DGAP-UK-Regulatory: Commerzbank: Neutral consolidated surplus in 2008


Commerzbank AG / Final Results/Quarter Results

18.02.2009 

Release of a UK Regulatory Announcement, transmitted by DGAP - a company of EquityStory AG. The issuer is solely responsible for the content of this announcement.
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Commerzbank: Neutral consolidated surplus in 2008 

 - Operating profit at minus EUR 378 m 

 - Operating profit without one-offs at EUR 2.1 bn 

 - Core capital ratio (Tier 1) 10.1%

 - No bonuses paid for 2008 

 - Blessing: 'The fourth quarter of 2008 was one of the most difficult
    ever for Commerzbank'

In 2008, Commerzbank’s consolidated surplus attributable to its
shareholders amounted to EUR 3 million. In the extraordinarily successful
year 2007, the consolidated surplus attributable to Commerzbank
shareholders stood at EUR 1.9 billion. After a respective positive
consolidated surplus of around EUR 0.8 billion for the first nine months of
2008, in Q4 the consolidated loss amounted to EUR 809 million (Q4 2007: EUR
201 million).

The operating profit came at minus EUR 378 million, compared to an
operating profit of EUR 2.5 billion as at December 31, 2007. For the fourth
quarter, the bank posted an operating profit of minus EUR 822 million (Q4
2007: plus EUR 169 million). Excluding one-offs, the operating profit for
the past year remained positive at EUR 2.1 billion. The bank’s operating
earnings potential remained impressive even in the financial markets crisis
in the core segments Private & Business Customers, Mittelstandsbank and
Central and Eastern Europe (CEE). However, this was not sufficient to
offset the negative impact of the global market turbulence.

'With its strong core business, the bank developed well into the second
half of the year in spite of the difficulties for the beleaguered financial
markets', said Martin Blessing, Chairman of the Commerzbank Board of
Managing Directors. 'Caused by the worsening developments and the
deteriorating economic environment since the end of the summer, we were not
longer able to escape the effects of the global downturn during 2008. The
fourth quarter was one of the most difficult ever for Commerzbank.'

Core capital ratio (Tier 1) 10.1%, Hybrids will be serviced 

For 2008, Commerzbank’s core capital ratio (Tier 1) was reported in
accordance with IFRS for the first time. It came at 10.1% at year end. The
outstanding profit-sharing certificates, the SoFFin’s (Sonderfonds
Finanzmarktstabilisierung) silent participation and the other hybrid
instruments will be fully serviced; there will be no participation in
losses. Commerzbank will not pay any dividend for 2008. For 2007, a
dividend of EUR 1.00 per share was awarded.

In the fourth quarter, the revaluation reserve amounted to minus EUR 2.2
billion. The major factors behind the EUR 1.1 billion decrease in the
fourth quarter were the widening spreads among various Western European
government bonds in the wake of Lehman Brothers and the Iceland moratorium
requiring adjustments in the Public Finance portfolio. On the other hand
stood positive silent reserves from claims and liabilities (fair value)
amounting to EUR 5.9 billion pre-tax. In the fourth quarter, Commerzbank
has utilized the changes in reclassifying assets (IAS 39 and IFRS 7) for
parts of the securities allocated to Public Finance (EUR 33 billion). For
the full year 2008 this resulted in charges of EUR 25 million in loan loss
provisions. In Q4 the revaluation reserve was relieved by EUR 750 million
net.

Private & Business Customers, Mittelstandsbank and CEE achieve positive
operating profit

In spite of the turbulence in the financial markets, the core business
areas Private & Business Customers and Mittelstandsbank continued to
perform well in Q4 2008. The number of private customers in Germany rose by
574,000 throughout the year to more than six million (an increase of 10%).
Dynamic growth was also recorded in customer deposits. They were at EUR
101.1 billion as of end-December after EUR 81.1 billion in the previous
year (plus 25%). The credit volume to the Mittelstand in Germany rose by
more than 10% to EUR 46.5 billion. Operating profit of the two segments was
EUR 551 million and EUR 868 million respectively (2007: EUR 401 million and
EUR 980 million).

The segment Central and Eastern Europe (CEE), which was newly formed in
2008, achieved an operating profit of EUR 304 million (2007: EUR 272
million). BRE Bank in particular posted a good annual result, despite being
hit by the effects of the financial market crisis in the fourth quarter.

Loan loss provisions increased for the capital market related businesses 

For 2008, Corporates & Markets (including Public Finance and Treasury)
posted an operating profit of minus EUR 1.7 billion, compared with minus
EUR 67 million in the previous year. In the fourth quarter 2008 the
operating profit was at minus EUR 754 million. This includes the negative
effects from a total return swap of minus EUR 303 million. The position has
since been closed with a positive income contribution for 2009 totalling
almost EUR 90 million. Profits were also dampened by trading activities,
especially in credit derivatives (minus EUR 271 million). Adding to this
were Lehman Brothers and the Iceland moratorium.

Commercial Real Estate (CRE) closed 2008 with an operating loss of EUR 424
million (2007: plus EUR 447 million). Increased loan loss provisions for
possible defaults in the international real estate business (EUR 618
million) and a net investment income (minus EUR 473 million) weakened by
writedowns on securitised US mortgages (RMBS-Portfolio) were the main
reasons for the negative performance. The operative core of the real estate
business, i.e. excluding the RMBS portfolio, delivered a positive result in
2008.

Net interest income reaches record level 

In 2008, the net interest income of Commerzbank Group increased by 18%
year-on-year to EUR 4.7 billion. The business segments Private & Business
Customers and Mittelstandsbank played an important role in this success.
Even in the difficult fourth quarter of 2008, net interest income in these
segments was up 7% to EUR 364 million quarter-on-quarter and 22% to EUR 354
million, respectively.

Despite the challenging situation in the global financial markets, net
commission income in the fourth quarter was EUR 677 million and only 8%
below the same quarter last year (EUR 735 million). Again, this was due to
encouraging results in the business segments Private & Business Customers
and Mittelstandsbank. With regard to the whole year, net commission income
was down 10% year-on-year at above EUR 2.8 billion.

Against the background of worsening economic expectations, the year closed
with loan loss provisions up by EUR 1.4 billion to EUR 1.9 billion. In the
fourth quarter, loan loss provisions totalled EUR 638 billion (a  q-o-q
increase of EUR 577 million). Strict cost management across all business
lines paid off also in 2008, with operating expenses falling by 8% to EUR
5.0 billion.

Trading profit and net investment income with a loss 

Following an outstanding trading profit in the second quarter (EUR 375
million), the capital market related segments posted considerable losses
from July 2008 onwards. Corporates & Markets (including Public Finance and
Treasury) alone showed a negative trading profit of EUR 674 million in the
final quarter. On group level, 2008 trading profit was also negative at
minus EUR 450 million (2007: EUR 879 million).

Net investment income decreased by EUR 126 million compared with 2007 to
EUR 665 million, attributable primarily to impairments on asset-backed
securities. Altogether, for the full year 2008 write downs on asset backed
securities in trading profit and net investment income totalled around EUR
1.0 billion, thereof EUR 514 million on securitised US real estate loans
(US-RMBS portfolio and CDOs), as well as EUR 350 million on Corporate CDOs.

In 2008, Commerzbank posted a consolidated surplus of EUR 62 million well
above the operating profit (minus EUR 378 million). This was caused by tax
loss carry-forwards capitalized in accordance with IAS 12. Thus at
year-end, the tax entry showed an income of EUR 465 million (previous year:
expenses of EUR 580 million). EUR 59 million of the consolidated surplus
were allocated to minority interests.

Key liquidity ratio at a comfortable level

The key liquidity ratio according to the standardised approach under the
Liquidity regulation was constantly maintained throughout 2008 at a
comfortable level between 1.06 and 1.21. By the end of the fourth quarter
the actual value was at 1.18. This also shows that the Commerzbank Group
has a solid positioning and that funding was implemented according to plan.

The balance-sheet total for the Commerzbank Group in 2008 remained almost
unchanged at EUR 625.2 billion. Claims on customers increased slightly to
EUR 284.8 billion; a result of the deposit growth in the private customers
segment. Claims on banks decreased considerably by 15% to EUR 63.0 billion.
Liabilities to banks rose only slightly to EUR 128.5 billion (+3%).

No bonuses to be paid for 2008 

'Our pre-tax earnings were negative. As a result, employees and members of
the Board of Managing Directors of Commerzbank will not receive a bonus for
2008. Nevertheless we have to reward employees individual extra payments
acknowledging their contribution and individually agreed salary components
will also be settled', said Eric Strutz, the Chief Financial Officer of
Commerzbank who is also in charge of Human Resources. This principle
applies to Commerzbank AG and all fully owned subsidiaries.

'Of course, we know that our employees worked hard in 2008 and displayed
great dedication and commitment. Many departments were profitable and many
employees delivered the performance that was expected. This makes it all
the more regrettable that the profit is insufficient for bonuses', Strutz
continued. Commerzbank is currently working on a new incentive and
compensation system. The new model will have to cope with the capabilities
of the new Commerzbank in all business areas while at the same time it will
have to be in line with the sustainability of returns. 'This will continue
to make us attractive for employees and to make high performers join us for
the long term', said Strutz.

Outlook: 2009 will be another very difficult year 

'We had a good start in January 2009, mainly driven by net interest income
and trading profit. We will face further economic charges, which will
however decrease in 2010', said Strutz. The integration of Dresdner Bank is
proceeding according to plan. As budgeted, in 2009 the integration will
generate costs that will be more than offset by synergy effects that the
merger will produce over time. Strutz added: 'Thanks to our effective
structure, our high-yielding core business lines and the synergies, we will
reap above-average benefits from an economic recovery. But we have to be
realistic: 2009 will be another very difficult year.'

Excerpt from Commerzbank's consolidated profit and loss statement 1) 

in € m                                   Q4/08   Q4/07  31.12.08  31.12.07
Net interest income                      1,325     971     4,729     4,007
Loan loss provisions                     - 638    - 61   - 1,855     - 479
Net commission income                      677     735     2,846     3,150
Trading profit                           - 701      73     - 450       879
Net investment income                    - 324   - 123     - 665       126
Other result                             - 137    - 27      - 27       196
Operating expenses                       1,024   1,399     4,956     5,366
Operating profit                         - 822     169     - 378     2,513
Restructuring expenses                       -       8        25         8
Taxes on income                             43      20     - 465       580
Consolidated profit attributable to      - 809     201         3     1,917
Commerzbank shareholders
Earnings per share in €                  - 1.22   0.31      0.00      2.92
Return on equity on the consolidated     - 22.5    6.5       0.0      15.4
surplus 1)
Cost/income ratio in op. business        121.9    85.9      77.0      64.2

1) unaudited figures of Commerzbank Group without Dresdner Bank 
2) adjusted for entire year

*** 

Wednesday, February 18, 2009  we will be hosting a teleconference for
journalists at 10:30 a.m. (CET). At the teleconference, Eric Strutz, the
Chief Financial Officer of Commerzbank, will explain the annual financial
statement in detail. The dial-in number is +49 (0)695 8999 0509 or +44
(0)207 1620 177. A presentation will be available at this point on the
Commerzbank website.



Commerzbank AG 
Group Communications
Telephone +49 69 1 36-2 28 30 
pressestelle@commerzbank.com




DGAP 18.02.2009 
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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
Indices:            DAX, CDAX, HDAX, PRIMEALL
Listed:             Regulierter Markt in Berlin, Frankfurt (Prime
                    Standard), Hannover, München, Hamburg, Düsseldorf,
                    Stuttgart; Terminbörse EUREX; Foreign Exchange(s)
                    London, SWX
Category Code:      MSC
LSE Ticker:         CZB
Sequence Number:    92
Time of Receipt:    Feb 18, 2009 06:58:38
End of News                                     DGAP News-Service
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