Competing in a consolidating worldCommerzbank – building on No. 1 Mittelstandsbank position
Martin BlessingMember of the Board of Managing Directors Lisbon, June 14, 2007
Martin Blessing, Member of the Board of Managing Directors2 / 21
1. 2. 3. Where are we now?
Agenda
1. Where are we now?Mittelstandsbank No. 1 in Germany
2. How did we get there?Implementation of our “Move to the top” program
3. Where will we go?Expanding our wallet share of the German market
Martin Blessing, Member of the Board of Managing Directors3 / 21
1. 2. 3. Where are we now?
Our mission:To be the leading bank for Germany`s private and corporate customers
Private Clients
&Asset
Management
Corporate &Investment
Banking
Commercial Real Estate &
Public Finance Treasury
• One of Germany`s leading retail banks with more than 6m customers
• No. 1 in Online Brokerage• No. 1 for Business clients• No. 2 home finance provider• Among top 3 in Private Banking
• No. 1 Mittelstandsbank in Germany• Top 10 player in CEE (BRE one of the leading
banks in Poland and No. 1 Internet bank)• No. 1 producer of structured retail products at the
world’s biggest retail exchange EUWAX
• Leading in Commercial Real Estate in Europe / World
• Leading Public Finance institution in Germany and Luxembourg
• Leading Pfandbrief issuer in the European market
Best Retail Bank in
Germany
The best nationwide
Bank for (S)ME
customers (Mittelstand)
Europe’s leading
specialist forReal Estate and Public Finance
Objectives
Martin Blessing, Member of the Board of Managing Directors4 / 21
MITTELSTANDSBANK
Integrated Mittelstand approach opens up a range of opportunities
• Main focus on our clients in Germany• With target group-specific offers in emerging markets of Eastern Europe and Asia• Supported by Financial Institutions business with leading position as external trade-
financial institution and in European payment transactions plus worldwide correspondent banking
Germany CEE / AsiaMittelstand
• Small / Medium Enterprises
• Large Corporates
• Specialised Business*
• Participations (mainly Schiffsbank)
* Center of Competences for: Global Shipping, Renewable Energies
CEE
• BRE Bank (Poland)
• Promsvyazbank (Russia)
• CB branches/subsidiaries•Czech•Hungary •Russia
Asia Pacific
• Singapore
• China (Shanghai,Hongkong)
• Japan (Tokyo)
• Business activity with banks worldwide – more than 5,000 contacts
• Foreign trade and transaction finance
• ProCredit Banks (micro credits)
• Representative Offices
Financial Institutions
1. 2. 3. Where are we now?
Martin Blessing, Member of the Board of Managing Directors5 / 21
1. 2. 3. Where are we now?
Commerzbank`s market position in CEE
• SME Banking / Retail Banking / Private Banking• Optimization of product and market strategies• Sales measurements for CEE
STRATEGIC FOCUS
Operating units Representative offices ProCredit banks
Poland: BRE Bank(72.14% participation)Russia: CB Eurasija(100% subsidiary) & Promsvyazbank 15.3%Czech: Branch PragueOffices in Brno, OstravaSlovakia: Branch BratislavaHungary CB Budapest Zrt.(100% subsidiary)
CroatiaKazakhstanRomaniaRussia (Moscow & Novosibirsk)Serbia-MontenegroUkraineUzbekistanBelarusAserbaijan (shortly)
Bosnia-HerzegovinaBulgariaSerbiaKosovoAlbaniaGeorgiaRomania
BUSINESS MODELS IN CEE
Martin Blessing, Member of the Board of Managing Directors6 / 21
Mittelstandsbank important driver to group result in Q1 2007
16% 19% 18% 8% 9%
Operating profit Q1 2007 in € m, part of total result in %
145266
174 16477 82
Private- & Business
Clients
Mittel-stands-
bank
Corporates &
Markets
Commercial Real
Estate
Public Finance & Treasury
Others
Ave. Equity tied up in € m & Operating RoE in %22.9 31.7 15.7 26.3
29%
35.9
1. 2. 3. Where are we now?
2,530 2,967 2,1974,183
1,171 419
Private- & Business
Clients
Mittel-stands-
bank
Corporates &
Markets
Commercial Real
Estate
Public Finance & Treasury
Others
Mittelstandsbank with highest profit contribution
Mittelstandsbank key value driver for Commerzbank
Martin Blessing, Member of the Board of Managing Directors7 / 21
1. 2. 3. Where are we now?
All units of Mittelstandsbank with strong q-o-q operating profitGermany in € m
BREin € m
CEE (excl. BRE) in € m
Financial Institutions in € m
150
103 92
129
186
Q1 Q2 Q3 Q4 Q12006 2007
2006 2007
2006 2007
2006 2007
11
6
3
1618
Q1 Q2 Q3 Q4 Q1
+ 45% + 81%
67
20 18
37
60
Q1 Q2 Q3 Q4 Q1
27
9
1619
29
Q1 Q2 Q3 Q4 Q1
x 3 x 3
Martin Blessing, Member of the Board of Managing Directors8 / 21
Overview Mittelstandsbank
80 81
13-46
30
Q1 Q2 Q3 Q4 Q1
333
159 165 163 188 187
306 287 328 343
Q1 Q2 Q3 Q4 Q1
35.942.6
31.1
18.020.0
Q1 Q2 Q3 Q4 Q1
266
142 129
221
312
Q1 Q2 Q3 Q4 Q1
Operating profitin € m
Operating RoEin %
Commission vs. Interest income in € m LLP & Ave. equity tied up in € m
2006 2007
2006 2007 2006 2007
+ 87%
2006 2007
Commission incomeInterest income
+ 16 bp
1. 2. 3. Where are we now?
2,840 2,866 2,8382,932 2,967
Martin Blessing, Member of the Board of Managing Directors9 / 21
1. 2. 3. Where are we now?
Others promised – we delivered…
ASU German grading system ranking based on the criteria “Mittelstand orientation“, “quality of relationship“ and “competitive terms“ (from 1 = very good to 6 = very poor)
Deutsche Bank Deutsche Bank (3.37)Deutsche Bank
Dresdner Bank
Sparkassen
Volksbanken
Commerzbank
HypoVereinsbank
2004
Volksbanken (2.93)
Commerzbank (2.67)
Sparkassen (2.88)
HypoVereinsbank (2.96)
Dresdner Bank (2.88)
2006
HypoVereinsbank
Sparkassen
Volksbanken
Dresdner Bank
Commerzbank
2005
We are grateful for our clients‘ trust – we take it as a challenge for the future
Source: Corporate Survey „Mittelstandsfinanzierung durch Banken“ conducted by Arbeitsgemeinschaft Selbständiger Unternehmer(ASU), December 2006
Martin Blessing, Member of the Board of Managing Directors10 / 21
1. 2. 3. How did we get there?
Agenda
1. Where are we now?Mittelstandsbank No. 1 in Germany
2. How did we get there?Implementation of our “Move to the top” program
3. Where will we go?Expanding our wallet share of the German market
Martin Blessing, Member of the Board of Managing Directors11 / 21
Move to the top program – implementing a new business approach
• End to end credit• Optimization of Documentary
Business • Value-based steering of
business
• Enhanced customer segmentation
• Optimized sales process• New customer acquisition• Product innovation &
development
New business model Process optimizationMove to the top
Employee development
program
Managingcapital
Cutting operating expenses
Achieving optimal
provisioning
Accompanying measures
1. 2. 3. How did we get there?
Martin Blessing, Member of the Board of Managing Directors12 / 21
1. 2. 3. How did we get there?
Successful gaining of new clients
Our positive position is
represented by the development
in new clients acquisition
15.586
4.767
4.616
1.250
4.953
2004 2005 2006 Q1 2007 Ende Q12007
Development of new clients 2004 – Q1 2007
Target of 2006:9,000 new customers
already achieved in 2005
4,767
4,953
4,6161,250 15,586
Martin Blessing, Member of the Board of Managing Directors13 / 21
1. 2. 3. How did we get there?
Key financials of Mittelstandsbank in q-o-q comparison
~ 70% of total lending
Slightly in the average
Strong increase in lending resulting from international business activities
Mittelstandsbank (segment) Q1/2006 FY 2006 Q1/2007Total lending Mittelstandsbank (segment) (in € bn) 47.6 48.1 51.3
Margin on total corporate lending (in %) 1.41 1.42 1.35Loan-loss provision ratio (in %) 0.67 0.27 0.24Domestic corporate lending (in € bn)* 36.2 35.9 36.5Margin on domestic corporate lending(in %)** 1.43 1.41 1.34
Domestic corporate customers’ deposits(in € bn) 18.5 20.1 23.3
Margin on domestic corporate customers‘deposits (in %) 0.76 0.83 0.88
Risk-weighted assets (in € bn)*** 45.1 45.6 48.5Commission income (in € m) 159.5 674.8 186.9Net interest income (in € m) 306.1 1,264.1 333.2
Commission income / Net interest income 0.52 0.53 0.56
FTE 6,720 7,122 7,052Total income / FTE (in € ‘000) 73 284 80Operating expenses / FTE (in € ‘000) 40 153 38
Lending with higher growth in CEE
* 3 month average of domestic EP200, ** incl. loan commissions, ***MSB entities excl. BRE goodwill
Martin Blessing, Member of the Board of Managing Directors14 / 21
1. 2. 3. How did we get there?
BRE 2006 - best result in the bank`s history – on track for further success
BRE BANK’s POSITIONING
Corporates & MarketsRetail Banking
• High market position: Trading & Investments 1st place (33% share) in the bank bonds market
• Growing profitability: profit before tax at PLN 137.6 m in Q1 2007 up 42 % y-o-y
• Business expansion: 606 new corporate customers gained in Q1 2007 up 22% y-o-y
• Plans to open 20 further business offices
• Record-high profitability: profit before tax at PLN 69 m in Q1 2007 up by a factor of 6 y-o-y
• Successful launch of the Car Insurance Supermarket
• Over 2 million accounts: Retail accounts number up 6.9% q-o-q
• Leader in mortgage loans: Third largest provider of new mortgage loans in Q1 2007; with a market share of 9.4%
Martin Blessing, Member of the Board of Managing Directors15 / 21
1. 2. 3. How did we get there?
BRE Bank strategic projects focus on Retail Banking & market expansion
Maximum benefits and convenience in personal finance
Finance forindividual customers &
entrepreneurs
Offering a bene-ficial partnership in
distribution of Financial services for
retail & corporate clients
• Bank for demanding customers representing the middle class
• Modern products tailored to customers
• Multichannel service leader
• Credit card customised to individual needs
• Innovative products for entrepreneurs
• mBank as a leader in Internet banking
• Leader of innovation in personal finance
• Distribution based on cheap electronic access channels
• Transparent & straightforward range of top-quality products
• Focussing on distribution of financial services
• Cash loans
• Car loans
• Mortgage loans
• Products combined with complementary insurance products
• 10 branches & 400 representatives
Martin Blessing, Member of the Board of Managing Directors16 / 21
1. 2. 3. How did we get there?
CB subsidiaries – enlargement of our business models due to individual country`s specifications
Enlargement of our product range focussed on
complex solutions
• Long-term regional presence since 1983• Wide product range for our target
groups (German & Russian corporate customers and financial institutions)
• Continuation of strong trend in operating profit due to interest and commission income
• Our business model is focused on corporate customers
• CB represented with 10 branches
• Strong growth and expansion of operating business drives the results
• Operating profit high above Q1 2006 • Units: Corporate & Investment Banking as
well as Private Banking
Hungary
Increase dynamics of Russia –
portfolio by using capital market instruments
Implementation of InnoBanking
Czech
Russia
Martin Blessing, Member of the Board of Managing Directors17 / 21
1. 2. 3. How did we get there?
Financial Institutions contributes an important part to Mittelstand
A global footprint of Commerzbank Financial Institutions providing a broad range of products and services for banks worldwide
Our mission
Our set-up Our success
Client-driven organization delivers product excellence globally
Cash Services
Trade Services
Banking products
Market products
Our clients
Rel
atio
nshi
p M
anag
er
Central and Eastern Europe1
1. Deutsche Bank2. Bank of New York3.3. Amex
2003
1. Deutsche Bank2. ..3. Dresdner Bank
2006
Our approach shows results in our customer recognition
1 Ranking of the Euro Institutional Satisfaction IndexSource: FImetrix Studies 2003 – 2005
Martin Blessing, Member of the Board of Managing Directors18 / 21
1. 2.1. 3.2. 3. Where will we go?
Agenda
1. Where are we now?Mittelstandsbank No. 1 in Germany
2. How did we get there?Implementation of our “Move to the top” program
3. Where will we go?Expanding our wallet share of the German market
Martin Blessing, Member of the Board of Managing Directors19 / 21
Further strategic projects support the growth path in Germany…
Impact
• Intensified relationship-approach and strategic dialogue with large corporates
• Intensified cooperation with IB units• Focussing on capital markets and structured
products
• Increase of revenues in mid- & long-term credit segment
• Value-driven growth• Basis: risk-adjusted pricing
InitiativesProducts
Derivatives
Credit
Large Corporates
• Doubling of revenues from derivatives until 2010
• Build-up of additional sales-specialists com-bined with a qualification program
• Enlarged product-range
• Ambitious growth in revenues• Standardized access to products and services• Extension of cross-selling
TFTS goes global
Increase wallet share
One service around the world
Positioning as strategic partner of
our customers
Credit is Core business
for Commerzbank
1. 2. 3.1. 2. 3. Where will we go?
Martin Blessing, Member of the Board of Managing Directors20 / 21
1. 2.1. 3.2. 3. Where will we go?
In CEE we focus our client-driven approaches on high-potential markets
CEE as second main pillar in the Mittelstandsbank
Being the best bank for Germany`s Mittelstand in
CEE
• Expansion via anorganic growth
• Increase of portfolio dynamics
• Enlargement of business model by further introducing InnoBanking
• Further expansion of product range focussed on complex product solutions
• Intensification of cross-border cooperation
• Use of best practice solutions
• Supporting SME in transition countries & strengthening our position
• Enhancing our position as Germany’s leading trade finance bank
Russia Hungary Czech BRE Bank ProCreditBanks & Rep.
Offices
Martin Blessing, Member of the Board of Managing Directors21 / 21
1. 2.1. 3.2. 3. Where will we go?
Outlook on Mittelstandsbank`s profitability
Financials
Value Drivers of Mittelstand
Units & Financials
• Increase revenues and profitability with large corporates
• Product initiatives
RoE
Germany
CEE
Financial Institutions
Costs
LLP
Maintain on a sufficient level
Ongoing cost discipline
Stable outlook
Key Initiatives
• Further expansion into selected markets
• Intensified cross-boarder cooperation
• Demand-driven approach to further increase our customer recognition
• Client- & product-orientated placement guarantees for global excellence
Martin Blessing, Member of the Board of Managing Directors22 / 21
Notes
Martin Blessing, Member of the Board of Managing Directors23 / 21
Disclaimer
/ investor relations /
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
Martin Blessing, Member of the Board of Managing Directors24 / 21
For more information, please contact Commerzbank´s IR-team:
Ute Heiserer-JäckelP: +49 69 136 41874M: [email protected]
Simone NuxollP: +49 69 136 45660M: [email protected]
Stefan PhilippiP: +49 69 136 45231M: [email protected]
Andrea Flügel (Assistant)P: +49 69 136 22255M: [email protected]
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]
Wennemar von BodelschwinghP: +49 69 136 43611M: [email protected]
www.commerzbank.com/ir