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May 06, 2011

Operating profit of EUR 1.14 billion in first quarter 2011

  • Gross revenues of approximately EUR 3.6 bn, net profit of roughly EUR 1.0 bn (41 % up on Q1 2010)
  • Core bank reports operating profit of EUR 1.2 bn, private customer business shows positive trend
  • Risk-weighted assets significantly lower, core Tier 1 ratio 11.0 % as of March 31, 2011
  • Martin Blessing: "From January to March 2011 we achieved our best quarterly results to date"

With an operating profit of EUR 1.14 billion in the first quarter of 2011, Commerzbank has gotten off to a very good start into the current financial year (first quarter 2010: EUR 771 million). At around EUR 3.6 billion, gross revenues were roughly on par with the same quarter last year. Due to the continued derisking, and supported by the favourable economic development, loan loss provisions fell by more than half to EUR 318 million from EUR 644 million in the first quarter of 2010. Net profit (including minorities) of roughly EUR 1.0 billion represented a 41 % increase year-on-year. The core bank with the operating segments Private Customers, Mittelstandsbank, Corporates & Markets and Central & Eastern Europe, generated an operating profit of approximately EUR 1.2 billion overall, after EUR 695 million a year earlier. This includes extraordinary gains of EUR 358 million from capital optimisation measures successfully implemented at the beginning of 2011. All segments of the core bank concluded the first quarter 2011 on a positive note. The Portfolio Restructuring Unit was also profitable. In Asset Based Finance, the continued derisking had a negative impact on results.

"From January to March 2011 we achieved our best quarterly results to date. Our very good start into the current year shows the potential of the Bank in normalised markets. Once again, Mittelstandsbank and Corporates & Markets delivered a strong earnings contribution. In our Private Customers business, we have made significant progress. In Central & Eastern Europe the positive trend has stabilised," said Martin Blessing, Chairman of the Board of Managing Directors of Commerzbank. "Moreover, at the end of May 2011, after only 1,000 days, we will have completed the Dresdner Bank integration project." Following the finalisation of the largest integration project ever seen within the German banking sector, just under 400 branch pairs will be merged by the end of 2012.

Total assets further reduced as planned, core tier 1 ratio increased again

The reduction of risks and assets continues to proceed as planned in the 'Roadmap 2012'. Total assets were reduced by EUR 57 billion from the fourth quarter of 2010 to EUR 697 billion. Risk-weighted assets decreased by EUR 19 billion to EUR 248 billion. Not taking the first quarter profit into account, as at the end of March 2011, the core Tier 1 ratio increased to 11.0 % (December 31, 2010: 10.0 %), with the Tier 1 ratio standing at 12.7 % (December 31, 2010: 11.9 %). "After completing the planned reduction of the SoFFin silent participations, and including the profit from the first quarter of 2011, the core Tier 1 ratio will be 9.7 % on a pro forma basis as at March 31, 2011, and the equity Tier 1 ratio 9.0 %," said Eric Strutz, Chief Financial Officer of Commerzbank.

Operating expenses down, net commission income increased

In the first quarter of 2011, operating expenses fell slightly by 2.5 % year-on-year to EUR 2.15 billion. In line with expectations, as at end of March 2011 synergies totalling EUR 1.3 billion p.a. were realised from the integration of Dresdner Bank. Net interest income remained positive at approximately EUR 1.7 billion, but fell by 8 % from the unusually strong first quarter of 2010 and as a result of one-off effects (including sales of subsidiaries). Net commission income rose slightly year-on-year (plus 2 % to roughly EUR 1.0 billion) as client securities transactions began to pick up again. As was expected, net trading income was well below the very strong first quarter of 2010 at EUR 519 million (down EUR 317 million), but rose compared with the fourth quarter of 2010 (up EUR 135 million).

All segments of the core bank positive, ABF and PRU successfully continuing asset reduction

Against a background of rising net interest and commission income as well as focused risk and cost management, the Private Customer business closed the first quarter of 2011 with an operating profit of EUR 116 million. Gross revenues rose by EUR 44 million to roughly EUR 1.05 billion. Loan loss provisions fell by EUR 25 million year-on-year to EUR 41 million, and operating expenses decreased by EUR 24 million to EUR 888 million. Mittelstandsbank's operating profit rose in the first quarter of 2011, to EUR 415 million, compared with the first quarter of 2010 (EUR 314 million). Loan loss provisions totalled EUR 8 million, showing a further significant decrease compared to the first quarter of 2010 (EUR 161 million) as a result of the favourable economic trend and successful derisking. In Central and Eastern Europe, the positive trend in results which emerged at year-end 2010 continued. In the first quarter of 2011, the Central & Eastern Europe (CEE) segment reported an operating profit of EUR 78 million, up from EUR 6 million in the first quarter of 2010 and EUR 71 million in the fourth quarter of 2010. Loan loss provisions fell by EUR 64 million to EUR 30 million year-on-year. The number of customers in the region increased by over 90,000 in the period January to March 2011 to around 4.3 million. In Corporates & Markets, operating profit in the first quarter of 2011 further improved to EUR 240 million from the strong fourth quarter of 2010 (operating profit: EUR 223 million). Compared to the first quarter of 2010, which was characterised by successful major transactions, it has decreased by EUR 93 million. All three business areas - Corporate Finance, Fixed Income & Currencies and Equity Markets & Commodities (EMC) got off to a good start in 2011, with EMC showing its best quarter since the takeover of Dresdner Bank.

In Asset Based Finance (ABF) and the Portfolio Restructuring Unit (PRU), risks and assets were successfully further reduced. Loan loss provisions thus decreased to EUR 241 million in ABF (from EUR 325 million in the first quarter of 2010). The segment's operating result decreased year-on-year by EUR 53 million to minus EUR 138 million. As at 31 March 2011, PRU assets totalled EUR 12.5 billion, down from EUR 16.9 billion at end of March 2010. With an operating profit of EUR 63 million (down EUR 98 million year-on-year), PRU again made a positive earnings contribution.

Outlook: 2011 operating profit expected to significantly exceed 2010

"We are maintaining our successful course, and have got off to a very good start into 2011. The positive trend of the first quarter has continued in April 2011. Over Easter, we successfully completed the migration of customer and product data, thus reaching all major milestones in the integration of Dresdner Bank. Our focus now is on realising the synergies resulting from the integration and further reducing our costs," said Eric Strutz. Overall, synergies from the integration of Dresdner Bank are expected to reach around EUR 2.4 billion a year after 2013. "We are also steadily working through 'Roadmap 2012'. The very good results are already proof of the success of implementing this strategy. However, we will not content ourselves with achieving the 'Roadmap 2012' targets. On the contrary: We intend to bring about a clear increase in profit subsequently", said Strutz. Overall - given a stable market environment - the Bank continues to expect that it will conclude 2011 with an operating profit according to IFRS that is significantly higher than in 2010.


Press contact:
Reiner Roßmann +49 69 136 46646
Simone Fuchs +49 69 136 44910
Maximilian Bicker +49 69 136 28696




Excerpt from the consolidated profit and loss statement

in EUR m Q1 2011 Q1 2010 Q4 2010 2010 2009
Net interest income 1,727 1,886 1,682 7,054 7,174
Provision for loan losses -318 -644 -595 -2,499 -4,214
Net commission income 1,020 997 875 3,647 3,773
Net trading income 519 836 384 1,958 -409
Net investment income 12 -119 191 108 417
Current income on companies
accounted for at equity
- 2 32 35 15
Other income 338 22 -149 -131 -22
Operating expenses 2,154 2,209 2,164 8,786 9,004
Operating profit/loss 1,144 771 256 1,386 -2,270
Impairments of goodwill - - - - 768
Restructuring expenses - - - 33 1,621
Taxes 135 55 -21 -136 -26
Consolidated profit/loss 1,009 716 277 1,489 -4,633
Consolidated profit/loss
(attributable to
Commerzbank shareholders)
985 708 257 1,430 -4,537
Cost/income ratio
in operating business (%)
59.6 61.0 71.8 69.3 82.2


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About Commerzbank

Commerzbank is a leading bank for private and corporate customers in Germany. With the segments Private Clients, Mittelstandsbank, Corporates & Markets, Central & Eastern Europe as well as Asset Based Finance, the Bank offers its customers an attractive product portfolio, and is a strong partner for the export-oriented SME sector in Germany and worldwide. With a future total of some 1,200 branches, Commerzbank has one of the densest networks of branches among German private banks. It has above 60 sites in more than 50 countries and serves more than 14 million private clients as well as one million business and corporate clients worldwide. In 2010 it posted gross revenues of EUR 12.7 billion with some 59,000 employees.

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Disclaimer

This release contains statements concerning the expected future business of Commerzbank, efficiency gains and expected synergies, 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 developments and information. 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.

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