296 283 304 Provision for possible loan losses 151 151 150 103 Net interest income after provisioning 118 145 133 201 Net commission income 104 92 108 99 Net result on hedge accounting 0 0 0 0 Trading profit 6 10 12 15 Net result on investments and securities portfolio 3 1 3 0 Other operating result 20 32 22 11 Total income 251 280 272 326 Operating expenses 233 240 222 303 Operating profit 18 40 50 23 Regular amortization of goodwill 2 3 2 3 Restructuring expenses 0 0 0 0 Expenses arising from special factors 0 0 0 0 Pretax profit 16 37 48 20 Average equity 2.646 2.692 2.660 2.654 Operative return on equity (%) 2,7% 5,9% 7,5% 3,5% Cost/income ratio (%) 58,0% 55,7% 52,6% 70,6%
Chart 48 International Corporate Development of 2004 quarterly results [ m] Q1 / 2004 Q2 / 2004 Q3 / 2004 Q4 / 2004 Net interest income 81 84 62 74 Provision for possible loan losses 36 5 5 48 Net interest income after provisioning 45 79 67 122 Net commission income 37 43 41 34 Net result on hedge accounting 0 0 0 0 Trading profit 8 4 10 10 Net result on investments and securities portfolio 12 6 3 7 Other operating result 3 9 2 0 Total income 105 141 123 173 Operating expenses 60 57 56 58 Operating profit 45 84 67 115 Regular amortization of goodwill 0 0 0 0 Restructuring expenses 0 0 0 0 Expenses arising from special factors 0 0 0 0 Pretax profit 45 84 67 115 Average equity 1.363 1.399 1.318 1.268 Operative return on equity (%) 13,2% 24,0% 20,3% 36,3% Cost/income ratio (%) 42,6% 39,0% 47,5% 46,4%
Chart 49 Corporates & Markets Development of 2004 quarterly results [ m] Q1 / 2004 Q2 / 2004 Q3 / 2004 Q4 / 2004 Net interest income 58 47 50 35 Provision for possible loan losses 7 7 3 18 Net interest income after provisioning 51 40 53 17 Net commission income 44 34 32 42 Net result on hedge accounting 0 0 0 0 Trading profit 310 141 1 115 Net result on investments and securities portfolio 5 2 3 12 Other operating result 0 1 4 8 Total income 410 218 85 154 Operating expenses 261 256 232 193 Operating profit 149 38 147 39 Regular amortization of goodwill 0 0 0 0 Restructuring expenses 0 0 132 0 Expenses arising from special factors 0 0 0 0 Pretax profit 149 38 279 39 Average equity 1.957 2.093 2.067 1.971 Operative return on equity (%) 30,5% 7,3% 28,4% 7,9% Cost/income ratio (%) 62,6% 113,8% 282,9% 112,2%
Chart 50 Mortgage Development of 2004 quarterly results [ m] Q1 / 2004 Q2 / 2004 Q3 / 2004 Q4 / 2004 Net interest income 59 43 43 88 Provision for possible loan losses 5 5 5 36 Net interest income after provisioning 54 38 38 52 Net commission income 2 4 3 3 Net result on hedge accounting 0 6 9 1 Trading profit 5 48 25 32 Net result on investments and securities portfolio 1 58 17 52 Other operating result 0 0 2 4 Total income 46 38 34 66 Operating expenses 8 9 9 19 Operating profit 38 29 25 47 Regular amortization of goodwill 2 2 2 2 Restructuring expenses 0 0 0 0 Expenses arising from special factors 0 0 0 0 Pretax profit 36 27 23 45 Average equity 1.039 1.003 988 982 Operative return on equity (%) 14,6% 11,6% 10,1% 19,1% Cost/income ratio (%) 15,7% 20,9% 23,1% 18,6%
Chart 51 Others & Consolidation Development of 2004 quarterly results [ m] Q1 / 2004 Q2 / 2004 Q3 / 2004 Q4 / 2004 Net interest income 7 55 3 38 Provision for possible loan losses 0 0 0 0 Net interest income after provisioning 7 55 3 38 Net commission income 1 7 0 5 Net result on hedge accounting 3 5 5 2 Trading profit 8 21 9 8 Net result on investments and securities portfolio 32 105 1 32 Other operating result 34 26 2 16 Total income 55 209 4 27 Operating expenses 30 56 77 65 Operating profit 25 153 81 92 Regular amortization of goodwill 1 1 2 2 Restructuring expenses 0 0 0 0 Expenses arising from special factors 0 0 0 0 Pretax profit 24 152 83 94 Average equity 760 580 778 1.006 Operative return on equity (%) Cost/income ratio (%)
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