Commerzbank Aktiengesellschaft / Miscellaneous - Urgent Priority
Commerzbank: Board of Managing Directors presents strategy and financial
objectives 2020 to the Supervisory Board
29-Sep-2016 / 10:39 CET/CEST
Dissemination of a Regulatory Announcement, transmitted by EQS Group AG.
The issuer is solely responsible for the content of this announcement.
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In response to current market rumours, the Board of Managing Directors of
Commerzbank AG confirms that it has presented Commerzbank's draft strategic
and financial objectives until 2020 to the Supervisory Board for
consideration. No decision has yet been taken with regard to the
implementation of these objectives. The Board of Managing Directors will
decide tomorrow on the strategic objectives after discussions with the
Supervisory Board. The objectives presented are as follows:
By the end of 2020 Commerzbank will have sustainably increased its
profitability. As part of the 'Commerzbank 4.0' strategy, it will
concentrate on its core businesses, digitalise 80% of relevant processes,
and thereby achieve significant efficiency gains. Its business will be
focused in two customer segments, 'Private and Small Business Customers'
and 'Corporate Clients'. The Mittelstandsbank and Corporates & Markets
segments will be merged and trading activities in investment banking scaled
back. This will reduce earnings volatility and regulatory risk and will
free up capital to be invested in core client businesses.
In the context of the decision of the new strategy, goodwill and intangible
assets of both Corporates & Markets and Mittelstandsbank will be subjected
to an impairment test. This means that most probably around 700 million
euros would be written off in the third quarter of 2016. Consequently, the
net result would be negative in the third quarter. The write-offs do not
affect the Common Equity Tier 1 (CET 1) ratio. In terms of Operating
profit, Commerzbank is expecting revenues to be approximately the same as
in the second quarter. Loan loss provisions will be considerably higher
than in the first two quarters due to ongoing weakness in the shipping
markets. Despite the goodwill write-offs, Commerzbank is expecting a small
net profit for 2016 as a whole. The CET 1 ratio after full application of
Basel 3 will be higher in the third quarter of 2016 than in the previous
quarter. The Bank is expecting its Common Equity Tier 1 ratio to stand at
nearly 12% at the end of the year, provided no significant market
distortions occur.
Commerzbank is aiming for a net return on tangible equity (RoTE) of at
least 6% by the end of 2020. This target is based on the expectation that
the interest rate environment will remain challenging. Should the interest
rate environment improve, a net return on tangible equity of at least 8%
will be achievable. Commerzbank is expecting revenues for 2020 to total
between 9.8 and 10.3 billion euros. The cost base is to be reduced to 6.5
billion euros, taking the cost/income ratio to below 66%. In a normalised
interest rate environment, revenues could rise to over 11 billion euros and
the cost/income ratio could fall to around 60%.
The Common Equity Tier 1 (CET 1) ratio, after full application of Basel 3,
is expected to stay at around 12% and will be above 12% in 2018 taking into
account currently foreseeable regulatory developments. For 2020 the Bank
expects a ratio of above 13%.
The focus on the core business, with some business activities being
discontinued, and the digitalisation and automation of workflows will lead
to staff reductions amounting to around 9,600 full-time positions. The Bank
will shortly begin preparatory discussions with the relevant employee
representative committees. At the same time, around 2,300 new jobs will be
created in areas of business growth. Hence the net number of jobs shed will
amount to around 7,300 full-time positions.
To cover its restructuring costs in the region of 1.1 billion euros,
Commerzbank will cease dividend payments for the time being and will retain
its full earnings.
*****
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.
Contact:
Commerzbank AG
Group Communications
Tel.: +49 69 136 - 22830
mediarelations@commerzbank.com
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Language: English
Company: Commerzbank Aktiengesellschaft
Kaiserstraße 16
60311 Frankfurt am Main
Germany
Phone: +49 (069) 136 20
Fax: -
E-mail: pressestelle@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; Regulated Unofficial Market in Tradegate
Exchange; London, SIX
Category Code: MSCU
TIDM: CZB
Sequence Number: 3448
Time of Receipt: 29-Sep-2016 / 10:02 CET/CEST
End of Announcement EQS News Service
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507105 29-Sep-2016
DGAP-Regulatory: Commerzbank: Board of Managing Directors presents strategy and financial objectives 2020 to the Supervisory Board
| Source: EQS Group AG