Commerzbank AG / Corporate Action/Quarter Results
03.11.2008
Release of a Adhoc News, transmitted by DGAP - a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
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Commerzbank strengthens core capital and competitiveness
EUR 0.9 bn consolidated surplus for the first nine months
- Core capital sustainably strenghtened by EUR 8.2 billion through silent
participations by SoFFin
- Increase of core capital ratio (Tier 1, HGB) to 11.2% ensures
international competitiveness
- Core business profitable in Q3, net loss for Q3 of EUR 285 million
Commerzbank will utilize the German Governments Financial Markets
Stabilization Fund to strengthen its capital base. The bank struck an
according agreement with the Stabilization Fund (SoFFin). The SoFFin will
make available to Commerzbank a silent participation of EUR 8.2 billion. It
will be 100% eligible for Tier1. In addition, SoFFin will grant Commerzbank
Group guaranteed funding commitments to the scope of
EUR 15 billion to offer additional funding options.
Core capital ratio (Tier 1) rises to 11.2%; new medium term target range of
7% to 9% set
The SoFFin silent participation will boost the core capital ratio (Tier 1)
of Commerzbank to 11.2%. With this increase Commerzbank reflects the sharp
rise in capital requirements for banks demanded by supervisory authorities,
rating agencies and the capital markets in the wake of the financial
crisis. The ratio is in line with the international competition. In view of
changes in the market situation, Commerzbank has raised its medium-term
target range for the core capital ratio (Tier 1) from 7% - 8% to 7% - 9%.
Following the takeover of Dresdner Bank the new Commerzbank will have a
core capital, in the upper range of the increased midterm target range and
far beyond the currently planned ratio. The clients of both banks will
profit from the boosted capital basis. As the leading German bank for small
and medium sized companies the new Commerzbank will full fill its
responsibilities to offer loans to companies on an ongoing basis,
especially in light of the threat of an overall economic downturn in
Germany.
Under the terms of the agreement, SoFFin will guarantee additional new debt
securities to be issued by December 31, 2009 and other liabilities of the
Commerzbank Group for a total amount of up to EUR 15 billion. Any
liabilities guaranteed by SoFFin have a maximum maturity of 36 months.
Respective guarantees mature at the end of 2012 the latest. Commerzbank
pays a market rate for the guarantees granted.
The agreement with SoFFin stipulates that Commerzbank may not pay any
dividends in 2009 and 2010. The annual fixed salaries of the management
board members are currently at EUR 480,000 thus below the limit of EUR
500,000 set by SoFFin. The compensation of the CEO will be capped at EUR
500,000. Bonuses for 2008 and 2009 will not be granted.
Consolidated surplus of EUR 0.9 billion for the first three months of 2008
The consolidated surplus for the first nine months 2008 amounts to EUR 0.9
billion. The operating profit for the respective period is EUR 444 million.
Taking into account the restructuring costs in the first quarter of 2008
for Essen Hyp, the pre-tax profit came out at EUR 419 million. For the same
period in the exceptionally strong prior year (2007) it was EUR 2.3
billion. Commerzbank posted a net loss of EUR 285 million for the third
quarter of 2008 (Q3 2007: EUR 339 million). The operating profit was minus
EUR 475 million. In Q2 Commerzbank reported an operating profit of EUR 484
million (Q3 2007: EUR 361 million).
Core segments with an operating profit of EUR 451 million
The trend continued to be upbeat in the core business areas of Private and
Business Customers, Mittelstand and the Central and Eastern Europe
operations. The operating profit for these segments in the third quarter
was EUR 451 million (Q2 2008: EUR 494 million). All segments saw an
increase in clients and deposits.
The strong growth in clients was particularly impressive. Private and
Business Customers gained approximately 416,000 new clients in the third
quarter alone, thereof 183,000 in Germany more than in any previous quarter
ever. Since the start of the financial crisis we have gained approximately
EUR 25 billion in client deposits, with more than EUR 8 billion coming in
Q3. The Mittelstand segment has gained more than 5,000 new clients since
the beginning of the year.
The adverse impact of the financial crisis for the capital market business
amounts to EUR 1.1 billion
The Commercial Real Estate segment is also continuing to perform well,
although Q3 showed an operating loss of EUR 56 million. This reflects the
impact of write-downs on the US RMBS portfolio totaling EUR 144 million.
The worsening financial crisis in September had an adverse affect on the
quarterly operating profit of the Corporates & Markets and Public Finance
Treasury units which were reported together for the first time with an
operating loss of EUR 898 million. The Lehman failure (EUR 357 million) and
the Iceland moratorium (EUR 232 million) had the biggest impact.
Net interest and commission income of EUR 1.9 billion
Net interest income of the Commerzbank Group in the third quarter was EUR
1.2 billion, up 3.1% over Q2 (Q3 2007: 21.4%). One segment benefiting from
this success was Private and Business Customers, which maintained the high
level of the previous quarter, along with the Mittelstand and Central and
Eastern Europe segments, which significantly surpassed their results from
the second quarter.
Loan loss provisions were increased from EUR 414 million in Q2 to EUR 628
million. This significant increase was primarily due to Corporates &
Markets. The New York Corporates business segment was affected by the
Lehman Brothers and additional write-downs on structured products. We also
increased the general loan loss provisions as well as provisions for the
effects of an economic slowdown in the Central and Eastern European
segment.
Strong growth in the Private and Business Customers and Mittelstand core
segments was particularly responsible for the good performance of
commission income, which totaled EUR 720 million, in line with Q2 2008 (Q3
2007: EUR 810 million). It should be noted that in 2007 the international
asset management units, which have been sold, were included in the results.
In addition, Mittelstand had a positive one-off effect of EUR 105 million.
Securities trading of private customers was weaker in Q3 due to turbulences
in the financial markets. However, the Commercial Real Estate segment
realised a higher commission income. Compared with the first nine months of
last year, however, the commission income decreased by 10.2% to EUR 2.2
billion.
After the outstanding trading profit of the second quarter (EUR 375
million), Q3 saw a loss of EUR 297 million. While customer-oriented
business, which is one of Commerzbanks core activities, was solid,
Corporates & Markets in its new structure (including Public Finance
Treasury) was impacted by the Lehman failure and the extreme widening of
spreads.
Negative trend for investment income but a positive trend for operating
expenses
Net investment income decreased quarter-on-quarter by EUR 143 million to
minus EUR 229 million. The proceeds from the sale of ThyssenKrupp shares
were offset by impairments on ABS (asset backed securities). Impairments
totaled EUR 144 million on the RMBS portfolio, and EUR 55 million on
Corporate CDOs. Net investment income in the first three quarters of 2008
was minus EUR 341 million, compared with a profit of EUR 249 million for
the same period last year.
Operating expense decreased by 9.9% to EUR 1.2 billion, reflecting the
continuing success of our disciplined cost management. In comparison with
the first nine months of 2007, other expenses decreased slightly by 0.9% to
EUR 4 billion. Personnel expenses fell 8% to EUR 2.2 billion. Other
expenses increased to EUR 1.6 billion (+ 11.9%) as a result of growth
initiatives.
Commerzbank utilized the changes in reclassifying assets under IAS 39 and
IFRS 7 for a portion of the securities allocated to Public Finance (EUR 44
billion). The trading assets (investment banking business) were not
affected by this. The revaluation reserve at the end of September 2008
amounted to minus
EUR 1.2 billion. Without the changes, it would have totaled minus EUR 2
billion.
EUR 0.9 billion consolidated surplus for the first nine months of 2008
IAS 12 required us to capitalize changes in estimated tax loss carry
forwards on domestic results, so that the item for taxation shows income of
EUR 508 million (previous year: tax expense of EUR 560 million). As a
result, the consolidated surplus was EUR 0.9 billion, clearly surpassing
the operating result.
EUR 115 million of the surplus is attributable to minority interests. The
amount attributable to Commerzbank shareholders is EUR 812 million. With an
average of 663.5 million outstanding shares, operating earnings per share
came at EUR 0.67 and earnings per share to EUR 1.22, compared with EUR 3.57
and EUR 2.61 respectively in the same period last year. Net ROI for Q3 was
minus 8.3% (Q2: 24.4%).
Slight decrease in balance sheet total
Commerzbank has reduced the consolidated balance sheet total to EUR 595.6
billion (- 3.4%) since the end of 2007. Claims against banks were reduced
significantly by 18.9% to EUR 60.0 billion, while claims against customers
were increased slightly to EUR 295.9 billion.
While customer deposits grew 8.3% to EUR 172.4 billion, liabilities to
banks rose only slightly to EUR 125.9 billion (+ 0.6%).
Core capital, equity ratio and key liquidity all in the target range
In September we increased equity by EUR 1.1 billion in a matter of hours
through a capital increase without subscription rights. As at September 30,
2008, Commerzbank had a Tier 1 of 7.6% on the basis of the German
Commercial Code or 7.3% on the basis of IFRS. Both are at the upper end of
our previous target range. Key liquidity on the reporting date of 1.14 was
also in the upper end of the target range (1.08 - 1.15).
Outlook
There are growing signs that the situation in the global financial markets
is affecting the real economy. The worldwide economic downturn has reached
Germany, and the Central and Eastern European regions will increasingly
lose momentum. However, the banks economists expect a noticeable recovery
of the economy in 2010.
Commerzbank Group: Consolidated income statement<pre>
Q3 Q2 Change Q3
2008 2008 2007
Net interest income 1,213 1,176 3.1% 999
Provision for credit risks - 628 - 414 51.7% - 107
Net commission income 720 717 0.4% 810
Trading profit - 297 375 - 124
Net investment income - 229 -86 - - 238
Other results -17 89 - 56
Operating expenses 1,237 1,373 - 9.9% 1,283
Operating profit - 475 484 - 361
Restructuring expenses - - - -
-
Taxes - 202 - 386 47,7% 10
Consolidated surplus attributable to
Commerzbank shareholders - 285 817 - 339
Earnings per share in EUR - 0.45 1.24 0.51
Return on equity on the consolidated
surplus 1) - 8.3% 24.4% 10.9%
Operating expense ratio 89.0% 60.5% 73.3%
1) extrapolated for full year</pre>
DGAP 03.11.2008
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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 Frankfurt (Prime Standard), Berlin,
Hannover, Stuttgart, Düsseldorf, Hamburg, München;
Terminbörse EUREX; Foreign Exchange(s) London, SWX
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