Commerzbank AG — Interim / Quarterly Report 2011

Aug 16, 2011

Q2/2011

Interim Report as of June 30, 2011

Achieving more together

Key figures

Income statement	1.1.–30.6.2011	1.1.–30.6.2010
Operating profit (€m)	1,199	1,014
Operating profit per share (€)	0.53	0.86
Pre-tax profit/loss (€m)	1,199	981
Consolidated profit/loss1 (€m)	1,009	1,060
Earnings per share (€)	0.46	0.90
Operating return on equity2 (%)	7.5	6.6
Cost/income ratio in operating business (%)	70.0	65.9
Return on equity of consolidated profit/loss1, 2, 3 (%)	6.5	7.1
Balance sheet	30.6.2011	31.12.2010
Total assets (€bn)	683.7	754.3
Risk-weighted assets (€bn)	239.5	267.5
Equity as shown in balance sheet (€bn)	26.4	28.7
Own funds as shown in balance sheet (€bn)	43.2	45.7
Capital ratios
Core capital ratio (Tier 1 ratio) (%)	11.6	11.9
Hard core capital ratio (Core Tier 1 ratio)4 (%)	9.9	10.0
Equity Tier 1 capital ratio5 (%)	9.1	3.9
Own funds ratio (%)	15.9	15.3
Staff	30.6.2011	30.6.2010
Germany	44,295	45,671
Abroad	13,960	15,199
Total	58,255	60,870
Long/short-term rating
Moody's Investors Service, New York	A2/P-1	Aa3/P-1
Standard & Poor's, New York	A/A-1	A/A-1
Fitch Ratings, New York/London	A+/F1+	A+/F1+

Operating profit (€m) Return on equity of consolidated profit/loss1, 2, ³ (%)

¹ Insofar as attributable to Commerzbank shareholders. ² Annualized. ³ The capital base comprises the average Group capital attributable to Commerzbank shareholders without the average revaluation reserve and the cash flow hedge reserve. ⁴ The hard core capital ratio (core Tier 1 ratio) is the ratio of hard core capital (ordinary shares, retained earnings and silent participations) to risk-weighted assets. ⁵ The equity Tier 1 capital ratio is the ratio of Tier 1 capital (hard core capital excluding silent participations) to risk-weighted assets.

Contents

4 To our Shareholders

• 4 Letter from the Chairman of the Board of Managing Directors
• 7 Our share

9 Interim Management Report

• 10 Business and overall conditions
• 12 Earnings performance, assets and financial position
• 18 Segment reporting
• 24 Outlook and opportunities report
• 27 Events after the reporting date

28 Interim Risk Report

• 29 Risk-oriented overall bank management
• 31 Default risk
• 45 Intensive care
• 47 Market risk
• 49 Liquidity risk
• 50 Operational risk
• 51 Other risks

52 Interim Financial Statements

• 53 Statement of comprehensive income
• 57 Balance sheet
• 59 Statement of changes in equity
• 62 Cash flow statement
• 63 Selected notes
• 91 Responsibility statement by the Board of Managing Directors
• 92 Boards of Commerzbank Aktiengesellschaft
• 93 Review report

94 Significant subsidiaries and associates

Letter from the Chairman of the Board of Managing Directors

Martin Blessing Chairman of the Board of Managing Directors

The first half of 2011 presented a very mixed picture. Apart from the completion of the integration, the most significant event in the second quarter was certainly our successful capital increase and the associated repayment of a sizeable proportion of the government aid. On the macroeconomic front, the German economy proved pleasingly robust, while the European sovereign debt crisis worsened considerably towards the end of the second quarter. At the EU special summit in July, heads of state and government made far-reaching decisions to manage the crisis. We welcome these. Private sector banks also put forward a voluntary plan, consisting of buying back Greek bonds below their nominal value and exchanging them for new ones with longer maturities. In order to convince market participants that the financial markets have finally stabilized, the reforms that have been instigated need to be systematically implemented and pushed forward.

In response to the decisions of the special summit, we cut the value of our holding of Greek government bonds by €760m on June 30. That is the equivalent of 21% of the securities booked as loans, irrespective of their residual term. Furthermore, the securities in the available-for-sale portfolio have been written down to fair value. In the second quarter we also carried on reducing our holding of securities from the peripheral countries of the eurozone, and we intend to continue to pursue this reduction strategy.

• 4 Letter from the Chairman of the Board of Managing Directors
• 7 Our share

Before correcting our holdings of Greek government bonds, we closed the first half of the year with a very strong operating profit of just under €2bn. After write-downs of €760m on our Greek government bonds, operating profit amounted to €1,199m, of which €55m relates to the second quarter.

The core bank segments performed gratifyingly. This demonstrates that the efforts we have made over the past two years have resulted in an efficient business model. Mittelstandsbank benefited from the stable German economy and again made the largest contribution to Group earnings, followed by Corporates & Markets, which performed very well in a difficult environment. The Private Customers business leveraged synergies resulting from the integration, thus significantly improving its result. The positive trend also continued in Central and Eastern Europe. In the first half of 2011, the core bank was therefore able to almost double its operating profit compared with the same period of the previous year, to €2,132m. Outside the core bank, the Portfolio Restructuring Unit benefited from further write-ups. We had to post another loss in the Asset Based Finance segment, which includes the writedowns for the Public Finance business in the second quarter. We are continuing our optimization and redimensioning efforts and pressing ahead with the strategic repositioning process in this area.

As part of our capital increase, in a first step we placed conditional mandatory exchangeable notes (CoMEN) on the market in April and already achieved €5.7bn, more than half of the target volume of €11.0bn. With the approval of our shareholders at the Annual General Meeting in May, the CoMEN were exchanged for shares and, in a second step, a capital increase with subscription rights was carried out in June. The transaction also helped us to win the trust of new shareholders. Thanks to the capital increase and the additional payment of €3.3bn from the bank's excess regulatory capital, we were able to reduce our SoFFin silent participations of €16.2bn by around €14.3bn, earlier than originally expected. In this connection, we also made a one-off payment to SoFFin in the amount of approximately €1bn. This prompt repayment increases our financial and strategic flexibility. It was particularly important to us to keep, that is to say, largely achieve our promise to repay the support given to us by the government during the financial crisis as soon as possible. We intend to redeem the remaining SoFFin silent participations, which amount to €1.9bn, in full by no later than 2014.

At the end of the first half of the year, our core Tier 1 ratio stood at 11.6%. The capital increase has in particular enabled us to strengthen our Tier 1 equity capital significantly from 3.9% to 9.1%; this puts us in excellent shape to meet the Basel III requirements. This was also demonstrated by this year's considerably tougher European Banking Authority (EBA) stress test: we exceeded the requirements and are thus well positioned, even in difficult economic conditions. The banking sector is still experiencing a lack of clarity as regards the regulatory environment. "System-relevant financial institutions" is a key topic here. On the basis of a resulting one percent increase in the capital ratio requirement, Commerzbank is well capitalized in this respect, too.

I am also pleased to be able to report that we concluded the integration of Dresdner Bank – the biggest integration project in German banking history – at the end of May. The last major milestone was the successful migration of the client and product data of the former Dresdner Bank to the Commerzbank platform.

I would like to assure you, our esteemed shareholders, that despite the write-downs in the second quarter we are systematically continuing to pursue our "Roadmap 2012" strategy against the backdrop of the successful development of our core bank. The targets set in the year 2009 are still conditional upon stable markets, which we are presently only seeing to a limited extent owing to the sovereign debt crisis. A return to more stable markets is dependent on how the current crisis develops.

Martin Blessing, Chairman of the Board of Managing Directors

• 4 Letter from the Chairman of the Board of Managing Directors
• 7 Our share

Commerzbank share performance driven by capital measures

The performance of the Commerzbank share was driven in particular by the capital increase in the second quarter of 2011.

On April 6 Commerzbank announced the two-stage package of capital measures for the extensive repayment of the silent participations of the Financial Market Stabilization Fund (SoFFin). In the first stage, institutional investors were offered conditional mandatory exchangeable notes (CoMEN) under a bookbuilding procedure. The market initially responded positively to the announcement. However, the price came under pressure in the course of the CoMEN issue, and fell by a good 20% in the week following the announcement of the capital measure.

All of the approx. €1bn CoMEN offered were successfully placed, and the purchase price was set at €4.25 each on April 13. Existing shareholders were given purchase rights as part of the CoMEN placement. One CoMEN could be purchased for each share. There was particular interest in CoMEN among institutional investors in the USA and UK.

The CoMEN were listed on the Frankfurt Stock Exchange and the Xetra trading system on April 18. Over the course of the 14 trading days the CoMEN price varied between €4.01 and €4.35; during the same period the share price fluctuated between €4.12 and €4.44. After approval of the capital measures by the General Meeting on May 6, the CoMEN were exchanged for Commerzbank shares on May 12.

In the second stage of the capital measure on May 22, the conditions were set for the capital increase with subscription rights. The subscription price for the new shares was €2.18 a share, and the new shares were offered to existing shareholders for subscription in the ratio 11:10.

The discount of the subscription price compared with the closing price on the last trading day on May 20 was 45%. In the eight trading days the price of the subscription right varied between €0.761 and €0.925. The peak volume was 114 million units on one day.

Almost all subscription rights were exercised, with a ratio of 99.94%. As with the issue of CoMEN, US and UK investors were heavily represented. After conclusion of the capital measure, the total number of outstanding shares was approx. 5.1 billion. The share price on June 8 on completion of the second stage of the capital measure was €3.16.

Analysts responded positively to the successful conclusion of the capital measure and upgraded Commerzbank again afterwards. While the proportion of buy recommendations for the Commerzbank share among equity analysts at end-2010 was only 18%, this increased to 46% by the end of the second quarter.

During the year to date, the Commerzbank share fell 33.3% from €4.45 at end-2010 to €2.97 on June 30, 2011. Bank shares were particularly adversely affected by the European sovereign debt crisis in the second quarter. While the EURO STOXX Banks index fell 0.3%, the DAX index gained 6.7% over the same period.

There was a sharp quarter-on-quarter rise in the volume of Commerzbank shares traded in the second quarter, and in the first half of 2011 was significantly higher than in the first half of 2010, with a daily average of 36.1 million shares. The month with the highest volume was May, due to the capital increase. At the peak of trading, on June 17, 165.6 million Commerzbank shares were traded on German stock exchanges. Commerzbank's market capitalization at the end of the second quarter of 2011 totalled €15.2bn, compared with €6.8bn at end-June 2010. After the capital increase, the Commerzbank share's weighting in DAX was 1.82%.

We provide our shareholders with comprehensive information. For data on Commerzbank's shares as well as current news, publications and presentations, visit our website at www.ir.commerzbank.de

Highlights of the Commerzbank share	1.1.–30.6.2011	1.1.–30.6.2010
Shares issued on June 30
in millions	5,113.4	1,181.4
Xetra intraday prices1 in €
High	5.18	5.70
Low	2.71	4.27
Closing price on June 30	2.97	4.63
Daily trading volume2
in millions
High	165.6	35.7
Low	4.1	3.4
Average	36.1	11.7
Earnings per share (EPS) in €	0.46	0.90
Book value per share3 in €
on June 30	4.63	9.45
Market value/book value1 on June 30	0.64	0.49

1 For comparative purposes the share price for all periods before June 8, 2011 was adjusted for the effect of the subscription rights issued in the course of the capital increase.

2 Total German stock exchanges.

3 Excluding silent participations, non-controlling interests and cash flow hedges.

• 12 Earnings performance, assets and financial position
• 18 Segment reporting
• 24 Outlook and opportunities report

10 Business and overall conditions

27 Events after the reporting date

Interim Management Report

10 Business and overall conditions

• 10 Overall economic situation
• 11 Important business policy events

12 Earnings performance, assets and financial position

• 13 Income statement
• 14 Balance sheet
• 16 Funding and liquidity
• 17 Key figures

18 Segment reporting

• 18 Private Customers
• 19 Mittelstandsbank
• 20 Central & Eastern Europe
• 20 Corporates & Markets
• 21 Asset Based Finance
• 22 Portfolio Restructuring Unit
• 23 Others and Consolidation

24 Outlook and opportunities report

• 24 Future economic situation
• 25 Future situation in the banking sector
• 25 Financial outlook
• 26 General statement on the outlook for the Group

27 Events after the reporting date

Business and overall conditions

Overall economic situation

The upswing in the global economy continued in the first half of the year. Emerging markets again showed the highest growth, although there are initial signs of a slowdown in these regions, particularly since the central banks in many countries have further tightened monetary policy.

In the USA, economic statistics have been extremely disappointing so far. The recovery of the US economy has lost pace significantly compared to 2010, partly due to temporary effects. The substantial rise in energy prices has had a clear impact on private household purchasing power, which posted only slight growth in the first half as a result. In addition, components from Japan suffered major delivery bottlenecks at times, meaning that production in the automotive industry in particular had to be temporarily cut back. However, even without these effects the US economy would have shown average growth at best, despite the continuing very expansionary stance in monetary policy and the tax cuts which came into effect at the start of the year.

The eurozone economies continue to show very different trends. In Germany and its neighbours the sharp upturn continued, with slightly lower growth in the second quarter. These countries are reaping the full benefits of the expansionary monetary policy and the global upturn. By contrast, the economies in the peripheral countries remained stalled, held back by the consolidation of national budgets and the correction of past excesses.

One of the issues driving the capital market continues to be the sovereign debt crisis in the eurozone. In March, Portugal became the third euro member state to seek financial assistance from the other euro states. It then became increasingly evident that Greece needs an additional aid programme. By the middle of the year, the crisis had escalated to the point that a special EU summit held in July approved a new bailout package which – unlike previous packages – also made provision for holders of Greek government bonds to participate in the rescue measures on a voluntary basis for the first time. As a result of the ongoing sovereign debt crisis, which was approaching another peak, the risk premium on sovereign bonds issued by the peripheral nations reached the highest level yet. At the same time, demand for Bunds continued to be strong as a safe haven. As a result, yields on ten-year Bunds remained very low mid-year at around 3%, although the European Central Bank (ECB) reversed its interest rate policy in the first half of the year.

By contrast, the DAX gained in the first six months, benefiting from the continuing rise in corporate profits. The euro also gained against the dollar over the same period, despite the ongoing sovereign debt crisis, as the dollar continued to be weighed down by the Federal Reserve's extremely expansionary monetary policy.

• 10 Business and overall conditions
• 12 Earnings performance, assets and financial position
• 18 Segment reporting
• 24 Outlook and opportunities report 27 Events after the reporting date

Important business policy events

Capital measures for extensive reduction of SoFFin silent participations successfully completed

In the second quarter of 2011 Commerzbank reduced the silent participations of the Financial Market Stabilization Fund (SoFFin) totalling €16.2bn by around 90%. This means that the lion's share has now been repaid, with the remaining approx. €1.9bn to be repaid by 2014 at the latest. The decrease of €14.3bn consists of two components, with about €3.3bn from free regulatory capital and €11.0bn from capital increases. Of these, around €8.25bn was placed in the capital market, while SoFFin also converted approx. €2.75bn of its silent participations into Commerzbank shares to maintain its share of 25% plus 1 share in Commerzbank share capital. In addition, SoFFin received a one-off payment of €1.03bn in connection with the repayment of the silent participations.

For the capital increases, a package of measures was initiated in two stages, with the aim of attracting new investors, protecting the interests of existing shareholders and ensuring maximum possible security of the transaction.

In a first step, beginning April 6, 2011, conditional mandatory exchangeable notes (CoMEN) with a volume of around 1 billion units were offered to existing shareholders by an international banking syndicate and placed with national and international investors as part of a bookbuilding procedure. Shareholders who held Commerzbank shares at the close of trading on April 6, 2011 were allocated purchase rights within the scope of the CoMEN offering, i.e. they were able to acquire one CoMEN for each share. The purchase price was set at €4.25 per CoMEN in the bookbuilding procedure, yielding a total of €4.3bn. Based on the resolution of the General Meeting on May 6, 2011, some 1 billion CoMEN were exchanged for Commerzbank shares on May 12, 2011, with entitlement to a share in profits from January 1, 2011. The new shares were created as planned by the conversion of SoFFin's silent participations. In exchange, SoFFin received the gross proceeds of approx. €4.3bn from the placement of the CoMEN. The issue price of the new shares of €4.25 per share from the new conditional capital matched the purchase price of the CoMEN, as planned. The corresponding conditional capital of around €1.3bn to create the new shares was entered in the Commercial Register on May 9, 2011. From this conditional capital, SoFFin converted additional silent participations totalling about €1.4bn into some 334.7 million Commerzbank shares on May 12, 2011. In all, the number of Commerzbank shares outstanding after completion of the first stage of the capital measure is approx 2.7 billion.

The second stage was a capital increase with subscription rights, where the shares exchanged for CoMEN in the first stage also carried subscription rights. Based on the General Meeting's resolution on May 6, 2011, the Board of Managing Directors of Commerzbank set the subscription price at €2.18, with the approval of the Supervisory Board. In the course of the capital increase with subscription rights, some 2.4 billion new shares were issued with entitlement to a share in profits from January 1, 2011. In all, proceeds totalled approx. €5.3bn. Holders of subscription rights exercised 99.94% of the rights. The unsubscribed approx. 1.5 million new shares and the fraction of 1.4 million new shares excluded from the subscription right were sold on the market. As agreed, SoFFin participated fully in the capital increase.

The completion of the capital increase was entered in the Commercial Register on June 6, 2011. In all, the number of Commerzbank shares outstanding after completion of the capital measure is some 5.1 billion.

Commerzbank successfully concludes bank-wide project to integrate Dresdner Bank

Commerzbank successfully concluded the bank-wide project to integrate Dresdner Bank in fewer than 1,000 days. All of the important milestones in the biggest integration project in German banking history were reached as planned. In some areas, the Bank actually progressed farther than expected, despite the challenging global economic situation. Over Easter 2011 the Bank completed the last major step in the bank-wide integration project with the customer and product data migration. Since then, all customers have been able to access the same products and services in all branches. Commerzbank had already modified its organizational structure in 2009 and 2010. Some 3,800 management positions were filled, and approx. 45,000 employees were assigned to new target functions. The conversion of around 1,600 buildings to the new brand image started in mid-2010. In IT, around 300,000 trading positions and one billion data records were transferred to Commerzbank's systems. Commerzbank expects the integration of Dresdner Bank to generate annual synergies of around €2.4bn from 2013 onwards. Commerzbank is still on plan concerning the staff reduction programme.

In the course of the downstream project work, the Dresdner Bank systems will be archived and shut down at the segment level by end-2011, and some 400 pairs of branches merged by end-2012.

Changes in the Commerzbank Board of Managing Directors

In its meeting on May 19, 2011 the Supervisory Board of Commerzbank agreed to Achim Kassow's request to release him from his position on the Board of Managing Directors with effect from July 12, 2011. Ulrich Sieber is taking over the Central & Eastern Europe segment, in addition to his current responsibility for Human Resources.

Earnings performance, assets and financial position

The Commerzbank Group generated an excellent result in the first quarter of the current financial year, which was followed by another good second quarter in the core bank segments. In the first half of 2011, the core bank was therefore able to almost double its operating profit compared with the same period of the previous year, to over €2.1bn. The core bank consists of the entire Group excluding the Asset Based Finance and Portfolio Restructuring Unit segments. However, the worsening of the European sovereign debt crisis resulted in extensive write-downs on Greek government bonds. These charges had an impact on results outside the core bank in the Asset Based Finance segment; they came to €760m. Against this backdrop the Commerzbank Group is posting a second-quarter operating profit of only €55m; for the first six months it came to €1,199m. We have made further progress with reducing volumes: total assets and risk-weighted assets each fell by around 10%; the government financing portfolio of the countries affected by the European sovereign debt crisis was also reduced. Against the backdrop of the successful capital increase with a volume of €11.0bn and the subsequent reduction of the SoFFin silent participations by €14.3bn, the Commerzbank Group had a solid capital base at the end of June with a core Tier 1 ratio of 9.9% and a core capital ratio of 11.6%.

To our shareholders Interim Management Report Interim Risk Report Interim Financial Statements 13

• 12 Earnings performance, assets and financial position
• 18 Segment reporting
• 24 Outlook and opportunities report 27 Events after the reporting date

Income statement of the Commerzbank Group

Net interest income fell by 5.9% year on year to €3,517m during the first six months of this financial year. This was partly because of our efforts to reduce existing business, particularly in the Asset Based Finance segment as well as reduced lending volumes – principally outside Germany - , and also partly owing to the year-on-year increase in provisions for servicing earnings-related hybrid bonds and profit-sharing certificates. In contrast, the deposit business of the Private Customers, Mittelstandsbank and CEE segments generated higher contributions compared with the prior-year period thanks to margins. Income from restructured loans was also received.

The net allocation to loan loss provisions fell significantly year on year by 53.5% to €596m. As a result of the more favourable economic conditions, gross allocations were lower than in the previous year, while reversals rose. With the exception of the Corporates & Markets segment – where a net reversal was recorded in the first half of 2010 – loan loss provisions were below the previous year's levels in all segments. In the Asset Based Finance segment loan loss provisions nevertheless remained at a high €474m, owing to the persistently difficult situation in the commercial real estate business.

At €1,948m, net commission income for the first six months was approx. 2.4% higher than in the previous year, although the figure for the comparative period in 2010 contained a higher level of income from non-strategic participations which have since been sold. The increase was owing to higher income in the securities business and to loan restructuring. Income from foreign payment transactions in the Mittelstandsbank segment also rose. Income increased in the Central & Eastern Europe segment, too.

During the period under review, net trading income and net income on hedge accounting fell by 5% year on year to €1,095m. This was mainly owing to the decrease in the Portfolio Restructuring Unit; although the segment generated a positive contribution, it was, as expected, unable to match the very high income achieved in the same period of the previous year. In contrast, the Corporates & Markets segment increased its net trading income significantly, by 30.1%, in what was sometimes a difficult first half. Good performance by Equity Markets & Commodities made a particularly helpful contribution to this result.

Net income from financial investments was badly hit by the developing European sovereign debt crisis. It came to a negative figure of €942m, after €–59m in the previous year. In total, we have formed a write-down of €760m on Greek government bonds. This includes both our holding in the IAS 39 loans and receivables category, on which we have formed a write-down of 21%, irrespective of the term to maturity, and our holding designated as available-for-sale, which we have written down to current fair value. In addition, losses on disposals were incurred during the period under review, owing to the targeted reduction of parts of the Public Finance portfolio in the Asset Based Finance segment. The negative result in the same period of the previous year was also caused by losses on the sale of parts of the state financing portfolio as well as by impairments on positions in the Portfolio Restructuring Unit's ABS book.

The Other result rose by €356m to €348m. This was connected with the measures implemented in January to optimize the capital structure, primarily by redeeming hybrid instruments that were trading significantly below their nominal value.

Operating expenses amounted to €4,184m for the first six months of 2011, down 5.7% on the same period of the previous year. Other operating expenses including ongoing impairments fell by 13.5% to €1,951m, due chiefly to the lower ongoing implementation costs relating to the integration of Dresdner Bank. By contrast, at €2,233m, personnel expenses were 2.4% higher than in the previous year. While ongoing salary payments fell because of the decrease in the number of employees, expenditure on occupational pensions and performance-related remuneration increased.

As a result of the developments described above, the Commerzbank Group posted an operating profit of €1,199m for the first half of 2011, an improvement of €185m year on year. Pre-tax profit came to €1,199m, compared with €981m in the same period of the previous year.

For the period under review, tax expenses came to €137m, compared with tax income of €96m in the first six months of 2010. Consolidated profit after tax amounted to €1,062m, down 1.4% on the previous year. €53m of consolidated profit after tax was attributable to non-controlling interests and €1,009m to Commerzbank shareholders.

Operating earnings per share amounted to €0.53 and earnings per share to €0.46 (previous year: €0.86 and €0.90 respectively).

Consolidated balance sheet

Total assets of the Commerzbank Group amounted to €683.7bn as at June 30, 2011. As in the previous quarter, Commerzbank has therefore significantly reduced its total assets – by 9.4% or €70.6bn compared with year-end 2010. The decrease is owing to declining fair values for derivatives and the planned reduction in balance sheet volumes and risks.

On the assets side, trading assets in particular fell, while claims on banks, customer lending and financial investments also declined. Compared with the previous year, the cash reserve fell by €1.4bn to €6.7bn. Claims on banks fell by €18.3bn to €92.3bn. This was driven by a big drop in collateralized money market transactions in the form of reverse repos and cash collaterals. Claims on customers fell by €10.4bn to €317.3bn, with opposing effects evident here. On the one hand lending declined owing to the downsizing of the portfolio as part of the new strategic focus on the Bank's core business, while on the other, reverse repos and cash collaterals rose. Trading assets decreased significantly by €28.2bn to €139.6bn compared with year-end 2010 owing to the fall in positive fair values attributable to derivative financial instruments – mainly among interest rate derivatives as a result of increased interest rates. Financial assets fell by €9.8bn to €105.9bn, almost exclusively because of reductions in the Public Financing business.

• 10 Business and overall conditions
• 12 Earnings performance, assets and financial position
• 18 Segment reporting 24 Outlook and opportunities report
• 27 Events after the reporting date

On the liabilities side, the main factor was a decrease in liabilities to banks, the Eurohypo Pfandbrief business and trading liabilities. Liabilities to banks fell by €25.1bn to €112.5bn, primarily because of a decline in money market business and sight deposits. Liabilities to customers remained practically unchanged, at €262.1bn. Owing mainly to the sharp fall in Eurohypo public-sector Pfandbriefe as they came to maturity, securitized liabilities declined by €13.7bn to €117.7bn. Trading liabilities dropped significantly, by €26.4bn to €126.0bn. As with trading assets, this fall was attributable to the decline in negative fair values for derivative financial instruments as a result of interest rate movements.

Equity

Commerzbank carried out a number of capital measures in the first half of the year. In the first quarter, hybrid equity investments were acquired as a contribution in kind in exchange for new Commerzbank shares in order to optimize the capital structure. A two-stage capital increase amounting to €11.0bn was executed in the second quarter. The number of outstanding Commerzbank shares thereby increased to 5,113.4m in the first half of 2011. The Financial Market Stabilization Fund (SoFFin) maintained its equity interest ratio in Commerzbank of 25% plus one share upon completion of the transactions. Including an amount of around €3.3bn out of free regulatory capital, a total of €14.3bn of silent participations were repaid to SoFFin. The €1.03bn one-off payment to SoFFin in this connection and the costs of the capital measure, which amounted to approx. €0.2bn, were recognized after tax and without P&L effect in equity.

Through these measures – including the consolidated profit for the current year and positive effects in the revaluation reserve – the equity reported in the balance sheet as at June 30, 2011 fell by 7.8% or €2.2bn to €26.4bn compared with the end of 2010.

The capital increase triggered a significant shift in equity. In the first half of the year, subscribed capital rose by €2.1bn to €5.1bn and the capital reserve increased by €9.6bn to €10.9bn. Retained earnings increased by €0.2bn to €9.5bn. In contrast, the silent participations decreased significantly following the partial repayment to SoFFin, falling by €14.5bn to €2.7bn, of which the SoFFin silent participations still accounted for €1.9bn.

As at June 30, 2011, the revaluation reserve, the cash flow hedge reserve and the currency translation reserve had a negative impact on equity of €2.6bn, down €400m compared with the end of 2010. Within the revaluation reserve, the negative effect of interest-bearing financial assets was markedly lower at €–1.5bn. This was an improvement of €0.5bn compared with the end of the previous year, chiefly because of valuation allowances on Greek government bonds.

As at June 30, 2011, risk-weighted assets fell by €28.0bn to €239.5bn compared with the last day of 2010, mainly owing to parameter adjustments and a decline in volumes. Regulatory core capital decreased by €4.0bn to €27.7bn compared with the end of 2010. This too was largely connected with the partial repayment of the SoFFin silent participations out of free regulatory capital in the amount of around €3.3bn and the one-off payment of €1.03bn made to SoFFin. The Core capital ratio (Tier 1 ratio) continues to be satisfactory at 11.6%, having stood at 11.9% in the previous year. Core Tier 1 capital, which is important in relation to Basel III, came to around €23.8bn, or a ratio of 9.9%. Both ratios are clearly above our target range. The capital increase resulted in a rise in what is known as hard core capital, which pushed up the Equity Tier 1 capital ratio from 3.9% to 9.1%. Our own funds ratio was 15.9% on the reporting date.

Funding and liquidity

The funding profile is actively managed by Group Treasury on the basis of regular structural analyses. In the first half of 2011, Commerzbank had a stable liquidity position. This was also reflected in the Bank's liquidity reserve, consisting of assets eligible for central bank borrowing and balances with central banks, which amounted to €76.8bn. The regulatory provisions applicable to liquidity were complied with at all times. As at the reporting date of June 30, 2011, Commerzbank Aktiengesellschaft's key liquidity figure according to the German Liquidity Regulation was significantly higher than the minimum regulatory requirement of 1.00, at 1.07.

After an initial rise in key rates at the start of April 2011, the ECB decided to raise interest rates further by 25 basis points in July 2011 in order to combat inflation. Compared with the first quarter of 2011, the yield curve was flatter. The interest difference between the threemonth and twelve-month Euribor fell from 76 to 61 basis points.

In the first half of 2011, Commerzbank had unrestricted access to the money and capital markets and was able at all times to raise the funds required to achieve a balanced refinancing mix, both in secured and unsecured form. Thanks to its conservative and forwardlooking funding strategy, the Bank was not reliant on central bank liquidity facilities in the first half year.

Furthermore, the Bank again benefited in the first half of 2011 from a stable deposit base in its private and corporate customer business. The funding spread for long-term unsecured funding widened significantly at the start of the year, due to the discussion on laying claims on the holders of unsecured debt in the event of restructuring. However, funding spreads stabilized in the course of the first quarter. The announcement of Commerzbank Aktiengesellschaft's capital measures at the beginning of April also had a positive impact on Commerzbank funding spreads.

• 12 Earnings performance, assets and financial position
• 18 Segment reporting
• 24 Outlook and opportunities report 27 Events after the reporting date

Group capital market funding in the first half of 2011 Volume €10.8bn

1 Incl. €1.9bn in subordinated bonds

Commerzbank raised long-term funds of €10.8bn in the capital market in the first half of 2011. Of this, €4.2bn came from senior unsecured issues, €4.8bn from Pfandbriefe and Lettres de Gage, and €1.9bn from subordinated bonds.

In the unsecured segment Commerzbank Aktiengesellschaft increased the senior unsecured benchmark bond issued in the previous year by €500m. It also placed a number of currency issues denominated in currencies such as the Australian dollar and Canadian dollar, as well as a benchmark subordinated bond amounting to €1.25bn. The issue has a term of ten years and a coupon of 7.75%, and was oversubscribed by a factor of around 3.5. The issue is an important step in optimizing the Bank's long-term subordinated capital structure (Tier 2) in anticipation of the changeover to Basel III.

In the secured segment in the first half of 2011 issues comprised €4bn in mortgage Pfandbriefe, €0.5bn in public sector Pfandbriefe, €0.2bn in ship Pfandbriefe and €0.1bn in Lettres de Gage. In January, Eurohypo AG issued a five-year jumbo mortgage Pfandbrief with a volume of €1.25bn. The re-offer spread was 40 basis points above the mid-swap rate. This was followed in March by a ten-year syndicated mortgage Pfandbrief with a volume of €500m. In the second quarter, Eurohypo AG placed a jumbo mortgage Pfandbrief with a volume of €1.5bn in the capital market. The Pfandbrief had a three-year term and the re-offer spread was 33 basis points above the mid-swap rate. The issue was also in heavy demand among foreign investors, with a share of 47%. In a favourable market environment, the Bank also increased several existing benchmark Pfandbrief issues by a total of €500m.

Key figures for the Commerzbank Group

In the first half of 2011 the Commerzbank group achieved an operating return on equity of 7.5% overall, after 6.6% in the same period of the previous year. The return on equity based on the consolidated surplus was 6.5%, compared with 7.1% the year before. The cost/income ratio rose to 70.0% because of the negative impact of Greek government bonds. It stood at 65.9% for the same period of 2010.

Segment reporting

The core bank segments produced gratifying results in the first half of 2011, and this was reflected in significant year-on-year growth in operating profit in some areas. Outside the core bank, the Portfolio Restructuring Unit posted an operating profit in the first half of 2011, whereas the Asset Based Finance segment made a significant loss because of write-downs on our Greek bond portfolio in particular.

Private Customers

€m	1.1.–30.6.2011	1.1.–30.6.2010	Change in %
Income before provisions	2,004	1,998	0.3
Loan loss provisions	76	136	– 44.1
Operating expenses	1,733	1,826	– 5.1
Operating profit/loss	195	36

In the Private Customers segment, the technical integration of Dresdner Bank was completed in the first half of this year. Migrating the customer and product data over the Easter weekend was a major milestone. Although this led to a drop in income, particularly in the second quarter, operating profit rose markedly year on year, from €36m to €195m. This pleasing performance is even more evident when adjusted for the effects of selling non-strategic interests. Income before provisions would be up by 4.4% after the adjustment. The number of customers remained steady at 11 million.

Income before provisions rose by 0.3% to €2,004m year on year in the first half. Net interest income increased by 3.2% year on year to €1,006m, which was attributable to higher margins in the deposit business. Net commission income fell by 1.9% to €1,024m, mainly because of a decline in income from the payment transactions business. The Other result was negative, at €–36m, down from €–44m in the previous year, partly owing to net allocations to provisions for legal risks. Loan loss provisions fell by 44.1% to €76m, mainly as a result of the upturn in the German economy. Operating expenses fell by 5.1% to €1,733m. This included a slight fall in personnel expenses of 1.7% to €698m. Other operating expenses fell by 17.5% to €419m. Overall the Private Customers segment posted a pre-tax profit of €195m, compared with €36m in the same period of the previous year.

The operating return on equity based on capital employed of €3.4bn climbed significantly to 11.5% (prior-year period: 2,0%). At 86.5%, the cost/income ratio was below the figure for the first half of 2010 (91.4%).

• 12 Earnings performance, assets and financial position
• 18 Segment reporting

10 Business and overall conditions

24 Outlook and opportunities report 27 Events after the reporting date

Mittelstandsbank

€m	1.1.–30.6.2011	1.1.–30.6.2010	Change in %
Income before provisions	1,643	1,662	– 1.1
Loan loss provisions	– 17	255
Operating expenses	744	705	5.5
Operating profit/loss	916	702	30.5

In an economic environment that continued to improve compared with the previous year, and against the backdrop of a stable business model and a strong customer base, the Mittelstandsbank segment increased its operating profit by 30.5% year on year.

In the period under review, income before provisions came to €1,643m, which was slightly below the prior-year figure. Earnings growth in the customer business was more than compensated by valuation effects. At €1,104m, net interest income was 2.5% higher than in the same period of 2010. The contribution made by the deposit business increased thanks to higher margins. Declining volumes in the lending business were also offset by higher margins compared with the previous year. Net commission income rose to €559m, after €493m a year ago, due especially to the noticeable upturn in foreign trade and higher income from related product categories. Net trading income came to €10m, down by €36m on the figure for the first six months of 2010, largely due to remeasurement effects from credit hedge transactions. Net investment income for the reporting period amounted to €–33m, mainly as a result of remeasurement effects on ownership interests. The Other result came to €–4m, compared with €34m in the previous year.

Thanks to the continuing very positive economic environment, net reversals for loan loss provisions amounted to €17m in the period under review. The prior-year result contained net allocations of €255m. The allocations required in the first half were more than offset by reversals.

Operating expenses stood at €744m, up 5.5% on the previous year's figure of €705m. While personnel expenses rose by 13.2% year on year as a result of higher provisions for variable compensation in particular, other operating expenses decreased versus the prioryear period.

The Mittelstandsbank segment generated a pre-tax profit of €916m in the first half of this year; compared with the same period of 2010 this represented an increase of some 30%.

The operating return on equity based on average capital employed of €5.3bn was 34.6% (prior-year period: 25.5%). The cost/income ratio again reached an excellent level, at 45.3% (first half of 2010: 42.4%).

Central&Eastern Europe

€m	1.1.–30.6.2011	1.1.–30.6.2010	Change in %
Income before provisions	505	473	6.8
Loan loss provisions	36	186	– 80.6
Operating expenses	292	274	6.6
Operating profit/loss	177	13

In the first half of this year, the positive economic trend continued in the Central and Eastern European countries. Poland remained the driving force, but Ukraine's economy stabilized further, too. Against this backdrop and helped by a significant decrease in loan loss provisions, the segment result maintained its positive trend. An operating profit of €177m was generated in the first six months of the year.

Income before provisions remained stable at a high level and rose from €473m to €505m year on year, mainly owing to BRE Bank's good performance. Increased margins in the deposit business resulted in an improvement in net interest income. Net commission income benefited in particular from higher income from payment transactions at BRE Bank.

The improved economic conditions led to a significant decrease in loan loss provisions to €36m, down from €186m in the prior-year period.

Operating expenses were €18m higher at €292m. This rise can be attributed primarily to a growth-related increase in personnel expenses.

The pre-tax profit generated by the Central&Eastern Europe segment amounted to €177m in the first half of 2011, up €164m on the same period of 2010.

The operating return on equity based on average capital employed of €1.7bn was 20.9% (prior-year period: 1.6%). The cost/income ratio was 57.8% compared with 57.9% in the same period of the previous year.

Corporates&Markets

€m	1.1.–30.6.2011	1.1.–30.6.2010	Change in %
Income before provisions	1,390	1,228	13.2
Loan loss provisions	31	– 19
Operating expenses	838	805	4.1
Operating profit/loss	521	442	17.9

In the first half of 2011, the financial markets reflected the sovereign debt crisis that was hitting a number of European countries. Growing uncertainty about how the crisis would develop – combined with high volatility – made investors cautious, especially on the fixed income markets.

• 10 Business and overall conditions
• 12 Earnings performance, assets and financial position
• 18 Segment reporting
• 24 Outlook and opportunities report 27 Events after the reporting date

At the same time, companies continue to show greater interest in optimizing their refinancing. In this environment, Corporates& Markets generated an operating profit of €521m in the first half of 2011, compared with €442m in the equivalent period of 2010.

The Corporate Finance division significantly increased its income year on year; the issuing and financing business made the biggest contribution here. Equity Markets&Commodities boosted its income by around 31% in the period under review. This is mainly attributable to increased demand for structured investment products. By contrast, the ongoing sovereign debt crisis, accompanied by reduced liquidity on the markets, had a negative impact on Fixed Income&Currencies; overall, however, income remained at the same level as in the first half of 2010.

As a result of the developments in the individual Group divisions described above, income before provisions rose by €162m to €1,390m. The main driver for income growth was net trading income, which improved significantly in all Group divisions, rising from €635m in the first half of 2010 to €826m. This reflects the excellent performance of Equity Markets & Commodities, in particular.

In the first half of 2011, loan loss provisions amounted to €31m. In the same period of the previous year a positive figure of €19m was posted, thanks to the reversal of existing valuation allowances.

During the reporting period, operating expenses rose by €33m year on year to €838m.

The Corporates& Markets segment generated a pre-tax profit of €521m in the first half of this year; compared with the same period of 2010 this represented an increase of about 18%.

With capital employed down 16.1% to €3.2bn, the operating return on equity was 32.1% (prior-year period: 22.9%). The cost/income ratio was 60.3% compared with 65.6% in the same period of the previous year.

€m	1.1.–30.6.2011	1.1.–30.6.2010	Change in %
Income before provisions	– 288	644
Loan loss provisions	474	679	– 30.2
Operating expenses	298	299	– 0.3
Operating profit/loss	– 1,060	– 334

Asset Based Finance

The situation on the government financing markets continued to deteriorate in the first half, and we took write-downs on our holdings of Greek bonds in particular. We did not conduct any significant new business on the government financing markets during the period under review, having decided to implement a strategic reorientation and run the Public Finance portfolio in a risk-oriented manner, allowing assets to mature, declining any new business except for purposes of cover pool management and to meet contractual obligations.

Despite the economic recovery in parts of Europe, progress on the international real estate and shipping markets has been very uneven. Some sub-markets continued to improve, whereas in other markets – such as the Spanish real estate market, for example – conditions remained difficult. New commitments in respect of real estate funding, which play a significant role in achieving the targeted reduction in assets and portfolio volumes, amounted to €1.3bn in the first half compared with €2.4bn in the same period of 2010.

In the first half of 2011 the operating loss came to €–1,060m, compared with a loss of €–334m in the first six months of 2010.

Income before provisions stood at €–288m, compared with €644m in the same period of the previous year; the fall was primarily due to to write-downs connected with the European sovereign debt crisis. In the first six months of 2011, net interest income remained 10.7% below the previous year's figure at €551m, because of the portfolio reduction and higher refinancing costs. At €168m, net commission income stayed at a similar level to last year. Following a positive result in the equivalent period of 2010, net trading income posted a loss of €34m in the first six months of this year; valuing derivatives in accordance with IAS 39 had a negative impact on this result. Net investment income amounted to €–978m. This was mainly connected with write-downs on our Greek bond portfolio. Losses on disposals were also incurred in connection with our de-risking of the Public Finance portfolio.

At €474m, loan loss provisions were below last year's very high level, but they still reflected the continuing tense situation on the real estate and shipping markets.

Operating expenses of €298m were at the same level as last year. The pre-tax loss was €–1,060m compared with a pre-tax loss of €–367m in the same period of 2010.

The operating return on equity based on average capital employed of €5.3bn was –40.1%, compared with –10.6% in the previous year.

€m	1.1.–30.6.2011	1.1.–30.6.2010	Change in %
Income before provisions	161	358	– 55.0
Loan loss provisions	– 4	50
Operating expenses	38	52	– 26.9
Operating profit/loss	127	256	– 50.4

Portfolio Restructuring Unit

The Portfolio Restructuring Unit (PRU) reduced its portfolio by €2.9bn in the first half of 2011, to €11.2bn. This reduction was achieved through proactive restructuring, the use of market opportunities and natural amortization of assets. Currency effects were also responsible for the shrinking books in the first half of 2011. The PRU posted an operating profit of €127m in the first six months of this year, compared with €256m in the prior-year period.

• 10 Business and overall conditions 12 Earnings performance, assets and financial position
• 18 Segment reporting
• 24 Outlook and opportunities report 27 Events after the reporting date

Income before provisions fell year on year from €358m to €161m. This was mainly due to lower write-ups on structured securities, reflected in a €205m drop in net trading income compared with the same period of 2010.

Since there was no significant need for loan loss provisions in the first half, the net reversals amounted to €4m during the period under review. In the first six months of 2010 there were net allocations of €50m.

In the first half of 2011, operating expenses totalled €38m, a year-on-year drop of €14m.

The PRU posted a pre-tax profit of €127m in the first half, down from €256m in the same period of the previous year.

Average capital employed came to €1.0bn, compared with €1.3bn in the first half of 2010.

Others and Consolidation

The Others and Consolidation segment contains the income and expenses which are not attributable to the business segments. The reporting for this segment under Others comprises equity holdings that are not assigned to business segments, as well as Group Treasury. The costs of the service units which – except for integration and restructuring costs – are charged in full to the segments are also shown here. Consolidation includes expenses and income items that represent the reconciliation of internal management reporting figures shown in segment reporting with the consolidated financial statements in accordance with IFRS. The costs of the Group management units are also shown here, which ~ except for integration and restructuring costs ~ are also charged in full to the segments.

In the first six months of 2011, an operating profit of €323m was posted, compared with €–101m in the previous-year period. Operating income before loan loss provisions rose from €371m in the first half of 2010 to €564m in the same period of 2011. This rise was mainly due to special effects connected with the capital measure implemented in the first quarter of 2011 to optimize the capital structure. In addition, there were one-off gains from the partial sale of a participation in the first quarter of this year. The rise in operating profit was to some extent offset by the income posted by Group Treasury, where the previous year's very high figure could not be matched. The marked drop in operating expenses, which fell by €235m, was principally attributable to declining integration costs for the service and management units in relation to the "Growing together" project. The pre-tax profit for the first half of 2011 amounted to €323m after a loss of €–101m in the first half of 2010.

Outlook and opportunities report

The following information should always be read in conjunction with the Business and Economy section of this interim report as well as the Outlook and opportunities report of the 2010 annual report.

Future economic situation

Although the global economic upswing should continue in the coming months, it will likely lose some of its previous momentum. This applies in particular to the emerging markets, where the economies look set to slow from the rapid growth rates seen in the last two years, given the noticeable tightening of monetary policy in many countries.

In the USA, growth in the second half of 2011 is likely to be higher than in the weak first six months of the year, as the restraining factors gradually lose their force. For example, oil prices have stabilized recently, and industry in Japan is increasingly overcoming the consequences of the natural disaster. However, there is likely to be little change in the fundamental picture of the US economy as seen in the past two years: it is still struggling to drag itself out of the deep crisis. Unemployment will fall only slowly, meaning that no interest rate increases by the Federal Reserve are on the cards for the time being.

No early improvement can be expected in the eurozone peripheral countries either, as governments are likely on balance to have to increase their efforts to consolidate their public finances, while the consequences of past excesses (such as the housing bubble in Ireland and Spain) are far from resolved. By contrast, the upswing in the core eurozone countries looks set to continue, albeit at a slower pace. The German economy should post growth of around 2.0% in 2012, after growing by just under 3.5% in the current year.

One reason for this is that monetary policy in the eurozone is likely to remain expansionary for some time, since the ECB will probably raise interest rates only on a gradual basis. This implies that the sovereign debt crisis will continue for some time, maintaining the suspense for both the ECB and the markets in general. This will keep premiums high on peripheral bonds over Bunds, and the upside potential for yields on Bunds will be limited since they are likely to encounter increased demand whenever the crisis shows signs of worsening. The euro also looks set to suffer from the crisis and will probably trend downwards against the dollar. However it should receive support if after averting the debt crisis in the USA, no effective steps follow on from there and the USA's credit rating were to come under further pressure.

• 12 Earnings performance, assets and financial position
• 18 Segment reporting
• 24 Outlook and opportunities report 27 Events after the reporting date

Future situation in the banking sector

10 Business and overall conditions

Even if the continuing economic growth in Germany and other parts of Europe is providing some support for the banking industry, growth in 2011 and 2012 is expected to be only moderate overall. As a result, growth prospects for the sector are rather limited in several areas of the banking business. In addition, banks in Europe still face substantial risks.

In our view, the greatest risk factor at the current time is a further intensification of the European debt crisis. The capital market is already factoring in any such escalation in the debt crisis, at least partially in bank share prices and yield expectations for sovereign bonds of European peripheral nations.

This deterioration in the environment for the banking sector has led equity analysts to downgrade their earnings estimates for the banks, since many banks will probably form valuation allowances for their exposures to Greece in the second quarter.

Near-term growth prospects for traditional new lending are somewhat subdued as many governments and private households in Europe are having to deleverage. However, there will be differences between countries, and in Germany we see plenty of potential to grow business going forward. We also expect that there will be further intense competition for private customer deposits in the coming years, which means margins in this area will remain under pressure. Many banks are still reducing refinancing on the interbank market.

In 2010, the average return on equity for major European banks was around 7% according to ECB figures. The ECB has stated that the return on equity for major European banks improved in the first quarter of 2011, but has not given any exact figure. The ECB further expects that banks will profit from declining loan loss provisioning in 2011 as a whole. Banks in Europe also have a tight grip on costs. As a result, the European banking sector should remain profitable over the year, provided that the debt crisis does not escalate.

Financial outlook for the Commerzbank Group

Financing plans

Commerzbank's Group Treasury is responsible for the Group's capital and liquidity management. Clearly defined processes ensure that under this concept funding activities are regularly adjusted to reflect changed circumstances. The Commerzbank Group's funding structure can still rely in this on broad diversification across investor groups, regions, products and currencies.

Long-term funding is mainly assured by means of secured and unsecured capital market products, along with customer deposits that can be regarded as stable and available to the Bank over the long term. For 2011, the Commerzbank's funding need is around €10bn to €12bn. With funding of €10.8bn in the first half of the year, the full-year funding requirement for 2011 had already been covered by the middle of the current year.

To further diversify an already balanced refinancing mix in the capital market, a US dollar issuing programme was established by Commerzbank, which will be used for an issue in the second half year if the market environment is favourable. In placing unsecured bonds, the Bank continues to rely on private placements and also public benchmark transactions, which are selectively used to broaden the investor base. Secured refinancing is mainly through Pfandbriefe, issued by Eurohypo AG as a benchmark issue or through private placements.

Given the continuing difficult refinancing situation in several peripheral countries, we expect the capital market environment to remain fraught. With regular reviews and adjustments to the assumptions made for liquidity management, the Bank will continue to take full account of changes in the market environment and secure a solid liquidity cushion and an appropriate funding structure.

Planned investments

In the first half of 2011 there has been no significant change in the planning shown in pages 155–157 of the 2010 annual report.

Liquidity outlook

After an initial rise in key rates at the start of April 2011, the ECB decided to raise interest rates further by 25 basis points in July 2011. We expect the ECB to announce further rate increases in this cycle at the end of 2011 and in the first quarter of 2012. The allocation for the weekly tender is likely to remain unlimited for the present. In the second quarter of 2011, the average EONIA rate was approx. 1.06%, still significantly lower than the main refinancing rate of 1.25%. In the third quarter we expect the average EONIA rate to continue to converge toward the main refinancing rate. In the fourth quarter of 2011 we expect interest rates to rise further, in line with the continuing ECB interest rate increases expected by the market.

We expect that Commerzbank will continue to enjoy unrestricted access to secured and unsecured funding on the money and capital markets. Besides the Bank's good standing in the market, the location in a strong euro member state is a further advantage. This also improves refinancing opportunities, and hence the refinancing structure. In addition, the Bank benefits from its well developed liquidity management. Accordingly, we expect that we will be able to achieve our refinancing goals as planned in the next two financial years as well.

Commerzbank is well prepared for changing market conditions. The Bank's funding strategy will take account of regulatory changes promptly and implement these accordingly. As part of the further development of liquidity risk monitoring and liquidity management, we are focusing on supporting various regulatory initiatives to harmonize international liquidity risk standards. Commerzbank is taking into account the effect of the liquidity risk ratios defined in Basel III and is actively participating in constructive dialogue with the supervisory authorities.

General statement on the outlook for the Group

We are expecting a challenging environment characterized by a high degree of market uncertainty in the second half of this financial year. One decisive factor will be how market participants evaluate the progress of the European sovereign debt crisis. At a macroeconomic level, the eurozone will continue to develop along two different paths.

12 Earnings performance, assets and financial position

18 Segment reporting

10 Business and overall conditions

24 Outlook and opportunities report 27 Events after the reporting date

The economy in Germany will grow at an above-average rate again; Commerzbank should benefit from this in terms of income and loan loss provisions in particular. Growth in other eurozone countries is expected to remain limited. Backed by our business model and the robust economic environment in Germany, we are striving to make operational improvements in all areas of the core bank. We plan to grow the Mittelstandsbank further and ensure that Corporates & Markets achieves good results over the long term. We expect the Private Customers segment to benefit more from the integration in terms of expenses over the course of the year. We predict that the economy will continue to develop well in the Central and Eastern Europe region and we expect this to have a correspondingly positive impact on the future growth of BRE Bank in Poland, in particular. Outside the core bank, the Portfolio Restructuring Unit will continue to reduce our holdings while optimizing value. We shall continue redimensioning and optimizing the Asset Based Finance segment, giving special attention to the government bonds portfolio. Independently of this, the progress of the European sovereign debt crisis will be the decisive influence on how the Asset Based Finance segment develops during the rest of the year.

The impact that the announced or – in some cases – approved regulatory reforms will have on Commerzbank cannot yet be quantified in every detail. The same applies to the regulations regarding the harmonization of statutory deposit guarantee schemes in the EU, which will – like the banking tax – be a burden on earnings in the years to come. Despite the write-downs in the second quarter we are systematically continuing to pursue our "Roadmap 2012" strategy against the backdrop of the successful development of our core bank. Our targets are still conditional upon market stability, and at present the markets look likely to stabilize only to a limited extent because of the sovereign debt crisis. Nevertheless, we are not predicting any significant repercussions on the core bank's business activities for the 2011 financial year. An operating profit well above the figure achieved in 2010 is therefore expected. The Group's results will significantly depend on the following factors: the implementation of the package of measures to tackle the European sovereign debt crisis, and the absence of any further escalation of the current situation.

Events after the reporting date

Commerzbank well placed for equity

In mid–July the European Banking Authority (EBA) published the results of this year's European bank stress testing. As expected, Commerzbank passed the stress test. In both of the scenarios used in the calculation, the Bank shows a core Tier 1 ratio significantly above the 5% required by the EBA. The core Tier 1 ratio calculated according to EBA standards was 8.9% in the baseline stress scenario, and 6.4% in the adverse stress scenario. By meeting the significantly more stringent criteria for this year's stress testing, the Bank shows that it is well equipped for the future, even under difficult economic conditions.

The results of the stress test already take into account capital measures completed in June 2011 for the extensive reduction in the silent participations of the Financial Market Stabilization Fund (SoFFin) and the effect of this on Commerzbank's capital base.

Interim Risk Report

29 Risk-oriented overall bank management

• 29 Risk management organization
• 29 Risk-taking capability and stress testing

31 Default risk

• 31 Commerzbank Group by segment
• 37 Cross-segment portfolio analysis

45 Intensive care

• 45 Loan loss provisions
• 46 Default portfolio

47 Market risk

• 48 Market risk in the trading book
• 48 Market risk in the banking book
• 49 Liquidity risk
• 50 Operational risk
• 51 Other risks

31 Default risk

• 45 Intensive care
• 47 Market risk
• 49 Liquidity risk
• 50 Operational risk 51 Other risks

Risk-oriented overall bank management

1 Risk management organization

Commerzbank defines risk as the danger of possible losses or profits foregone due to internal or external factors. In risk management we normally distinguish between quantifiable risks – those to which a value can normally be attached in financial statements or in regulatory capital requirements – and non-quantifiable types of risk such as reputational and compliance risk.

The Bank's Chief Risk Officer (CRO) is responsible for implementing the Group's risk policy guidelines for quantifiable risks laid down by the Board of Managing Directors. The CRO regularly reports to the Board of Managing Directors and the Risk Committee of the Supervisory Board on the overall risk situation within the Group.

Risk management activities are split between Credit Risk Management, Market Risk Management, Intensive Care and Risk Controlling, and Capital Management, all of which span across the group and report directly to the CRO. The heads of these four risk management divisions together with the CRO make up the Risk Management Board within Group Management.

Details on the risk management organization at Commerzbank may be found in the 2010 Annual Report.

2 Risk-taking capability and stress testing

The risk-taking capability analysis is a key part of overall bank management and Commerzbank's Internal Capital Adequacy Assessment Process (ICAAP). The purpose is to ensure that sufficient capital is held for the risk profile of Commerzbank Group at all times.

Commerzbank monitors risk-taking capability using a gone concern approach which seeks primarily to protect unsubordinated lenders. This objective should be met even in the event of extraordinarily high losses from an unlikely extreme event.

When determining the economic capital required, allowance is made for potential unexpected fluctuations in value. Where such fluctuations exceed forecasts, they have to be covered by available economic capital to absorb unexpected losses (capital available for risk coverage). The quantification of capital available for risk coverage is based on a nuanced view of the accounting values of assets and liabilities in consideration of the economic evaluation of certain items in the balance sheet.

The capital requirement for the risks taken is quantified using the internal economic capital model. When setting the economic capital required, allowance is made for all types of risk at Commerzbank Group classified as material in the annual risk inventory. The economic risk approach therefore also includes risk types not contained in the regulatory requirements for banks' capital adequacy and reflects the effect of portfolio-specific interrelationships. The high confidence level in the economic capital model is in line with the underlying gone concern assumptions and ensures the risk-taking capability concept is internally consistent.

Risk-taking capability at Commerzbank Group level is monitored and managed monthly. It is assessed by means of the utilization level of the capital available for risk coverage. Under this approach, risk-taking capability is taken to be assured as long as utilization is below 100%. In the first half of 2011, the utilization level always remained well under 100% and was 58.8% as at June 30, 2011. The result of the second quarter already takes into account capital measures completed in June 2011 for the extensive reduction in the Financial Market Stabilization Fund (SoFFin) silent participations and the effect this had on Commerzbank's capital base.

Risk-taking capability Commerzbank Group €bn	30.6.20112	31.3.20112	31.12.20103
Capital available for risk coverage	33	38	36
Economically required capital	19	20	20
thereof for credit risk	13	13	14
thereof for market risk	5	5	6
thereof for OpRisk	2	2	3
thereof for business risk	2	1	2
thereof diversification between risk types	– 3	– 3	– 4
Utilization level1	58.8%	52.9%	56.8%

1 Utilization level = economically required capital/capital available for risk coverage. 2

Based on current methodology from the first quarter of 2011; only partially comparable to values for 2010.

3 2010 figures based on methodology as at December 31, 2010.

Macroeconomic stress scenarios are also used to check risk-taking capability in the face of assumed adverse changes in the economic environment. The underlying macroeconomic scenarios, which are updated at least every quarter as part of the control process, show exceptional, but plausible negative developments in the economy and are applied across all risk types. In the scenario calculations, the input parameters for the calculation of economic capital required are simulated to reflect the forecast macroeconomic situation. In addition to the amount of capital required, the income statement is also stressed using the macroeconomic scenarios and then, based on this, changes in the capital available for risk coverage are simulated. The assessment of the risk-taking capability in stress scenarios is also carried out by means of the utilization level of the capital available for risk coverage. In the first half of 2011, the utilization level in stress scenarios also remained well under 100%. The continuing development of our risk-taking capability and stress testing concept remains our focus.

29 Risk-oriented overall bank management

• 31 Default risk
• 45 Intensive care
• 47 Market risk
• 49 Liquidity risk
• 50 Operational risk
• 51 Other risks

In 2011, Commerzbank took part in an EU-wide stress test, which was carried out by the European Banking Authority (EBA) in conjunction with national supervisory bodies. The aim of these stress tests was to examine the resistance of the European banking sector to a stressed market environment. Even in a critical macroeconomic scenario, the Commerzbank's simulated (regulatory) core Tier 1 ratio was, at 6.4%, well above the EBA requirement of 5%. The detailed results are disclosed in the Investor Relations section of our homepage.

In the following sections please find details regarding risks Commerzbank is exposed to, beginning with the most important of which namely default risk.

Default risk

Default risk refers to the risk of losses due to defaults by counterparties as well as to changes in this risk. In addition to credit default risk and risk from third-party debtors, Commerzbank also includes under default risk issuer and counterparty risk as well as country and transfer risk.

1 Commerzbank Group by segment (performing loans)

To manage and limit default risks, the risk parameters exposure at default (EaD), expected loss (EL), risk density (EL/EaD) and credit VaR (CVaR = economically required capital for credit risk with a confidence level of 99.91%) as well as All-In for bulk risk are used. These credit risk parameters are distributed in the performing loan book (rating levels 1.0 – 5.8) as follows over the segments:

Credit risk figures by segment as at 30.6.2011	Exposure at default	Expected loss	Risk density	CVaR
	€bn	€m	bp	€m
Core bank	316	1,069	34	7,501
Private Customers	69	261	38	758
Residential mortgage loans	36	109	30
Investment properties	6	23	40
Individual loans	11	67	59
Consumer and installment loans/ credit cards	13	57	45
Domestic subsidiaries	2	3	15
Foreign subsidiaries and other	1	1	8
Mittelstandsbank	111	378	34	3,449
Financial Institutions	19	72	38
Corporates Domestic	79	274	35
Corporates International	14	32	24
Central & Eastern Europe	27	229	84	740
BRE Group	24	178	75
CB Eurasija	1	20	142
Bank Forum	<1	19	633
Other	2	12	61
Corporates & Markets	70	165	23	2,019
Germany	27	49	18
Western Europe	25	64	26
Central and Eastern Europe	3	6	23
North America	11	31	29
Other	5	15	30
Others and Consolidation	38	35	9	535
Optimization – Asset Based Finance1	199	615	31	4,259
Commercial Real Estate	64	358	56
Eurohypo Retail	16	25	16
Shipping	22	142	64
thereof ship financing	18	140	78
Public Finance1	98	90	9
Downsize – PRU	12	103	85	1,085
Total1	527	1,787	34	12,844

1 EaD including non-impaired parts of Greek bonds in LaR and AfS.

Compared to the end of 2010, EaD was reduced by €37bn to €527bn and EL by €138m to €1,787m at Group level. Risk density remained at 34 basis points. This does not include valuations driven by inflation of securities holdings mostly booked as loans and receivables with a volume of approximately €0.5bn

1.1 Private Customers

In the Private Customers segment clients in the areas of private and business customers (including those with financial statements showing a turnover of up to €2.5m) and wealth management are serviced and managed from a risk perspective.

• 29 Risk-oriented overall bank management
• 31 Default risk
• 45 Intensive care
• 47 Market risk
• 49 Liquidity risk 50 Operational risk
• 51 Other risks

Exposure in the segment mainly relates to residential mortgage loans (€36bn), investment properties (€6bn), individual loans (€11bn) and consumer loans, instalment loans and credit cards (€13bn).

On the whole, the portfolio progressed steadily in the second quarter of 2011. The risk density of the books rose slightly to 38 basis points.

In the first half of 2011, the credit profile in the new mortgage loan business improved further and made an important value contribution to the private customer portfolio. For 2011 we expect a stable macroeconomic environment which will allow us to foster the planned expansion of new business in real estate funding and business customers.

1.2 Mittelstandsbank

This segment bundles together the Group's activities with Mittelstand customers (where they are not assigned to Central & Eastern Europe or Corporates & Markets), the public sector and institutional customers. The segment is also responsible for the Group's relationships with domestic and foreign banks, financial institutions and central banks.

The second quarter of 2011 was distinguished by the key themes of the turn of energy policy in Germany, the development of the sovereign debt crisis and the global slowdown in economic recovery. In the meantime many companies have recovered from the impacts of the crisis and now face the challenge of continuing the momentum in a more competitive situation. In particular the effects of the change in energy policy which was adopted in Germany in the interim must be analyzed in detail and appropriate decisions taken on the customer side.

Furthermore, the improved economic situation is demonstrated by improvements in creditworthiness within the Corporates Domestic sub-portfolio. The positive rating migration for individual customers continued in the second quarter of 2011. Risk density in this area therefore dropped to a value of 35 basis points as of June 30, 2011, which is very low for the area of Mittelstand financing.

EaD in Corporates International was reduced to €14bn and EL to €32m in the first half of 2011. Risk density decreased to 24 basis points as at June 30, 2011. At the end of the first six months, the EaD of Mittelstandsbank stood at €111bn.

For details of the development in the Financial Institutions portfolio see section 2.3.

1.3 Central & Eastern Europe

This segment includes the activities of the Group's operating units and investments in Central and Eastern Europe.

The recovery of the Central and Eastern European economies has continued. Despite this, risk density in this area has remained unchanged since the end of 2010 at 84 basis points.

GDP growth in Poland has once again accelerated thanks to the strong domestic economy and high foreign demand. We therefore once again anticipate further profitable loan growth primarily in corporate business and consumer lending from our subsidiary, BRE Bank, which represents the largest share of exposure n the segment.

Russia is benefiting from stable or rising commodity prices. To achieve further stabilization in the portfolio quality, we are focusing on selected new business with blue chips in key industries such as metal production, commodity exploitation and the public sector. However, decreasing margins meanwhile result in business getting less attractive in this area.

Ukraine is rapidly emerging from the crisis although it has not shown any particular economic momentum. The risk management measures adopted have led to a continued decrease in risk density in Bank Forum. Moreover, the establishing of an Internal Restructuring Unit resulted in the successful restructuring of the grey and black books. In this challenging market our focus is still on limiting risk, therefore only allowing selective new business.

1.4 Corporates &Markets

This segment covers client-driven capital market activities and commercial business with multinationals and selected major customers of Commerzbank Group. The regional focus is on Germany and Western Europe, which continue to account for more than two-thirds of exposure. North America accounted for around €11bn as at June 30, 2011.

Overall, the segment's EaD fell by €8bn to €70bn since the beginning of the year, with Markets accounting for €41bn of EaD and Corporates for €29bn. We continue to insist on high quality in trading and new lending business and are planning to further reduce risk in the existing business in 2011.

For details of the development in the Financial Institutions portfolio see section 2.3.

1.5 Asset Based Finance

Asset Based Finance (ABF) comprises the sub-portfolios Commercial Real Estate (CRE) including Asset Management, Eurohypo Retail, Ship Financing and Public Finance, which are described in detail below.

Commercial Real Estate The reduction of existing business, mainly at Eurohypo, is being continued. The total exposure (EaD) decreased by €6bn to €64bn in the first half of the year. The portfolio composition by type of use remains unchanged, the main components of exposure are the sub-portfolios Office (€23bn), Commerce (€20bn) and Residential Real Estate (€8bn). The CRE exposure also contains the Asset Management (Commerz Real) portfolios, which are composed of warehouse assets for funds as well as the typical leasing receivables of the movable property sector.

The decrease in exposure in the first half of 2011 is mainly the result of repayments of loans, exchange rate fluctuations and market-related transfers to the default portfolio. Bearing in mind the strategic reorientation of Eurohypo up to 2014, we will continue to focus our efforts on reducing existing business.

Activity in the real estate markets is very varied. Recovery is continuing at a moderate rate in Germany. In the UK, the recovery is concentrated in the sought-after sectors of London's West End and City, whereas the market in the rest of the country is characterized by the fragile economic recovery. There is a similar situation in the US real estate market with respect to the large business centres in New York and Washington. Spain remains under pressure. Demand is focussed on good to premium real estate in all markets. As a result, the number of transactions has only gradually increased. The low supply of high-quality products, which are still the focus of investor interest, is a limiting factor.

• 29 Risk-oriented overall bank management
• 31 Default risk

• 45 Intensive care

• 47 Market risk

• 49 Liquidity risk
• 50 Operational risk
• 51 Other risks

Loans secured on mortgage charges have reasonable loan to value ratios.

¹ Loan to values based on market values; exclusive margin lines and corporate loans; additional collateral not taken into account. All figures relate to business secured by mortgages.

Values as at June 2011 (December 2010).

Eurohypo Retail Since the transfer of new business activities in retail banking to Commerzbank in 2007, Eurohypo has only been responsible for the existing loan book. There are no strategic plans for new business activity in this area. We are steadily pushing forward the portfolio reduction in a profitable manner. Exposure in the Eurohypo retail portfolio was again cut by €1bn in the first half of 2011 and amounted to €16bn as at June 30, 2011; the focus remains on owner-occupied houses (€9bn) and apartments (€3bn). Given the low loan to value ratios as implied by the remaining time to maturity and generally senior security, the risk in this portfolio is regarded as relatively low, especially against the backdrop of the macroeconomic improvement in Germany.

Ship Financing The exposure of ship financing (including Deutsche Schiffsbank), which is largely denominated in US dollars, decreased by €3bn from December 31, 2010 to €18bn mainly due to the weakened US dollar. The portfolio is still focused on the three standard types of ship, namely containers (€6bn), tankers (€5bn) and bulkers (€4bn). The remaining €3bn is accounted for by various special tonnages which are well diversified across the various ship segments.

The strategy of systematic risk reduction in existing business resulted in a greater degree of stabilization in the first half of 2011. Expected loss was reduced by €45m from year-end 2010 to €140m, with risk density falling 12 basis points to 78 basis points.

Growth in the global economy continued, although lost some of its momentum from the end of the second quarter. As the demand for energy rises, LPG tankers and selected segments of the offshore sectors benefit from the economic climate. Strong economic growth, especially in Asian emerging markets, is likely to push long-term demand for marine transport higher. However, current economic data indicates that risks are increasing. High fleet growth and declines in transport volumes, partly caused by weather, and the resolution of temporary effects, such as the interim storage of oil on tankers, contributed to a more difficult first half year in the bulker and tanker segment. The charter rates in the container area grew in the first quarter. At the end of the second quarter, however, falling freight rates and slower trade growth resulted in declining charter rates. The predicted world economy growth of more than 4% in 2011 and 2012 and the resulting trade growth, which will have a knock-on effect on transport demand, continue to be offset by the influx of newly-built ships onto the market. Given the comparably low scrappage potential, it can be assumed that the charter rates in the majority of shipping segments will continue to be under pressure.

Commerzbank plans to fully integrate Deutsche Schiffsbank. This will bring all ship financing activities under the legal umbrella of Commerzbank.

Public Finance Commerzbank's Asset Based Finance segment holds a large part of the government financing positions. The Public Finance portfolio comprises receivables and securities held in our subsidiaries Eurohypo and EEPK.

Borrowers in the Public Finance business (€62bn EaD) are sovereigns, federal states, regions, cities and local authorities as well as supranational institutions. The main exposure is in Germany and Western Europe.

The remaining Public Finance portfolio in ABF is accounted for by banks (€36bn EaD), where the focus is also on Germany and Western Europe (approximately 92%). Most of the bank portfolio comprises securities/loans which to a large extent are covered by grandfathering, guarantee/maintenance obligations or other public guarantees, or were issued in the form of covered bonds.

The strategy for ABF is to wind down the Public Finance portfolio (government financing and banks) by repayments, maturities and active sales, where these make commercial sense. In the second quarter of 2011 some positions have been sold for risk reduction realizing losses to a minor extent.

The Public Finance portfolio in the White Paper, which was decreased by €20bn to €109bn in 2010, largely by using maturities and also through some active portfolio reduction, was further reduced in the first six months of 2011 to €98bn (including non-impaired parts of Greek bonds in LaR and AfS). The reduction originally planned by the end of 2012 to less than €100bn was therefore already achieved by the end of the first half of 2011. We are still targeting a reduction in public finance exposures to below €80bn for the end of 2014.

1.6 Portfolio Restructuring Unit (PRU)

The PRU only manages assets that have been classified as non-strategic by Commerzbank and are therefore being wound down. Bundling allows these positions to be managed uniformly and efficiently. They are mainly structured credit positions (essentially asset-backed securities − ABSs) with a nominal value of €23.8bn as at June 30, 2011, as shown in detail in section 2.1.1.

29 Risk-oriented overall bank management 31 Default risk

• 45 Intensive care
• 47 Market risk
• 49 Liquidity risk 50 Operational risk
• 51 Other risks

In the second quarter of 2011 the remaining other positions in the PRU (credit default swaps and tranches on pools of credit default swaps outside the strategic focus of Commerzbank) were completely reduced. Therewith only structured credit assets remain in the PRU.

2 Cross-segment portfolio analysis

It is important to note that the following positions are already contained in full in the Group and segment presentations.

2.1 Structured Credit Portfolio

2.1.1 Structured credit exposure PRU Although most asset classes reported declining spreads and spread volatilities at the beginning of the second quarter, which took them back to or below the levels of 2010, all asset classes showed a move in the opposite direction as a result of the sovereign debt crisis in the last third of the quarter, led by RMBS transactions from Greece, Spain and Portugal. In contrast to the general economic recovery in industrial nations, the uneasy market situation meant that potential buyers were cautious during the period under review, slowing down the portfolio reduction. Nevertheless, the nominal volume fell from €26.3bn to €23.8bn in the second quarter of 2011 – also due to further devaluation of the US dollar and to a limited degree to that of the pound sterling – while risk values declined from €15.8bn to €14.4. Commerzbank remains committed to the valuemaximizing reduction of the structured credit portfolio.

Structured credit	30.6.2011			31.3.2011		31.12.2010
portfolio PRU
	Nominal	Risk	Nominal	Risk	Nominal	Risk
€bn	values	values	values	values	values	values
RMBS	4.5	2.6	4.8	2.8	5.1	3.0
CMBS	0.6	0.4	0.6	0.4	0.7	0.5
CDO	9.5	5.7	10.2	6.2	11.1	6.7
Other ABS	2.2	1.9	2.8	2.4	3.3	2.8
PFI/Infrastructure
financing	4.1	3.6	4.2	3.7	4.3	3.8
CIRC	0.6	0.0	0.7	0.0	0.7	0.0
Other structured credit
positions	2.3	0.2	3.0	0.3	3.6	0.2
Total	23.8	14.4	26.3	15.8	29.0	17.1

Overall we expect write-ups over the residual life of these assets, with possible future write-downs on assets such as US RMBSs and US CDOs of ABSs, which have already been written down substantially, to be compensated by a positive performance from other assets. This forecast is based primarily on the long period that has now passed since the structures were launched, which enables a reliable assessment of the future performance of the portfolio, as well as the general stabilization and recovery respectively in the economies which are of importance for us. The following table shows the breakdown of structured credit exposures by rating, based on the risk values.

Rating breakdown structured credit portfolio €bn	30.6.2011
AAA	1.7
AA	2.9
A	3.1
BBB	3.6
< BBB	3.1

Residential Mortgage-backed Securities (RMBS) This sub-segment contains all positions whose interest and principal are secured by private mortgage loans or are contractually linked to their real development. The mortgage loans themselves are likewise partially or fully secured by the residential property being financed. The total risk value here at the end of the reporting period was €2.6 bn (December 31, 2010: €3.0bn).

The holdings of direct and indirect securitizations of US mortgage loans have already been written down by a high percentage. In spite of the loan repayments we are currently receiving in some cases due to the seniority of our investments, the ongoing uncertainty surrounding the sector's future performance is likely to result in further impairments in some cases. The US RMBS portfolio had a risk value of €0.6bn at the end of the year (December 31, 2010: €0.7bn). The mark-down ratio for US RMBS was 71% as at June 30, 2011.

European RMBS positions (risk value €2.0bn) firstly showed a decline in spreads and spread volatilities in the period under report. In the final third of the quarter this development changed as a result of the government debt crisis which led to widening spreads and higher volatilities particularly at RMBS transactions from southern European countries. However, despite the market fluctuations, we expect, based on the fundamental and transactional data, that these securitizations will mostly be repaid in full.

Rating breakdown RMBS €bn	30.6.2011
AAA	0.9
AA	0.4
A	0.6
BBB	0.2
< BBB	0.4

Commercial Mortgage-backed Securities (CMBS) This sub-segment contains all the positions whose interest and principal are secured by commercial mortgage loans or are contractually linked to their real performance. The mortgage loans themselves are likewise partially or fully secured by the commercial property being financed.

The risk value of the CMBS portfolio as at June 30, 2011 was just €0.4bn (December 31, 2010: €0.5bn). The mark-down ratio as at June 30, 2011 was 39%.

• 29 Risk-oriented overall bank management
• 31 Default risk
• 45 Intensive care
• 47 Market risk
• 49 Liquidity risk
• 50 Operational risk
• 51 Other risks

Collateralized Debt Obligations (CDO) This sub-segment contains all the positions whose interest and principal are secured by corporate loans and bonds or other ABSs, or which are contractually linked to their real development.

The total risk exposure for this asset class at the end of the reporting period was €5.7bn (December 31, 2010: €6.7bn), supported by US dollar devaluation effects. The largest share in this sub-segment, with 51% of the risk value, is accounted for by CDOs, which are predominantly based on lending to corporates in the USA and Europe (CLOs). CLOs are still profiting directly from the stability and recovery seen in the major economies, as well as from increased expectations of recovery in the corporate sector. Better portfolio quality and further improved investor demand, especially for senior CLO tranches, resulted in improved market values in this portfolio. The mark-down ratio as at the end of the period was 11%.

A further 42% of the risk value is accounted for by US CDOs of ABSs, which are mostly secured by US subprime RMBSs. Due to our continued adverse assessment of the credit quality of residential mortgages in the US subprime market and our conservative assumptions for the resulting losses, the mark-down ratio is 56%, even though the securitizations held by Commerzbank consist predominantly of the most senior tranches of such CDOs.

Rating breakdown CDO €bn	30.6.2011
AAA	0.3
AA	1.3
A	0.9
BBB	1.7
< BBB	1.6

Other ABSs This sub-segment contains all the positions whose interest and principal are secured by consumer loans (including automobile financing and student loans), lease receivables and other receivables or which are contractually linked to their real performance. The degree of collateralization of these assets varies from very low to very high (e.g. auto loans) depending on the transaction.

The total risk value here as at June 30, 2011 was €1.9bn (December 31, 2010: €2.8bn). The largest part of this risk exposure is accounted for by Consumer ABSs and ABSs secured by other US assets, such as securitized receivables from the marketing of film rights and life insurance policies. The exposure to receivables from the marketing of film rights was further reduced during the reporting quarter. Although our expectations are currently neutral, transaction-specific structural characteristics mean that modest charges against earnings cannot be completely ruled out. The mark-down ratio of the positions remaining in this sub-segment was 16% at the reporting date.

PFI/Infrastructure financing As at June 30, 2011 the risk value of the exposures to Private Finance Initiatives (PFI) was €3.6bn. The portfolio consists of the private financing and the operation of public sector facilities and services, such as hospitals and water and electricity supply operations. All lending relates to the UK and has extremely long maturities of more than 10 to over 40 years. The credit risk of the portfolio is more than 80% hedged, mainly with monoline insurers. The valuation considers the latent risk of default.

Credit investment related conduits (CIRC)/Other structured credit positions At June 30, 2011 there was no risk exposure anymore, as the structures are sufficiently capitalised.

2.1.2 Structured credit exposure non-PRU Below are details of structured credit positions from our strategic customer business which will continue to be allocated to the core bank in future and therefore were not transferred to the PRU.

Structured credit portfolio non-PRU	30.6.2011		31.3.2011		31.12.2010
€bn	Nominal values	Risk values1	Nominal values	Risk values1	Nominal values	Risk values1
Conduit exposure	3.7	3.7	3.8	3.8	4.3	4.3
Other asset-backed exposures	5.9	5.7	6.1	5.9	6.5	6.3
Total	9.6	9.4	9.9	9.7	10.8	10.6

1 Risk value is the balance sheet value of cash instruments. For long CDS positions it comprises the nominal value of the reference instrument less the net present value of the credit derivative.

Conduit exposure The asset-backed commercial paper (ABCP) conduit business of Corporates & Markets, which is not managed by the PRU, amounted to €3.7bn at the end of June 2011 (December 2010: €4.3bn). The fall in volumes is due to the ongoing amortization of ABCP transactions.

In the first quarter of 2011, the two conduits sponsored by Commerzbank, Kaiserplatz and Silver Tower, were consolidated and all transactions from Kaiserplatz were transferred to Silver Tower. The majority of the reported positions consist of liquidity facilities/back-up lines granted to Silver Tower. Due to the stability of the markets, unamortized transactions in the conduit business will continue to be fully financed by commercial papers.

In this Commerzbank sponsored conduit, Commerzbank structures, arranges and securitizes almost exclusively ABS transactions of core customers of Mittelstandsbank and Corporates & Markets. However, this portfolio also contains a securitization of in-house loan receivables, which is currently already around 90% amortized.

The underlying receivables of the Bank's ABCP programmes are strongly diversified and reflect the differing business strategies pursued by the sellers of receivables or customers. These receivable portfolios basically do not contain any asset classes directly impacted by the financial crisis. To date there are no recorded losses on any of these transactions. Currently Commerzbank does not see any need for loan loss provisions in respect of the liquidity facilities/back-up lines.

31 Default risk

• 45 Intensive care
• 47 Market risk
• 49 Liquidity risk
• 50 Operational risk
• 51 Other risks

Rating breakdown conduits non-PRU €bn	30.6.2011
AAA	0.0
AA	1.6
A	1.9
BBB	0.1
< BBB	0.1

Other Asset-backed Exposures Other ABS positions with a total risk exposure of €5.7bn were held mainly by Eurohypo in Public Finance (€4.8bn) and by Commerzbank Europe (Ireland) (€0.9bn). These were principally government guaranteed securities (€4.9bn), of which about €3.7bn were attributable to US Government Guaranteed Student Loans. A further €0.8bn was related to non-US RMBSs, CMBSs and other mainly European ABS papers.

2.1.3 Originator positions Apart from the role as investor Commerzbank also acts as originator of securitizations of its own customer receivables. Commerzbank and Eurohypo have in recent years securitized receivables from loans to the Bank's customers with a current volume of €9.4bn, primarily for capital management purposes. This also includes the securitization of Mittelstand loans in the amount of €1bn placed in January 2011. As at the reporting date June 30, 2011, risk positions of €5.3bn were retained, with by far the largest portion of these positions at €4.9bn attributable to senior tranches which are nearly all rated AAA or AA. Compared to the previous quarter, this marked a significant reduction in the risk positions held due to the repayment of a securitization of Mittelstand loans in the amount of €4.5bn.

The exposures stemming from the role of originator reflect the perspective of statutory reporting, taking into account a risk transfer recognized for regulatory purposes. In addition to Commerzbank's securitized credit portfolios, securities repurchased on the secondary market and/or tranches retained are also listed. This applies regardless of whether the tranches were structured in the form of a tradeable security.

			Commerzbank volume1
Securitization pool as at 30.6.2011 €bn	Maturity	Total volume1	Senior	Mezzanine	First loss piece
Corporates	2013 – 2027	4.5	4.1	0.2	0.1
MezzCap	2036	0.2	<0.1	<0.1	<0.1
RMBS	2048	0.2	<0.1	<0.1	<0.1
CMBS	2010 – 2084	4.5	0.8	<0.1	<0.1
Total		9.4	4.9	0.3	0.1

1 Tranches/retentions (nominal): banking and trading book.

2.2 Leveraged Acquisition Finance (LAF) portfolio

Over the course of the first half of 2011 the EaD of the LAF portfolio was cut from €3.4bn to €3.1bn. This was driven by early repayments of existing business − especially refinancing in the capital market and corporate divestments.

Overall, good economic performance in the core operating markets has resulted in a further improvement in portfolio quality. The geographic focus of the portfolio remains on Europe (94%) with a strong concentration in Germany (50%).

The market volume of classic LAF financing was higher in the first six months than in the previous year, although it stayed just below the expectations of many market players. However, we expect a recovery in LAF business for 2011 as a whole, provided capital markets remain stable.

Direct LAF portfolio by sector EaD €bn	30.6.2011
Technology/Electrical industry	0.6
Chemicals/Plastics/Healthcare	0.4
Automotive/Mechanical engineering	0.4
Financial Institutions	0.4
Consumption	0.4
Services/Media	0.4
Basic materials/Energy/Metals	0.2
Transport/Tourism	0.2
Other	0.2
Total	3.1

2.3 Financial Institutions portfolio

In the second quarter of 2011 the focus in the Financial Institutions portfolio continued to lie on the evaluation of country risks under rating aspects and their impact on business and risk strategy. The emphasis was on facilitation of new business with clients of adequate rating level and general proactive risk reduction across the whole portfolio. The downsizing of the Financial Institutions portfolio in the area of public finance since the end of 2010 was largely compensated by trade finance activities at Mittelstandsbank performed on behalf of our customers.

The portfolio figures have been adjusted in line with the change in the delineation of our Financial Institutions portfolio in the second quarter of 2011; exposures to selected institutions, such as the Federal Reserve Bank, the European Central Bank and selected European issuing banks, which are classified as "exceptional debtors" under our risk strategy, were excluded from the isolated version of the Financial Institutions portfolio. This exclusion resulted in a reduction of EaD in the amount of €13bn as at the balance sheet date 30 June 2011. These exposures are still included in full in the presentation of our Group portfolio in the section "Commerzbank Group by segment".

The NFBI portfolio continues to operate within the risk strategy framework and is conducting an increasing amount of attractive new business. The EaD of the sub-portfolio (including ABS and LAF transactions relating to NBFIs as well as NBFI assets in the PRU) fell slightly to €33bn. The outlook for the NFBI sector is positive and, as we anticipated, the natural disaster in Japan did not have a significant negative impact on our insurance portfolio.

• 29 Risk-oriented overall bank management
• 31 Default risk
• 45 Intensive care
• 47 Market risk
• 49 Liquidity risk
• 50 Operational risk
• 51 Other risks

		Financial Institutions		Non-Bank Financial Institutions
FI portfolio by region as at 30.6.2011	Exposure at default €bn	Expected loss €m	Risk density bp	Exposure at default €bn	Expected loss €m	Risk density bp
Germany	20	9	4	10	16	17
Western Europe	32	39	12	15	32	22
Central and Eastern Europe	8	43	51	2	8	40
North America	3	1	5	4	40	90
Other	16	39	24	2	3	13
Total	80	132	17	33	99	30

2.4 Country classification

The regional breakdown of the exposure corresponds to the Bank's strategic direction and reflects the main areas of its global business activities. Around half of the Bank's exposure relates to Germany, another third to other countries in Europe and 7% to North America. The rest is broadly diversified and split between a large number of countries where we serve German exporters in particular or where Commerzbank has a local presence.

Portfolio by region as at 30.6.2011	Exposure at default €bn	Expected loss €m	Risk density bp
Germany	266	729	27
Western Europe	128	380	30
Central and Eastern Europe	44	317	72
North America	38	129	34
Other	51	231	45
Total	527	1,787	34

The table below shows the exposure in the countries Greece, Ireland, Italy, Portugal and Spain based on the member state of the head office or the object.

EaD1 as at 30.6.2011 €bn	Sovereign	Banks	CRE	Corporates/ Other	Total
Greece2	2.2	0.6	0.2	0.1	3.1
Ireland	0.0	1.0	0.2	0.8	2.0
Italy	8.7	1.1	2.5	2.7	15.0
Portugal	0.9	0.5	1.9	0.4	3.7
Spain	2.9	5.5	4.1	3.0	15.5

1 Without exposures of ABF Shipping.

2 Including non-impaired parts of Greek bonds in LaR and AfS.

In the second quarter of 2011 a profit & loss relevant write-down amounting to €760m was booked on the bonds issued and guaranteed by Greece. Details are shown in the notes of the interim report.

2.5 Rating classification

The Bank's overall portfolio is split into the following internal rating classifications based on PD ratings:

Rating breakdown as at 30.6.2011 %	1.0–1.8	2.0–2.8	3.0–3.8	4.0–4.8	5.0–5.8
Private Customers	28	46	18	5	4
Mittelstandsbank	14	55	24	4	2
Central & Eastern Europe	23	37	32	5	3
Corporates & Markets	46	38	12	2	1
Asset Based Finance	35	44	14	4	2
Group1	34	44	16	4	2

1 Including PRU as well as Others and Consolidation.

2.6 Sector classification Corporates

The table below shows the breakdown of the Bank's corporates exposure by sector, irrespective of business segment:

Sub-portfolio corporates by sectors as at 30.6.2011	Exposure at Default €bn	Expected Loss €m	Risk density Bp
Basic materials/Energy/Metals	25	110	44
Consumption	21	97	47
Chemicals/Plastics	11	53	49
Transport/Tourism	10	46	45
Technology/Electrical industry	10	32	32
Automotive	10	34	35
Services/Media	10	46	48
Mechanical engineering	8	35	45
Construction	5	20	43
Other	18	91	52
Total	126	565	45

• 29 Risk-oriented overall bank management
• 31 Default risk
• 45 Intensive care
• 47 Market risk
• 49 Liquidity risk
• 50 Operational risk
• 51 Other risks

Intensive care

1 Loan loss provisions

Loan loss provisions decreased substantially in the first half of 2011. With a charge almost €700m lower than in the prior-year period, loan loss provisions declined by more than half to €596m. The loan loss provisions for the second quarter of 2011 were €278m and thus even lower than in the first quarter of 2011. The development at segment level was as follows:

Loan loss provisions €m	H1 2011	Q2 2011	Q1 2011	2010 total	Q4 2010	Q3 2010	H1 2010	Q2 2010	Q1 2010
Private Customers	76	35	41	246	46	64	136	70	66
Mittelstandsbank	– 17	– 25	8	279	93	– 69	255	94	161
Central & Eastern Europe	36	6	30	361	48	127	186	92	94
Corporates & Markets	31	31	0	– 27	– 14	6	– 19	0	– 19
Asset Based Finance	474	233	241	1,584	412	493	679	354	325
Portfolio Restructuring Unit	– 4	– 3	– 1	62	10	2	50	28	22
Others and Consolidation	0	1	– 1	– 6	0	– 2	– 4	1	– 5
Total	596	278	318	2,499	595	621	1,283	639	644

In the first half of 2011 loan loss provisions in Private Customers fell by €60m compared with the first half of 2010 as a result of continued favourable external conditions. The Mittelstandsbank benefited the most from the positive economic environment in the first half of the year, such that loan loss provisions here were €272m less than in the same period of 2010. A decline in new cases, releases of provisions due to successful restructuring and lower portfolio loan loss provisions resulted in a net reversal of €17m for the segment as a whole.

Loan loss provisions were also down considerably in the Central & Eastern Europe segment. Here the charge declined by €150m to €36m for the first half of 2011 compared with the first half of 2010. Bank Forum was the driving force behind the decrease, as no significant net loan loss provisions were reported there in the first half of the year. BRE Bank also booked significantly lower loan loss provisions in the first half of 2011 as compared to the prior-year period, in part due to one-off income from a successful portfolio transaction.

In the Corporates & Markets segment, where specific provisions for individual cases predominate, the loan loss provisions for the first half of 2011 remained low at €31m, although somewhat higher than in the first half of 2010.

In the Asset Based Finance segment, loan loss provisions for the first half of 2011 decreased by €205m as compared to the prior-year period. The decline came largely from CRE Banking.

In the Portfolio Restructuring Unit, where little movement was reported in loan loss provisions overall, a net reversal of €4m was posted in the first half of 2011, which compares with a decrease of €54m in loan loss provisions in the first half of 2010.

The trend in loan loss provisions across all segments in the first half of 2011 was generally stable to positive. We currently expect provisions for 2011 as a whole to be less than €1.8bn.

Major uncertainties are still present, however, of which the greatest risk factor is the potential worsening of the debt crisis in Europe and the USA. If an escalation should occur and trigger corresponding market turbulence, global economic growth will be seriously dampened. An economic deterioration could have negative consequences for loan loss provisions. Depending on the circumstances, therefore, significantly higher loan loss provisions may be necessary.

2 Default portfolio

The Group's default portfolio was reduced significantly by a total of €1.0bn in the first half of 2011 and amounted to €20.7bn as of the reporting date. The portfolio includes receivables in the LaR category, but not impaired securities. The structure can be seen in detail below:

1 Including Others and Consolidation.

Nearly all segments showed a reduced default portfolio in the first half of 2011 with the exception of ABF, showing a slight increase of the volume. Main driver was the segment Mittelstandsbank with a reduction of more than €600m.

Over the course of the second half of 2011 we are currently expecting the default volume to further decline.

• 29 Risk-oriented overall bank management
• 31 Default risk
• 45 Intensive care
• 47 Market risk
• 49 Liquidity risk
• 50 Operational risk
• 51 Other risks

Market risk

Market risk is the risk of financial losses due to changes in market prices (interest rates, commodities, credit spreads, exchange rates and equity prices) or in parameters that affect prices such as volatilities and correlations. The losses may impact profit or loss directly, e.g. in the case of trading book positions, or may be reflected in the revaluation reserve or in hidden liabilities/reserves in the case of banking book positions. We also monitor market liquidity risk, which covers cases where it is not possible for the Bank to liquidate or hedge risky positions in a timely manner and to the desired extent on acceptable terms as a result of insufficient liquidity in the market.

In the first half of 2011, the markets were influenced by the European sovereign debt crisis, expectations of interest hikes due to increasing inflation, the natural disaster in Japan and the unrest in North Africa. High levels of debt, downgrades of some European states by rating agencies and debt restructuring plans resulted in increased uncertainty and high price volatility on the bond markets.

Proposals for the voluntary participation of private creditors in debt-restructuring programmes in Greece also increased uncertainty in the markets even further. Following a significant increase in interest rates in core European countries, due to the anticipated increase in key interest rates by the European Central Bank, the uncertainties regarding peripheral European countries in the second quarter led to a rush for safe securities and thus to decreasing (long-term) interest rates. The anticipated rate hike also boosted the euro on the foreign exchange market, while the natural disaster in Japan caused the yen to fluctuate sharply.

Despite the difficult market environment, appropriate management measures have kept the overall currency risk at Commerzbank at a very low level. The same applies to commodity risk, which in the first half of 2011 mainly concerned rising oil prices due to unrest in North Africa. On the international equity markets the clear upward trend from the beginning of the year was derailed by the natural disaster in Japan and further turbulence in the government debt crisis.

After rather disappointing economic performance in the year to date, Commerzbank expects the US recovery to turn more positive. The growth rate in Germany and in the core European countries should return to normal however, following the sharp recovery in the first half of 2011. At the start of the second half of 2011, further countries have taken centre stage in the government debt crisis. Until the current problems are resolved, Commerzbank expects that the government debt crisis will continue to dominate the markets, resulting in further turmoil on the interest rate and currency markets. The equity markets will not be spared the impact of this environment, and Commerzbank is therefore expecting to see further price rises and a slower pace of momentum. Despite rising key rates, we expect the structural low interest rate environment to persist in 2011. There are also dangers from rising inflation, especially as a result of higher commodity prices.

Commerzbank will rigorously drive forward the reduction and optimization of critical portfolios. Due to the continued turmoil regarding the European debt crisis, we are expecting a moderate rise in market risk for our portfolio.

1 Market risk in the trading book

Commerzbank uses an overall market price risk model based on historical simulation (Hist-Sim model) for its internal risk management. This ensures that risk measurement is consistent across the whole Group and will meet the future requirements of Basel III. In the first half of the year, the market price risk model was improved and expanded to cover credit spread and ABS components.

Value at risk1 in the trading book declined significantly in the first half of 2011. The decrease of €43.3m to €52.6m was achieved by all risk classes (credit spread, interest rate, currency, equity and commodity risk). A major factor in the significant decrease in VaR was the drop in interest and credit spread volatilities since the middle of 2010, when the European government debt crisis reached its first peak. The VaR results as at June 30, 2011 were no longer impacted by the high volatilities. Furthermore, measures to reduce risk positions, particularly in the Portfolio Restructuring Unit, were rigorously driven forward in the first half of 2011 thereby reducing credit spread risk. Credit spread risk amounting to €35.5m is a significant factor in Commerzbank's market risk.

The portfolio reduction, together with the resolution of the aforementioned crisis situations, resulted in a fall in credit spread risk of €8.4m. In the first half of 2011, the model extensions had the opposite effect here.

The regulatory capital requirement is calculated in consultation with BaFin as before, using the regulator-certified market risk models of Commerzbank (old) and former Dresdner Bank. Commerzbank expects the Bundesbank/BaFin to approve the use of the new market price risk model for regulatory purposes during the course of the current year. Future Basel III requirements have already been taken into account with the implementation of the Incremental Risk Charge (ICR), which covers migration and default risks for interest risk and equity positions in the trading book.

2 Market risk in the banking book

The main drivers of market risk in the banking book are credit spread risk in the Public Finance portfolio including the positions held by subsidiaries Eurohypo and Erste Europäische Pfandbrief und Kommunalkreditbank (EEPK), the risks from the Treasury portfolios and equity price risks in the equity investment portfolio. The decision to reduce the Public Finance portfolio continues to be implemented as part of the de-risking strategy.

The diagram below documents the development of credit spread sensitivities for all securities and derivative positions (excluding loans) in Commerzbank Group. The reduction measures mentioned above, especially in the Public Finance portfolio, and slightly lower market values due to an increase in euro interest rates in southern European countries cut the overall position in credit spread sensitivity to €74m at June 30, 2011. Roughly 74% of credit spread sensitivity still relates to securities positions classified as loans and receivables (LaR). Changes in credit spreads have no impact on the revaluation reserve or the income statement for these portfolios.

1 99% confidence level, holding period 1 day, equally-weighted market data, 254 days' history.

As planned, holdings in the equity investment portfolio were greatly cut down over the year, significantly reducing the risk from equity investments.

Liquidity risk

Liquidity risk is defined in the narrower sense as the risk that Commerzbank will be unable to meet its payment obligations on a day-to-day basis. In a broader sense, liquidity risk is the risk that future payments cannot be funded as and when they fall due, in full, in the correct currency and at standard market conditions.

Commerzbank's internal liquidity risk model is the basis for liquidity management and reporting to the Board of Managing Directors. This risk measurement approach calculates the available net liquidity (ANL) for the next twelve months based on various scenarios. The calculation is carried out on the basis of deterministic, i.e. contractually agreed, and also statistically expected economic cash flows (forward cash exposure – FCE and dynamic trade strategy – DTS respectively), taking into account realizable assets (balance sheet liquidity – BSL). As at June 30, 2011 the volume of freely available assets eligible for discounting at the central bank that were included in ANL modelling as part of balance sheet liquidity was around €73.9bn.

The stress scenario used by management which forms the basis of modelling allows for the impact of both a bank-specific stress event and a broader market crisis when calculating liquidity and setting limits. The underlying scenarios are derived from the risk tolerance that is determined in accordance with the overall risk strategy and updated if necessary. This also includes a definition of scenarios that are no longer covered by the risk tolerance.

The stress scenarios are run daily and reported to management. The underlying assumptions are checked regularly and adjusted to reflect changed market conditions as necessary. The existing stress scenarios were expanded in the second quarter to include a survival period. This type of scenario shows the liquidity of the bank within the period of one month under the assumption of an adverse market scenario without additional sources of finance and a negative effect on the core business.

The stress scenarios described form the basis of detailed contingency plans for the bank's liquidity. According to the separation of functions described above, Liquidity Risk is responsible for the internal processes, while Treasury is responsible for taking the previously documented action.

The graph below of ANL and its subcomponents FCE, DTS and BSL shows that under the stress scenario relevant for management calculated as at June 30, 2011 a sufficient liquidity surplus was available throughout the period analyzed.

Available net liquidity in the combined stress scenario of the internal liquidity model

In the first half of 2011, the calculated liquidity surpluses were always significantly above the limits set by the Board of Managing Directors, despite a market environment marked by the European debt crisis. Commerzbank's solvency was therefore sufficient at all times, not only in terms of the external regulatory requirements of the German Liquidity Regulation, but also in terms of internal limit setting. Our liquidity position can therefore continue to be regarded as stable.

We benefit from our core business activities in private and corporate banking and a widely diversified funding base in terms of products, regions and investors in the money and capital markets.

The customer and product migration of former Dresdner Bank business was also successfully implemented in liquidity risk management. The figures reported in ANL continued to be stable throughout the migration. The technical integration has resulted in a reduction in the complexity of data supply and Commerzbank now retrieves all relevant information from the Commerzbank IT architecture.

As part of the further development of liquidity risk monitoring and ongoing reporting, we are focusing on supporting various regulatory initiatives to harmonize international liquidity risk standards. Commerzbank takes into account the effect of the liquidity risk ratios defined in Basel III and is actively taking part in constructive dialogue with the supervisory authorities. In addition, the bank is increasing the available analysis options for liquidity risk reporting.

Operational risk

Operational risk (OpRisk) in Commerzbank is based on the German Solvency Regulation and is defined as the risk of loss resulting from the inadequacy or failure of internal processes and systems, people or from external events. This definition includes litigation risks; it does not cover reputational, strategic or compliance risks.

• 29 Risk-oriented overall bank management
• 31 Default risk
• 45 Intensive care
• 47 Market risk
• 49 Liquidity risk
• 50 Operational risk
• 51 Other risks

The total charge to Commerzbank at the end of the first half of 2011 for OpRisk events (losses plus changes in provisions for operational risks and ongoing litigation) was €47m compared to €67m in the first half of 2010 (full-year 2010: €274m).

OpRisk events by segment €m	H1 2011	Q2 2011	Q1 2011	2010 total
Private Customers	30	12	18	132
Mittelstandsbank	14	7	7	– 8
Central & Eastern Europe	0	0	0	7
Corporates & Markets	– 6	2	– 8	14
Asset Based Finance	5	3	2	34
Portfolio Restructuring Unit	0	0	0	11
Others and Consolidation	4	2	2	84
Group	47	26	21	274

The risk weighted assets (RWA) for operational risks according to the advanced measurement approach (AMA) were €22.1bn at the end of the first half of 2011 (December 31, 2010: €21.8bn). Of this, roughly 64% related to Private Customers and Corporates & Markets.

Until the newly developed and integrated model has been certified by the regulatory authorities, the capital requirement for both regulatory and internal reporting purposes will still be calculated separately for Commerzbank (old) and former Dresdner Bank and reported as a total.

Other risks

In terms of all other risks, there were no significant changes in the first half of 2011 compared to the position reported in detail in the 2010 Annual Report.

Disclaimer

Commerzbank uses state-of-the-art risk measurement methods and models that are based on banking sector practice. The results obtained with the risk models are suitable for the purposes of the management of the Bank. The measurement approaches are regularly reviewed by Risk Control and Internal Audit, external auditors and the German supervisory authorities. Despite the careful development of the models and regular controls, models cannot capture all the influencing factors that may arise in reality, nor the complex behaviour and interactions of these factors. These limits to risk modelling apply particularly in extreme situations. Supplementary stress tests and scenario analyses can only show examples of the risks to which a portfolio may be exposed in extreme market situations; stress testing all imaginable scenarios however is unfeasible. The analyses cannot give a definitive indication of the maximum loss in the case of an extreme event.

Interim Financial Statements

53 Statement of comprehensive income

• 53 Income statement
• 54 Condensed statement of comprehensive income
• 56 Income statement (by quarter)

57 Balance sheet

• 59 Statement of changes in equity
• 62 Cash flow statement (condensed version)

63 Selected notes

• 63 General information
• 66 Notes to the income statement
• 77 Notes to the balance sheet
• 85 Other notes

91 Responsibility statement by the Board of Managing Directors

• 92 Boards of Commerzbank Aktiengesellschaft
• 93 Review Report

53 Statement of comprehensive income

• 57 Balance sheet
• 59 Statement of changes in equity
• 62 Cash flow statement 63 Selected notes

Statement of comprehensive income

Income statement

€m	Notes	1.1.–30.6.2011	1.1.–30.6.20101	Change in %
Interest income		8,567	9,644	– 11.2
Interest expense		5,050	5,905	– 14.5
Net interest income	(1)	3,517	3,739	– 5.9
Loan loss provisions	(2)	– 596	– 1,283	– 53.5
Net interest income after provisions		2,921	2,456	18.9
Commission income		2,228	2,223	0.2
Commission expense		280	321	– 12.8
Net commission income	(3)	1,948	1,902	2.4
Net trading income	(4)	1,212	1,223	– 0.9
Net income from hedge accounting		– 117	– 71	64.8
Net trading income and net income from hedge accounting		1,095	1,152	– 4.9
Net investment income	(5)	– 942	– 59
Current net income from companies accounted for using the equity method		13	8	62.5
Other net income	(6)	348	– 8
Operating expenses	(7)	4,184	4,437	– 5.7
Impairments of goodwill and brand names		–	–
Restructuring expenses		–	33	– 100.0
Pre-tax profit/loss		1,199	981	22.2
Taxes on income	(8)	137	– 96
Consolidated profit/loss		1,062	1,077	– 1.4
Consolidated profit/loss attributable to non-controlling interests		53	17
Consolidated profit/loss attributable to Commerzbank shareholders		1,009	1,060	– 4.8

1 Prior-year figures restated (see page 63).

Earnings per share €	1.1.–30.6.2011	1.1.–30.6.2010	Change in %
Earnings per share	0.46	0.90	– 48.9

Earnings per share, calculated in accordance with IAS 33, are based on the consolidated profit/loss attributable to Commerzbank shareholders less the expected dividend on the silent participations.

Condensed statement of comprehensive income

€m	1.1.–30.6.2011	1.1.–30.6.2010	Change in %
Consolidated profit/loss	1,062	1,077	– 1.4
Change in revaluation reserve
Reclassified to income statement	170	– 5
Change in value not recognized in income statement	268	– 378
Change in cash flow hedge reserve
Reclassified to income statement	123	130	– 5.4
Change in value not recognized in income statement	19	– 51
Change in currency translation reserve
Reclassified to income statement	–	–
Change in value not recognized in income statement	– 172	359
Change in companies accounted for using the equity method	– 1	2
Other comprehensive income	407	57
Total comprehensive income	1,469	1,134	29.5
Comprehensive income attributable to non-controlling interests	61	55	10.9
Comprehensive income attributable to Commerzbank shareholders	1,408	1,079	30.5

2nd Quarter €m	1.4.–30.6.2011	1.4.–30.6.2010	Change in %
Consolidated profit/loss	53	361	– 85.3
Change in revaluation reserve
Reclassified to income statement	231	– 117
Change in value not recognized in income statement	123	– 529
Change in cash flow hedge reserve
Reclassified to income statement	59	80	– 26.3
Change in value not recognized in income statement	– 10	– 51	– 80.4
Change in currency translation reserve
Reclassified to income statement	–	– 1	– 100.0
Change in value not recognized in income statement	– 34	188
Change in companies accounted for using the equity method	–	1	– 100.0
Other comprehensive income	369	– 429
Total comprehensive income	422	– 68
Comprehensive income attributable to non-controlling interests	41	– 26
Comprehensive income attributable to Commerzbank shareholders	381	– 42

• 53 Statement of comprehensive income 57 Balance sheet
• • 59 Statement of changes in equity 62 Cash flow statement

63 Selected notes

Other comprehensive income €m	1.1.–30.6.2011			1.1.–30.6.2010
	Before taxes	Taxes	After taxes	Before taxes	Taxes	After taxes
Change in revaluation reserve	625	– 187	438	– 460	77	– 383
Change in cash flow hedge reserve	198	– 56	142	127	– 48	79
Change in currency translation reserve	– 172	–	– 172	359	–	359
Change in companies accounted for using the equity method	– 1	–	– 1	2	–	2
Other comprehensive income	650	– 243	407	28	29	57

Other comprehensive income for the second quarter broke down as follows:

Other comprehensive income €m	1.4.–30.6.2011			1.4.–30.6.2010
	Before taxes	Taxes	After taxes	Before taxes	Taxes	After taxes
Change in revaluation reserve	474	– 120	354	– 761	115	– 646
Change in cash flow hedge reserve	74	– 25	49	54	– 25	29
Change in currency translation reserve	– 34	–	– 34	187	–	187
Change in companies accounted for using the equity method	–	–	–	1	–	1
Other comprehensive income	514	– 145	369	– 519	90	– 429

Income statement (by quarter)

€m	2011			20101
	2nd quarter	1st quarter	4th quarter	3rd quarter	2nd quarter	1st quarter
Net interest income	1,790	1,727	1,682	1,633	1,853	1,886
Loan loss provisions	– 278	– 318	– 595	– 621	– 639	– 644
Net interest income after provisions	1,512	1,409	1,087	1,012	1,214	1,242
Net commission income	928	1,020	875	870	905	997
Net trading income	664	548	384	445	358	865
Net income from hedge accounting	– 88	– 29	0	– 23	– 42	– 29
Net trading income and net income
from hedge accounting	576	519	384	422	316	836
Net investment income	– 954	12	191	– 24	60	– 119
Current net income from companies
accounted for using the equity method	13	0	32	– 5	6	2
Other net income	10	338	– 149	26	– 30	22
Operating expenses	2,030	2,154	2,164	2,185	2,228	2,209
Impairments of goodwill and brand names	–	–	–	–	–	–
Restructuring expenses	–	–	–	–	33	–
Pre-tax profit/loss	55	1,144	256	116	210	771
Taxes on income	2	135	– 21	– 19	– 151	55
Consolidated profit/loss	53	1,009	277	135	361	716
Consolidated profit/loss attributable to
non-controlling interests	29	24	20	22	9	8
Consolidated profit/loss attributable to
Commerzbank shareholders	24	985	257	113	352	708

1 Prior-year figures restated (see page 63).

• 53 Statement of comprehensive income 57 Balance sheet
• • 59 Statement of changes in equity
• 62 Cash flow statement 63 Selected notes

Balance sheet

Assets €m	Notes	30.6.2011	31.12.2010	Change in %
Cash reserve		6,653	8,053	– 17.4
Claims on banks	(10,12,13)	92,341	110,616	– 16.5
of which pledged as collateral		86	94	– 8.5
Claims on customers	(11,12,13)	317,315	327,755	– 3.2
of which pledged as collateral		–	–
Value adjustment portfolio fair value hedges		37	113	– 67.3
Positive fair values of
derivative hedging instruments		3,814	4,961	– 23.1
Trading assets	(14)	139,579	167,825	– 16.8
of which pledged as collateral		33,313	19,397	71.7
Financial investments	(15)	105,872	115,708	– 8.5
of which pledged as collateral		29,526	22,374	32.0
Holdings in companies accounted for
using the equity method		723	737	– 1.9
Intangible assets	(16)	3,031	3,101	– 2.3
Fixed assets	(17)	1,511	1,590	– 5.0
Investment properties		942	1,192	– 21.0
Assets held for sale and disposal groups		1,482	1,082	37.0
Current tax assets		652	650	0.3
Deferred tax assets		3,538	3,567	– 0.8
Other assets	(18)	6,191	7,349	– 15.8
Total		683,681	754,299	– 9.4

Liabilities and equity €m	Notes	30.6.2011	31.12.2010	Change in %
Liabilities to banks	(19)	112,483	137,626	– 18.3
Liabilities to customers	(20)	262,127	262,827	– 0.3
Securitized liabilities	(21)	117,694	131,356	– 10.4
Value adjustment portfolio fair value hedges		– 35	121
Negative fair values of derivative hedging instruments		7,106	9,369	– 24.2
Trading liabilities	(22)	126,025	152,393	– 17.3
Provisions	(23)	4,165	4,778	– 12.8
Current tax liabilities		1,065	1,072	– 0.7
Deferred tax liabilities		163	222	– 26.6
Liabilities from disposal groups held for sale		692	650	6.5
Other liabilities	(24)	8,957	8,136	10.1
Subordinated capital	(25)	13,702	12,910	6.1
Hybrid capital	(26)	3,106	4,181	– 25.7
Equity		26,431	28,658	– 7.8
Subscribed capital		5,113	3,047	67.8
Capital reserve		10,889	1,302
Retained earnings		9,513	9,345	1.8
Silent participations		2,687	17,178	– 84.4
Other reserves		– 2,600	– 2,999	– 13.3
Total before non-controlling interests		25,602	27,873	– 8.1
Non-controlling interests		829	785	5.6
Total		683,681	754,299	– 9.4

53 Statement of comprehensive income

57 Balance sheet 59 Statement of changes in equity

62 Cash flow statement

63 Selected notes

Statement of changes in equity

	Sub scribed	Capital reserve	Retained earnings	Silent partici	Revalu	Other reserves Cash	Currency	Total before	Non control	Equity
	capital			pations	ation reserve	flow hedge	translation reserve	non control	ling interests
€m						reserve		ling interests
Equity as at 1.1.2010	3,071	1,334	7,878	17,178	– 1,755	– 1,223	– 477	26,006	570	26,576
Total comprehensive
income	–	–	1,430	–	24	218	214	1,886	127	2,013
Consolidated profit/loss			1,430					1,430	59	1,489
Change in revaluation reserve					24			24	18	42
Change in cash flow hedge reserve						218		218	12	230
Change in currency translation reserve							212	212	38	250
Change in companies
accounted for using the equity method							2	2		2
Dividend paid on silent participations								–		–
Dividend paid on shares								–	– 12	– 12
Capital increases								–	173	173
Change in ownership interests			5					5		5
Other changes1	– 24	– 32	32					– 24	– 73	– 97
Equity as at 31.12.2010	3,047	1,302	9,345	17,178	– 1,731	– 1,005	– 263	27,873	785	28,658
Total comprehensive
income	–	–	1,009	–	429	142	– 172	1,408	61	1,469
Consolidated profit/loss Change in revaluation			1,009					1,009	53	1,062
reserve					429			429	9	438
Change in cash flow hedge reserve						142		142		142
Change in currency
translation reserve							– 171	– 171	– 1	– 172
Change in companies accounted for using the equity method							– 1	– 1		– 1
Dividend paid on silent participations								–		–
Dividend paid on shares								–	– 13	– 13
Change in accounting
par value	– 2,142	2,142						–		–
Capital increases	4,184	7,463						11,647		11,647
Withdrawal from retained earnings			– 868					– 868		– 868
Decrease in silent participations				– 14,491				– 14,491		– 14,491
Change in ownership interests			5					5	– 4	1
Other changes1	24	– 18	22					28	0	28
Equity as at 30.6.2011	5,113	10,889	9,513	2,687	– 1,302	– 863	– 435	25,602	829	26,431

1 Including change in treasury shares, change in derivatives on own equity instruments and changes in the group of consolidated companies.

As at June 30, 2011 €28m of the cash flow hedge reserve and €–74m of the currency translation reserve were attributable to assets held for sale and disposal groups.

In January 2011 we increased our share capital by 10% less one share (118,135,291 shares) from authorized capital for non-cash contributions, with shareholders' pre-emptive rights excluded. The new shares were subscribed in their entirety and paid for by non-cash contributions of hybrid equity instruments (trust preferred securities) issued by companies of the Commerzbank Group. The nominal value of the hybrid instruments returned was €0.9bn and generated non-recurring income of €0.3bn within group pre-tax profit. Subscribed capital and the capital reserve increased by €0.3bn respectively as a result.

The Financial Market Stabilization Fund (SoFFin) subsequently converted a portion of its silent participations into shares in order to maintain its stake in Commerzbank at 25% plus one share. Thus silent participations with a nominal value of €0.2bn were converted into 39,378,430 shares from the conditional capital approved by the Annual General Meeting (AGM) in 2009.

The capital measures announced in an ad hoc announcement on 6 April 2011 and approved by the Commerzbank AGM on 6 May 2011 were as follows:

• Between April 6 and 13, 2011 Conditional Mandatory Exchangeable Notes (CoMEN) were placed with investors by means of a bookbuilding procedure. Commerzbank shareholders with the exception of SoFFin received subscription rights for this placement. All 1,004,149,984 CoMEN were successfully placed at a price of €4.25, representing a total issue volume of €4.3bn, and were automatically converted into Commerzbank shares on 12 May 2011. In order to maintain its stake of 25% plus one share SoFFin converted silent participations in the amount of €1.4bn into 334,716,661 no-par-value shares.

• A capital increase with pre-emptive rights was carried out in June 2011 and 1,826,771,821 no-par-value shares were issued from authorized capital at a price of €2.18 per share, representing a total issue volume of €4.0bn. The shares arising from the conversion of the CoMEN in the first stage of the capital increase had pre-emptive rights for this share issue. To maintain its stake of 25% plus one share SoFFin again converted silent participations of €1.3bn into 608,923,940 no-par-value shares.

In addition to the repayment of €11.0bn of silent participations as a result of the capital measures, a further €3.27bn of silent participations were repaid to SoFFin in June out of free regulatory capital. The remaining silent participations of €1.9bn will be redeemed by 2014 at the latest from future free regulatory capital.

In connection with the capital measures a one-off payment of €1.03bn was agreed with SoFFin to compensate it for the early repayment of the silent participations. This payment is reported in equity (after deducting the resulting tax effects of €162m) as a withdrawal from retained earnings. The costs of the capital increases were €188m (after tax effects of €31m) and were deducted directly from the capital reserve. As the calculation of taxes is based on a provisional tax estimate for the whole of 2011, these items may still change.

As at June 30, 2011, the subscribed capital of Commerzbank Aktiengesellschaft pursuant to the Bank's articles of association stood at €5,113m and was divided into 5,113,429,053 no-par-value shares (accounting value per share €1.00). The redenomination of the accounting par value per shares from €2.60 to €1.00 was resolved at the AGM on 6 May 2011. The average number of ordinary shares issued was 2,019,086,800 (June 30, 2010: 1,180,166,902).

• 53 Statement of comprehensive income
• 57 Balance sheet 59 Statement of changes in equity
  • 62 Cash flow statement
• 63 Selected notes

For information: Statement of changes in equity from January 1 to June 30, 2010

€m	Sub scribed capital	Capital reserve	Retained earnings	Silent partici pations	Revalu ation reserve	Other reserves Cash flow hedge reserve	Currency translation reserve	Total before non control ling interests	Non control ling interests	Equity
Equity as at 1.1.2010	3,071	1,334	7,878	17,178	– 1,755	– 1,223	– 477	26,006	570	26,576
Total comprehensive income	–	–	1,060	–	– 398	66	351	1,079	55	1,134
Consolidated profit/loss			1,060					1,060	17	1,077
Change in revaluation reserve					– 398			– 398	15	– 383
Change in cash flow hedge reserve						66		66	13	79
Change in currency translation reserve							349	349	10	359
Change in companies accounted for using the equity method							2	2		2
Dividend paid on silent participations								–		–
Dividend paid on shares								–		–
Capital increases								–		–
Decrease in silent participations								–		–
Change in ownership interests								–		–
Other changes1	– 8	– 3	78					67	71	138
Equity as at 30.6.2010	3,063	1,331	9,016	17,178	– 2,153	– 1,157	– 126	27,152	696	27,848

1 Including change in treasury shares, change in derivatives on own equity instruments and changes in the group of consolidated companies.

Cash flow statement (condensed version)

€m	2011	2010
Cash and cash equivalents as at 1.1.	8,053	10,329
Net cash from operating activities	– 6,751	1,344
Net cash from investing activities	8,827	876
Net cash from financing activities	– 3,122	259
Total net cash	– 1,046	2,479
Effects from exchange rate changes	– 302	220
Effects from non-controlling interests	– 52	– 17
Cash and cash equivalents as at 30.6.	6,653	13,011

The cash flow statement shows the changes in cash and cash equivalents for the Commerzbank Group. These correspond to the cash reserve line item and consist of cash on hand, balances with central banks, as well as debt issues of public sector borrowers and bills of exchange rediscountable at central banks.

The cash flow statement cannot be considered very informative for the Commerzbank Group. For us the cash flow statement replaces neither liquidity planning nor financial planning, nor is it employed as a management tool.

• 53 Statement of comprehensive income
• 57 Balance sheet
• 59 Statement of changes in equity
• 62 Cash flow statement 63 Selected notes

Selected notes

General information

Accounting policies

The interim financial statements of the Commerzbank Group as of June 30, 2011 were prepared in accordance with Art. 315a (1) of the German Commercial Code (HGB) and Regulation (EC) No. 1606/2002 (IAS Regulation) of the European Parliament and of the Council of July 19, 2002, together with other regulations for adopting certain international accounting standards on the basis of the International Financial Reporting Standards (IFRS) approved and published by the International Accounting Standards Board (IASB) and their interpretation by the International Financial Reporting Interpretations Committee (IFRIC). This report takes particular account of the requirements of IAS 34 relating to interim financial reporting.

In preparing this interim report, we have employed the same accounting policies as in our group financial statements as of December 31, 2010 (see page 214 ff. of our 2010 annual report) unless otherwise required by changes in the

Changes to accounting policies

As at December 31, 2010 we amended the structure of the income statement and balance sheet in accordance with IAS 1.82 and IAS 1.54. The resulting restatement of the quarterly income statements for 2010 related to the reporting of net income from hedge accounting and current net income from companies accounted for using the equity method as separate items.

In addition we harmonized differing reporting structures in connection with the integration of the former Dresdner law. This interim report takes into account the standards and interpretations that must be applied from January 1, 2011 in the EU.

Uniform accounting and measurement methods are used throughout the Commerzbank Group in preparing the financial statements. For fully consolidated companies and holdings in companies accounted for using the equity method we predominantly used financial statements prepared as at June 30, 2011. The reporting currency of the consolidated financial statements is the euro. Unless otherwise indicated, all amounts are shown in millions of euros. In the statement of comprehensive income, the balance sheet, the statement of changes in equity and the condensed cash flow statement amounts under €500,000.00 are shown as €0m; where an item is €0.00 this is denoted by a dash. In all other notes both amounts rounded down to €0m and zero items are indicated by a dash.

Bank in 2010. In the first and second quarters of 2010 we reclassified items within net interest income and reclassified foreign exchange commission income from net trading income to commission from payment transactions and foreign business within net commission income.

The prior-year figures for the items affected by these changes were restated in the quarterly and annual income statements and the notes.

Consolidated companies

The following companies were consolidated for the first time in the first half of 2011:

Name of company	Equity share and voting rights	Acquisition cost	Assets	Liabilities
	%	€m	€m	€m
Cosmo Finance 2010-1 Ltd., Dublin	0.0	0.0	66.7	66.7
Hurley Investments No.3 Limited, London	100.0	0.0	1,300.4	410.3
Mandas Receivables No.1 Limited, Jersey	100.0	0.1	0.1	0.0
Mantilla Investments Limited, London	100.0	865.3	1,579.5	279.4

The entities listed above were newly formed or acquired, often in the course of structured financing transactions.

We have also decided to include all active ComStage ETF funds and SICAV funds in the consolidated financial statements, including those which were previously not included for materiality reasons. This led to the consolidation of a further 87 funds with equity shares of between 18.2% and 100.0%. The assets of these funds amounted to €2,811m and the liabilities to €15m. The first-time consolidations did not give rise to any goodwill requiring to be recognized as an asset.

The following companies were sold or liquidated and are therefore no longer consolidated:

• Disposals
• MS "CPO Barcelona" Offen Reederei GmbH & Co.KG, Hamburg
• MS "CPO Cadiz" Offen Reederei GmbH & Co.KG, Hamburg
• MS "CPO Vigo" Offen Reederei GmbH & Co.KG, Hamburg
• Commerz Real Autoleasing GmbH, Hamburg
• Commerz Real Leasingservice GmbH & Co. KG, Hamburg
• Liquidations (including companies which have ceased operating activities and entities that have permanently fallen below our materiality threshold for consolidation or were no longer subject to a consolidation requirement)
• ALMURUS Grundstücks-Vermietungsgesellschaft mbH, Düsseldorf
• CoCo Finance 2006-1 plc, Dublin
• Commerzbank Capital Ventures Management Limited, London
• Dresdner Kleinwort Capital Investment Trust Limited, London
• Idilias SPC (Silo II), George Town/Cayman Islands

• Kaiserplatz Funding LLC, Wilmington/Delaware1

• Kaiserplatz Holdings Ltd., St. Helier/Jersey¹ (sub-group including subsidiaries)

• Kleinwort Benson (Canada) Limited, Toronto
• Mole Finance Inc., George Town/Cayman Islands
• Parc Continental Ltd., London
• Southwark Bridge Investments Ltd., London
• Wisley Inc., George Town/Cayman Islands2
• Vendome Lease S.A., Paris

1 No longer needs to be consolidated.

² Fell below materiality threshold.

The following companies:

• Dresdner Bank Brasil S.A. Banco Multiplo, São Paulo
• Intermarket Bank AG, Vienna
• KGAL GmbH & Co. KG, Grünwald (Munich)
• Magyar Factor Zrt., Budapest
• MS "CPO Alicante" Offen Reederei GmbH & Co.KG, Hamburg
• MS "CPO Ancona" Offen Reederei GmbH & Co.KG, Hamburg
• MS "CPO Bilbao" Offen Reederei GmbH & Co.KG, Hamburg
• MS "CPO Marseille" Offen Reederei GmbH & Co.KG, Hamburg
• MS "CPO Palermo" Offen Reederei GmbH & Co.KG, Hamburg
• MS "CPO Toulon" Offen Reederei GmbH & Co.KG, Hamburg
• MS "CPO Valencia" Offen Reederei GmbH & Co.KG, Hamburg
• Property Invest Italy Srl, Milan
• Transfactor Slovakia a.s., Bratislava

are reported as held for sale in accordance with IFRS 5 as there are plans to sell them and their sale is highly probable within one year.

• 53 Statement of comprehensive income 57 Balance sheet
• 59 Statement of changes in equity
• 62 Cash flow statement 63 Selected notes

In addition an office building was reclassified from investment properties to assets held for sale in the second quarter of 2011.

Until the final disposal of the shares is completed we will measure groups held for sale in accordance with the regula-

Impact of the European sovereign debt crisis

At the emergency eurozone summit on July 21, 2011 the banks and insurance companies agreed to make a contribution to supporting Greece. According to calculations by the IIF (Institute of International Finance), the agreed bond swap will lead to write-down of 21 % on instruments due to mature by 2020. We think that a similar level of impairment is appropriate for longer-dated paper (after 2020; 96% of the bank's Greek government bonds).

In the Commerzbank Group, the acquisition cost of Greek government bonds before adjusting for the write-down was €3,107m (including accrued interest). Of this, €381m related to available-for-sale bonds (AfS) and €2,726m to securities that were reclassified into the loans and receivables category (LaR) in 2008 and 2009. The write-downs applicable to them as of June 30, 2011 totaled €760m. On the basis of our measurement methodology this resulted in a €565m writedown in the value of securities in the LaR category. The new carrying amount of these securities was therefore €2,162m.

The write-down under IAS 39.67 of the remaining bonds in the AfS category to the lower of cost or fair value (market tions of IFRS 5 and will report their assets and liabilities separately in the relevant balance sheet items and in the statement of changes in equity.

value as of June 30, 2011) led to a €195m expense with the new carrying amount of the securities being €186m.

We also executed hedging transactions to protect our portfolio against interest rate risk and to offset the effects of fluctuations in inflation. We use the accounting and measurement practices of IAS 39.85 ff. for these financial instruments. Remeasurement effects on the instruments used to offset interest rate risk and inflationary fluctuations amounted to €150m and the new carrying amount therefore totalled €436m.

We believe that we have thus made adequate provision for current discernable default risks associated with the European debt crisis. Due to the continuing uncertainty in the eurozone and the potential consequences this may have for the world economy and financial markets, there is a possibility of further impacts on the Commerzbank Group in future, however.

Notes to the income statement

(1) Net interest income

€m	1.1.–30.6.2011	1.1.–30.6.20101	Change in %
Interest income	8,567	9,644	– 11.2
Interest income from lending and money market transactions and from the securities portfolio (available-for-sale)	619	791	– 21.7
Interest income from lending and money market transactions and from the securities portfolio (loans and receivables)	7,631	8,219	– 7.2
Interest income from lending and money market transactions and from the securities portfolio (from applying the fair value option)	57	73	– 21.9
Prepayment penalty fees	40	53	– 24.5
Gain on the sale of loans and receivables and repurchase of liabilities	125	5
Dividends from securities	27	18	50.0
Current net income from equity holdings and non-consolidated subsidiaries	19	18	5.6
Current income from assets held for sale and from investment properties	49	44	11.4
Other interest income	–	423	– 100.0
Interest expense	5,050	5,905	– 14.5
Interest expense from subordinated and hybrid capital and from securitized and other liabilities	4,654	5,616	– 17.1
Interest expense from applying the fair value option	22	53	– 58.5
Loss on the sale of loans and receivables and repurchase of liabilities	24	34	– 29.4
Current expenses from assets held for sale and from investment properties	40	13
Other interest expense	310	189	64.0
Total	3,517	3,739	– 5.9

1 Prior-year figures restated (see page 63).

The unwinding effect for the period January 1 to June 30, 2011 was €116m (previous year: €118m).

• 53 Statement of comprehensive income
• 57 Balance sheet 59 Statement of changes in equity
• 62 Cash flow statement 63 Selected notes

(2) Loan loss provisions

The breakdown of loan loss provisions in the consolidated income statement was as follows:

€m	1.1.–30.6.2011	1.1.–30.6.2010	Change in %
Allocation to provisions	– 1,762	– 2,297	– 23.3
Reversals of provisions	1,297	1,056	22.8
Net balance of direct write-downs, write-ups and amounts recovered on claims written-down	– 131	– 42
Total	– 596	– 1,283	– 53.5

(3) Net commission income

€m	1.1.–30.6.2011	1.1.–30.6.20101	Change in %
Securities transactions	685	678	1.0
Asset management	79	99	– 20.2
Payment transactions and foreign business	543	567	– 4.2
Real estate lending business	97	91	6.6
Guarantees	76	86	– 11.6
Net income from syndicated business	159	127	25.2
Fiduciary transactions	2	2	0.0
Other	307	252	21.8
Total2	1,948	1,902	2.4

1 Prior-year figures restated (see page 63).

2 Of which commission expense: €280m (previous year: €321m).

(4) Net trading income

We have split net trading income into three components:

• Net gain/loss on trading in securities, promissory note loans, precious metals and derivative instruments
• Net gain/loss on remeasurement of derivative financial instruments that do not qualify for hedge accounting
• Net gain/loss from applying the fair value option (including changes in the fair value of related derivatives)

All financial instruments held for trading purposes are measured at fair value. Fair value is derived from both stock market prices and internal pricing models (primarily net present value and option pricing models). Apart from realized and unrealized gains and losses, net trading income also includes the interest and dividend income related to trading transactions and their funding costs.

€m	1.1.–30.6.2011	1.1.–30.6.20101	Change in %
Net trading gain/loss	1,291	482
Net gain/loss on the remeasurement of derivative financial instruments	– 139	557
Net gain/loss from applying the fair value option	60	184	– 67.4
Total	1,212	1,223	– 0.9

1 Figures restated (see page 63).

(5) Net investment income

Net investment income contains gains/losses on disposals and remeasurement of securities in the loans and receivables and available-for-sale categories, equity holdings, holdings in companies accounted for using the equity method and subsidiaries.

€m	1.1.–30.6.2011	1.1.–30.6.2010	Change in %
Net gain/loss from interest-bearing business	– 974	– 215
In the available-for-sale category	– 195	– 137	42.3
Gain on disposals (including reclassification from revaluation reserve)1	82	78	5.1
Loss on disposals (including reclassification from revaluation reserve)1	– 86	– 193	– 55.4
Net remeasurement gain/loss1	– 191	– 22
In the loans and receivables category	– 779	– 78
Gain on disposals	5	3	66.7
Loss on disposals	– 83	– 78	6.4
Net remeasurement gain/loss2	– 701	– 3
Net gain/loss on equity instruments	32	156	– 79.5
In the available-for-sale category	74	156	– 52.6
Gain on disposals (including reclassification from revaluation reserve)1	75	157	– 52.2
Loss on disposals (including reclassification from revaluation reserve)1	– 1	– 1	0.0
In the available-for-sale category, measured at cost of acquisition	4	11	– 63.6
Net remeasurement gain/loss1	– 44	– 6
Net gain/loss on disposals and remeasurement of companies accounted for using the equity method	– 2	– 5	– 60.0
Total	– 942	– 59

1 This includes a net €–31m of reclassifications from the revaluation reserve created in the financial year 2011 (previous year: €205 m).

2 Includes portfolio vauation allowances of €13m (previous year: €2m) for reclassified securities.

• 53 Statement of comprehensive income 57 Balance sheet
• 59 Statement of changes in equity
• 62 Cash flow statement 63 Selected notes

(6) Other income

€m	1.1.–30.6.2011	1.1.–30.6.2010	Change in %
Other material items of income	168	130	29.2
Operating lease income	76	80	– 5.0
Reversals of provisions	92	50	84.0
Other material items of expense	156	141	10.6
Operating lease expenses	62	79	– 21.5
Allocations to provisions	94	62	51.6
Balance of sundry other income/expenses	336	3
Total	348	– 8

Non-recurring income of €0.3bn relating to the capital increase in January 2011 was recognized in other income (see page 63).

(7) Operating expenses

€m	1.1.–30.6.2011	1.1.–30.6.2010	Change in %
Personnel expenses	2,233	2,181	2.4
Other operating expenses	1,728	1,974	– 12.5
Depreciation/amortization of fixed assets and other intangible assets	223	282	– 20.9
Total	4,184	4,437	– 5.7

Operating expenses for the first half of 2011 include integration costs of €129m (previous year:€268m).

(8) Taxes on income

Group tax expense was €137m as at June 30, 2011. With pre-tax profit of €1,199m the Group's effective tax rate was therefore 11.4 % (Group income tax rate: 30.85 %). Group tax expense was incurred principally in foreign branch offices and subsidiaries. The comparatively low Group tax rate resulted in particular from profits being offset against loss carryforwards for which no deferred tax assets had been recognized to date and from the retrospective recognition of deferred tax assets at its German subsidiaries.

(9) Segment reporting

Segment reporting reflects the results of the operating business segments within the Commerzbank Group. The segment information below is based on IFRS 8 Operating Segments, which adopts the so-called management approach. In accordance with this standard, segment information must be prepared on the basis of the internal reporting information that is evaluated by the chief operating decision maker to assess the performance of the operating segments and make decisions regarding the allocation of resources to the operating segments. Within the Commerzbank Group, the function of chief operating decision maker is exercised by the Board of Managing Directors.

Our segment reporting covers six operating segments and the Others and Consolidation segment. This reflects the Commerzbank Group's organizational structure and forms the basis for internal management reporting. The business segments are divided up on the basis of distinctions between products, services and/or customer target groups. As part of the further refinement of the segments' business models slight adjustments were made to the business responsibilities.

Income statement line items were further harmonized in 2010 in the context of the Dresdner Bank integration. This involved firstly harmonizing the reporting of the funding of equity holdings and of income from the investment of equity capital for consolidated subsidiaries. In addition, current net income from companies accounted for using the equity method was reported separately and the foreign exchange commission earnings of the former Dresdner Bank were reported in net commission income. The prior-year comparison figures have been restated accordingly.

• The Private Customers segment set up a new staff department organization in 2011 and now comprises the three group divisions Private, Business and Wealth Management Customers, Direct Banking and Credit. The Private and Business Customers and Wealth Management divisions were merged to form the new group division Private, Business and Wealth Management Customers. The staff departments of both group divisions are grouped together in a single unit. Customer service on the sales side remains separate for Private and Business Customers in the classic branch business and for Wealth Management for wealthy clients in Germany and abroad. This new group division also integrates the call centre services of Commerz Direktservice GmbH for the domestic branch network. Direct Banking encompasses the activities of the comdirect bank group, while Credit is the central division responsible for lending operations with the above-mentioned customer groups.

• The Mittelstandsbank segment is divided into the three group divisions Mittelstand Germany, Corporate Banking & International, and Financial Institutions. The Mittelstand Germany division serves small and mid-sized customers, the public sector and institutional clients. Our comprehensive service offering includes payments, flexible financing solutions, interest rate and currency management products, professional investment advisory services and innovative investment banking solutions. In the Corporate Banking & International division we concentrate on serving corporate customers with a turnover of over €500m. Smaller companies with a strong capital market affinity or significant operations outside Germany are also housed within this division. With our foreign branch offices we act as a strategic partner for both the international activities of our German corporate customers and for international companies with business activities in our home market of Germany. The Financial Institutions division is responsible for relationships with banks and financial institutions in Germany and abroad, as well as with central banks. The strategic focus is on Commerzbank becoming customers' preferred source of trade finance. Against this backdrop the division offers our customers an extensive platform and professional advice and support. Financial Institutions uses a network of over 7,000 correspondent banks, together with business relationships in emerging markets, to support the Group's financing and processing of foreign trade activities on behalf of all Commerzbank Group customers throughout the world.
• The Central & Eastern Europe segment comprises the operations of our Polish subsidiary BRE Bank, Ukraine's Bank Forum, Russia's Commerzbank Eurasija, Hungary's Commerzbank Zrt., our branches in the Czech Republic and Slovakia, and investments in seven microfinance banks and Russia's Promsvyazbank. The activities are grouped together under a management holding company which acts as a centre of competence, operational management unit and interface between the local units and the central departments. The main business focus in the Central and Eastern Europe segment is private and corporate customer business and customer-driven investment banking.

53 Statement of comprehensive income 57 Balance sheet

59 Statement of changes in equity

62 Cash flow statement 63 Selected notes

• Corporates & Markets consists of three major businesses. Equity Markets & Commodities trades in equities, equity derivatives and commodities products and includes the related distribution capacities. Fixed Income & Currencies handles trading and sales of interest rate and currency instruments together with related derivatives. Corporate Finance provides debt and equity financing and advisory services and includes the central credit portfolio management operations of the Corporates & Markets segment. In addition, Corporates & Markets houses the Group's client relationship management activities with a focus on the 100 biggest German corporates plus foreign and selected domestic insurers.
• The Asset Based Finance segment groups together the results from the Commercial Real Estate (CRE) Germany, CRE International, Public Finance, Asset Management and Leasing divisions as well as Ship Finance. CRE Germany, CRE International and Public Finance belong almost completely to the Commerzbank subsidiary Eurohypo Aktiengesellschaft along with Eurohypo's retail portfolio. The Asset Management and Leasing area primarily includes the activities of our subsidiary Commerz Real Aktiengesellschaft, and finally Ship Finance groups together the ship financing activities of the Commerzbank Group, which are predominantly located in our subsidiary Deutsche Schiffsbank Aktiengesellschaft.
• The Portfolio Restructuring Unit (PRU) is responsible for managing down assets related to proprietary trading and investment activities which no longer fit into Commerzbank's client-centric strategy and were discontinued in 2009. The segment's goal is to reduce the portfolio in such a way as to preserve maximum value. The positions managed by this segment initially included asset-backed securities (ABSs) which do not have a state guarantee, other structured credit products, proprietary trading positions in corporate or financial bonds and exotic credit derivatives. These positions were primarily transferred from the Corporates & Markets and former Commercial Real Estate segments to the Portfolio Restructuring Unit.
• The Others and Consolidation segment contains the income and expenses which are not attributable to the operational business segments. Equity holdings which are not assigned to the operating segments as well as Group Treasury are reported under Others. The costs of the service units which – except for integration and restructuring costs – are charged in full to the segments are also shown here. Consolidation includes expenses and income items that represent the reconciliation of internal management reporting figures shown in seg-

ment reporting with the consolidated financial statements in accordance with IFRS. The costs of the Group management units are also shown here, which – except for integration and restructuring costs – are also charged in full to the segments.

The result generated by each segment is measured in terms of operating profit/loss and pre-tax profit/loss, as well as the return on equity and cost/income ratio. Operating profit/loss is defined as the sum of net interest income after loan loss provisions, net commission income, net trading income and net income from hedge accounting, net income from financial investments, current net income from companies accounted for using the equity method and other net income less operating expenses. In the statement of pre-tax profits, non-controlling interests are included in both profit/loss and the average capital employed. All the revenue for which a segment is responsible is thus reflected in pre-tax profit.

The return on equity is calculated as the ratio of income (operating profit/loss and pre-tax profit/loss) to the average amount of capital employed. It shows the return on the capital employed in a given segment. The cost/income ratio in operating business reflects the cost efficiency of the various segments and shows the relationship of operating expenses to income before provisions.

Income and expenses are reported in the segments by originating unit and at market rates, with the market interest rate method being used in interest rate operations. Net interest income shows the actual funding costs for businessspecific equity holdings allocated to the relevant segments. The Group's return on capital employed is allocated to the net interest income of the various segments in proportion to the average capital employed in the segment. The interest rate corresponds to that of a risk-free investment in the longterm capital market. The average capital employed is calculated using the Basel II system, based on the computed average risk-weighted assets andthe capital charges for market risk positions (risk-weighted asset equivalents). At Group level, investors' capital is shown, which is used to calculate the return on equity. The regulatory capital requirement for risk-weighted assets assumed for segment reporting purposes is 7%.

The segment reporting of the Commerzbank Group shows the segments' pre-tax results. To reduce the impact on operating earnings of specific tax-induced transactions in the Corporates & Markets segment in this reporting, the net interest income of Corporates & Markets includes a pretax equivalent of the after-tax income from these transactions. When segment reporting is reconciled with the figures from external accounting this pre-tax equivalent is eliminated in Others and Consolidation.

The carrying amounts of companies accounted for using the equity method were €723m (previous year: €792m) and are divided over the segments as follows: Private Customers €256m (previous year: €181m), Mittelstandsbank €100m (previous year: €40m), Corporates & Markets €11m (previous year: €17m), Asset Based Finance €295m (previous year: €479m) and Others and Consolidation €61m (previous year: €75m).

The operating expenses reported under operating profit/loss contain personnel expenses, other operating expenses as well as write-downs on fixed assets und other intangible assets. Restructuring expenses are reported below the operating profit line in pre-tax profit/loss. Operating expenses are attributed to the individual segments on the basis of cost causation. The indirect expenses arising in connection with internal servicesare charged to the user of the service and credited to the segment performing the service. The provision of intra-group services is charged at market prices or at full cost.

The tables below contain information on the segments as of June 30, 2011 and on the comparative figures for the previous financial year.

• 53 Statement of comprehensive income
• 57 Balance sheet 59 Statement of changes in equity
• 62 Cash flow statement
• 63 Selected notes

1.1.–30.6.2011	Private Custo mers	Mittel stands bank	Central & Eastern Europe	Corporates & Markets	Asset Based Finance	Portfolio Restruc turing	Others and Consoli	Group
€m						Unit	dation
Net interest income	1,006	1,104	323	386	551	18	129	3,517
Loan loss provisions	– 76	17	– 36	– 31	– 474	4	–	– 596
Net interest income after provisions	930	1,121	287	355	77	22	129	2,921
Net commission income	1,024	559	110	140	168	–	– 53	1,948
Net trading income and net income from hedge accounting	– 3	10	48	826	– 34	133	115	1,095
Net investment income	2	– 33	4	30	– 978	11	22	– 942
Current net income from companies accounted for using the equity method	11	7	–	11	– 15	–	– 1	13
Other net income	– 36	– 4	20	– 3	20	– 1	352	348
Income before provisions	2,004	1,643	505	1,390	– 288	161	564	5,979
Income after provisions	1,928	1,660	469	1,359	– 762	165	564	5,383
Operating expenses	1,733	744	292	838	298	38	241	4,184
Operating profit/loss	195	916	177	521	– 1,060	127	323	1,199
Impairments of goodwill and brand names	–	–	–	–	–	–	–	–
Restructuring expenses	–	–	–	–	–	–	–	–
Pre-tax profit/loss	195	916	177	521	– 1,060	127	323	1,199
Assets	59,374	75,969	27,386	216,185	217,624	13,798	73,345	683,681
Average capital employed	3,377	5,295	1,694	3,245	5,290	962	12,117	31,980
Operating return on equity1 (%)	11.5	34.6	20.9	32.1	– 40.1			7.5
Cost/income ratio in operating business (%)	86.5	45.3	57.8	60.3				70.0
Return on equity of pre-tax profit/loss1 (%)	11.5	34.6	20.9	32.1	– 40.1			7.5
Staff (average headcount)	18,723	5,116	9,616	1,802	1,753	37	17,794	54,841

1 Annualized.

1.1.–30.6.20101 €m	Private Custo mers	Mittel stands bank	Central & Eastern Europe	Corporates & Markets	Asset Based Finance	Portfolio Restruc turing Unit	Others and Consoli dation	Group
Net interest income	975	1,077	320	406	617	33	311	3,739
Loan loss provisions	– 136	– 255	– 186	19	– 679	– 50	4	– 1,283
Net interest income
after provisions	839	822	134	425	– 62	– 17	315	2,456
Net commission income	1,044	493	100	139	168	4	– 46	1,902
Net trading income and net income from hedge accounting	2	46	38	635	26	338	67	1,152
Net investment income	14	12	3	29	– 160	– 24	67	– 59
Current net income from companies accounted for using the equity method	7	–	–	–	–	–	1	8
Other net income	– 44	34	12	19	– 7	7	– 29	– 8
Income before provisions Income after provisions	1,998 1,862	1,662 1,407	473 287	1,228 1,247	644 – 35	358 308	371 375	6,734 5,451
Operating expenses	1,826	705	274	805	299	52	476	4,437
Operating profit/loss	36	702	13	442	– 334	256	– 101	1,014
Impairments of goodwill and brand names	–	–	–	–	–	–	–	–
Restructuring expenses	–	–	–	–	33	–	–	33
Pre-tax profit/loss	36	702	13	442	– 367	256	– 101	981
Assets	68,015	83,120	28,509	356,647	256,707	21,674	83,078	897,750
Average capital employed	3,540	5,504	1,599	3,868	6,331	1,307	8,476	30,625
Operating return on equity2 (%)	2.0	25.5	1.6	22.9	– 10.6			6.6
Cost/income ratio in operating business (%)	91.4	42.4	57.9	65.6	46.4			65.9
Return on equity of pre-tax profit/loss2 (%)	2.0	25.5	1.6	22.9	– 11.6			6.4
Staff (average headcount)	20,140	5,132	9,791	1,900	1,855	56	18,603	57,477

1 Figures restated (see page 63).

2 Annualized.

• 53 Statement of comprehensive income 57 Balance sheet
• 59 Statement of changes in equity
• 62 Cash flow statement

63 Selected notes

Details for Others and Consolidation

€m		1.1.–30.6.2011			1.1.–30.6.20101
	Others	Consolidation	Others and Consolidation	Others	Consolidation	Others and Consolidation
Net interest income	87	42	129	279	32	311
Loan loss provisions	–	–	–	4	–	4
Net interest income after provisions	87	42	129	283	32	315
Net commission income	– 49	– 4	– 53	– 49	3	– 46
Net trading income and net income from hedge accounting	91	24	115	130	– 63	67
Net investment income	22	–	22	67	–	67
Current net income from companies accounted for using the equity method	– 1	–	– 1	1	–	1
Other net income	346	6	352	– 28	– 1	– 29
Income before provisions	496	68	564	400	– 29	371
Income after provisions	496	68	564	404	– 29	375
Operating expenses	244	– 3	241	477	– 1	476
Operating profit/loss	252	71	323	– 73	– 28	– 101
Impairments of goodwill and brand names	–	–	–	–	–	–
Restructuring expenses	–	–	–	–	–	–
Pre-tax profit/loss	252	71	323	– 73	– 28	– 101
Assets	73,345	–	73,345	83,078	–	83,078

1 Figures restated (see page 63).

Under Consolidation we report consolidation and reconciliation items between the results of the segments and the Others category on the one hand and the consolidated financial statements on the other. This includes the following items among others:

• Remeasurement effects from the application of hedge accounting to intra-bank transactions as per IAS 39 are shown in Consolidation.
• The pre-tax equivalent from tax-induced transactions allocated to the Corporates & Markets segment in net interest income is eliminated again under Consolidation.
• Net remeasurement gains/losses on own bonds and shares incurred in the segments are eliminated under Consolidation.
• Other consolidation effects from intragroup transactions are also reported here.
• Integration and restructuring costs of the Group controlling units are reported under Consolidation.

Results by geographical markets

The segmentation of results on the basis of the registered office of the branch or group company produced the following breakdown:

1.1.–30.6.2011	Germany	Europe excluding	America	Asia	Others	Total
€m		Germany
Net interest income	2,411	969	98	39	–	3,517
Loan loss provisions	– 285	– 342	34	– 3	–	– 596
Net interest income after provisions	2,126	627	132	36	–	2,921
Net commission income	1,730	178	25	15	–	1,948
Net trading income and net income from
hedge accounting	514	530	35	16	–	1,095
Net investment income	– 858	– 85	2	– 1	–	– 942
Current net income from companies
accounted for using the equity method	16	– 3	–	–	–	13
Other net income	319	26	–	3	–	348
Income before provisions	4,132	1,615	160	72	–	5,979
Income after provisions Operating expenses	3,847 3,241	1,273 794	194 98	69 51	– –	5,383 4,184
Operating profit/loss	606	479	96	18	–	1,199
Risk-weighted assets for credit risk	132,654	61,421	8,968	3,561	21	206,625

In 2010 we achieved the following results in the geographical markets:

1.1.–30.6.20101	Germany	Europe excluding	America	Asia	Others	Total
€m		Germany
Net interest income	2,430	1,186	120	3	–	3,739
Loan loss provisions	– 528	– 520	– 235	–	–	– 1,283
Net interest income after provisions	1,902	666	– 115	3	–	2,456
Net commission income	1,637	226	30	9	–	1,902
Net trading income and net income from hedge
accounting	340	921	– 94	– 16	1	1,152
Net investment income	– 237	126	49	3	–	– 59
Current net income from companies accounted
for using the equity method	8	–	–	–	–	8
Other net income	– 34	– 89	7	108	–	– 8
Income before provisions	4,144	2,370	112	107	1	6,734
Income after provisions	3,616	1,850	– 123	107	1	5,451
Operating expenses	3,543	740	104	50	–	4,437
Operating profit/loss	73	1,110	– 227	57	1	1,014
Risk-weighted assets for credit risk	162,176	76,306	15,584	5,115	69	259,250

1 Prior-year figures restated (see page 63).

Instead of non-current assets we report the risk assets for credit risks here.

• 53 Statement of comprehensive income
• 57 Balance sheet 59 Statement of changes in equity
• 62 Cash flow statement 63 Selected notes

Notes to the balance sheet

(10) Claims on banks

€m	30.6.2011	31.12.2010	Change in %
Due on demand	34,198	45,351	– 24.6
With a residual term	58,378	65,605	– 11.0
up to three months	37,747	45,557	– 17.1
over three months to one year	8,590	7,044	21.9
over one year to five years	10,203	10,928	– 6.6
over five years	1,838	2,076	– 11.5
Total	92,576	110,956	– 16.6
of which reverse repos and cash collaterals	52,501	68,687	– 23.6
of which relate to the category:
Loans and receivables	49,910	62,883	– 20.6
Available-for-sale financial assets	–	–
At fair value through profit or loss	42,666	48,073	– 11.2

Claims on banks after deduction of loan loss provisions amounted to €92,341m (previous year: €110,616m).

(11) Claims on customers

€m	30.6.2011	31.12.2010	Change in %
With an indefinite residual term	28,975	21,098	37.3
With a residual term up to three months over three months to one year over one year to five years	296,938 54,333 39,115 102,829	315,774 59,879 40,818 110,558	– 6.0 – 9.3 – 4.2 – 7.0
over five years Total	100,661 325,913	104,519 336,872	– 3.7 – 3.3
of which reverse repos and cash collaterals	38,154	29,963	27.3
of which relate to the category: Loans and receivables Available-for-sale financial assets	289,514 –	308,456 –	– 6.1
At fair value through profit or loss	36,399	28,416	28.1

Claims on customers after deduction of loan loss provisions amounted to €317,315m (previous year: €327,755m).

(12) Total lending

€m	30.6.2011	31.12.2010	Change in %
Loans to banks	25,153	23,404	7.5
Loans to customers	287,052	306,912	– 6.5
Total	312,205	330,316	– 5.5

We distinguish loans from claims on banks and customers such that only claims for which a special loan agreement has been concluded with the borrower are shown as loans. Interbank money market transactions and reverse repo transactions, for example, are thus not shown as loans. Acceptance credits are also included in loans to customers.

(13) Loan loss provisions

Provisions for loan losses are made in accordance with rules that apply Group-wide and cover all discernible credit risks. For loan losses that have already occurred but are not yet known, portfolio valuation allowances have been calculated in line with procedures derived from the Basel II methodology.

Development of provisioning  €m	2011	2010	Change in %
As at 1.1.	10,072	10,451	– 3.6
Allocations	1,762	2,297	– 23.3
Deductions	2,133	1,949	9.4
Utilization	836	893	– 6.4
Reversals	1,297	1,056	22.8
Change in group of consolidated companies	–	–
Exchange rate changes/reclassifications/unwinding	– 339	173
As at 30.6.	9,362	10,972	– 14.7

With direct write-downs, write-ups and recoveries on written-down claims taken into account, the allocations and reversals recognized in profit or loss resulted in provisions of €596m (June 30, 2010: €1,283m) (see Note 2).

Loan loss provisions  €m	30.6.2011	31.12.2010	Change in %
Specific valuation allowances	7,863	8,361	– 6.0
Portfolio valuation allowances	970	1,096	– 11.5
Provisions for on-balance-sheet loan losses	8,833	9,457	– 6.6
Specific loan loss provisions	341	384	– 11.2
Portfolio loan loss provisions	188	231	– 18.6
Provisions for off-balance-sheet loan losses	529	615	– 14.0
Total	9,362	10,072	– 7.0

For claims on banks, loan loss provisions amounted to €235m (previous year: €340m) and for claims on customers to €8,598m (previous year: €9,117m).

• 53 Statement of comprehensive income 57 Balance sheet
• 59 Statement of changes in equity
• 62 Cash flow statement
• • 63 Selected notes

(14) Trading assets

The Group's trading activities include trading in:

• Bonds, notes and other interest-rate-related securities,
• Shares and other equity-related securities and units in investment funds,
• Promissory note loans and other claims,
• Foreign currencies and precious metals,
• Derivative financial instruments and
• Other assets held for trading.

Other assets held for trading comprise positive fair values of loans for syndication and emission rights as well as loans and money market trading transactions.

All the items in the trading portfolio are shown at their fair value.

The positive fair values also include derivative financial instruments which cannot be used as hedging instruments in hedge accounting.

€m	30.6.2011	31.12.2010	Change in %
Bonds, notes and other interest-rate-related securities	24,502	30,305	– 19.1
Promissory note loans	1,401	1,810	– 22.6
Shares, other equity-related securities and units in investment funds	13,515	11,704	15.5
Positive fair values of derivative financial instruments	99,795	123,743	– 19.4
Currency-related derivative transactions	15,271	18,345	– 16.8
Interest-rate-related derivative transactions	77,742	97,012	– 19.9
Other derivative transactions	6,782	8,386	– 19.1
Other trading assets	366	263	39.2
Total	139,579	167,825	– 16.8

Other transactions involving positive fair values of derivative financial instruments consisted mainly of €3,586m (previous year: €4,125m) in equity derivatives and €2,885m (previous year: €3,565m) in credit derivatives.

(15) Financial investments

Financial investments are financial instruments not assigned to any other balance sheet item. They comprise bonds, notes and other interest-rate-related securities, shares and other equity-related securities not used for trading purposes, as well as units in investment funds, equity holdings (including companies not accounted for using the equity method and joint ventures) and holdings in non-consolidated subsidiaries.

€m	30.6.2011	31.12.2010	Change in %
Bonds, notes and other interest-rate-related securities1	103,937	113,493	– 8.4
Shares, other equity-related securities and units in investment funds	1,152	1,284	– 10.3
Equity holdings	651	807	– 19.3
Holdings in non-consolidated subsidiaries	132	124	6.5
Total	105,872	115,708	– 8.5
of which relate to the category:
Loans and receivables1	62,941	70,435	– 10.6
Available-for-sale financial assets	38,322	41,764	– 8.2
of which measured at amortized cost	380	372	2.2
At fair value through profit or loss	4,609	3,509	31.3

1 Reduced by portfolio valuation allowances for reclassified securities of €64m (previous year: €51m).

In its press release of October 13, 2008, the IASB issued an amendment to IAS 39 relating to the reclassification of financial instruments. In accordance with the amendment, securities in the Public Finance portfolio for which there was no active market were reclassified from the IAS 39 availablefor-sale financial assets category to the IAS 39 loans and receivables category in the financial years 2008 and 2009. The fair value at the date of reclassification was recognized as the new carrying amount of these securities.

The revaluation reserve after deferred taxes for all the securities reclassified in financial years 2008 and 2009 was €–0.8bn as at June 30, 2011 (previous year: €–1.0bn). Without these reclassifications, the revaluation reserve for these portfolios after deferred taxes would have been €–2.8bn (previous year: €–2.8bn) as at June 30, 2011; the carrying amount of these portfolios on the balance sheet date was €60.0bn (previous year: €67.1bn) and the fair value €57.1bn (previous year: €64.6bn).

• 53 Statement of comprehensive income 57 Balance sheet
• 59 Statement of changes in equity
• 62 Cash flow statement 63 Selected notes

(16) Intangible assets

€m	30.6.2011	31.12.2010	Change in %
Goodwill	2,062	2,081	– 0.9
Other intangible assets	969	1,020	– 5.0
Customer relationships	520	546	– 4.8
Brand names	8	9	– 11.1
In-house developed software	221	219	0.9
Other	220	246	– 10.6
Total	3,031	3,101	– 2.3

(17) Fixed assets

€m	30.6.2011	31.12.2010	Change in %
Land and buildings	852	874	– 2.5
Office furniture and equipment	659	716	– 8.0
Total	1,511	1,590	– 5.0

(18) Other assets

€m	30.6.2011	31.12.2010	Change in %
Collection items	11	612	– 98.2
Precious metals	854	671	27.3
Leased equipment	210	221	– 5.0
Accrued and deferred items	330	340	– 2.9
Initial/variation margins receivable	2,307	2,636	– 12.5
Other assets	2,479	2,869	– 13.6
Total	6,191	7,349	– 15.8

(19) Liabilities to banks

€m	30.6.2011	31.12.2010	Change in %
Due on demand	45,048	50,179	– 10.2
With a residual term up to three months over three months to one year over one year to five years	67,435 35,938 5,478 12,404	87,447 56,284 4,634 13,315	– 22.9 – 36.1 18.2 – 6.8
over five years Total	13,615 112,483	13,214 137,626	3.0 – 18.3
of which repos und cash collaterals	40,286	44,016	– 8.5
of which relate to the category: Liabilities measured at amortized cost At fair value through profit or loss	70,807 41,676	95,154 42,472	– 25.6 – 1.9

(20) Liabilities to customers

€m	30.6.2011	31.12.2010	Change in %
Savings deposits	7,267	6,556	10.8
With an agreed period of notice of three months over three months	6,661 606	5,700 856	16.9 – 29.2
Other liabilities to customers	254,860	256,271	– 0.6
Due on demand With a residual term up to three months over three months to one year over one year to five years over five years	131,096 123,764 62,357 15,226 12,426 33,755	143,807 112,464 48,616 15,624 12,980 35,244	– 8.8 10.0 28.3 – 2.5 – 4.3 – 4.2
Total	262,127	262,827	– 0.3
of which repos und cash collaterals	36,311	18,106
of which relate to the category: Liabilities measured at amortized cost At fair value through profit or loss	223,487 38,640	243,177 19,650	– 8.1 96.6

(21) Securitized liabilities

Securitized liabilities consist of bonds and notes,including mortgage and public-sector Pfandbriefe, money market instruments (e.g. certificates of deposit, euro notes, commercial paper), index certificates, own acceptances and promissory notes outstanding.

€m	30.6.2011	31.12.2010	Change in %
Bonds and notes issued	106,099	116,270	– 8.7
of which Mortgage Pfandbriefe	31,700	28,744	10.3
Public-sector Pfandbriefe	36,295	48,495	– 25.2
Money market instruments issued	11,539	15,024	– 23.2
Own acceptances and promissory notes outstanding	56	62	– 9.7
Total	117,694	131,356	– 10.4
of which relate to the category:
Liabilities measured at amortized cost	113,378	128,150	– 11.5
At fair value through profit or loss	4,316	3,206	34.6

Residual maturities of securitized liabilities €m	30.6.2011	31.12.2010	Change in %
Due on demand	–	62
With a residual term	117,694	131,294	– 10.4
up to three months	16,471	23,679	– 30.4
over three months to one year	20,032	18,011	11.2
over one year to five years	59,793	66,248	– 9.7
over five years	21,398	23,356	– 8.4
Total	117,694	131,356	– 10.4

In the first half of 2011, major new issues with a total volume of €34.2bn (of which €0.6bn from top-ups) were floated. In the same period the volume of redemptions/repurchases amounted to €1.8bn and the volume of bonds maturing to €45.4bn.

• 53 Statement of comprehensive income
• 57 Balance sheet 59 Statement of changes in equity
• 62 Cash flow statement
• 63 Selected notes

Trading liabilities show the negative fair values of derivative financial instruments that do not qualify for hedge accounting as well as lending commitments with negative fair values. Own issues in the trading book and delivery commitments arising from short sales of securities are also included under trading liabilities.

€m	30.6.2011	31.12.2010	Change in %
Currency-related derivative transactions	15,741	19,368	– 18.7
Interest-rate-related derivative transactions	80,024	100,479	– 20.4
Other derivative transactions	8,906	10,248	– 13.1
Certificates and other notes issued	9,501	9,070	4.8
Delivery commitments arising from short sales of securities, negative market values of lending commitments and other trading liabilities	11,853	13,228	– 10.4
Total	126,025	152,393	– 17.3

Other derivative transactions consisted mainly of €5,021m (previous year: €5,803m) in equity derivatives and €3,352m (previous year: €3,782m) in credit derivatives.

(23) Provisions

€m	30.6.2011	31.12.2010	Change in %
Provisions for pensions and similar commitments	466	539	– 13.5
Other provisions	3,699	4,239	– 12.7
Total	4,165	4,778	– 12.8

(24) Other liabilities

€m	30.6.2011	31.12.2010	Change in %
Liabilities attributable to film funds	2,183	2,197	– 0.6
Liabilities attributable to non-controlling interests	3,098	2,290	35.3
Accrued and deferred items	287	559	– 48.7
Variation margins payable	275	295	– 6.8
Other liabilities	3,114	2,795	11.4
Total	8,957	8,136	10.1

(25) Subordinated capital

€m	30.6.2011	31.12.2010	Change in %
Subordinated liabilities	12,271	11,256	9.0
Profit-sharing certificates	1,214	1,259	– 3.6
Accrued interest, including discounts	– 165	– 187	– 11.8
Remeasurement effects	382	582	– 34.4
Total	13,702	12,910	6.1
of which relate to the category:
Liabilities measured at amortized cost	13,679	12,886	6.2
At fair value through profit or loss	23	24	– 4.2

In the first six months of 2011, the volume of new issues under subordinated liabilities amounted to €3.1bn and the volume of redemptions/repayments to €1.2bn. Additionally, issues with a total volume of €0.8bn matured in the period. There were no significant changes recorded for profitsharing certificates.

(26) Hybrid capital

€m	30.6.2011	31.12.2010	Change in %
Hybrid capital	3,815	5,005	– 23.8
Accrued interest, including discounts	– 964	– 1,084	– 11.1
Remeasurement effects	255	260	– 1.9
Total	3,106	4,181	– 25.7
of which relate to the category: Liabilities measured at amortized cost At fair value through profit or loss	3,106 –	4,181 –	– 25.7

The €0.9bn decline in the first half of 2011 was related to the capital increase for non-cash contributions in January 2011 (see page 60).

• 53 Statement of comprehensive income
• 57 Balance sheet 59 Statement of changes in equity
• 62 Cash flow statement 63 Selected notes

Other notes

(27) Capital requirements and capital ratios

€m	30.6.2011	31.12.2010	Change in %
Core capital (Tier I)	27,692	31,727	– 12.7
Supplementary capital (Tier II)	10,421	9,130	14.1
Tier III capital	–	–
Eligible equity	38,113	40,857	– 6.7

€m	30.6.2011	31.12.2010	Change in %
Capital adequacy requirement credit risk	16,530	18,595	– 11.1
Capital adequacy requirement market risk	858	1,059	– 19.0
Capital adequacy requirement operational risk	1,771	1,746	1.4
Total capital requirement	19,159	21,400	– 10.5
Eligible equity	38,113	40,857	– 6.7
Core capital ratio (%)	11.6	11.9
Own funds ratio (%)	15.9	15.3

(28) Contingent liabilities and irrevocable lending commitments

€m	30.6.2011	31.12.2010	Change in %
Contingent liabilities	37,388	38,096	– 1.9
from rediscounted bills of exchange credited to borrowers	2	3	– 33.3
from guarantees and indemnity agreements	37,386	38,087	– 1.8
from other commitments	–	6	– 100.0
Irrevocable lending commitments	56,033	60,566	– 7.5

Provisions for contingent liabilities and irrevocable lending commitments have been deducted from the respective items.

(29) Derivative transactions

The nominal amounts and fair values in derivatives business (investment and trading books) were as follows:

			Nominal amount by residual term				Fair value
30.6.2011	due on demand	up to 3 months	over 3 months	over 1 to 5 years	over 5 years	Total	positive	negative
€m			to 1 year
Foreign-currency-based forward transactions	3	341,928	190,824	161,292	92,184	786,231	16,017	15,960
Interest-based forward transactions	15	675,344	1,812,792	3,229,178	2,978,064	8,695,393	222,969	229,070
Other forward transactions	993	52,735	114,103	211,698	23,666	403,195	6,822	8,946
Total	1,011	1,070,007	2,117,719	3,602,168	3,093,914	9,884,819	245,808	253,976
of which
exchange-traded Net position in the balance sheet	–	33,927	174,182	46,040	6,664	260,813	103,609	111,777

			Nominal amount by residual term				Fair value
31.12.2010 €m	due on demand	up to 3 months	over 3 months to 1 year	over 1 to 5 years	over 5 years	Total	positive	negative
Foreign-currency-based forward transactions	4	559,382	269,866	229,003	128,309	1,186,564	18,960	19,716
Interest-based forward transactions	23	936,704	1,784,901	3,790,639	3,564,154	10,076,421	308,399	316,541
Other forward transactions	1,436	50,654	101,124	206,039	26,255	385,508	8,433	10,295
Total	1,463	1,546,740	2,155,891	4,225,681	3,718,718	11,648,493	335,792	346,552
of which
exchange-traded Net position in the balance sheet	–	32,089	175,565	45,266	5,595	258,515	128,704	139,464

• 53 Statement of comprehensive income 57 Balance sheet
• 59 Statement of changes in equity
• 62 Cash flow statement

63 Selected notes

(30) Fair value of financial instruments

		Fair value		Carrying amount		Difference
€bn	30.6.2011	31.12.2010	30.6.2011	31.12.2010	30.6.2011	31.12.2010
Assets
Cash reserve	6.7	8.1	6.7	8.1	–	–
Claims on banks	92.2	110.5	92.3	110.6	– 0.1	– 0.1
Claims on customers	315.7	327.3	317.3	327.8	– 1.6	– 0.5
Value adjustment portfolio fair value hedges1	0.0	0.0	0.0	0.1	0.0	– 0.1
Positive fair values of derivative hedging instruments	3.8	5.0	3.8	5.0	–	–
Trading assets	139.6	167.8	139.6	167.8	–	–
Financial investments	103.1	113.1	105.9	115.7	– 2.8	– 2.6
Holdings in companies accounted for using the equity method	0.7	0.7	0.7	0.7	–	–
Liabilities
Liabilities to banks	112.8	137.7	112.5	137.6	0.3	0.1
Liabilities to customers	261.8	262.6	262.1	262.8	– 0.3	– 0.2
Securitized liabilities	117.8	130.3	117.7	131.4	0.1	– 1.1
Value adjustment portfolio fair value hedges1	0.0	0.0	0.0	0.1	0.0	– 0.1
Negative fair values of derivative hedging instruments	7.1	9.4	7.1	9.4	–	–
Trading liabilities	126.0	152.4	126.0	152.4	–	–
Subordinated and hybrid capital	15.9	14.5	16.8	17.1	– 0.9	– 2.6

1 The fair value adjustments on portfolio fair value hedges are contained in the relevant balance sheet line items of the hedged items.

In the tables below the financial instruments reported in the balance sheet at fair value are grouped by balance sheet item and category. They are broken down according to whether fair value is based on quoted market prices (Level I), observable market data (Level II) or unobservable market data (Level III).

		Level I	Level II	Level III	Total	Level I1	Level II1	Level III	Total
Financial assets €bn				30.6.2011			31.12.2010
Claims on banks	At fair value through profit or loss	–	42.7	–	42.7	–	48.1	–	48.1
Claims on customers	At fair value through profit or loss	0.5	35.7	0.2	36.4	0.2	27.6	0.6	28.4
Positive fair values of derivative hedging instruments	Hedge accounting	–	3.8	–	3.8	–	5.0	–	5.0
Trading assets	Held for trading	32.6	104.0	3.0	139.6	40.0	123.8	4.0	167.8
of which positive fair values from derivatives		–	98.5	1.3	99.8	–	123.0	0.7	123.7
Financial investments	At fair value through profit or loss	4.3	–	0.3	4.6	3.5	–	–	3.5
	Available-for-sale	35.9	1.4	1.0	38.3	38.4	2.1	1.3	41.8
Total		73.3	187.6	4.5	265.4	82.1	206.6	5.9	294.6

1 Prior-year figures restated (available-for-sale financial assets only).

		Level I	Level II	Level III	Total	Level I1	Level II1	Level III	Total
Financial liabilities €bn				30.6.2011			31.12.2010
Liabilities to banks	At fair value through profit or loss	0.1	41.6	–	41.7	0.6	41.9	–	42.5
Liabilities to customers	At fair value through profit or loss	1.3	37.4	–	38.7	1.3	18.4	–	19.7
Securitized liabilities	At fair value through profit or loss	4.3	–	–	4.3	3.2	–	–	3.2
Negative fair values of derivative hedging instruments	Hedge accounting	–	6.3	0.8	7.1	–	9.4	–	9.4
Trading liabilities	Held for trading	21.1	104.7	0.2	126.0	21.0	130.1	1.3	152.4
of which negative fair values from derivatives		–	104.7	–	104.7	–	130.1	–	130.1
Subordinated capital	At fair value through profit or loss	–	–	–	–	–	–	–	–
Total		26.8	190.0	1.0	217.8	26.1	199.8	1.3	227.2

¹ Prior-year figures restated (trading liabilities only).

In the first six months of 2011 we reclassified €5.5bn bonds of public sector and private issuers held for trading purposes from Level I to Level II, as no quoted prices on active markets could be obtained for these securities. Beyond these, there were no other significant reclassifications between Level I, Level II and Level III.

• 53 Statement of comprehensive income 57 Balance sheet
• 59 Statement of changes in equity
• 62 Cash flow statement 63 Selected notes

(31) Treasury shares

	Number of shares in units	Accounting par value1 in €1,000	Percentage of share capital
Balance as at 30.6.2011	63,984	64	0.00
Largest number acquired during the financial year	33,123,677	33,124	0.65
Total shares pledged by customers as collateral as at 30.6.2011	23,808,576	23,809	0.47
Shares acquired during the financial year	499,902,970	499,903
Shares disposed of during the financial year	509,154,321	509,154

1 Accounting par value per share €1.00.

(32) Related party transactions

As part of its normal business activities, the Commerzbank Group does business with related parties. These include parties that are controlled but not consolidated for reasons of materiality, companies accounted for using the equity method, equity holdings, external providers of occupational pensions for employees of Commerzbank Aktiengesellschaft, key management personnel and members of their families as well as companies controlled by these persons. Key management personnel refers exclusively to members of Commerzbank Aktiengesellschaft's Board of Managing Directors and Supervisory Board.

As the guarantor of the Financial Market Stabilization Authority, which administers the Special Fund for Financial Market Stabilization (SoFFin), the German federal government holds a stake of 25% plus one share in Commerzbank Aktiengesellschaft, which gives it the potential to exert significant influence over the Company. As a result the German federal government and entities controlled by it constitute related parties as defined by IAS 24. In the following we present relationships with federal government-controlled entities separately from relationships with other related parties.

Assets, liabilities and off-balance sheet items involving related parties (excluding federal government-controlled entities) were as follows:

€m	30.6.2011	31.12.2010	Change in %
Claims on banks	480	617	– 22.2
Claims on customers	1,523	1,359	12.1
Trading assets	–	1,285	– 100.0
Financial investments	77	82	– 6.1
Other assets	369	298	23.8
Total	2,449	3,641	– 32.7
Liabilities to banks	10	5	100.0
Liabilities to customers	1,715	1,607	6.7
Trading liabilities	–	2,021	– 100.0
Other liabilities	12	16	– 25.0
Total	1,737	3,649	– 52.4
Off-balance-sheet items
Guarantees and collaterals granted	701	590	18.8
Guarantees and collaterals received	7	7	0.0

The following income and expenses arose from loan agreements with, deposits from and services provided in connection with related parties (excluding federal government-controlled entities):

€m	1.1.–30.6.2011	1.1.–30.6.2010	Change in %
Income
Interest income	71	32
Commission income	3	21	– 85.7
Trade	–	3	– 100.0
Expenses
Interest expense	41	29	41.4
Commission expense	15	7
Trade	28	10
Write-downs/impairments	–	–

The Commerzbank Group conducts transactions with federal government-controlled entities as part of its ordinary business activities on standard market terms and conditions. Assets and liabilities and off-balance-sheet items in connection with federal government-controlled entities changed as follows in the reporting period:

€m	30.6.2011	31.12.2010	Change in %
Cash reserve	358	1,111	– 67.8
Claims on banks	292	726	– 59.8
Claims on customers	2,191	2,991	– 26.7
Trading assets	4,814	5,040	– 4.5
Financial investments	7,105	7,079	0.4
Total	14,760	16,947	– 12.9
Liabilities to banks	13,117	15,262	– 14.1
Liabilities to customers	248	88
Trading liabilities	2,488	1,9511	27.5
Silent participation	1,937	16,428	– 88.2
Total	17,790	33,729	– 47.3
Off-balance-sheet items
Guarantees and collaterals granted	73	298	– 75.5
Guarantees and collaterals received	5,000	5,000	0.0

1 Prior-year figure restated.

Income and expenses for transactions with federal government-controlled entities were as follows:

1.1.–30.6.2011 €m	Income	Expenses
Interest	298	45
Commission	–	24
Trade	4	–
Write-downs/impairments	–	3

• 53 Statement of comprehensive income 57 Balance sheet
• 59 Statement of changes in equity
• 62 Cash flow statement
• 63 Selected notes

We confirm that, to the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the interim consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the interim management report of the Group presents a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the prospective development of the Group during the remaining months of the financial year.

The Board of Managing Directors

Frankfurt/Main, August 2, 2011

Martin Blessing Frank Annuscheit Markus Beumer

Jochen Klösges Michael Reuther Stefan Schmittmann

Boards of Commerzbank Aktiengesellschaft

Supervisory Board

Klaus-Peter Müller Chairman Uwe Tschäge1 Deputy Chairman Hans-Hermann Altenschmidt¹ Dott. Sergio Balbinot Dr.-Ing. Burckhard Bergmann Dr. Nikolaus von Bomhard Karin van Brummelen¹

Astrid Evers¹ Uwe Foullong¹ Daniel Hampel1

Dr.-Ing. Otto Happel

Beate Hoffmann1 (since May 6, 2011)

Sonja Kasischke1 (until May 6, 2011)

Prof. Dr.-Ing. Dr.-Ing. E.h. Hans-Peter Keitel

Alexandra Krieger1

Dr. h.c. Edgar Meister

Prof. h.c. (CHN) Dr. rer. oec. Ulrich Middelmann

Dr. Helmut Perlet

Barbara Priester1

Mark Roach1 (since January 10, 2011)

Dr. Marcus Schenck

Dr. Walter Seipp Honorary Chairman

1 Elected by the Bank's employees.

Board of Managing Directors

Martin Blessing Chairman Frank Annuscheit Markus Beumer

Dr. Achim Kassow (until July 12, 2011) Jochen Klösges Michael Reuther

Dr. Stefan Schmittmann Ulrich Sieber Dr. Eric Strutz Martin Zielke

Review Report¹

To COMMERZBANK Aktiengesellschaft, Frankfurt/Main

We have reviewed the condensed consolidated interim financial statements – comprising the statement of financial position, statement of comprehensive income, condensed statement of cash flows, statement of changes in equity and selected explanatory notes – and the interim group management report of COMMERZBANK Aktiengesellschaft, Frankfurt am Main, for the period from 1 January to 30 June, 2011 which are part of the half-year financial report pursuant to § (Article) 37w WpHG ("Wertpapierhandelsgesetz": German Securities Trading Act). The preparation of the condensed consolidated interim financial statements in accordance with the IFRS applicable to interim financial reporting as adopted by the EU and of the interim group management report in accordance with the provisions of the German Securities Trading Act applicable to interim group management reports is the responsibility of the parent Company's Board of Managing Directors. Our responsibility is to issue a review report on the condensed consolidated interim financial statements and on the interim group management report based on our review.

We conducted our review of the condensed consolidated interim financial statements and the interim group management report in accordance with German generally accepted standards for the review of financial statements promulgated by the Institut der Wirtschaftsprüfer (Institute of Public Auditors in Germany) (IDW). Those standards require that we plan and perform the review so that we can preclude through critical evaluation, with moderate assurance, that the condensed consolidated interim financial statements have not been prepared, in all material respects, in accordance with the IFRS applicable to interim financial reporting as adopted by the EU and that the interim group management report has not been prepared, in all material respects, in accordance with the provisions of the German Securities Trading Act applicable to interim group management reports.

1

A review is limited primarily to inquiries of company personnel and analytical procedures and therefore does not provide the assurance attainable in a financial statement audit. Since, in accordance with our engagement, we have not performed a financial statement audit, we cannot express an audit opinion.

Based on our review, no matters have come to our attention that cause us to presume that the condensed consolidated interim financial statements have not been prepared, in all material respects, in accordance with the IFRS applicable to interim financial reporting as adopted by the EU nor that the interim group management report has not been prepared, in all material respects, in accordance with the provisions of the German Securities Trading Act applicable to interim group management reports.

Frankfurt/Main, August 3, 2011

PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft

Peter Goldschmidt Stephan Erb Wirtschaftsprüfer Wirtschaftsprüfer (German Public Auditor) (German Public Auditor)

Translation of the auditor's review report issued in German language on the condensed consolidated interim financial statements prepared in German language by the management of COMMERZBANK Aktiengesellschaft, Frankfurt/Main. The German language statements are decisive.

Significant subsidiaries and associates

Germany

Atlas Vermögensverwaltungs-Gesellschaft mbH, Bad Homburg v.d.H. comdirect bank AG, Quickborn Commerz Real AG, Eschborn Deutsche Schiffsbank AG, Bremen/Hamburg Eurohypo AG, Eschborn

Abroad
BRE Bank SA, Warsaw
Commerzbank (Eurasija) SAO, Moscow
Commerzbank Europe (Ireland), Dublin
Commerzbank International S.A., Luxembourg
Commerzbank Zrt., Budapest
Commerz Markets LLC, New York
Erste Europäische Pfandbrief- und Kommunalkreditbank AG, Luxembourg
Public Joint Stock Company "Bank Forum", Kiev

Operative foreign branches

Amsterdam, Barcelona, Bratislava, Beijing, Brno (office), Brussels, Dubai, Hong Kong, Hradec Králové (office), Košice (office), London, Luxembourg, Madrid, Milan, New York, Ostrava (office), Paris, Plzeň (office), Prague, Shanghai, Singapore, Tianjin, Tokyo, Vienna, Zurich

Representative Offices and Financial Institutions Desks

Addis Ababa, Almaty, Ashgabat, Baku, Bangkok, Beijing (FI Desk), Beirut, Belgrade, Brussels (Liaison Office to the European Union), Bucharest, Buenos Aires, Cairo, Caracas, Dubai (FI Desk), Ho Chi Minh City, Hong Kong (FI Desk), Istanbul, Jakarta, Johannesburg, Kiev, Kuala Lumpur, Lagos, Melbourne, Milan (FI Desk), Minsk, Moscow, Mumbai, New York (FI Desk), Novosibirsk, Panama City, Riga, Santiago de Chile, São Paulo, Seoul, Shanghai (FI Desk), Singapore (FI Desk), Taipei, Tashkent, Tripoli, Zagreb

Disclaimer

Reservation regarding forward-looking statements

This interim report contains forward-looking statements on Commerzbank's business and earnings performance, which are based upon our current plans, estimates, forecasts and expectations. The statements entail risks and uncertainties, as there are a variety of factors which influence our business and to a great extent lie beyond our sphere of influence. Above all, these include the economic situation, the state of the financial markets worldwide and possible loan losses. Actual results and developments may, therefore, diverge considerably from our current assumptions, which, for this reason, are valid only at the time of publication. We undertake no obligation to revise our forward-looking statements in the light of either new information or unexpected events.

2011/2012 Financial calendar
November 4, 2011	Interim Report Q3 2011
End-March 2012	Annual Report 2011
Early-May 2012	Interim Report Q1 2012
Early-August 2012	Interim Report Q2 2012
Early-November 2012	Interim Report Q3 2012

Commerzbank AG

Head Office Kaiserplatz Frankfurt am Main www.commerzbank.com

Postal address 60261 Frankfurt am Main Tel. +49 (0)69 / 136-20 info@commerzbank.com

Investor Relations Tel. +49 (0)69 / 136-2 22 55 Fax +49 (0)69 / 136-2 94 92 ir@commerzbank.com

VKI 02051