investors´ day clear objectives for the future...frankfurt, september 21, 2006 investors´ day...
TRANSCRIPT
Frankfurt, September 21, 2006
Investors´ DAY
Clear objectives for the futureClear objectives for the futureClear objectives for the futureClear objectives for the future
Klaus-Peter MüllerChairman of the Board of Managing Directors
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Disclaimer
/ investor relations /
All presentations shown at Investors’ Day contain pro forma results for Q1 2006 and Q1-Q4 2005 to fully reflect the integration effect of Eurohypo. The pro forma results include Eurohypo results as if integrated as from January 1st, 2005 (incl. full refinancing costs), capital increase as if carried out before January 2005 (instead of November 2005) and issue of hybrid capital as if it took place before January 2005 (instead of March 2006). It shows segments’ quarterly results in the new Group structure and segments’ equity employed based on new calculation method./This presentation has been prepared and issued by Commerzbank AG. This publication is intended for professional and institutional investors./Any information in this presentation is based on data obtained from sources considered to be reliable, but no representations or guarantees are made by Commerzbank Group with regard to the accuracy of the data. The opinions and estimates contained herein constitute our best judgement at this date and time, and are subject to change without notice. This presentation is for information purposes; it is not intended to be and should not be construed as an offer or solicitation to acquire, or dispose of any of the securities or issues mentioned in this presentation./Commerzbank AG and/or its subsidiaries and/or affiliates (herein described as Commerzbank Group) may use the information in this presentation prior to its publication to its customers. Commerzbank Group or its employees may also own or build positions or trade in any such securities, issues, and derivatives thereon and may also sell them whenever considered appropriate. Commerzbank Group may also provide banking or other advisory services to interested parties./Commerzbank Group accepts no responsibility or liability whatsoever for any expense, loss or damages arising out of, or in any way connected with, the use of all or any part of this presentation./Copies of this document are available upon request or can be downloaded from www.commerzbank.com/aktionaere/index.html
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2. Clear Strategic Positioning
Targets4.
1. Improved Performance
Management Agenda: Growth & Profitability3.
Agenda
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CB-share vs. MSCINet earnings per share*in €
Dividend per sharein €
Commerzbank has delivered a strong track record of growth and value creation for shareholders
* 2005, 2006 pro forma full integration of Eurohypo
0.00
2003
0.25
2004
0.50
2005 2006e
Target >0.5
Investors’ Day 2006
Full year 2006p
2005
2.00
2004
0.61
2003-4.26
1H 2006
1.59
Jan.
03
Jul.
03
Jan.
04
Jul.
04
Jan.
05
Jul.
05
Jan.
06
Jul.
06
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Operating profitin €m
Operating RoEin %
Cost income ratioin %
2002 2003 2004 2005 1H 06
One off gains due to sale of participations*
146 431 550
2002 2003 2004 2005 1H 06
77.3 73.3 70.9
54.864.4
1H 04
1H 05
2002 2003 2004 2005 1H 06
Continuous increase in operating profit and RoE supported by improved efficiency
Full year 2006p
2,030
1,011559
192
1,7321H05
1.64.9
9.9
17.7
28.1
- -
* without refinancing and related items; 2002 and 2003 not published
Note: 2005, 2006 pro forma full integration of Eurohypo
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MittelstandContinues upward trend
Private & Bus. CustomersNearly stable operating profit
Asset ManagementHigher commission income
Corporates & MarketsExcellent and stabilized result
Commercial Real EstateGood progress
Public Finance & TreasuryStable result
Operating profit in €m
2005 1H 2006
Core segments making good progress
1H 20062005 2005 1H 2006
2005 1H 20062005 1H 2006 2005 1H 2006
* Op. RoE annualized
142157 6752283195
33850
230206 215208
Op. RoE 21.2% 19.7%* Op. RoE 24.1% 24.4%* Op. RoE 9.4% 11.5%*
Op. RoE 30.3% 36.4%* Op. RoE 10.9% 11.8%* Op. RoE 13.1% 28.6%*
Full year 2006p
237
Note: 2005, 2006 pro forma full integration of Eurohypo
Note: Before one-offs due to harmonization of provisioning standards CB/ EH in 2006p
115
571
345401
310
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2. Clear Strategic Positioning
Targets4.
1. Improved Performance
Management Agenda: Growth & Profitability3.
Agenda
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PCAM (Private & Business Customers
and Asset Management)
CIB(Mittelstand and
Corporates & Markets)
CREPT (Commercial Real Estate,
Public Finance and Treasury)
The Leading Commercial Bank in Germany
Best Retail Bank in Germany
The best nationwide Bank for
Corporate Customers
Europe´s leading specialist for
Real Estate and Public Finance
New Group Structure: Clear strategic objectives for each unit
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Objectives
CREPTEurope´s leadingspecialist for Real Estate and Public Finance
CIBThe best nationwideBank for Corporate Customers
PCAMBest Retail Bank in Germany
• No 3 German Retailbank with 5 m customers:Strong market share among affluents
• No 1 in Online Brokerage• No 2 home finance provider• Among top 3 in Private Banking
Strategic objectives supported by strong market positions in core segments
• Approx. 40% of German „(S)ME“-clients and 80% of large customers with CB account
• Top 10 player in CEE (BRE one of the leading banks in Poland andNo 1 Internet bank, new Russian participation)
• Investment Bank leading issuer of structured products in Germany
• No 1 in Commercial Real Estate in Germany • No 1 in Public Finance• No 1 in Jumbo Covered Bonds
Status Quo market position
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Focus Germany
Core region: Commerzbank with focus on Germany and selected international business
Selected international business
• Supporting German Mittelstand in international business• Supporting international corporate customers in Germany/Europe• Utilization of profitable growth opportunities in areas of core competence and selected
regions, i.e. CRE (Eurohypo), CEE
73
62
77
Claims on customersin %
Operating profitin %
Germany
Abroad Employeesin %
Year end 2005 only CB
27
38
23
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Germany: Gross domestic productreal, seasonally adjusted, change in ppt
Germany: ifo – business situationseasonally adjusted monthly figures
Commerzbank benefits from recovering German economy
• German business structures more flexible, especially wages and working time
• German companies with noticeable increase in competitiveness (world champion in exports):
• Moderate development of unit labour costs
• Debt reduction leads to larger scope for investments
• Reforms of social fallback systems have been initiated
Q2 2006 strong GDP growth
Business climate: improving sentiment
-0.75-0.50
-0.250.00
0.250.50
0.751.00
2003 2004 2005 2006-1.5-1.0-0.50.00.51.01.52.02.5
qoq (LS) yoy (RS)
Noticeable progress has taken place
2003 2004 2005 200680859095
100105110
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2. Clear Strategic Positioning
Targets4.
1. Improved Performance
Management Agenda: Growth & Profitability3.
Agenda
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Growth and increase in profitability
Stabilization• Capital base strengthened
• Costs cut rigidly• Loan portfolio and business model de-risked
• Liquidity prudently managed
Profitability• Non-core participations sold
• Restored profitability in Retail Banking and Asset Management
• Major turnaround in Mittelstand segment
• De-risked and stabilized Investment Banking, significant turnaround
Management agenda for medium-term horizon
Management Agenda: Enhancing Growth & Profitability
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Actio
n
• Active capital management: e.g. sale of non-strategic participations and securization
• Continuous efficiency enhancement: Tight cost management, e.g. Service to Perform, Realignment Retail Credit business
• Participating in external growth opportunities: Eurohypo, Russia
• Accelerating organic growth: Focussed investments in core divisions Retail, Mittelstand and CRE/PF
Growth and increased profitability
Targ
etEx
ampl
esFocussed investment strategy to sharpen profile and increase growth and profitability
DivestmentInvestment
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Investing: Selected acquisitions and investment in core segments
• Strategically and financially attractive acquisition • Integration process fully on trackEurohypo
• Acquisition of 15% stake in Promsvyazbank to participate in fast growing Russian market
• Option of step-by-step-increase to majority positionRussia
• Investment in comdirect and affluent private clients• Focused investments in German AM: cominvest (“Alpha”)PCAM
• MSB: acquisition of new clients, increase wallet share/ Cross selling• BRE/ CEE: check rollout of m bank/ Multi bank• IB: selective investments in core competencies, i.e. equity derivatives
CIB
Exte
rnal
gr
owth
• Significant growth in international CRE markets• Increase profitability of German CRE portfolio• Further optimisation of Public Finance business
CREPT
Org
anic
gro
wth
Examples
Investment• Playing active
part in German consolidation; only targetedacquisitionsabroad
• Investing in growth in keyareas of competence
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Divesting: active capital management and continuous efficencyenhancement
• Sale of non-strategic participations, e.g. KEB, MAN, Heidelberger Druck, Unibanco, Banca Intesa
• Review Jupiter IPODisposals
Securitization
Service-to-Perform
Cap
ital
man
agem
ent
Retail Credit
business
Effic
ienc
y en
hanc
emen
t • Lean processes: optimisation of IT and transaction banking services
• 20% cost reduction until 2008 (~€200m)
• Concentration of retail credit back-office activities into four* centres
• Staff reduction by 450 employees
• €4,5 bn CLO´s 2Q 2006• €500 m loans via TSI 3Q 2006• Active management of credit portfolio
Examples
Divestment• Active capital
managementto increasecapitalefficiency
• Continuousefficiencyenhancement
* currently under negotiation
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New group structure
Strategic position: strong pillar
Stable earning components 1H 2006in €m
Stability: net interest income +30%
Operating RoE In %
Profitability: acquisition RoE accretive
New commitments – real estate financein €bn
Growth: strong new business
Eurohypo acquisition supports Commerzbank’s strategic objectives
* Excluding at equity distribution Eurohypo** Pro forma consolidation 1Q 2006
Net interest income
Net commission income
2005 1Q 2006
16.8% 17.7%
CB stand alone
CB stand alone
CB+EHCB+EH
31.3% 33.5%
PCAM CIB CRE, Public Finance and
Treasury
*
* Retail clients (without arrangemens to third parties, i.e. EH), Essenhyp (100%) and NY branch
** Business partly supplied by CB
+0.9ppts
+2.2ppts
6.7 7.0 7.9
20.8
CB stand alone*EH**
31.2
17.314.3
2003 2004 2005 1H 20061,4151,345
CB stand-alone CB+EHY**
1,6032,119+32% CB +EH
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Net synergiesin €m
Revenue synergies
Cost synergies
Further synergy potential
Integration process of Eurohypo on track, net synergies higher than expected, positive effects on cost of capital
Joint business processes established
Key functions centrally managed��
Total synergy potential reconfirmed
First revenue synergies realized��
All integration projects fully in line with plan
Required actions initiated��
Strong identification of staff with new Group … creating new business momentum��
Current synergy assumptions
Preliminary evaluation in 11/2005
142100 - 130
* Including €15 m funding synergies
• €118 m restructuring costs (vs. announced €150 m pre-merger)
• Lower EH market volatility (beta-factor) leads to lower cost of capital for consolidated group
• Future go-to-market strategy in PF segment still to be finalized: Optimal combination of Eurohypo, Essenhyp, EEPK capabilities to be reached
80 76
66*2030
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Increasing participation
• Path-to-Control: 15.3% stake planned with option of step-by-step increase to majority position
• Branch Network: Extension of existing market presence with CB (Eurasija) with nationwide branch network
• Corporate Banking: Enlargement of existing large customers portfolio• Retail Banking: Nationwide penetration of retail business/ if applicable
combined with successful BRE business model for private clients• Investment Banking: Widening of existing activities
• Attractive market: Upside potential via catch-up of banking penetration level, additionally supported by dynamic GDP development
• Attractive target: Promsvyazbank, currently ranked number 12 in terms of assets, is one of the fastest growing banks within the Russian banking sector
• Attractive price: Price in relation to risk profile is reasonable in current market conditions
Improving CB´s presence
Strong strategic fit
First step: acquisition of 15% stake in Promsvyazbank to benefit from Russia´s attractive market
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Prudent riskmanagement
Integration of Eurohypo risk management completed
3.
1. 2.
4.
Eurohypofully integrated in Commerzbank´srisk management
Sustainable reduction of default portfolio in focus until 2008
Net-LLP 2006 beforeone-off items below budget; incl. harmonisation of provisioning methodologies below €1 bn, 2007 below €0.9 bn
Strategic projects well on-track:• Basel II• Credit efficiency
processes
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2. Clear Strategic Positioning
Targets4.
1. Improved Performance
Management Agenda: Growth & Profitability3.
Agenda
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Commerzbank with clear strategic position and objectives for growth and profitability
Clear strategic positioning
Leading Commercial Bank in Germany:
Strategic objectives:• Growth• Profitability
•Strengthening position by selected acquisitions:Playing active part in German consolidation and selected acquisitions abroad
•Accelerated organic growth by investments in defined core segments with competitive strength
•Continuous efficiency enhancement in all divisions •Active capital management, i.e. selective divestments, securitization
• Well positioned in defined core segments
• Focussed on recovering German market and related international business
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Operating profit
Capital
2005*Trend
2005-2008 Comments
€6.8bn
€5.1bn
€1.8bn
€11.5bn
• Investments in core segments (examples):- PCAM: comdirect, upper retail and affluent
customers- CIB: new clients, increase wallet share, BRE- CRE: international growth markets
• Tight cost management in all segments• Projects Service-to-Perform and Retail Credit
business under way
• Significantly increasing profitability• Synergies of Eurohypo integration fully
implemented
• Stabilisation Tier 1 ratio, Target: 6.5% -7.0%• Dividend increase • Wherever applicable review of disposal of non-
strategic participations and further securitizationmeasurements
* Based on pro forma integration of Eurohypo and adjusted by one off items
Net RoEwell on
track for target15% in 2010e!
Further growth in revenues and stable cost situation leading in the medium-term to significant increase in profitability
Costs
Revenues after LLP
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2005
9.6%
2006p
≥≥≥≥ 10%
RoE after tax adjusted of one-off positions
2010e
15%
Long-term RoEgoal
As of 1H 2006
Financial target on track
RoE:
2007p
≥≥≥≥ 11%
CIR: 67% ≤≤≤≤ 65% ≤≤≤≤63% ≤≤≤≤60%
Commerzbank: The Leading Commercial Bank in Germany -strongly positioned to continue profitable growth
��
Note: 2005 CB stand alone, 2006 pro forma full integration of Eurohypo
���� ����
As of 1H 2006
For more information, please contact:
Jürgen Ackermann (Head of IR)P: +49 69 136 22338M: [email protected]
Sandra Büschken (Deputy Head of IR)P: +49 69 136 23617M: [email protected]
Ute Heiserer-JäckelP: +49 69 136 41874M: [email protected]
Simone NuxollP: +49 69 136 45660M: [email protected]
Andrea Flügel (Secretary)P: +49 69 136 22255M: [email protected]/ir