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DGAP-News: Commerzbank: Operating profit of EUR 547 m in first six months of 2013



DGAP-News: Commerzbank: Operating profit of EUR 547 m in first six months of 
2013

DGAP-News: Commerzbank AG / Key word(s): Quarter Results
Commerzbank: Operating profit of EUR 547 m in first six months of 2013

08.08.2013 / 07:00

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  - Revenues before loan loss provisions in Core Bank stable in second
    quarter at EUR 2.3 bn

  - Operating profit of EUR 78 m in second quarter, net profit of EUR 43 m 

  - Loan growth in Core Bank confirms strategic positioning 

  - Portfolio reduction in Non-Core Assets segment progressing faster than
    planned

  - Common Equity Tier 1 ratio (full application of Basel 3) as of the end
    of June 2013 at 8.4%, Leverage Ratio (pursuant to CRD 4, phase-in
    regulations of Basel 3) at 4.0%

  - Implementation of the strategic agenda leads to expected charges on
    results in year of transition 2013

  - Blessing: 'The implementation of the strategic measures is progressing
    as scheduled and in part even somewhat faster. The revenues before loan
    loss provisions stabilised in the second quarter - a sign that we are
    on the right track.'

The Commerzbank Group generated an operating profit of EUR 547 million in
the first six months of 2013 (first six months 2012: EUR 1.0 billion).
Thereof, EUR 78 million relate to the second quarter of 2013. The first six
months' decline over the previous year is due particularly to the weaker
interest rate environment and higher loan loss provisions. The latter rose
as a consequence of the accelerated portfolio reduction in the Non-Core
Assets (NCA) segment and, as expected, to single cases in the Core Bank. In
the first six months of 2013 the Core Bank attained an operating profit of
approximately EUR 1.0 billion (first six months 2012: EUR 1.4 billion). Of
this sum, EUR 465 million was accounted for by the second quarter of 2013.
The Group's net profit declined in the first six months of 2013 to minus
EUR 51 million (first six months 2012: EUR 625 million). The decline in
revenues over the previous year is mainly a result of special items within
the implementation of the strategic agenda, such as the restructuring
expenses and the implementation of the sale of the Commercial Real Estate
(CRE) portfolio in Great Britain. These two effects alone led to a one-off
charge of approximately EUR 630 million.

'We are implementing the measures announced in our strategic agenda as
planned - in some areas we actually are ahead of schedule. As expected, the
implementation of the strategic agenda is weighing on results, however.
2013 is a year of transition and we accept that individual measures are
associated with one-off restructuring expenses and higher loan loss
provisions. Thus we are establishing the basis for a further improvement in
the future profitability of the Bank,' said Martin Blessing, Chairman of
the Board of Managing Directors of Commerzbank. 'The revenues before loan
loss provisions in the Core Bank stabilised in the second quarter. This
shows that we are on the right track with our strategic measures.'

Loan loss provisions rise particularly due to the CRE portfolio in Great
Britain

In the first six months of 2013 the Bank generated revenues before loan
loss provisions of EUR 4.8 billion (first six months 2012: EUR 5.2
billion). The commission income, at EUR 1.7 billion, was slightly higher
than in the previous year. However, interest income decreased by 14 % in a
year-on-year comparison due to the weaker interest rate environment. In the
second quarter of 2013 Commerzbank generated revenues before loan loss
provisions of EUR 2.3 billion, which were particularly achieved in the Core
Bank. Compared to the previous quarter (first quarter 2013: EUR 2.3
billion), Core Bank's revenues before loan loss provisions were stable.
This was despite the weaker interest rate environment, particularly due to
the positive development of the Corporates & Markets segment and the
improvement of business in the Private Customers segment. The loan loss
provisions in the Group in the first six months of 2013 were EUR 804
million, and thus substantially higher in a year-on-year comparison (first
six months 2012: EUR 616 million). EUR 537 million of this was booked in
the second quarter alone (first quarter 2013: EUR 267 million). This
increase was particularly due to single cases in Mittelstandsbank and to
the CRE portfolio in Great Britain. Although the loan loss provisions for
Ship Finance remained at a high level of EUR 248 million in the first six
months of 2013, they were lower than the level seen in the previous year,
however (first six months 2012: EUR 284 million). The operating expenses
were again reduced in the first six months of 2013 despite investments in
the Core Bank due to a consistent implementation of the announced cost
measures. As of the end of the first six months of 2013 the operating
expenses were EUR 3.4 billion (first six months 2012: EUR 3.5 billion). In
the second quarter of 2013 they were slightly lower than in the previous
quarter.

Core capital ratio improved, Leverage Ratio already meets Basel 3
requirements

Commerzbank further improved its Common Equity Tier 1 ratio in the second
quarter of 2013, also as a result of the capital increase successfully
concluded in May. Pursuant to the phase-in regulations of Basel 3, as of
the end of June 2013 the ratio was at 10.3% (end of March 2013: 10.1%).
Under the full application of Basel 3 the ratio was at 8.4% (end of March
2013: 7.5%). With a view to the Leverage Ratio, which is increasingly
gaining in importance not only in the public discussion but also among
investors, Commerzbank is well positioned in the peer group comparison.
Pursuant to the current calculation logic of the EU's capital requirements
directive (CRD 4) and taking into account the phase-in-regulations of Basel
3 the Leverage Ratio as of the end of June 2013 was 4.0%. Additionally, as
of the end of the second quarter of 2013 the Bank had already fulfilled the
regulatory requirements under the full application of Basel 3, which do not
come into effect until 2018. The corresponding Leverage Ratio was 3.2%. The
risk-weighted assets were lowered slightly as of the end of June 2013 to
EUR 206 billion (end of June 2012 and end of March 2013: EUR 210 billion).
As of the end of June 2013 the total assets have been reduced over the
previous year by 5 % to EUR 637 billion.

Core Bank: Private Customers segment better than planned, Corporates &
Markets delivers strong result

In the first six months of 2013 the Private Customers segment attained a
better-than-planned operating profit of EUR 123 million (first six months
2012: EUR 167 million). Revenues before loan loss provisions stabilised,
and at EUR 1.7 billion were at the same level than in the previous year.
Commission income improved slightly in a year-on-year comparison to EUR 817
million, the interest income declined marginally to EUR 875 million. In the
first six months of 2013 the Bank made a net gain of approximately 100,000
new customers. In the second quarter of 2013 the segment improved its
operating profit in a year-on-year comparison from EUR 30 million to EUR 54
million. The revenues for the second quarter in the securities business
increased by EUR 25 million year-on-year, to EUR 254 million. The new loan
business saw a substantial expansion of 36%, to EUR 2.8 billion. The new
business volume in residential mortgages alone increased by 40% to EUR 2.3
billion. This pleasant development shows that the segment is benefitting
earlier than planned from the investments in new offerings and services.

In the first six months of 2013 Mittelstandsbank posted an operating profit
of EUR 542 million (first six months 2012: EUR 874 million), in the second
quarter the figure was EUR 216 million. In a year-on-year comparison the
revenues before loan loss provisions declined in the first six months of
the year by 8%, to EUR 1.4 billion, as a consequence of the weaker interest
rate environment and the challenging economic framework conditions. They
stabilised in the second quarter of 2013, however, at EUR 695 million
(first quarter 2013: EUR 728 million). Due to its strong competitive
position, the Bank has increased the loan volume with the German
Mittelstand by 5%. As a result of lower reversals and of the single cases
the loan loss provisions increased over the previous year as expected. In
the first six months of 2013 approximately EUR 225 million were booked in
loan loss provisions, with the second quarter accounting for EUR 147
million.

In the first six months of 2013 the Central & Eastern Europe segment again
attained a solid operating profit of EUR 127 million (first six months
2012: EUR 146 million). The year-on-year decline in revenues before loan
loss provisions to EUR 379 million (first six months 2012: EUR 430 million)
is due particularly to the weaker economic environment and the interest
rate cuts in Poland. In the second quarter of 2013, loan loss provisions
rose as expected compared to the first quarter. In the first quarter of
2013, the segment benefitted from reversals of loan loss provisions,
however.

Corporates & Markets performed substantially better in the first six months
of 2013 than in the same period of the previous year, improving its
operating profit to EUR 524 million (first six months 2012: EUR 77
million). The results include a positive effect from the market valuation
of our own liabilities ('Own Credit Spread') to the amount of EUR 45
million (first six months of 2012: minus EUR 142 million). The segment
profited from the capital market environment, which was more stable
compared to the previous year. Equity Markets & Commodities took advantage
of its excellent market position within the investment and hedging
solutions space profiting from higher customer demand. Corporate Finance
saw a stable performance in Debt Capital Markets bonds and loans, and also
benefitted from a rebound in equity capital. Revenues before loan loss
provisions increased to EUR 1.2 billion (first six months 2012: EUR 788
million). The second quarter of 2013 saw a continuation of the positive
trend observed in the first quarter. Although revenues before loan loss
provisions declined by 2% compared to the seasonally strong first quarter
year-on-year they rose by 46 % to EUR 569 million (second quarter 2012: EUR
390 million). The operating profit in the second quarter of 2013 was EUR
253 million.

Portfolio reduction in the NCA segment progressing faster than planned -
reduction target adjusted

In NCA Commerzbank is moving ahead with the reduction of portfolios faster
than originally planned. The Exposure at Default (EaD, including
non-performing loans) in NCA was reduced by 10% or by EUR 15 billion to EUR
136 billion in the first six months of 2013. This does not include the sale
of the CRE portfolio in Great Britain agreed upon in July. A reduction of
EUR 7 billion was achieved in the second quarter of 2013. The reduction
covers all three business areas: in CRE the EaD was reduced by 13% to EUR
48 billion in the first six months of 2013, in the Ship Finance portfolio
by 10% to 17 billion, and in Public Finance the Bank posted a decrease of
8% to EUR 71 billion.

Including the sale of the CRE portfolio in Great Britain, the NCA portfolio
has been reduced by as much as EUR 20 billion or 13% since the beginning of
the year. The Bank has adjusted the original segment reduction target for
2016 in the wake of the accelerated portfolio reduction. The Bank now
expects that the EaD (including non-performing loans) as of the end of 2016
will be substantially below EUR 90 billion (original target: EUR 93
billion). The share of non-performing loans will be reduced by the sale of
the portfolio in Great Britain.

In the first six months of 2013 the NCA segment posted an operating loss of
EUR 473 million (first six months 2012: loss of EUR 608 million, second
quarter 2013: loss of EUR 387 million). Revenues before loan loss
provisions increased substantially in the first six months of the year to
EUR 227 million (first six months 2012: EUR 57 million). The main reason
for this was the strong improvement in the result from financial
investments and in the trading result. In addition, it was possible to
increase the net interest income slightly despite the reduction in volume.
The loan loss provisions increased in the first six months of 2013 to EUR
522 million (first six months 2012: EUR 479 million). This rise was due
particularly to the CRE portfolio in Great Britain.

Outlook 

'As a consequence of the portfolio reduction and the ongoing weak interest
rate environment, the revenues before loan loss provisions are likely to
remain under pressure for the Group. However, we can see first positive
effects from our counteractive measures. For this reason we expect revenues
before loan loss provisions in the Private Customers and Mittelstandsbank
segments to remain stable. We are on track with regards to the capital
position. Under the full application of Basel 3, we still plan to achieve a
Common Equity Tier 1 ratio of 9% by the end of 2014,' said Stephan Engels,
Chief Financial Officer of Commerzbank.

The Bank will continue with the consistent implementation of the strategic
agenda in the second half of 2013. A strict cost discipline will finance
investments to increase earnings power. The successful conclusion of the
works council negotiations also allows Commerzbank to rapidly implement
additional measures to reduce costs. For 2013 as a whole the costs are not
to exceed EUR 7 billion. Commerzbank continues to stand by its expectations
for the loan loss provisions. As a result of the accelerated portfolio
reduction in the NCA segment and the increased loan loss provisions in the
Core Bank, for 2013 the Bank still assumes that these will be higher than
in the previous year.

Excerpt from the consolidated profit and loss statement 




In EUR m                 H1 2013   Q2 2013   Q1 2013   H1 2012   Q2 2012


Net interest income        2,985     1,629     1,356     3,478     1,784


Provisions for loan losses -804      -537      -267      -616      -404


Net commission income      1,655     808       847       1,633     769


Net trading income         308       -9        317       248       84


Net investment income      -126      -120      -6        -199      -23


Current income on          19        11        8         18        7
companies accounted for 
at equity


Other income               -67       -5        -62       -22       -43


Income before loan loss    4,774     2,314     2,460     5,156     2,578
provisions


Operating expenses         3,423     1,699     1,724     3,522     1,732


Operating profit or loss   547       78        469       1,018     442


Impairments of Goodwill    -         -         -         -         -


Restructuring expenses     493       -         493       43        9


Net gain or loss from sale -         -         -         -86       -86
of disposal groups


Pre-tax profit or loss     54        78        -24       889       347


Taxes                      57        12        45        211       52


Consolidated profit or     -51       43        -94       625       270
loss attributable to
Commerzbank shareholders


Cost/income ratio in       71.7      73.4      70.1      68.3      67.2
operating
business (%)





*****

Under http://www.tvservicebox.de you will find broadcast-ready video
material with statements by Stephan Engels from approximately 7am onwards.

The videos can be viewed directly using mobile end devices.
Statements Stephan Engels:
http://cbvideo.commerzbank.de/2013/Q2/Engels_en/index.php.

*****

Press contact: 

Simon Steiner    +49 69 136 46646
Nils Happich     +49 69 136 44986
Karsten Swoboda  +49 69 136 22339

*****

About Commerzbank 

Commerzbank is a leading bank in Germany and Poland. It is also present
worldwide in all markets for its customers as a partner to the business
world. With the business areas Private Customers, Mittelstandsbank,
Corporates & Markets and Central & Eastern Europe, it offers its private
and corporate customers as well as institutional investors the banking and
capital market services they need. With approximately 1,200 branches
Commerzbank has one of the densest branch networks among German private
banks. In total, Commerzbank boasts nearly 15 million private customers, as
well as 1 million business and corporate customers. In 2012, it generated
revenues of just under EUR 10 billion with approximately 56,000 employees
on average.

*****

Disclaimer

This release contains forward-looking statements. Forward-looking
statements are statements that are not historical facts. In this release,
these statements concern the expected future business of Commerzbank,
efficiency gains and expected synergies, expected growth prospects and
other opportunities for an increase in value of Commerzbank as well as
expected future financial results, restructuring costs and other financial
developments and information. These forward-looking statements are based on
the 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. Such factors
include the conditions in the financial markets in Germany, in Poland,
elsewhere in Europe and other regions from which Commerzbank derives a
substantial portion of its revenues and in which Commerzbank holds a
substantial portion of its assets, the development of asset prices and
market volatility, potential defaults of borrowers or trading
counterparties, the implementation of its strategic initiatives to improve
its business model, particularly to reduce its public finance portfolio in
Private Customers, the reliability of its risk management policies,
procedures and methods, risks arising as a result of regulatory change and
other risks. Forward-looking statements therefore speak only as of the date
they are made. 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.




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


End of Corporate News

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08.08.2013 Dissemination of a Corporate News, transmitted by DGAP - a
company of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

DGAP's Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de

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Language:    English                                                    
Company:     Commerzbank AG                                             
             Kaiserplatz                                                
             60311 Frankfurt am Main                                    
             Germany                                                    
Phone:       +49 (069) 136 20                                           
Fax:         -                                                          
E-mail:      ir@commerzbank.com                                         
Internet:    www.commerzbank.de                                         
ISIN:        DE000CBK1001                                               
WKN:         CBK100                                                     
Indices:     DAX, CDAX, HDAX, PRIMEALL                                  
Listed:      Regulierter Markt in Berlin, Düsseldorf, Frankfurt (Prime  
             Standard), Hamburg, Hannover, München, Stuttgart;          
             Terminbörse EUREX; London, SIX                             
 
 
End of News    DGAP News-Service  
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224765 08.08.2013                                                      
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