DGAP-News: Commerzbank: Net profit of EUR163 m in first quarter of 2016


DGAP-News: Commerzbank Aktiengesellschaft / Key word(s): Quarter Results
Commerzbank: Net profit of EUR163 m in first quarter of 2016

03.05.2016 / 07:00
The issuer is solely responsible for the content of this announcement.

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  - Operating profit of EUR273 m for Group in first quarter (Q1 2015:
    EUR670 m) burdened by difficult market environment

  - Good risk profile: low loan loss provisions of EUR148 m - NPL ratio for
    non-performing loans very low at 1.5% - further run-down of
    non-strategic portfolios of EUR1.0 bn

  - Operating expenses stable at EUR1,893 m (Q1 2015: EUR1,957 m)

  - Capital ratio CET 1 unchanged at 12.0% as of end of March 2016 (end of
    December 2015: 12.0%), dividend accrual of 5 cents per share already
    reflected

  - Engels: "In view of difficult market conditions and the increasingly
    challenging interest rate environment, the Bank achieved a reasonable
    operating profit in the first quarter. The Bank's risk profile is good
    and with its CET 1 capital ratio at 12.0 per cent, it continues to hold
    a solid midrange position among European peers."

In a difficult market environment, Commerzbank generated an operating
profit of EUR273 million in the first quarter of 2016 (Q1 2015: EUR670
million) and a net profit of EUR163 million (Q1 2015: EUR 338 million).
Revenues before loan loss provisions declined to EUR2,314 million (Q1 2015:
EUR2,785 million), reflecting a further deterioration in the interest rate
environment and a slowing client activity within difficult markets. The
loan loss provisions decreased again in the first quarter of 2016 to EUR148
million (Q1 2015: EUR158 million). The low level is a result of the high
quality of the loan book, the stable condition of the German economy, and
the continued run-down of non-strategic portfolios. The operating expenses
in the first quarter were at EUR1,893 million (Q1 2015: EUR1,957 million).
This already includes the entire European Bank Levy of EUR143 million
expected for 2016 as well as the Polish banking tax of EUR13 million for
two months. Strategic investments in digitilization as well as regulatory
and compliance enhancements were compensated in full by consistent
efficiency measures. The capital ratio CET 1 remained unchanged at 12.0%
and, as in the same quarter of the previous year, reflects a dividend
accrual of 5 cents per share.

The pre-tax profit after three months amounted to EUR273 million (Q1 2015:
EUR604 million). On the whole, the first quarter of 2016 saw a net profit
of EUR163 million (Q1 2015: EUR338 million).

"In view of difficult market conditions and the increasingly challenging
interest rate environment, the Bank achieved a reasonable operating profit
in the first quarter," said Stephan Engels, Chief Financial Officer of
Commerzbank. Engels added: "The Bank's risk profile is good and with its
CET 1 capital ratio at 12.0 per cent, it continues to hold a solid midrange
position among European peers."

Capital ratio stable - risk-weighted assets slightly reduced 

The Common Equity Tier 1 ratio (CET 1) with full application of Basel 3 as
of the end of March 2016 was unchanged at 12.0% (end of December 2015:
12.0%). This ratio takes into account a dividend accrual of 5 cents per
share. The leverage ratio as of the end of the first quarter of 2016
remained unchanged at a comfortable 4.5%. Risk-weighted assets (RWA) with
full application of Basel 3 decreased in the same period to EUR194.5
billion as of the end of March 2016 (end of December 2015: EUR197.4
billion). Positive impacts included the stronger exchange rate for the
euro, in particular vis-à-vis the US dollar and the British pound, and
beneficial effects from a new securitisation. The total assets in the Group
amounted to EUR536 billion as of the end of March 2016 (end of December
2015: EUR533 billion).

Development in the segments

In the Private Customers segment the operating profit increased
significantly in the first quarter of 2016 to EUR191 million (Q1 2015:
EUR157 million). This includes a positive one-off effect of EUR44 million
from a special dividend from EURO Kartensysteme GmbH. Despite the ongoing
burden deriving from the low interest rate environment and customer
reluctance in volatile stock markets, revenues before loan loss provisions
rose slightly to EUR944 million in Q1 2016 (Q1 2015: EUR935 million). A
growth in revenues in the strong lending business contributed to this.
Compared to the same quarter of the previous year, the segment's loan
volume increased by 8% in the first quarter of 2016. Volumes of new
business in mortgage loans totalled around EUR3.15 billion in the first
quarter, and grew by 8% year-on-year, while the new business in consumer
loans saw a volume increase of 44%. The loan loss provisions decreased in
the first quarter of 2016 to EUR9 million and thus remained at a very low
level (Q1 2015: EUR14 million). Operating expenses declined to EUR744
million in the same period (Q1 2015: EUR764 million). The segment's
customer growth continued with 59,000 net new customers acquired in the
first quarter 2016. Thus, the total net growth since the end of 2012
amounted to 878,000 customers.

Year on year, the operating profit at Mittelstandsbank declined in the
first quarter of 2016 to EUR209 million (Q1 2015: EUR364 million). This was
mainly due to the negative interest rate environment that further
intensified. The pressure on the deposit margins increased further with
loan volumes unchanged due to a subdued loan demand in Germany. All in all,
the core business with German SMEs and large corporates remained stable.
The revenues before loan loss provisions decreased in the first quarter to
EUR706 million (Q1 2015: EUR807 million), while loan loss provisions
increased to EUR53 million (Q1 2015: EUR24 million). The interest income
declined significantly, above all due to negative interest rates. Net
commission income decreased, among other things, as a consequence of the
lower income from FX hedging transactions. In the same quarter of the
previous year the strong client demand in this area had led to
exceptionally higher revenues. In order to counter the impact of negative
interest rates for both the clients and the Bank, Mittelstandsbank has
intensified its dialogue with its clients on alternative investment
opportunities for excess liquidity. Operating expenses increased in the
first quarter of 2016 to EUR444 million (Q1 2015: EUR419 million),
primarily due to higher investments in Compliance and IT.

In the first quarter of 2016, Central & Eastern Europe generated a good
operating profit of EUR77 million (Q1 2015: EUR88 million) despite the
introduction of a banking tax in Poland in February 2016. The result for
the same quarter of the previous year included a positive effect from the
sale of the insurance business of M Bank. Revenues before loan loss
provisions declined in the first quarter of 2016 to EUR220 million (Q1
2015: EUR253 million). Adjusted for the aforementioned effect of
approximately EUR46 million, revenues increased. In particular, interest
income rose because of the operational growth of M Bank and an improved
interest margin. Loan loss provisions fell by almost 50% in the first
quarter of 2016 to EUR13 million (Q1 2015: EUR23 million), with operating
expenses decreasing in the same period to EUR130 million (Q1 2015: EUR142
million). M Bank continued its prudent cost management. However, the new
Polish banking tax of EUR13 million was booked for the first time in the
first quarter of 2016. The dynamic customer growth of M Bank also
continued: year-on-year the number of customers increased by around
374,000. Therefore, the bank has now passed the level of 5 million
customers.

The operating profit in Corporates & Markets - adjusted for effects from
the valuation of own liabilities (OCS) and counterparty risks in the
derivatives business - declined to EUR70 million in the first quarter of
2016. Alongside weak development of the capital markets, it was
considerably lower than the extraordinarily good first quarter of 2015
(EUR250 million). The high degree of uncertainty with regard to capital
markets also led to lower demand for investment solutions in the first
quarter of 2016, and therefore to a decrease in the revenues before loan
loss provisions to EUR475 million (Q1 2015: EUR681 million). The generally
low level of primary issuance in syndicated loans and in equity markets
were partially compensated by higher revenues from bond issuance. Loan loss
provisions increased in the first quarter to EUR5 million, after the same
quarter of the previous year had seen a net release of EUR47 million. The
operating expenses declined in the first quarter of 2016 to EUR388 million
(Q1 2015: EUR431 million).

Ongoing run-down of EUR1.0 billion in non-strategic portfolios

The operating profit in the first quarter of 2016 in the new Asset &
Capital Recovery (ACR) segment amounted to minus EUR122 million (Q1 2015:
minus EUR187 million). Decreasing losses resulted in particular from lower
operating expenses and significantly lower loan loss provisions. The
revenues before loan loss provisions in the first quarter of 2016 totalled
minus EUR21 million (Q1 2015: minus EUR19 million). In the same period,
loan loss provisions decreased to EUR70 million (Q1 2015: EUR109 million)
as a consequence of the continued run-down of the portfolio. The operating
expenses in the first three months of this year amounted to EUR31 million
(Q1 2015: EUR59 million). The Bank has also successfully continued the
value-preserving portfolio run-down in the first quarter: the exposure at
default (EaD) in the segment fell by EUR1.0 billion compared to the fourth
quarter of 2015, to just over EUR17 billion as of the end of March. In the
Commercial Real Estate (CRE) area the run-down led to a reduction over the
previous quarter of EUR0.2 billion, to EUR2.9 billion as of the end of
March 2016. In the Ship Finance area the portfolio decreased by EUR0.6
billion to EUR5.5 billion despite difficult market conditions.

Outlook

Commerzbank will continue its strategy of increasing market share. In
addition, it is further intensifying its efforts to mitigate the effects
stemming from the negative interest rate environment. Without taking into
account additional external burdens, the aim is to keep the cost base
stable. The loan loss provisions are likely to see a moderate increase due
to lower net releases. In view of the subdued nature of the first quarter,
it will be more challenging to reach the net profit posted in 2015.

Financial figures at a glance



in EUR m                    Q1 2016   Q1 2015   Q4 2015      2015      2014

Net interest and trading      1,344     1,986     1,275     6,226     5,953
income

Provisions for loan losses     -148      -158      -112      -696    -1,144

Net commission income           821       915       829     3,424     3,260

Net investment income            32      -128        99        -7        82

Current income on                49        14        36        82        44
companies accounted for at
equity

Other income                     68        -2        -7        37      -577

Revenues before loan loss     2,314     2,785     2,232     9,762     8,762
provisions

Operating expenses            1,893     1,957     1,744     7,157     6,929

Operating profit or loss        273       670       376     1,909       689

Impairments of Goodwill           -         -         -         -         -

Restructuring expenses            -        66        20       114        61

Pre-tax profit or loss          273       604       356     1,795       628

Taxes                            86       237       138       618       256

Consolidated profit or          163       338       187     1,062       266
loss attributable to
Commerzbank shareholders

Earnings per share (EUR)       0.13      0.30      0.15      0.88      0.23

Cost/income ratio in           81.8      70.3      78.1      73.3      79.1
operating
business (%)

Operating RoTE (%)              4.1      10.9       5.6       7.3       2.8

Net RoTE (%)                    2.5       5.7       2.9       4.2       1.1

Net RoE (%)                     2.3       5.1       2.6       3.8       1.0

CET 1 ratio B3, fully          12.0       9.5      12.0      12.0       9.3
phased-in (%)

Leverage Ratio, B3 fully        4.5       3.7       4.5       4.5       3.6
phased-in (%)

Total assets (EUR bn)           536       609       533       533       558





*****

Press contact 
Alexander Cordes +49 69 136-42764 
Karsten Swoboda  +49 69 136-22339 
Kathrin Wetzel   +49 69 136-44011 

*****
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 M Bank it owns two of the world's
most innovative online banks. With approximately 1,050 branches and more
than 90 advisory centres for business customers Commerzbank has one of the
densest branch networks among German private banks. In total, Commerzbank
boasts more than 16 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 2015, it generated
gross revenues of EUR9.8 billion with 51,300 employees.

*****
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 ACR 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.


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03.05.2016 Dissemination of a Corporate News, transmitted by DGAP - a
service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

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   Language:    English                                                   
   Company:     Commerzbank Aktiengesellschaft                            
                Kaiserstraße 16                                           
                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                            
 
 
   End of News    DGAP News Service  
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459969 03.05.2016