DGAP-News: Commerzbank: Operating profit of EUR 1.0 bn in the first six months of 2012
(firmenpresse) - DGAP-News: Commerzbank AG / Key word(s): Quarter Results/Quarter
Results
Commerzbank: Operating profit of EUR 1.0 bn in the first six months of
2012
09.08.2012 / 07:00
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- EBA capital target overachieved by EUR 2.8 bn as of the end of June
2012
- Core Tier 1 ratio increased to 12.2 %, Commerzbank well prepared for
Basel 3
- Operating profit of EUR 451 m in Q2, Group net profit of EUR 275 m
- Blessing: 'In the first six months of 2012 we have again significantly
strengthened Commerzbank's capital base and consistently reduced risks.
The Bank is therefore well prepared for the currently challenging
market conditions.'
Commerzbank has clearly overachieved the capital target of EUR 5.3 billion
of the European Banking Authority (EBA) as of June 30, 2012 by EUR 2.8
billion. In the first six months of 2012, Commerzbank generated an
operating profit of EUR 1.0 billion (H1 2011: EUR 1.2 billion); in the
second quarter of 2012 the operating profit was EUR 451 million (Q1 2012:
EUR 584 million). This was due in particular to the further decreased
market interest rate level and the declining customer activity. While the
Mittelstandsbank and Central&Eastern Europe segments attained a solid
result, the Private Customers and Corporates&Markets segments suffered
under the challenging market environment. In total, the Core Bank posted an
operating profit of EUR 1.4 billion in the first six months of 2012 (H1
2011: EUR 2.1 billion). Thereof, EUR 560 million was accounted for by the
second quarter of 2012. Group net profit in the second quarter of 2012 was
EUR 275 million (Q1 2012: EUR 369 million).
'In the past six months we have successfully focussed on further
strengthening the Bank's capital base and reducing risks. We have succeeded
in doing this. We have therefore clearly overachieved the EBA capital
target despite the ongoing challenging market environment. As a result, the
Bank is well prepared for the difficult market conditions. Sustainable
capital management and the further reduction of risks will clearly continue
to be a priority in the future,' said Martin Blessing, Chairman of the
Board of Managing Directors of Commerzbank.
EBA capital target overachieved by EUR 2.8 bn, Commerzbank well prepared
for Basel 3
Commerzbank has significantly overachieved its own planning in the
fulfilment of the EBA capital target. Instead of the originally planned
buffer of at least EUR 1 billion, the Bank has attained an equity capital
excess of EUR 2.8 billion as of the end of June 2012. The major measures
behind this achievement were the risk-weighted assets reduction, retained
earnings, and measures to improve the capital structure. Not least, in the
second quarter of 2012 the capital base was also strengthened by the
payment in shares of variable remuneration for the fiscal year 2011 for
non-pay-scale employees.
The Bank has also made good progress in the reduction of risks. As of the
end of June 2012, risk-weighted assets were further reduced by EUR 13
billion to EUR 210 billion quarter-on-quarter. The Core Tier 1 ratio was
significantly increased in the second quarter, from 11.3 % as of the end of
March 2012 to 12.2 % as of the end of June 2012. Commerzbank continues to
be well positioned for regulatory capital requirements according to Basel
3. As of January 1, 2013 and taking into account all the requirements to be
met by this deadline, the Bank continues to expect a Core Tier 1 ratio of
at least 10 %. The balance sheet total amounted to EUR 673 billion as of
the end of June 2012 (end of March 2012: EUR 691 billion).
Lower revenues partially compensated by cost reductions
The main reason for a decline in revenues versus the first six months of
2011 was significantly weaker earnings as a consequence of the difficult
market environment. Revenues before loan loss provisions in the Group
declined by 14 % to EUR 5.2 billion in the first six months of 2012
year-on-year (H1 2011: EUR 6 billion), while the operating expenses were
reduced by 16 % to EUR 3.5 billion (H1 2011: EUR 4.2 billion). However, in
comparison to the first quarter of 2012 both ratios remained stable in the
second quarter of 2012. The revenues before loan loss provisions in the
second quarter 2012 were at EUR 2.6 billion, operating expenses were
approximately at EUR 1.7 billion. The downturn in revenues is primarily due
to the challenging market conditions, the lower customer activity, and a
further decreased market interest rate level. Interest income declined in
the first six months of 2012 to EUR 2.8 billion (H1 2011: EUR 3.5 billion).
Commission income was, at EUR 1.6 billion, also at a lower level than in
the same period of the previous year (H1 2011: EUR 1.9 billion).
Loan loss provisions normalise at a low level
The loan loss provisions in the second quarter of 2012 amounted to EUR 404
million and thus, as expected, remained at a low level, yet normalised in
comparison with the first quarter of 2012. In the first six months of 2012
they were at EUR 616 million and approximately at the level of the previous
year (H1 2011: EUR 596 million). The resilience of the German economy
contributed to the loan loss provisions in the Core Bank remaining stable
in the first six months of 2012 at a very low level of EUR 134 million
compared to the same period of the previous year (H1 2011: EUR 126
million).
Core Bank segments impacted by the further deteriorated market environment
In the second quarter of 2012, the Core Bank segments were also impacted by
deteriorating market conditions. In the Private Customers segment the
operating profit in the first six months of 2012 was EUR 126 million and
fell considerably short versus the same period of the previous year (H1
2011: EUR 195 million). The decline in profits is due in particular to the
lower interest and commission income in the wake of the lowered deposit
margins and ongoing low customer activity in the securities business. Lower
revenues could not be compensated by cost management. In the first six
months of 2012, Commerzbank successfully increased deposits by
approximately EUR 8 billion. In this period, the new business in mortgage
financing rose by 27 % to EUR 3 billion compared to the corresponding
period in the previous year. Compared to the first six months of 2012,
operating expenses were significantly reduced at EUR 1.4 billion (H1 2012:
EUR 1.7 billion). 'All in all the operating profit in the Private Customers
segment is not satisfying,' said Chief Financial Officer Stephan Engels.
'Due to synergies realised from the take-over of Dresdner Bank and active
cost management, costs have been developing as planned. But given that
revenues remained below expectations due to the market environment, we will
advance the strategic development of the segment.'
The Mittelstandsbank continues to profit from its strong market position
and the robust state of the German economy. In the first six months of 2012
the segment posted a good operating profit of EUR 878 million (H1 2011: EUR
948 million). It again made the largest contribution to the Group's
operating profit. However, the interest and commission income in the
Mittelstandsbank followed the general trend. Despite the further decreased
market interest rate level, the revenues before loan loss provisions were
nonetheless at a solid level.
The operating profit in Central&Eastern Europe in the first six months of
2012 was at EUR 146 million (H1 2011: EUR 143 million). BRE Bank again made
a strong contribution, which would have been larger excluding foreign
currency effects. In the second quarter of 2012 it was able to expand its
business further on a stable cost base. In the other regions of Eastern
Europe, Commerzbank has refocused its business in the first six months of
2012. Since the first quarter of 2012, the corporate customer business in
Russia, the Czech Republic, Slovakia, and Hungary has been served by the
Mittelstandsbank. The Bank's activities in Russia were also further aligned
with the corporate customer-related core business with the conclusion of
the sale of the minority stake in Promsvyazbank. As announced at the end of
July 2012, Commerzbank is selling its majority stake in Ukrainian Bank
Forum. In the second quarter of 2012, the signing of the sale and purchase
agreement leads to an extraordinary charge in Commerzbank's profit and loss
statement amounting to approximately EUR 86 million.
Despite difficult market conditions, the operating profit in Corporates&Markets slightly increased in the second quarter of 2012 compared to the
first quarter of 2012. However, the segment reported a distinctly lower
operating profit of EUR 75 million in the first six months of 2012 (H1
2011: EUR 521 million) compared to the preceding year. This was due to the
lower customer activity affecting the whole industry following the
uncertain market environment as well as to significantly reduced
risk-weighted assets. Without the effects from the valuation of the own
credit spreads, the segment generated an operating profit of EUR 217
million in the first six months of 2012 (H1 2011: EUR 492 million).
Operating profit improved at ABF and PRU, organisational changes came into
effect
The operating profit in the Asset Based Finance (ABF) segment in the first
six months of 2012 was at EUR minus 553 million (H1 2011: EUR minus 1.1
billion). Lower losses in the sovereign bond portfolio helped the result
from financial investments. In addition, in the first six months of 2012
the loan loss provisions remained stable at EUR 479 million year-on-year
(H1 2011: EUR 474 million). But in the second quarter of 2012 loan loss
provisions increased versus the previous quarter particularly in Ship
Finance. Above all due to the discontinuation of new business at Eurohypo
as decided in November 2011, commission income declined in the first six
months of 2012, however.
In the second quarter of 2012 the exposure at default (EaD) in Public
Finance was reduced to EUR 80 billion (End of March 2012: EUR 82 billion).
The EaD to the GIIPS countries was reduced by 8 % to EUR 11.2 billion as of
the end of the second quarter of 2012 (Q1 2012: EUR 12.1 billion). The
sovereign exposure to Italy was lowered by EUR 0.6 billion to EUR 7.8
billion (minus 7 %), and the corresponding Spanish exposure by EUR 0.3
billion to EUR 2.6 billion (minus 10 %).
As already announced at the end of June 2012, the new segment Non Core
Assets (NCA) is replacing the ABF segment as of July 1, 2012. All public
finance, commercial real estate finance and ship finance portfolios will be
consolidated in the NCA segment and wound down. As already announced, the
Commerz Real business area and the retail portfolio of Eurohypo will be
integrated into the Private Customers segment.
In the first six months of 2012 the Portfolio Restructuring Unit (PRU)
achieved a good result. The operating profit was EUR 184 million and 45 %
higher than in the same period of the previous year (H1 2011: EUR 127
million).The reduction in the portfolio is now so advanced that the
remaining portfolio was largely transferred to the Corporates&Markets
segment as of July 1, 2012. This does not apply to the public
infrastructure investments portfolio of EUR 1.5 billion, which is now being
managed in the Public Finance business area within the NCA segment.
New allocation of responsibilities within the Board of Managing Directors
comes into effect as of August 9, 2012
Following the decision to significantly expand the Non Core Assets (NCA)
segment and not to launch the Real Estate and Ship Finance (RES) segment,
the responsibilities within the Board of Managing Directors of Commerzbank
are being reassigned. In addition to Group Human Resources Ulrich Sieber
is, together with Jochen Klösges, assuming overall responsibility for the
expanded NCA segment. In order to focus on the value-preserving reduction
of the portfolios in the new NCA segment, Sieber is relinquishing his
responsibility for Central and Eastern Europe (CEE). In the future CEE will
be part of the responsibilities of the CEO. In return, Martin Blessing is
handing over responsibility for Treasury to Michael Reuther, who is already
responsible for the Corporates&Markets segment. Reuther is a proven
treasury expert, and previously headed Treasury from 2006 to 2008. As of
August 9, 2012 the new allocation of responsibilities within the Board of
Managing Directors comes into effect as already announced.
Outlook: No short-term stabilisation of the market environment expected
'We still do not expect the macroeconomic and market environment to
stabilise in the second half of 2012. Therefore we expect operating profits
to continue to be under pressure,' said Engels. 'We have costs firmly under
control. Even though we expect a slight increase in the second half of the
year, we will significantly overachieve our cost target of EUR 7.6 billion.
Our target for the loan loss provisions of EUR 1.7 billion is achievable.
Considering current market conditions, this target is however becoming
increasingly ambitious. Against this background, we expect the net profit
in the second half of the year to be below the net profit of the first six
months.'
Commerzbank is currently reviewing all business areas within its annual
strategic planning process. The results will be presented on November 8,
2012. 'Our management focus is on the strategic repositioning of the
Private Customers segment as well as on the strategy for the run-down
portfolios within the Non Core Assets segment,' said Engels. 'In view of
the difficult revenues situation, we are subjecting the costs to a
consistent review. The strategic goal remains to consistently focus
Commerzbank on a customer-centric and sustainably profitable core business
while continuing to reduce risks and capital lockup.'
Excerpt from the consolidated profit and loss statement
In EUR m H1 2012 Q2 2012 Q1 2012 H1 2011 Q2 2011
Net interest income 2,762 1,333 1,429 3,517 1,790
Provisions for loan losses -616 -404 -212 -596 -278
Net commission income 1,600 757 843 1,948 928
Net trading income 1,012 555 457 1,095 576
Net investment income -199 -23 -176 -942 -954
Current income on companies
accounted for at equity 18 7 11 13 13
Other income -22 -43 21 348 10
Operating expenses 3,520 1,731 1,789 4,184 2,030
Operating profit 1,035 451 584 1,199 55
Net measurement gain/loss on
the prospective selling price
of disposal groups -86 -86 - - -
Restructuring expenses 43 9 34 - -
Taxes 209 56 153 137 2
Consolidated profit 697 300 397 1,062 53
Consolidated profit
attributable to
Commerzbank shareholders 644 275 369 1,009 24
Cost/income ratio in operating
business (%) 68.1 66.9 69.2 70.0 85.9
*****
Under www.tvservicebox.de and www.getaudio.de you will find broadcast-ready
video and audio material with statements by Stephan Engels from 7.30
onwards on August 9, 2012.
The videos can be viewed directly using mobile end devices.
Statements Stephan Engels:
http://cbvideo.commerzbank.de/2012/Engels_de/index.php
*****
Press contact:
Armin Guhl +49 69136 42764
Simon Steiner +49 69 136 46646
Simone Fuchs +49 69 136 44910
Nils Happich +49 69 136 44986
*****
About Commerzbank
Commerzbank is a leading bank for private and corporate customers in
Germany. With the segments Private Customers, Mittelstandsbank, Corporates&Markets as well as Central&Eastern Europe 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 around 60 sites in
52 countries and serves almost 15 million private clients as well as 1
million business and corporate clients worldwide. In 2011, it posted gross
revenues of almost EUR 10 billion with 58,160 employees.
*****
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 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. 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.
End of Corporate News
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09.08.2012 Dissemination of a Corporate News, transmitted by DGAP - a
company of EquityStory AG.
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Language: English
Company: Commerzbank AG
Kaiserplatz
60261 Frankfurt am Main
Germany
Phone: +49 (069) 136 20
Fax: -
E-mail: ir(at)commerzbank.com
Internet: www.commerzbank.de
ISIN: DE0008032004
WKN: 803200
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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