Commerzbank AG / Quarter Results
07.05.2015 07:04
Dissemination of a Regulatory Announcement, transmitted by
DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.
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- Revenues before loan loss provisions in the Group increased
year-on-year by 23% to approximately EUR 2.8 bn
- Operating expenses of EUR 1.9 bn include European bank levy of EUR 167
m
- Loan loss provisions reduced to EUR 158 m (Q1 2014: EUR 238 m)
- Net profit increased considerably to EUR 366 m (Q1 2014: EUR 200 m)
- Capital ratio CET 1 with full application of Basel 3 increased to 9.5%
as at end of March 2015 (end of 2014: 9.3%) - including dividend
accrual of EUR 57 m for first quarter of 2015
- Capital ratio CET 1 at to 10.2% after capital increase (pro forma end
of March 2015)
- Blessing: 'We have made a good start into 2015 and have considerably
increased the revenues in all operating segments. For the financial
year 2015 we plan to pay a dividend.'
In the first quarter of 2015 Commerzbank has considerably increased both
the revenues and the profits, while further strengthening its capital
ratio. The operating profit has more than doubled to EUR 685 million (Q1
2014: EUR 324 million). This also includes the European bank levy of EUR
167 million as well as a valuation adjustment on the exposure to Austria's
HETA in the amount of EUR 0.2 billion. The operating performance in the
Core Bank segments has made a significant contribution to the very good
result. Negative charges could be compensated in the Core Bank by positive
one-off effects and in NCA by positive valuation effects.
In the first quarter of 2015 the revenues before loan loss provisions in
the Group increased by 23% to approximately EUR 2.8 billion (Q1 2014: EUR
2.3 billion). The loan loss provisions declined year-on-year to EUR 158
million (Q1 2014: EUR 238 million). This development is testimony to the
high quality of the loan portfolio, the portfolio rundown in NCA, and the
robust state of the German economy. The operating expenses in the first
quarter were higher than in previous quarters due to the first-ever
consideration of the European bank levy. They rose to just over EUR 1.9
billion (Q1 2014: approximately EUR 1.7 billion). The net profit increased
considerably to EUR 366 million (Q1 2014: EUR 200 million). This includes
restructuring expenses of EUR 66 million for the Corporates & Markets and
Non-Core Assets (NCA) segments.
'We have made a successful start into 2015. We are performing well in all
the operating segments and thanks to greater activity on the part of our
customers have considerably improved the revenues. We have more than
doubled the result in the first quarter - and this despite the charges from
the European bank levy and a valuation adjustment on the HETA exposure. We
are planning for a dividend for the financial year 2015 and are accruing
quarterly. However, we have to wait, whether it will be enough at the end
of the year,' said Martin Blessing, Chief Executive Officer of Commerzbank.
Capital ratio improved considerably - leverage ratio further increased
With the further increase in the Common Equity Tier 1 ratio (CET 1), the
Bank has again strengthened its capital position. The ratio with full
application of Basel 3 rose to 9.5% at the end of the first quarter 2015,
compared to 9.3% as at the end of December 2014. This considers a dividend
accrual totalling EUR 57 million. The leverage ratio with full application
of Basel 3 improved to 3.7% as at the end of the first quarter of 2015,
following on from 3.6% as at the end of December 2014. Due to the capital
measure performed at the end of April 2015, the CET 1 ratio improved to
10.2% (pro forma as at end of March 2015) and the leverage ratio rose to
3.9% (pro forma as at end of March 2015). The risk-weighted assets (RWA)
with full application of Basel 3 as at the end of March 2015 were, at EUR
221.5 billion, higher than the figure as at the end of December 2014 (EUR
214.1 billion). The reasons for this were, above all, foreign exchange
effects as a result of the weak euro. The total assets in the Group
amounted to EUR 605 billion as at the end of March 2015 (end of December
2014: EUR 558 billion).
Operating profit in Core Bank increased by approximately 55% compared to
previous year
In the Core Bank the operating profit was significantly improved by a total
of approximately 55% to EUR 771 million (Q1 2014: EUR 498 million). This
positive development is also reflected in the return on equity (RoE) of
15.4% in the Core Bank. The revenues before loan loss provisions in the
Core Bank increased to EUR 2.7 billion, following on from EUR 2.2 billion
in the first quarter of 2014. Essentially, the reason for this was the
greater customer activity in the operating segments. In this respect, both
the interest and trading income (up 21% to EUR 1.7 billion) as well as the
commission income (up 10% to EUR 895 million), improved considerably. The
loan volume was again increased in this period. In a year-on-year
comparison the loan volumes in the Private Customers and Mittelstandsbank
segments rose. Corporates & Markets profited above all from the good
developments on the stock and foreign exchange markets. Moreover, one-off
effects in the Central & Eastern Europe segment and the good Treasury
result had positive effects. The lower loan loss provisions of EUR 61
million further aided the operational development (Q1 2014: EUR 104
million). The operating expenses rose in the Core Bank year-on-year by 7%
to EUR 1.8 billion (Q1 2014: EUR 1.6 billion), something which was due
above all to the European bank levy paid for 2015, and to higher regulatory
requirements.
Revenues and profits improved in all Core Bank segments
In the Private Customers segment, a very good operating profit of EUR 161
million was generated in the first quarter of 2015. This was 45% higher
than in the first quarter of 2014 (EUR 111 million). Despite the downturn
in the interest rate levels, the revenues before loan loss provisions
improved to EUR 914 million, following on from EUR 873 million in the first
quarter of 2014. The growth is, among other things, due to the higher
volumes in Wealth Management products and Premium Depots. These saw
considerable year-on-year growth of 16%. Thus, on the whole, the revenues
increased to their highest level since mid-2011. The positive development
in revenues in the Private Customers segment was bolstered by a sustainably
high level of customer satisfaction and the ongoing high level of demand on
the part of customers. Thus, the segment continued its growth path with
66,000 net new customers in the first quarter of 2015. The result also
profited from the lower loan loss provisions, which, at EUR 13 million,
were approximately 64% lower than in the previous year. The operating
expenses amounted to EUR 740 million and include the annual contribution of
the segment to the European bank levy to the amount of EUR 15 million.
Mittelstandsbank was able to increase its operating profit slightly
year-on-year to EUR 345 million (Q1 2014: EUR 340 million). This includes
the European bank levy of EUR 44 million for 2015, which was booked for the
first time ever. The development of the result profited from lower loan
loss provisions of EUR 35 million (Q1 2014: EUR 57 million). The revenues
before loan loss provisions increased year-on-year by EUR 44 million to EUR
763 million. This positive development reflects the loan growth and the
heightened customer demand, in particular for letter of credit and foreign
exchange hedging transactions. In addition, the loan volume was increased
by 10% over the first quarter of 2014. On the whole, it was therefore
possible to compensate for the downturn in deposit income. The operating
expenses rose to EUR 383 million.
The Central & Eastern Europe (CEE) segment improved the operating profit in
the first quarter of 2015 to EUR 116 million (Q1 2014: EUR 98 million). The
revenues before loan loss provisions were, at EUR 254 million, 13% higher
year-on-year. In this respect, the conclusion of the sale of the insurance
business of mBank to AXA Group ensured one-off proceeds of approximately
EUR 46 million. The segment again attracted more net new customers. In
addition, it was possible to compensate for the impact of the current
interest rate environment to a considerable degree through growth in the
loan and deposit volumes. The loan loss provisions increased slightly to
EUR 23 million (Q1 2014: EUR 21 million). The operating expenses were, at
EUR 115 million, up slightly year-on-year. Essentially responsible for this
were the European bank levy and higher costs for the Polish deposit
protection fund. In total mBank also continued its dynamic growth with new
customers and volumes in the first quarter of 2015.
Corporates & Markets posted a very good start into 2015. In the first
quarter of 2015 the segment attained an operating profit of EUR 300
million, a year-on-year improvement of 40% (Q1 2014: EUR 214 million). Even
after adjustment for valuation effects from own liabilities (OCS) and from
counterparty risks in the derivatives business (CVA/DVA), which totalled
EUR 47 million, the segment posted a year-on-year increase of more than
25%. Year-on-year the revenues before loan loss provisions were increased
significantly to EUR 666 million (Q1 2014: EUR 541 million). The key
drivers behind higher profits year-on-year were the areas Fixed Income &
Currencies (FIC) and Equity Markets & Commodities (EMC). FIC generated a
very good result, increasing the revenues over the previous year by 45% to
EUR 196 million, thanks to higher volatility in foreign exchange markets
and higher bond trading activities. The EMC area also saw a good start into
the year and was up 14% year-on-year thanks to healthy demand for
structured investment solutions across all asset classes, as well as for
hedging solutions to commodity exposures. Net reversals in loan loss
provisions for Corporates & Markets amounted to EUR 47 million. Operating
expenses increased to EUR 413 million due to first-time charges of EUR 65
million for the European bank levy. In addition, Corporates & Markets saw
restructuring expenses of EUR 50 million of IT operations by Centres of
Competence.
NCA with improved operating profit
The Non-Core Assets (NCA) segment improved the operating profit in the
first quarter of 2015. There was an operating result of minus EUR 86
million, following on from minus EUR 174 million in the first quarter of
2014. The revenues before loan loss provisions increased year-on-year to
EUR 116 million (Q1 2014: EUR 41 million). The segment result profited from
positive valuation effects; these contrasted with valuation adjustments on
the exposure to Austria's HETA to the amount of EUR 0.2 billion. The loan
loss provisions declined year-on-year, above all as a consequence of the
portfolio rundown in the area Commercial Real Estate (CRE), by 28% to EUR
97 million (Q1 2014: EUR 134 million). The operating expenses increased
year-on-year to EUR 105 million (Q1 2014: EUR 81 million). Of this sum the
European bank levy accounted for EUR 27 million in the first quarter of
2015. Furthermore, restructuring expenses of EUR 16 million were booked in
the segment.
The portfolio rundown was also continued in the first quarter of 2015, yet
was partly compensated by foreign exchange effects. The Exposure at Default
(EaD) of the Commercial Real Estate (CRE) and Ship Finance divisions as at
the end of March 2015 was EUR 30 billion. Thus it was reduced by
approximately EUR 2 billion over the fourth quarter of 2014 (Q4 2014: EUR
32 billion). The rundown over the first quarter of 2014 amounted to
approximately EUR 16 billion (Q1 2014: EUR 46 billion). Commercial Real
Estate accounted for approximately EUR 17.5 billion EaD as at the end of
March 2015, which corresponds to a downturn of EUR 2.5 billion over the end
of December 2014. In the Ship Finance division the portfolio was EUR 12.6
billion. Here the portfolio rundown of EUR 0.8 billion was offset by a
negative foreign exchange effect of EUR 1.3 billion.
Outlook
'Despite the challenging environment as a result of the low interest rates,
in the 2015 financial year we aim to grow the revenues and market share in
the Core Bank. In the current year we expect loan loss provisions for the
Group at the level of 2014 with lower loan loss provisions in NCA due to
the asset run down. As expenses are under pressure due to regulatory
requirements and the European bank levy, comprehensive exection of ongoing
efficiency programs are necessary to keep our cost base stable over the
year at approximately EUR 7 billion. We aim to organically increase our
capital ratio CET 1 to significantly more than 10 percent by the end of
2015,' said Stephan Engels, Chief Financial Officer of Commerzbank.
Excerpt from the consolidated profit and loss statement
<pre>
In EUR m Q1 Q1 Q4 2014 2013
2015 2014 2014
Net interest and trading income 2,017 1,538 1,441 6,000 6,079
Provisions for loan losses -158 -238 -308 -1,144 -1,747
Net commission income 900 815 809 3,205 3,206
Net investment income -128 -38 64 82 17
Current income on companies accounted for 14 13 2 44 60
at equity
Other income -21 -68 -469 -577 -87
Revenues before loan loss provisions 2,782 2,260 1,847 8,754 9,275
Operating expenses 1,939 1,698 1,779 6,926 6,797
Operating profit or loss 685 324 -240 684 731
Impairments of Goodwill - - - - -
Restructuring expenses 66 - 61 61 493
Net gain or loss from sale of disposal - - - - -
groups
Pre-tax profit or loss 619 324 -301 623 238
Taxes 218 95 -67 253 66
Consolidated profit or loss attributable to 366 200 -261 264 81
Commerzbank shareholders
Cost/income ratio in operating 69.7 75.1 96.3 79.1 73.3
business (%)
</pre>
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Press contact
Alexander Cordes +49 69 136-42764
Nils Happich +49 69 136-44986
Kathrin Wetzel +49 69 136-44011
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About Commerzbank
Commerzbank is a leading international commercial bank with branches and
offices in more than 50 countries. The core markets of Commerzbank are
Germany and Poland. With the business areas Private Customers,
Mittelstandsbank, Corporates & Markets and Central & Eastern Europe, its
private customers and corporate clients, as well as institutional
investors, profit from a comprehensive portfolio of banking and capital
market services. Commerzbank finances more than 30 per cent of Germany's
foreign trade and is the unchallenged leader in financing for SMEs. With
its subsidiaries comdirect and Poland's mBank it owns two of the world's
most innovative online banks. With approximately 1,100 branches and
approximately 90 advisory centres for business customers Commerzbank has
one of the densest branch networks among German private banks. In total,
Commerzbank boasts approximately 15 million private customers, as well as 1
million business and corporate clients. The Bank, which was founded in
1870, is represented at all the world's major stock exchanges. In 2014, it
generated gross revenues of almost EUR 9 billion with an average of
approximately 52,000 employees.
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Disclaimer
This release contains forward-looking statements. Forward-looking
statements are statements that are not historical facts. In this release,
these statements concern inter alia the expected future business of
Commerzbank, efficiency gains and expected synergies, expected growth
prospects and other opportunities for an increase in value of Commerzbank
as well as expected future financial results, restructuring costs and other
financial developments and information. These forward-looking statements
are based on the management's current plans, 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. Such
factors include the conditions in the financial markets in Germany, in
Europe, in the USA and other regions from which Commerzbank derives a
substantial portion of its revenues and in which Commerzbank holds a
substantial portion of its assets, the development of asset prices and
market volatility, especially due to the ongoing European debt crisis,
potential defaults of borrowers or trading counterparties, the
implementation of its strategic initiatives to improve its business model,
particularly to reduce its NCA portfolio, the reliability of its risk
management policies, procedures and methods, risks arising as a result of
regulatory change and other risks. Forward-looking statements therefore
speak only as of the date they are made. Commerzbank has no obligation to
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.
Contact:
Commerzbank AG
Group Communications
Tel.: +49 69 136 - 22830
mediarelations@commerzbank.com
07.05.2015 The DGAP Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de
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Language: English
Company: Commerzbank AG
Kaiserplatz
60311 Frankfurt am Main
Germany
Phone: +49 (069) 136 20
Fax: -
E-mail: ir@commerzbank.com
Internet: www.commerzbank.de
ISIN: DE000CBK1001
Indices: DAX, CDAX, HDAX, PRIMEALL
Listed: Regulated Market in Berlin, Dusseldorf, Frankfurt
(Prime Standard), Hamburg, Hanover, Munich, Stuttgart;
Terminbörse EUREX; London, SIX
Category Code: MSC
TIDM: CZB
Sequence Number: 2657
Time of Receipt: May 07, 2015 07:00:09
End of Announcement DGAP News-Service
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DGAP-Regulatory: Commerzbank: Operating profit more than doubled to EUR 685 m in the first quarter of 2015
| Source: EQS Group AG