DGAP-News: Commerzbank AG / Key word(s): Half Year Results
Operating profit increased to more than EUR 1 bn in first half of 2015
03.08.2015 / 07:07
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- Operating profit in Group increased to EUR 1,070 m (first half of 2014:
EUR 581 m); in second quarter at EUR 385 m (Q2 2014: EUR 257 m)
- Revenues before loan loss provisions in Core Bank improved by
approximately 14% to EUR 5.1 bn in first half (first half of 2014: EUR
4.5 bn) - revenues in all Core Bank segments higher than in first half
of 2014 despite adverse interest rate environment
- Operating expenses in Group at EUR 1,753 m in second quarter of 2015
(Q2 2014: EUR 1,727 m)
- Net profit more than doubled to EUR 646 m (first half of 2014: EUR 300
m); net profit improved to EUR 280 m in second quarter of 2015 (Q2
2014: EUR 100 m)
- NCA with substantial portfolio run-down of EUR 1.0 bn in CRE and of EUR
1.8 bn in Ship Finance division - successful CRE transactions totalling
EUR 2.9 bn will be visible in third quarter of 2015
- Loan loss provisions of EUR 280 m in Group in second quarter of 2015
(Q2 2014: EUR 257 m) and thus still at low level
- Capital ratio CET 1 increased to comfortable level of 10.5% as of end
of June 2015 (end of March 2015: 9.5%)
- Blessing: "The substantially improved operating profit in the first six
month of the year is clear testimony to the successful turnaround
achieved by Commerzbank."
Commerzbank improved its operating profit in the first half of 2015
compared to the previous year by more than 80% to more than EUR 1 billion
and increased the capital ratios to a comfortable level for the business
model of Commerzbank. The operating profit in the Group in this period
amounted to EUR 1,070 million (first half of 2014: EUR 581 million). In the
second quarter of 2015, the operating profit improved substantially to EUR
385 million (Q2 2014: EUR 257 million). The revenues before loan loss
provisions in the Group also increased considerably in the first half of
2015, to EUR 5.2 billion (first half of 2014: EUR 4.5 billion). In total,
the second quarter of 2015 contributed EUR 2.4 billion to this result (Q2
2014: EUR 2.2 billion). The loan loss provisions in the second quarter of
2015 were EUR 280 million (Q2 2014: EUR 257 million). The ongoing low level
is based on the high quality of the loan book and on the ongoing good state
of the German economy. In the second quarter of 2015 the operating expenses
amounted to EUR 1,753 million (Q2 2014: EUR 1,727 million). There were
higher expenses for strategic investments in digitalisation, as well as for
regulatory issues and compliance. The development of costs was also
impacted by foreign exchange effects as a consequence of the weaker euro.
All in all, year-on-year, the net profit soared to EUR 280 million in the
second quarter and to EUR 646 million in the first half of 2015 (Q2 2014:
EUR 100 million; first half of 2014: EUR 300 million).
Capital ratio improves to comfortable level - further dividend accrual
The Common Equity Tier 1 ratio (CET 1) with full application of Basel 3
rose to 10.5% as of the end of June 2015 (end of March 2015: 9.5%). Thus,
it reached a comfortable level for the business model of Commerzbank. The
ratio of 10.5% takes into account a dividend accrual for the first half of
2015 of EUR 125 million or 10 cents per share. The leverage ratio likewise
improved as of the end of the second quarter of 2015 to 4.0%, following on
from 3.7% as of the end of March 2015. The risk-weighted assets (RWA) with
full application of Basel 3 declined slightly over the end of March 2015 to
EUR 214.4 billion as of the end of June 2015 (end of March 2015: EUR 221.5
billion). The total assets in the Group amounted to EUR 561 billion as of
the end of June 2015 (end of March 2015: EUR 605 billion).
Core Bank: operating profit improved substantially year-on-year
In the Core Bank, the operating profit was substantially increased
year-on-year both in the second quarter of 2015 and in the first half of
2015. In the second quarter, an operating profit of EUR 641 million was
attained (Q2 2014: EUR 442 million), with the effect that the Core Bank
improved its operating profit considerably in the first half of 2015 to EUR
1,412 million (first half of 2014: EUR 940 million). This positive
development is also shown in the operating return on equity (RoE) at the
Core Bank, as well as in the operating return on tangible equity less
intangible assets (RoTE). In the Core Bank, these were at a good level in
the second quarter of 2015 with an operating RoE of 11.7% and an operating
RoTE of 13.6% - despite considerably higher capital resources. The revenues
in the Core Bank rose in the first half of 2015 by approximately 14%, to
EUR 5,122 million, over the first half of 2014 (EUR 4,500 million). All
segments across the Core Bank improved compared to the first half of 2014.
The loan loss provisions in the Core Bank increased as expected compared to
the same quarter of the previous year. However, at EUR 138 million in the
second quarter of 2015, they remained at a low level (Q2 2014: EUR 193
million). In the second quarter, the operating expenses were at EUR 1,677
million (Q2 2014: EUR 1,646 million), and in the first half of 2015 at EUR
3,511 million, up from EUR 3,263 million in the first half of 2014. The
increase is due, among other things, to higher expenses for strategic
investments in digitalisation and for regulatory issues.
"In the first half of 2015, we increased the operating profit in the Group
substantially year-on-year to more than EUR 1 billion. This is further
testimony to the successful turnaround achieved by the Bank. We are on the
right course with the strategic positioning. This is also shown in the
return on equity for the first half of 2015, which, despite higher capital
resources, increased considerably over the previous year," said Martin
Blessing, Chairman of the Board of Managing Directors of Commerzbank.
Revenues increased in all Core Bank segments in first half of 2015
An improved operating profit and higher revenue levels speak for the
successful turnaround of the Private Customers segment. In the first half
of 2015, the operating profit amounted to EUR 332 million. This is 46% more
than in the previous year (first half of 2014: EUR 227 million). An
operating profit of EUR 171 million (Q2 2014: EUR 116 million) was attained
in the second quarter alone. In the first half of 2015 the revenues before
loan loss provisions rose by nearly 6% to EUR 1,829 million (first half of
2014: EUR 1,719 million) despite the ongoing burdens posed by the low
interest rate environment. In particular the mortgage financing business
continued to grow and for the first time ever the volume of new business
exceeded the EUR 3.5 billion level in a quarter. In the second quarter of
2015, the credit business in the branch bank posted significant growth of
approximately 8% over the same period of the previous year. Furthermore,
the positive development in results is supported by further growth of the
segment: 68,000 net new customers chose Commerzbank in the second quarter,
meaning that net new customer growth has totalled 666,000 since the end of
2012. The loan loss provisions - at EUR 34 million - remained at a low
level in the first half of 2015 (first half of 2014: EUR 52 million). The
operating expenses amounted to EUR 1,463 million in the first half of 2015
(first half of 2014: EUR 1,440 million).
Mittelstandsbank increased its operating profit year-on-year in the first
half of 2015 by approximately 5% to EUR 636 million (first half of 2014:
EUR 608 million). Hereof, EUR 294 million were booked in the second quarter
of 2015, which corresponds to an increase of 9% for the quarter (Q2 2014:
EUR 269 million). The increase in the first half was mainly due to lower
loan loss provisions compared to the previous year. The revenues before
loan loss provisions at EUR 1,465 million remained stable compared to the
same period of the previous year (first half of 2014: EUR 1,461 million),
while loan loss provisions of EUR 92 million (first half of 2014: EUR 200
million) decreased considerably. It was possible to compensate for the
market environment-driven downturn in deposits revenues through an increase
in the interest income from loans and in the commission income, above all
from foreign exchange hedging transactions. At the same time, the loan
volume in the first half of 2015 increased by 7% year-on-year. The
operating expenses rose over the first half of 2014 and amounted to EUR 737
million (first half of 2014: EUR 653 million), which was due, among other
things, to the European Bank Levy booked in the first half of 2015.
In the first half of 2015, the Central & Eastern Europe segment attained an
operating profit of EUR 180 million, which approximates the level seen in
the previous year (first half of 2014: EUR 182 million). In this respect,
the second quarter of 2015 contributed EUR 64 million (Q2 2014: EUR 84
million); this sum reflects the ongoing low level of interest rates. The
revenues before loan loss provisions in the first half of 2015 were
slightly higher year-on-year (first half of 2015: EUR 462 million; first
half of 2014: EUR 457 million). In the first half of 2015 the revenues
included the one-off effect of approximately EUR 46 million from the sale
of the insurance business of mBank. In contrast, there was a downturn in
the interest and commission income. Clear growth in loan and deposit
volumes was not able to compensate in full for the effects of the lower
interest rate levels on the interest income in Poland. To date some 150,000
new customers have been won from the partnership with Orange. Year-on-year
the loan loss provisions decreased in the first half of 2015 to EUR 47
million (first half of 2014: EUR 59 million). The operating expenses
increased to EUR 235 million in the first half of 2015 (first half of 2014:
EUR 216 million), which was primarily due to increased regulatory expenses
as well as further investment to secure the innovation leadership of mBank.
Corporates & Markets had a good performance in the first half of 2015. The
operating profit, excluding valuation effects from own liabilities (OCS)
and counterparty risk in the derivatives business was at EUR 398 million
(first half of 2014: EUR 396 million) of which EUR 144 million corresponded
to the second quarter of 2015 (Q2 2014: EUR 194 million). Revenues before
loan loss provisions remained solid, with the first half of 2015 at EUR
1,198 million (first half of 2014: EUR 1,045 million), of which EUR 531
million were attributable to the second quarter of 2015 (Q2 2014: EUR 504
million). Equity Markets & Commodities (EMC) contributed a strong result,
with its best quarter in five years driven by high demand for investment
and liability management solutions. Within Corporate Finance, Equity
Capital Markets (ECM) had a good quarter. The performance of Fixed Income &
Currencies (FIC) division was in line with the market, which was burdened
by reduced market liquidity and the low interest rate environment. Loan
loss provisions in the second quarter were at EUR 11 million, following net
releases in the first quarter of 2015. Overall, the segment had net loan
loss provisions releases of EUR 36 million for the first half of 2015
(first half of 2014: net releases of EUR 14 million). Operating expenses
amounted to EUR 748 million in the first half of 2015 (first half of 2014:
EUR 659 million), also due to the European Bank Levy booked in the first
quarter of 2015.
NCA with further portfolio run-down in the CRE and Ship Finance segments
The operating profit in the Non-Core Assets (NCA) segment was minus EUR 342
million in the first half of 2015 (first half of 2014: minus EUR 359
million); in the second quarter of 2015, it totalled minus EUR 256 million
(Q2 2014: minus EUR 185 million). Revenues before loan loss provisions
amounted to EUR 78 million in the first half of 2015 and minus EUR 38
million in the second quarter of 2015 (first half of 2014: EUR 1 million;
Q2 2014: minus EUR 40 million). The loan loss provisions increased in the
second quarter of 2015 to EUR 142 million (Q2 2014: EUR 64 million). The
operating expenses added up to EUR 181 million in the first half, of which
EUR 76 million were incurred in the second quarter of 2015 (first half of
2014: EUR 162 million; Q2 2014: EUR 81 million).
The Bank maintained its speed with the portfolio run-down in the second
quarter: the Exposure at Default (EaD) was reduced by EUR 3 billion over
the first quarter of 2015 in the Commercial Real Estate (CRE) and Ship
Finance divisions. As of the end of June 2015, the EaD was EUR 27 billion
(first quarter of 2015: EUR 30 billion; Q2 2014: EUR 37 billion). EUR 1.0
billion was reduced in the CRE division, with the effect that as of the end
of June 2015 there was an exposure of EUR 16.5 billion (first quarter of
2015: EUR 17.5 billion). In the Ship Finance division, the portfolio was
run down by EUR 1.8 billion; this figure includes a foreign exchange effect
of EUR 0.4 billion. In the second quarter of 2015 the portfolio totalled
EUR 10.8 billion (first quarter of 2015: EUR 12.6 billion). The sale of two
portfolios of commercial real estate loans with a total volume of EUR 2.9
billion, which was communicated at the beginning of July 2015, will become
visible in the third quarter of 2015. Likewise, in July 2015, the sale of
the ship restructuring platform Hanseatic Ship Asset Management (HSAM) for
a price of approximately EUR 233 million was agreed. The charges from both
transactions totalling EUR 98 million were already booked in the income
statement in the second quarter of 2015.
Outlook
"In the second half of the year we intend to continue the Core Bank's
sustainable growth path. In the 2015 financial year we are, therefore,
still aiming to grow the revenues and market shares. With a view to our
business model, our CET 1 capital ratio is comfortable. The framework
conditions for the banking sector are difficult and will remain so in the
foreseeable future. For this reason we continue to consistently pursue our
objective of becoming leaner, more efficient and more customer-centric,"
said Stephan Engels, Chief Financial Officer of Commerzbank.
With a view to the loan loss provisions, the Bank expects these to remain
below EUR 1 billion for the 2015 financial year - with lower loan loss
provisions in both NCA and in the Core Bank. Despite the consistent
implementation of the efficiency programmes, the cost pressure remains
high. Commerzbank still plans to pay a dividend for the 2015 financial
year.
Excerpt from the consolidated profit and loss statement
<pre>
In EUR m H1 Q2 Q1 H1 Q2
2015 2015 2015 2014 2014
Net interest and trading income 3,526 1,509 2,017 2,964 1,426
Provisions for loan losses -438 -280 -158 -495 -257
Net commission income 1,739 839 900 1,597 782
Net investment income -67 61 -128 3 41
Current income on companies accounted 31 17 14 23 10
for at equity
Other income -29 -8 -21 -86 -18
Revenues before loan loss provisions 5,200 2,418 2,782 4,501 2,241
Operating expenses 3,692 1,753 1,939 3,425 1,727
Operating profit or loss 1,070 385 685 581 257
Impairments of Goodwill - - - - -
Restructuring expenses 66 - 66 - -
Net gain or loss from sale of disposal - - - - -
groups
Pre-tax profit or loss 1,004 385 619 581 257
Taxes 301 83 218 227 132
Consolidated profit or loss attributable 646 280 366 300 100
to Commerzbank shareholders
Cost/income ratio in operating 71.0 72.5 69.7 76.1 77.1
business (%)
Earnings per share 0.55 0.23 0.32 0.26 0.08
Operating RoE (%) 7.5 5.2 10.0 4.3 3.8
</pre>
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From approximately 7 am onwards you can find broadcast-ready video and
audio material with statements by Chief Financial Officer Stephan Engels at
http://mediathek.commerzbank.de/.
You can download the video directly via mobile end devices:
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*****
Press contact
Alexander Cordes +49 69 136-42764
Karsten Swoboda +49 69 136-22339
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
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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
WKN: CBK100
Indices: DAX, CDAX, HDAX, PRIMEALL
Listed: Regulated Market in Berlin, Dusseldorf, Frankfurt (Prime
Standard), Hamburg, Hanover, Munich, Stuttgart;
Terminbörse EUREX; London, SIX
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382981 03.08.2015
DGAP-News: Operating profit increased to more than EUR 1 bn in first half of 2015
| Source: EQS Group AG