Commerzbank AG — Management Reports 2009

May 8, 2009

News Details

Corporate | 8 May 2009 06:59

Roadmap 2012: Commerzbank introduces new strategic, operational and personnel structure

Commerzbank AG / Quarter Results/Strategic Company Decision

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

---

Roadmap 2012: Commerzbank introduces new strategic, operational and
personnel structure

• Focus on Germany-related client business - optimization of asset-based
  loan business - reduction of portfolios not fitting the core business

• Return to profitability no later than 2011 - operating profit of more
  than EUR 4 bn p.a. from 2012 - return on equity after tax around 12%
  from 2012

• Operating profit in the first quarter 2009 minus EUR 591 million - core
  capital ratio (Tier 1) of 10.2% (including SoFFin funds) - measures
  beginning to take effect

• Blessing: 'We are focusing on our strengths as the house bank for
  private and corporate customers in Germany'

Against the backdrop of the financial markets and economic crisis as well
as the integration of Dresdner Bank, Commerzbank is introducing a new
strategic, operational and personnel structure. With its new strategic
three-way-programme 'Roadmap 2012', Commerzbank wants to reinforce its
position as market leader in the German private and corporate customer
banking business. The focus is on a profitable customer bank, along with
the optimization of the asset-based loan business of commercial real estate
and public finance activities and, in addition, the active management and
reduction of portfolios not fitting the bank's core business.

'The Private Customer and Mittelstandsbank segments, client-focused
Corporates & Markets activities as well as Central and Eastern Europe will
be at the heart of the new Commerzbank. We want to fully exploit our
earnings potential and to continue gaining market share,' said Martin
Blessing, Chairman of the Board of Managing Directors of Commerzbank.
'Roadmap 2012 is our response to the challenges of the financial markets
and the economic crisis and follows the logic of the Dresdner Bank
takeover: we are focusing on our strengths as the house bank for private
and corporate customers in Germany and adapting our business model
accordingly. We want to return to profitability no later than 2011.
Starting in 2012, we want to achieve an operating profit of more than EUR 4
billion p.a. and a return on equity after tax of around 12%. This is
appropriate for our business model and our risk profile. By 2012 the
risk-weighted assets of the bank will be reduced to EUR 290 billion.'

Having successfully concluded talks with the European Commission, the bank
can now increase its core capital (Tier 1) by EUR 10 billion. Taking all
SoFFin funds into account, the core capital ratio (Tier 1) stands at pro
forma 10.2% as of March 31, 2009. This strengthening of equity capital is
tied to certain conditions. By 2014 the bank will be required to divest
Eurohypo and some of its smaller holdings. Further, Commerzbank's balance
sheet total (incl. Dresdner Bank) shall be reduced by the end of 2012 from
some EUR 1,100 billion (as at December 31, 2008) to EUR 900 billion. Taking
the proposed divestment of Eurohypo into account, the balance sheet total
will be reduced to EUR 600 billion. Acquisitions will in principle not be
possible for three years.

Personnel changes on the board of management

The new orientation of the Group is also reflected in personnel changes on
the board of management and a new division of responsibilities: Ulrich
Sieber, head of the group area Human Resources at Commerzbank, and Jochen
Klösges, head of Group Development, are being appointed to the board of
management as of June 1. Ulrich Sieber will be responsible for the area of
Human Resources and Integration at board level; Jochen Klösges for the
newly-created segment Real Estate and Public Finance. As of June 1, Chief
Financial Officer Eric Strutz will also take over the new Portfolio
Restructuring Unit. Achim Kassow, responsible for Private Clients, will
also be responsible for the segment Central & Eastern Europe from June 1
onwards.

Furthermore, Stefan Schmittmann, to date responsible on the board for the
areas Commercial Real Estate and Central & Eastern Europe, was yesterday
appointed as the new Chief Risk Officer of Commerzbank. Prior to moving to
Commerzbank, at the end of 2008 Stefan Schmittmann was a member of the
board of Bayerische Hypo- und Vereinsbank AG and a member of the Executive
Committee of UniCredit's Corporate Division. He is regarded as a proven
expert in the field of risk management and controlling, with many years of
experience as Chief Risk Officer.

Focus on Private Customers, Mittelstandsbank, CEE and client-focused C&M
business

In the Private Customer segment, the new Commerzbank will have the largest
consultant network in the German banking market, with some 1,200 branches
and 10,000 employees. Its already strong market position will be further
enhanced by the fast integration of Dresdner Bank and strict cost
management. The segment aims for a return on equity before tax of more than
30% by 2012. Operating profit will also increase relative to the successful
financial year 2008. The cost income ratio will be significantly decreased.

The Mittelstandsbank segment will focus on servicing German companies in
the domestic as well as international markets. Already today some 20% of
German foreign trade is channelled through the new Commerzbank. The
position of leading export financier for German industry is to be further
enhanced. The bank is also aiming to become the preferred point of contact
for foreign companies doing business in Germany. Purely foreign business,
for example financing for foreign companies without connection to Germany,
will no longer be taken on. A further growth area to be pursued is business
with companies generating an annual turnover of up to approximately EUR
12.5 million. In 2012, the target operating result for Mittelstandsbank
will be more than EUR 1.5 billion and thus clearly higher than the
respective 2008 figure. The cost income ratio will be improved in this
segment as well. Due to market conditions it should be expected that
risk-weighted assets will increase slightly.

The Eastern European economy will grow more strongly than Western Europe
and the US over the mid- and long-term. In its Central and Eastern Europe
segment (CEE) Commerzbank will focus on its existing activities in 2009 and
2010. In 2012, CEE is set to achieve an operating profit in excess of EUR
350 million. The cost base will be further reduced. Notwithstanding
difficult market conditions, risk-weighted assets are expected to remain
stable. Return on equity before tax will also remain approximately on the
same level as 2008.

Corporates & Markets (C&M) will concentrate on client-focused services for
the core customers of Commerzbank. Other activities will be exited or
discontinued. The investment banking activities of Dresdner Kleinwort will
be integrated into Commerzbank's organisational structures and will be
mainly based in Frankfurt and London. The operating result should
significantly increase by 2012. Return on equity before tax will come in at
above 20%. The cost-income ratio, too, will improve considerably while
risk-weighted assets will be clearly reduced in volume.

In Commercial Real Estate, Public Finance and Shipping, risk-weighted
assets will be reduced and activities refocused. In commercial real estate
financing, Commerzbank will reduce its portfolio from today's EUR 80
billion approximately (as of year-end 2008) to about EUR 60 billion by the
end of 2012. In Public Finance, a reduction to a maximum portfolio of EUR
100 billion is planned by 2010. Shipping finance activities will also be
refocused. In all of the three areas of the asset based business, the bank
will pursue new business only very selectively. Eurohypo will in future
focus on core clients in 10 markets worldwide. From the end of 2011 onwards
one-third of the current cost base - equalling around EUR 110 million
annually - will be cut. As part of the restructuring, 390 full-time
positions will be reduced by the end of 2011.

Portfolios not fitting the new bank's client-focused profile (such as ABS,
MBS, CDOs, and various types of credit derivatives) totalling some EUR 38
billion will be merged into the separate Portfolio Restructuring Unit
(PRU), actively managed and reduced as optimally as possible.

Measures begin to take effect and stabilize operations in the first quarter
of 2009

Operating profit was at minus EUR 591 million in the first quarter of 2009,
compared with an operating pro-forma profit of EUR 470 million as at March
31, 2008. Excluding one-off effects, the operating profit for the recent
three month period was positive at EUR 643 million. Despite the continuing
difficult market environment, the core business areas Private Customers
(EUR 48 million) and Mittelstandsbank (EUR 339 million) have finished the
first three months of the financial year with a profit. However, they could
not compensate for the charges in Corporates & Markets (including Public
Finance: minus EUR 1.2 billion) and Commercial Real Estate (minus EUR 54
million). Notwithstanding this, initial success is being seen from
restructuring measures already taken especially in Corporates & Markets.
Customer business in Central and Eastern Europe remains robust. Also in
this segment cost management is taking effect. As loan loss provisions
increased, the operating profit was down at minus EUR 58 million.

In the first quarter of 2009 consolidated surplus after minority interests
was also negative (minus EUR 861 million). On a pro-forma basis it was EUR
236 million year-on-year. Also contributing to the quarterly loss were
charges from the financial markets turbulence as well as restructuring
costs (EUR 289 million) resulting from the Dresdner Bank integration. Due
to continuing market dislocation, the revaluation reserve came in at minus
EUR 2.9 billion. The balance sheet total of the new Commerzbank dropped in
the first quarter of 2009 to EUR 1,012 billion.

In Q1 2009 Net interest income increased by approximately 13% to some EUR
1.7 billion, after EUR 1.5 billion year-on-year. This mainly reflects the
strong customer and deposit growth in Mittelstandsbank and CEE. Due to
negative economic forecasts, loan loss provisions rose from a comparatively
low level by EUR 653 million to EUR 844 million year-on-year. Net
commission income fell by 28% to EUR 850 million. This is most notably due
to customer caution in securities transactions and M&A activities across
all segments.

Trading profit in the first quarter of 2009 (minus EUR 523 million)
suffered from ongoing volatile markets and further impairments on
structured credit products. At EUR 386 million, net investment income also
dropped relative to the first quarter of 2008 (EUR 467 million). Operating
expenses were down from EUR 2.3 billion in the first quarter of 2008 to
nearly EUR 2.1 billion in the first three months of the current financial
year.

In the Private Customer segment net interest income was stable in the first
quarter of 2009, while net commission income dropped year-on-year to EUR
502 million due to customer caution in securities transactions. Operating
expenses declined by 2% to EUR 981 million compared with the first quarter
of 2008. Customer growth was in line with the positive development of the
previous quarters: In spite of the difficult environment the new
Commerzbank gained net some 60,000 private customers from January to March
2009.

In the first quarter of 2009 the domestic loan business performed
positively in Mittelstandsbank and led to an increase in its already high
market share while foreign trade financing saw a decline due to a
significant slowdown in export volumes. Loan loss provisions of EUR 90
million reflect conservative economic estimates but should be expected to
increase further in the months to come.

In the Central and Eastern Europe segment, the number of new customers
continued to grow in the first quarter of 2009, following the positive
trend of last year. Net, BRE Bank acquired some 153,000 new customers,
while Bank Forum gained some 19,000.

In the first quarter of the financial year Corporates & Markets saw
impairments on the ABS portfolio which resulted in losses in both trading
profit and net investment income. Loan loss provisions increased to EUR 327
million. Reasons are in particular increasing risks in the area of
acquisition financing. Whilst the client business in total developed well,
portfolios now allocated to the Portfolio Restructuring Unit burdened the
segment result by approximately EUR 1.2 billion.

Due to a scaling back of new business, net commission income in Commercial
Real Estate decreased by 40% in the first quarter of 2009 to EUR 69
million. Primarily activities in the US and Spain caused an increase in
loan loss provisions from EUR 62 million in the first quarter of 2008 to
EUR 189 million in the first quarter of 2009. Further write-downs were
made to the US-RMBS portfolio by the amount of EUR 55 million. Overall, the
RMBS portfolio is impaired to about 80%.

Outlook: Synergies will be realised as expected

A forecast for all of 2009 is currently not possible due to the continued
market deterioration. 'We have successfully launched the new Commerzbank
over the last months and we have laid the foundation to emerge strengthened
from the crisis,' noted Eric Strutz, CFO of Commerzbank. 'The synergies
created by the Dresdner Bank merger will be realised as expected and
beginning in 2011 our customer bank will reap above average benefits from
an economic recovery.'

Operating expenses will be cut to below EUR 8 billion by the end of 2010.
Assuming the return of normal market conditions, the SoFFin's silent
participation can start to be repaid from 2012 onwards. The Commerzbank
Group's refinancing needs of EUR 20 billion for 2009 is about 60% covered
after the successful issue of securities at the beginning of the year.

Blessing: 'We have tackled the challenges, we have stabilized the bank and
we know how to solve the problems. We have developed a viable strategy and
structures capable for the future. This will enable us to further expand
our market leadership in the private and corporate customer business in
Germany.'

Excerpt from the consolidated profit and loss statement

in EUR m Q1 Q1 Q4
2009 20081) 20081)
Net interest income 1,692 1,491 2,245
Loan loss provisions - 844 - 191 - 1,976
Net commission income 850 1,180 1,064
Trading profit - 523 - 247 - 3,476
Net investment income 386 467 - 104
Other result - 71 45 - 151
Operating expenses 2,081 2,275 1,937
Operating profit - 591 470 - 4,335
Restructuring expenses 289 25 0
Taxes 8 154 1,126
Consolidated profit attributable to Commerzbank
shareholders - 861 236 - 5,450
Profit per share in EUR - 1.02 0.36 - 7.56
Return on equity on the consolidated surplus
in % - 7,0 -
Operating expense ratio in % 89.2 77,5 -

1) on a pro-forma basis

*****

A press conference will be held today, Friday, May 8, 2009 at 9:00 a.m.
(CEST) in the auditorium of Commerzbank AG, Kaiserplatz, Frankfurt am Main.
(Those in attendance should use the auditorium's entrance at Große
Gallusstraße 19.) During the press conference, Martin Blessing will present
the new Commerzbank's strategic focus. Eric Strutz will comment on the
developments in the first quarter of 2009, followed by a Q&A session with
all members of the Board of Managing Directors. Before the beginning of the
press conference presentations will be provided on the website of
Commerzbank. The speeches and the discussion will be transmitted live via
internet.

*****

This release contains statements concerning the expected future business of
Commerzbank, efficiency gains and synergies expected in connection with the
transaction, expected growth prospects and other opportunities for an
increase in value of the company as well as expected future net income per
share, restructuring costs and other financial data. These forward-looking
statements are based on management's current expectations, estimates and
projections. They are subject to a number of assumptions and involve known
and unknown risks, uncertainties and other factors that may cause actual
results and developments to differ materially from any future results and
developments expressed or implied by such forward-looking statements.
Commerzbank has no obligation to periodically update or release any
revisions to the forward-looking statements contained in this release to
reflect events or circumstances after the date of this release.

This release does not constitute an offer to sell or a solicitation of an
offer to buy shares of Commerzbank. Shares of Commerzbank may not be
offered or sold in the United States of America absent registration or an
exemption from registration under the U.S. Securities Act of 1933, as
amended. Commerzbank does not intend to conduct a public offering of shares
in the United States.

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

08.05.2009 Financial News transmitted by DGAP

Language: English
Issuer: Commerzbank AG
Kaiserplatz
60261 Frankfurt am Main
Deutschland
Phone: +49 (069) 136 20
Fax: -
E-mail: ir@commerzbank.com
Internet: www.commerzbank.de
ISIN: DE0008032004
WKN: 803200
Indices: DAX, CDAX, HDAX, PRIMEALL
Listed: Regulierter Markt in Berlin, Frankfurt (Prime Standard),
Hannover, München, Hamburg, Düsseldorf, Stuttgart;
Terminbörse EUREX; Foreign Exchange(s) London, SWX

End of News DGAP News-Service

---