Commerzbank AG — Earnings Release 2010

Nov 8, 2010

News Details

UK Regulatory | 8 November 2010 07:05

Commerzbank: Net profit as of September 30, 2010 at EUR 1.2 bn

Commerzbank AG / Quarter Results/Interim Report

08.11.2010 07:05

Dissemination of a UK Regulatory Announcement, transmitted by
DGAP - a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.

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Commerzbank: Net profit as of September 30, 2010 at EUR 1.2 bn

• Operating profit as of September 30: EUR 1.1 bn, Q3: EUR 116 m

• Gross revenues as of September 30: EUR 9.7 bn, Q3: EUR 2.9 bn

• Mittelstandsbank with best quarter to date, Corporates & Markets
  again positive

• Tier 1 ratio 11.2%, Core Tier 1 ratio at 9.9% considerably higher than
  target range (7% to 8%)

• Blessing: 'We are returning to profitability one year earlier
  than expected'

Due to its consistent customer-focused orientation, Commerzbank has
continued its successful development even in the typically weaker third
quarter of 2010. At EUR 116 million, the operating profit was again
positive (Q2 2010: EUR 243 million). Gross revenues were EUR 2.9 billion,
after EUR 3.1 billion in the second quarter. Net profit attributable to
Commerzbank shareholders amounted to EUR 113 million (Q2 2010: EUR 352
million). In the first nine months of the current financial year, the bank
posted a total operating profit of EUR 1.1 billion and a net profit of EUR
1.2 billion. In particular, the operating segments of the core bank
(Private Customers, Mittelstandsbank, Central & Eastern Europe, Corporates
& Markets) have together displayed a sustainably positive trend. They
attained an operating profit of EUR 552 million (Q2 2010: EUR 525 million)
in the third quarter. Against the background of the excellent economic
development it was also possible to considerably lower loan loss provisions
in the core bank to EUR 126 million (minus 78%) in a year-on-year
comparison. In the Group loan loss provisions were reduced by more than one
third in the third quarter of 2010 over the same period of the previous
year, to EUR 621 million.

'The pleasing course of the business year is testimony to the successes in
the implementation of the 'Roadmap 2012'. We have further reduced risks and
assets, and have made visible progress along the path towards sustainable
profitability. Mittelstandsbank has seen its best quarterly result to date,
and the Corporates & Markets segment also continues to develop positively.
The Private Customers segment is still heavily burdened by the integration,
but this will increasingly change with the conclusion of the data migration
in the second quarter 2011,' said Martin Blessing, Chairman of the Board of
Managing Directors of Commerzbank. 'On the whole, we intend to conclude
2010 with a net profit according to IFRS of at least EUR 1 billion. Thus we
are returning to profitability one year earlier than expected. We have not
yet reached our targets and will continue to lower risks and reduce total
assets as planned in 2011. At the same time we want to achieve selective
growth in the core bank.'

Total assets considerably reduced, risk-weighted assets at EUR 280 bn

Total assets have been reduced considerably as of September 30, 2010. At
EUR 848 billion, they were almost EUR 50 billion below the level as of June
30 (EUR 898 billion). Risk-weighted assets (RWA) amounted to EUR 280
billion as of the end of September. 'For 2014, we are targeting around EUR
300 billion in RWAs. We will compensate for the impact of the planned
regulatory changes associated with Basel III through a reduction of the
assets in non-core bank areas,' said Eric Strutz, Chief Financial Officer
of Commerzbank. The Tier 1 ratio was a comfortable 11.2%, and thus above
the figure as of June 30 (10.8 %). With respect to Basel III, Commerzbank
will in future also report the so-called core Tier 1 ratio; as of the end
of September it was 9.9 % and thus well above the target range of 7% to 8%.

Interest and commission income down, trading profit up quarter-on-quarter

The background to the lower gross revenues (EUR 2.9 billion, after EUR 3.1
billion in Q2 2010) is the sale of subsidiaries, as well as the ongoing
difficult interest rate environment. Thus, net interest income declined
noticeably over the second quarter of 2010 (EUR 1.9 billion) to EUR 1.6
billion. Net commission income (EUR 870 million) was around 4% lower than
in the previous quarter, something which is typical for the quarter. At EUR
422 million trading profit rose over the second quarter of 2010 (EUR 316
million) by one third, contrary to the industry trend. Net investment
income, which, at minus EUR 24 million, was much lower than in the previous
quarter (EUR 60 million), reflects the further risk reduction in Public
Finance. Also due to expenses for the integration of Dresdner Bank (EUR 147
million), operating expenses were virtually unchanged quarter-on-quarter at
EUR 2.2 billion.

Core bank again with a positive operating profit in the third quarter of
2010

Although the operating profit of the Private Customers segment in the third
quarter was, at EUR 27 million, slightly higher than in the second quarter
(EUR 18 million), it was clearly lower than that of the previous year (Q3
2009: EUR 45 million). As a consequence of the sale of subsidiaries, an
ongoing low level of securities activities on the part of customers, and
the charges from the implementation of the Dresdner Bank integration, net
commission income declined to EUR 459 million (Q2 2010: EUR 499 million).
This was only partly compensated for by the rise in net interest income
(EUR 506 million, after EUR 491 million in Q2 2010) and successes in the
realisation of cost synergies (operating expenses down 4% compared to Q2
2010). The number of customers in the segment is 11 million. Slight growth
has been recorded here lately.

Mittelstandsbank was once again able to clearly increase its operating
profit in the third quarter (EUR 456 million, after EUR 386 million in the
previous quarter). This resulted in particular from the economic recovery
and write-backs in loan loss provisions (plus EUR 78 million). Net
commission income also rose especially thanks to an increase in export
activities on the part of the bank's corporate customers. Net interest
income declined over the second quarter of 2010 to EUR 496 million (minus
10%). Operating expenses increased slightly to EUR 365 million compared to
the previous quarter (EUR 347 million).

After a positive operating profit of EUR 8 million in the second quarter of
2010, the Central & Eastern Europe (CEE) segment posted a minus of EUR 31
million in the third quarter. Loan loss provisions increased from EUR 92
million to EUR 127 million. The ongoing difficult market environment in the
Ukraine caused considerable charges here. BRE Bank continued to develop
positively. In the first three quarters of the 2010 financial year the
operating profit in the CEE segment was minus EUR 18 million (previous
year: minus EUR 191 million). As of the end of September CEE had more than
4 million customers.

The operating profit of the Corporates & Markets segment in the
traditionally weaker third quarter, which at EUR 100 million was only
slightly lower than that of the second quarter (EUR 113 million), reflects
the ongoing successes of the customer-oriented business model. The trading
profit was clearly positive at EUR 313 million - after EUR 187 million in
the second quarter - in particular thanks to the pleasing development in
Fixed Income and Currencies business for customers. Corporate Finance also
continued to generate stable revenues. Operating expenses increased by EUR
43 million to EUR 439 million.

ABF burdened by difficult environment, PRU assets reduced by 45 % since
foundation

In the Asset Based Finance (ABF) segment loan loss provisions increased
from EUR 354 million in the second quarter of 2010 to EUR 493 million in
the third quarter - in particular due to charges in the area of commercial
real-estate financing. In the months July to September the operating profit
decreased clearly compared to the second quarter of 2010 (minus EUR 249
million) to minus EUR 404 million. At the same time assets in Public
Finance were reduced by EUR 7 billion to EUR 111 billion. In the medium
term an improved market situation is expected for the ABF segment.

With an operating profit of EUR 315 million (Q2 2010: EUR 94 million) the
Portfolio Restructuring Unit (PRU) also concluded the third quarter of 2010
positively. Since the foundation of the PRU, assets have been reduced by
some 45% to EUR 14.2 billion as of the end of September 2010. As of June
30, 2010 the assets were at EUR 16.5 billion. As already announced, an
operating profit is expected in the PRU for the year as a whole.

ABF volume reduction accelerated

In line with EU requirements, Commerzbank has to dispose of Eurohypo by
year-end 2014. Against this background the volume reduction in the Asset
Based Finance segment will be accelerated in the course of the following
years. In Public Finance, Commerzbank will not acquire any new business
anymore and reduce the existing volume over time. In Commercial Real
Estate, the activities will also be considerably reduced in the subsequent
years with very selective new business in the core markets. As the future
revenues of Eurohypo will be lower, the book value of Eurohypo to be stated
in the balance sheet of Commerzbank AG (individual financial statement
according to German GAAP) as of the end of 2010 is expected to be
significantly below the figure stated at the end of 2009. This leads to a
corresponding impairment in the individual financial statement according to
German GAAP, which will be prepared in March 2011. The exact amount of the
impairment will be determined then. There are no corresponding impairments
in net profit according to IFRS.

Outlook: Operating profit in 2011 likely to be higher than in 2010

'Our revenues have increased and costs are under control. Also due to our
successes in reducing assets, loan loss provisions have decreased. We
expect that they will remain below EUR 2.7 billion for 2010 as a whole,'
said Eric Strutz, Chief Financial Officer of Commerzbank. 'In the coming
year, loan loss provisions and costs should decline further. Following the
data migration in the second quarter of 2011, we will increasingly profit
from the Dresdner Bank integration also in the Private Customers segment,'
said Strutz. 'We are sailing into the next year with a tailwind and assume
that the operating profit for 2011 will be higher than that seen in 2010.'

The charges from the integration will, as expected, total EUR 2.5 billion.
The cost synergies to the amount of EUR 2.4 billion per year will be
realised as planned. 'As of the end of September 2010 we have already
attained some EUR 1.1 billion, and thus more than 45% of our synergy
target. In the coming year, we want to realise a further EUR 300 million in
synergies,' said Strutz. 'We are also continuing to implement the 'Roadmap
2012' step by step.'

Excerpt from the consolidated profit and loss statement

in EUR m 9M 2010 9M 2009 Q3 2010 Q2 2010 Q3 2009

Net interest income 5,375 5,299 1,628 1,859 1,769
Provision for loan losses -1,904 -2,890 -621 -639 -1,053
Net commission income 2,772 2,788 870 905 965
Net trading income 1,574 165 422 316 647
Net investment income -83 504 -24 60 -54
Other income 18 46 26 -30 112
Operating expenses 6,622 6,608 2,185 2,228 2,264
Operating profit 1,130 -696 116 243 122
Impairments of goodwill - 716 - - 646
Restructuring expenses 33 1,409 - 33 904
Taxes -115 -99 -19 -151 -375
Consolidated profit/loss
(attributable to Commerzbank
shareholders) 1,173 -2,680 113 352 -1,055
Cost/income ratio in
operating business(%) 68.6 75.1 74.8 71.6 65.8

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Telephone Conference

A telephone conference call will be held at 10:30 a.m. (CET) on November 8,
2010. In the call, Eric Strutz will comment on the business performance in
the third quarter of 2010. The conference will last about 45 minutes.
Please dial +49 (0)69 247 501 898 approx. 10 minutes before the scheduled
starting time. A presentation is expected to be made available at
https://www.commerzbank.de/en/hauptnavigation/aktionaere/vortrag/praesenta
tionen.html from 7:00 a.m. From 7:00 a.m. you will also be able to access
broadcast-quality video and audio material, including statements from Eric
Strutz, at www.tvservicebox.de or www.directradio.de.

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About Commerzbank

Commerzbank is the leading bank for private and corporate clients in
Germany. With the segments Private Clients, Mittelstandsbank, Corporates &
Markets, Central & Eastern Europe as well as Asset Based Finance, the bank
offers its customers an attractive product portfolio, and is a strong
partner for the export-oriented SME sector in Germany and worldwide. With a
total of some 1,200 branches, Commerzbank has the densest network of
branches among German private banks. It has above 60 sites in more than 50
countries and serves approximately 14 million private clients as well as 1
million business and corporate clients. In 2009, it posted gross revenues
of EUR 10.9 billion with some 63,000 employees.

*****

Disclaimer

This release contains statements concerning the expected future business of
Commerzbank, efficiency gains and expected synergies, expected growth
prospects and other opportunities for an increase in value of the company
as well as expected future net income per share, restructuring costs and
other financial developments and information. These forward-looking
statements are based on management's current expectations, estimates and
projections. They are subject to a number of assumptions and involve known
and unknown risks, uncertainties and other factors that may cause actual
results and developments to differ materially from any future results and
developments expressed or implied by such forward-looking statements.
Commerzbank has no obligation to periodically update or release any
revisions to the forward-looking statements contained in this release to
reflect events or circumstances after the date of this release. This
release does not constitute an offer to sell or a solicitation of an offer
to buy shares of Commerzbank. Shares of Commerzbank may not be offered or
sold in the United States of America absent registration or an exemption
from registration under the U.S. Securities Act of 1933, as amended.
Commerzbank does not intend to conduct a public offering of shares in the
United States.

Contact:
Commerzbank AG
Group Communications
Tel.: +49 69 136 - 22830
mediarelations@commerzbank.com

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Language: English
Company: Commerzbank AG
Kaiserplatz
60261 Frankfurt am Main
Deutschland
Phone: +49 (069) 136 20
Fax: -
E-mail: ir@commerzbank.com
Internet: www.commerzbank.de
ISIN: DE0008032004
Indices: DAX, CDAX, HDAX, PRIMEALL
Listed: Regulierter Markt in Frankfurt (Prime Standard),
Berlin, Hannover, Stuttgart, Hamburg, München,
Düsseldorf; Terminbörse EUREX; Foreign Exchange(s)
London, SIX
Category Code: QRT
LSE Ticker: CZB
Sequence Number: 611
Time of Receipt: Nov 08, 2010 06:59:47

End of Announcement DGAP News-Service

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