the leading commercial Bank in Germany Cheuvreux 5 th German Corporate Conference Frankfurt, January 17, 2006 Dr. Eric Strutz Chief Financial Officer
Agenda Highlights of 2005 2. Commerzbank and Eurohypo: A powerful combination 3. Outlook 1/20
Top 5 highlights of 2005 Commerzbank produced one of its best results ever 2. Improved underlying business led to an overall increased earnings quality 3. New structure of divisions is paying off 4. Mittelstand, Corporates & Markets and Mortgage Banks ahead of expectations 5. Acquisition of Eurohypo 2/20
Core figures reflect consistently strong performance Q3 05 vs. Q3 04 Jan-Sep 05 vs. 04 Operating profit, in m 419 >100% 1,251 +48% Net profit, in m 262 >100% 832 >100% EPS, in 0.44 >100% 40 >100% ROE after tax, in % 14 +20.8pps 12.1 +8.2pps Cost/income ratio in operating business, in % 65.8-17.2pps 64.9-4.1pps 3/20
Achievements in de-risking the bank Loan-loss provisions: Clear positive trend in m 273 256 238 214 199 185 198 177 151 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2003 2004 2005 Q3 Loan-loss provisions in bps 111 67 44 110 106 99 90 85 74 70 74 66 57 52 46 < 44 53 38 40 44 33 33 32 33 33 1997 1998 1999 2000 2001 2002 2003 2004 2005e Gross LLP Net LLP Releases Average net LLP 1997-2004 4/20
Good performance of equity portfolio boosted revaluation reserve Revaluation reserve in bn pre-revaluation post-revaluation 24 25 04 21 60 43 51 78 69 Major participations of Commerzbank as of Sep 30, 2005 10% KEB ~ 10% Linde (DAX) 0.65 1-5% Generali (strategic) Mediobanca (strategic) ThyssenKrupp -0.26 Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep 2003 2004 2005 Nov (1) Sold in Nov `05-10 2.9% Banca Intesa SpA 1 Excluding Banca Intesa 5/20 equities bonds equities and bonds
Solid capital base and strong Tier 1 ratio Risk-weighted assets in bn 146 148 143 140 141 143 147 No hybrid capital issued 7.1 7.0 7.2 7.5 7.2 7.0 6.7 With consolidated profit for the first nine months included, Tier 1 ratio would be 7.2% Capital increase boosted Tier 1 ratio (7.7% as of Nov 30, 2005) Mar Jun Sep Dec Mar Jun Sep 2004 2005 Tier 1 ratio, in % 6/20
Strong business performance some units exceeded expectations Operating profit in m Private & Business Customers Asset Management Mittelstand 99 103 103 81 73 70 69 84 80 68 53 46 36 42 37 46 40 50 Σ 323 Σ 233 Q1 Q2 Q3 Q4 Q1 Q2 2004 2005 23 17 18 Σ 177 Σ 100 Σ 131 Σ 274 Q3 Q1 Q2 Q3 Q4 Q1 Q2 2004 2005 Q3 Q1 Q2 Q3 Q4 Q1 Q2 2004 2005 Q3 7/20 International Corporate Banking 115 84 80 67 45 45 31 Σ 311 Σ 156 Q1 Q2 Q3 Q4 Q1 Q2 2004 2005 Corporates & Markets 149 Σ -75 Σ 126 38-38 -39-55 Mortgage Banks 98 99 90 82 69 47 29 25 Σ 139 Σ 257-147 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 2004 2005 2004 2005 Q3
Commerzbank s path to stability and growth Progressing: Stability and focused growth Strong standalone position Restored: Corporate financial strength (2000-2004) Management changes implemented Costs cut rigidly Liquidity prudently managed Capital base strengthened Regained: Improved core business (2003-2005) Significantly de-risked loan portfolio and VaR Non-core participations sold Restored profitability in PBC Major turnaround in Mittelstand De-risked Corporates & Markets, significant turnaround Active role in the consolidating German banking market Enhanced profitability in all divisions Focus on regions and products with competitive strengths Focused investments for internal and external growth Increasing capital efficiency Continuing tight cost management 8/20
Agenda Highlights of Q3 2005 2. Commerzbank and Eurohypo: A powerful combination 3. Outlook 9/20
Key rationale and transaction highlights of acquiring Eurohypo Strategic rationale Reinforcement as the leading German commercial bank Revenue enhancement through a broader customer base and improved product range Exploring new market opportunities Active role in consolidating the fragmented German real estate market Higher leverage to economic turnaround in Germany Financial rationale Significant EPS and RoE accretion starting 2006 Value enhancing with identified synergies More stable and predictable earnings stream Limited integration risk due to complementary businesses Increased leverage through capital management 10/20
Commerzbank and Eurohypo a major player in commercial banking Germany No. 1 Commercial real estate bank - market share increased from 17 to 22% No. 1 Public sector financing in combination with Essenhyp No. 2 Residential real estate financing - market share doubled to 6% No. 2 German bank by total assets and profit before taxes (2004) No. 2 Mittelstandsbank No. 3 Retail bank with 5m customers International No. 1 originator of Commercial Mortgage-Backed Securities No. 1 Jumbo Pfandbriefe Europe (jointly with Essenhyp 26% market share) Top 5 Real estate banking in USA Leading position in securitization and syndication in Europe No. 10 CEE bank with BRE and strong presence in Moscow, Prague and Budapest 11/20
No. 2 in commercial banking in Germany Operating profit (Jan-Sep `05) in m 5,515 1,703 1,634 1,296 1,251 643 544 517 477 328 (2) Deutsche Bank (1) CB + EH HVB (2) Dresdner Bank Commerzbank (3) DZ Bank Eurohypo Postbank Depfa Hypo Real Estate 12/20 Without our at-equity consolidated profit of Eurohypo ( 92m) 2. Adjusted for restructuring expenses 3. Jan-Jun 2005
High RoE and EPS accretion RoE improvement (1) in percentage points up to 2.3 EPS accretion (1) in % up to 26% up to 2 up to 17% up to 0.3 up to 6% (3) (2) (3) 2006 (2) 2006 2007 2006 2006 2007 Return on Investment in 2007: 12.4% 13/20 vs. IBES estimates for Commerzbank 2. including restructuring charges 3. excluding restructuring charges (assumption 150m)
Leverage of the transaction Retail RE Commercial RE Corporate Center Cost synergies Revenue synergies Retail RE Commercial RE Corporates & Markets / RE IB Hybrid leverage Basel II capital reduction from 2008 Capital effects & Basel II Other synergies Use of tax loss carry-forwards To be detailed in joint teams by April 2006 14/20
Synergies add up to 100m- 130m Preliminary evaluation Retail real estate Commercial real estate Others Cost synergies Optimizing credit process Better scale Optimizing credit process Better scale Corporate center (administration and IT functions) 80m- 100m Revenue synergies Increase of agency sales Cross-selling access to ~190.000 non-cb retail customers Enhancing competitiveness Cross-selling to Eurohypo customers and extension of product range for Commerzbank customers Pfandbrief-refunding can be used immediately Synergies in investment banking products (hedges, currencies, etc.) 20m- 30m Σ 100m- 130m in 2008 15/20
Comfortable financing capacity Core capital increase Accelerated bookbuild offering Volume of 36bn Hybrid capital Existing Eurohypo volume 900m Estimated additional volume available up to 2.5bn 2. capacity up to 7.5bn 3. Revaluation reserves/ Securitisation Revaluation reserve: up to 69bn total (ex Intesa) Capital management Securitisation > 200m Release of excess capital Volume: up to 900m (Tier 1-ratio reduction from 7.1 to 6.5%) 4. 16/20
Capital increase was well received by investors CBK share price performance: Nov 10 25, 2005 in CBK outperformed DAX and German financial sector in 2005 1 26 Nov 15, 2005 Commerzbank +71% Confirmation of talks 25 Sale of CBK s Banca Intesa shares HVB +52% Dt. Postbank +50% 24 Nov 17, 2005 Allianz +31% 23 Announcement of acquisition of Eurohypo DAX +27% ABO by CBK selling 10% stake 22 Nov 16, 2005 Closing price 23.13 Offering price 23.50 ABO completed within 2 hours 3 times oversubscribed DJES Banken Munich RE +26% +26% 21 Nov 11 Nov 15 Nov 17 Nov 21 Nov 23 Nov 25 Deutsche Bank +25% 1 Opening price Jan 03, `05 vs closing price Dec 30, `05 17/20
Higher profitability leads to Tier 1 build-up Planned evolution of Tier 1 ratio 6.5 7.0% > 6.5% > 6.3% Including interim profits for Q1 2006 Mar 31, 2006e Dec 31, 2006e Dec 31, 2007e post closing (1) 18/20
Agenda Highlights of Q3 2005 2. Commerzbank and Eurohypo: A powerful combination 3. Outlook 19/20
Commerzbank s challenges in 2006 Market positioning Building on position as the leading German commercial bank Playing an active part in consolidating the German banking market 2. 3. Additional Eurohypo shareholder value Strengthening our divisions Completion of acquisition Successful integration Exploring synergy potential on a joint basis Keeping strong momentum in Mittelstand and Corporates & Markets Profitability enhancement in International Corporate Banking 4. Capital management Launching hybrid capital Regaining solid Tier 1 ratio Rising trend for dividend payout 20/20
For more information, please contact: Commerzbank Investor Relations Jürgen Ackermann Head of Investor Relations P: +49 69 136 22338 M: juergen.ackermann@commerzbank.com www.commerzbank.com/ir Sandra Büschken P: +49 69 136 23617 M: sandra.bueschken@commerzbank.com Ute Heiserer-Jäckel P: +49 69 136 41874 M: ute.heiserer-jaeckel@commerzbank.com Simone Nuxoll P: +49 69 136 45660 M: simone.nuxoll@commerzbank.com
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