04.11.2016
Commerzbank Aktiengesellschaft DE000CBK1001
DGAP-News: Commerzbank: Operating Profit Up - CET 1 Capital Ratio Increased to 11.8%
DGAP-News: Commerzbank Aktiengesellschaft / Key word(s): 9-month figures
Commerzbank: Operating Profit Up - CET 1 Capital Ratio Increased to 11.8%
04.11.2016 / 07:00
The issuer is solely responsible for the content of this announcement.
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- Operating profit of EUR429 m for third quarter 2016 compared to EUR351
m for second quarter 2016
(Q3 2015: EUR452 m)
- CET 1 capital ratio increased to 11.8% as of end of September 2016 (end
of June 2016: 11.5%;
end of September 2015: 10.8%), leverage ratio at 4.5%
- Higher loan loss provisions of EUR610 m in the first nine months (first
nine months of 2015: EUR584 m); non-performing loan ratio still very
low at 1.7%
- Operating expenses down slightly at EUR5,328 m in the first nine months
(first nine months of 2015: EUR5,413 m), more than compensating for the
new Polish banking tax
- New strategy and structure will result in balanced profit contributions
from the two operating segments Private and Small Business Customers
and Corporate Clients
- Goodwill write-off of EUR627 m results in net profit of EUR96 m in the
first nine months (first nine months of 2015: EUR891 m), and of minus
EUR288 m for the third quarter (Q3 2015: EUR235 m)
- Zielke: "Commerzbank has a strong market position in corporate banking.
We have seen further growth in retail banking and at our Polish
subsidiary mBank. These are good prerequisites for the implementation
of our Commerzbank 4.0 strategy, which will enable us to sustainably
increase our profitability. We are pursuing our growth targets
ambitiously, consistently, and forcefully."
Commerzbank improved its operating profit in the third quarter compared to
the previous quarter, and increased its Common Equity Tier 1 ratio to
11.8%. The operating profit for this period stood at EUR429 million versus
EUR351 million in the second quarter (Q3 2015: EUR452 million). The figure
for the first nine months of 2016 was EUR1,062 million (first nine months
of 2015: EUR1,558 million). Revenues before loan loss provisions were
EUR2,437 million in the third quarter (Q3 2015: EUR2,317 million) and
EUR7,000 million in the first nine months (first nine months of 2015:
EUR7,555 million). Loan loss provisions increased to EUR610 million in the
first nine months of 2016 (first nine months of 2015: EUR584 million). This
was due to the fact that, as expected, loan loss provisions were
considerably higher, at EUR275 million, in the third quarter of 2016 than
in the same quarter of last year (Q3 2015: EUR146 million) on account of
the further deterioration in the shipping markets. Apart from that, loan
loss provisions remain low, reflecting the Bank's healthy risk profile. Its
good risk profile is also evident from its non-performing loan ratio of
just 1.7%, which is very low compared to its European peers. Operating
expenses were down slightly year-on-year at EUR5,328 million for the first
nine months of 2016 (first nine months of 2015: EUR5,413 million). The
Bank's ongoing efficiency measures more than compensated for strategic
investments in digitalisation, regulatory, and compliance enhancements as
well as the new Polish banking tax. Operating expenses amounted to EUR1,733
million in the third quarter of 2016 (Q3 2015: EUR1,719 million). The pre-
tax profit, taking into account an impairment on goodwill and other
intangible assets of EUR627 million and restructuring costs of EUR97
million, came in at EUR338 million for the first nine months of 2016. So
after deduction of taxes of EUR161 million and minority interests of EUR81
million, Commerzbank posted a net profit of EUR96 million for the first
nine months of 2016 (first nine months of 2015: EUR891 million). The net
result for the third quarter of 2016 came out at minus EUR288 million (Q3
2015: EUR235 million), due mainly to the aforementioned impairment on
goodwill and other intangible assets, which was already announced at the
time of the unveiling of the new Commerzbank strategy.
"Commerzbank has a strong market position in corporate banking. We have
seen further growth in retail banking and at our Polish subsidiary mBank.
These are good prerequisites for the implementation of our Commerzbank 4.0
strategy, which will enable us to sustainably increase our profitability.
We are pursuing our growth targets ambitiously, consistently, and
forcefully," said Martin Zielke, Chairman of the Board of Managing
Directors of Commerzbank.
CET 1 ratio of 11.8%
The Common Equity Tier 1 ratio (CET 1) with full application of Basel 3
stood at 11.8% at the end of September 2016 (end of June 2016: 11.5%; end
of September 2015: 10.8%). The improvement in the CET 1 ratio is
attributable in particular to a reduction in risk-weighted assets (RWA).
RWA with full application of Basel 3 were reduced by approximately EUR4
billion, through active risk management, to EUR195 billion as of 30
September 2016 (end of June 2016: EUR198 billion). The total assets in the
Group amounted to EUR513 billion as of the end of September 2016 (end of
June 2016: EUR533 billion). The leverage ratio stood at 4.5% at the end of
September 2016 (end of June 2016: 4.4%).
"We have reconfirmed our very good risk profile and increased our Common
Equity Tier 1 ratio to 11.8 percent. It should rise to around 12 percent by
the end of the year," said Stephan Engels, Chief Financial Officer of
Commerzbank.
Development of the segments
The restructuring of the segments announced as part of the new strategy
decided at the end of September will mean that the two new operating
segments will contribute fairly equally to the Bank's comprehensive income.
Under the new structure and based on a preliminary calculation, the Private
and Small Business Customers segment generates an operating profit of
EUR0.8 billion and revenues before loan loss provisions of EUR3.6 billion
for the first nine months of 2016. The Corporate Clients segment generates
an operating profit of EUR0.9 billion and revenues before loan loss
provisions of EUR3.4 billion for the same period. The new reporting
structure will come into effect in the fourth quarter of 2016, and the
results will be presented in this format for the first time with the annual
press conference on 9 February 2017.
The results under the former structure were as follows:
The Private Customers segment saw its operating profit climb to EUR580
million in the first nine months of 2016 (first nine months of 2015: EUR555
million). The third quarter accounted for EUR209 million of this (Q3 2015:
EUR228 million). In the period under review, as in the first nine months of
the previous year, non-recurring effects were recognised which, overall,
had a positive impact on the operating profit. Revenues before loan loss
provisions slipped slightly to EUR2,823 million in the first nine months
(first nine months of 2015: EUR2,870 million). The segment worked to
counter the ongoing pressure on its deposit business caused by the negative
interest-rate environment with the help of targeted measures, aimed in
particular at increasing the volume of the lending business. Its loan
volume rose by 8% year-on-year in the third quarter of 2016. New mortgage
financing was up on the previous quarter and year-on-year. The securities
business also improved slightly over the previous quarter. In addition,
there was a further improvement in the composition of securities revenues.
The proportion of the securities volume in premium custody accounts and
managed accounts increased from 43% to 48% in the first nine months in a
year-on-year comparison. Overall, the Private Customers segment saw
continued growth. The Bank has attracted a total of 994,000 net new
customers since 2013, so it is already close to its target of 1 million net
new customers by the end of the year. Loan loss provisions decreased in the
first nine months to a very low level of EUR11 million (first nine months
of 2015: EUR51 million). Operating expenses were down slightly for the
first nine months at EUR2,232 million (first nine months of 2015: EUR2,264
million).
Mittelstandsbank saw its operating profit reduced year-on-year in the first
nine months of 2016 to EUR640 million due largely to lower revenues and
much higher loan loss provisions (first nine months of 2015: EUR910
million). The third quarter accounted for EUR229 million of this (Q3 2015:
EUR231 million). Hence, Mittelstandsbank continued to show a solid
performance overall. Revenues before loan loss provisions - excluding
adjustments for counterparty risk in the derivatives business - amounted to
EUR2,078 million in the first nine months of 2016 (first nine months of
2015: EUR2,195 million). The negative interest rate environment,
especially, had an adverse effect on deposit margins. In addition, net
commission income was lower, particularly in Financial Institutions, due to
the strategic focussing. However, revenues before loan loss provisions held
stable in Large Corporates & International over the same period. Loan loss
provisions for the segment rose substantially in the first nine months of
2016 to EUR213 million (first nine months of 2015: EUR110 million).
Operating expenses were up over the same period - due primarily to
investments in Compliance and IT - at EUR1,238 million (first nine months
of 2015: EUR1,195 million).
The Central & Eastern Europe segment posted a good operating profit of
EUR243 million for the first nine months of 2016 (first nine months of
2015: EUR254 million). Of this, EUR57 million were contributed in the third
quarter (Q3 2015: EUR97 million). The new Polish banking tax introduced in
February 2016 resulted in a charge of EUR54 million, which was partly
offset by the positive revenue trend in the first nine months. Revenues
before loan loss provisions climbed to EUR720 million in the first nine
months of 2016 (first nine months of 2015: EUR687 million). The good
revenue performance was supported by a positive one-off effect from the
sale of the One Visa shares, totalling EUR65 million, in the second
quarter. The revenues for the first nine months of 2015 also included a
positive one-off effect of EUR46 million from the sale of the insurance
business to the Axa Group. Even excluding these two one-off effects,
revenues increased year-on-year. This was due to continued organic growth
at mBank, which is reflected particularly in the positive trend in net
interest income. There was an improvement both in volume terms and in the
interest margin, for example the volume of consumer loans increased by 15%
over this period. mBank also continued its positive trend in attracting new
customers. In the third quarter around 104,000 net new customers in Poland,
the Czech Republic and Slovakia joined mBank, taking its customer total to
around 5.3 million customers at the end of September. Loan loss provisions
of the segment remained virtually unchanged at EUR74 million in the first
nine months of 2016 (first nine months of 2015: EUR75 million). Operating
expenses increased in the first nine months, as a result of the Polish
banking tax, to EUR403 million (first nine months of 2015: EUR358 million).
The Corporates & Markets segment, continuing to operate in a difficult
market environment, saw its operating profit for the first nine months of
2016 reduced to EUR147 million after adjustments for valuation effects from
own liabilities (OCS effect) and adjustments for counterparty risk in the
derivatives business (first nine months of 2015: EUR410 million). This
decrease was due mainly to a weaker first half in 2016. Its adjusted
operating profit for the third quarter was at EUR22 million (Q3 2015: EUR25
million). Revenues before loan loss provisions - excluding the OCS effect
and adjustments for counterparty risk in the derivatives business - fell to
EUR1,210 million in the first nine months (first nine months of 2015:
EUR1,514 million). Fixed Income & Currencies (FIC) and Advisory & Primary
Markets (APM) saw their revenues remain virtually stable over this period,
while Equity Markets & Commodities (EMC) and Credit Portfolio Management
(CPM) registered a dip in revenues. EMC in particular was hit by the high
level of uncertainty on the capital markets, which took its toll on
business in structured investment products for institutional clients. Loan
loss provisions in the segment totalled EUR22 million in the first nine
months, versus net releases of loan loss provisions amounting to EUR25
million in the first nine months of 2015. Operating expenses were down
sharply in the first nine months of 2016 at EUR1,041 million (first nine
months of 2015: EUR1,129 million).
The Asset & Capital Recovery (ACR) segment reported a year-on-year
improvement in its operating result in the first nine months of 2016 to
minus EUR359 million (first nine months of 2015: minus EUR399 million). The
third quarter accounted for minus EUR108 million of this (Q3 2015: EUR52
million). Revenues before loan loss provisions slipped to EUR30 million in
the first nine months of 2016 (first nine months of 2015: EUR62 million).
Loan loss provisions for the same period were lower, at EUR292 million
(first nine months of 2015: EUR311 million), with only Ship Finance
reporting a net addition to loan loss provisions in 2016. Operating
expenses were down sharply in the first nine months of 2016 at EUR97
million (first nine months of 2015: EUR150 million).
Outlook
Including the goodwill impairments, Commerzbank is expecting a positive net
result for the full year 2016. The CET 1 ratio after full application of
Basel 3 should rise to around 12% by the end of the year. Commerzbank
intends to keep its cost base for full year 2016 stable compared to last
year. The Bank will fully offset additional external burdens to achieve
this. Loan loss provisions should be under EUR1 billion despite the
continuously challenging situation on the shipping markets.
Financial figures at a glance
in EUR m 9M 2016 Q3 2016 Q2 2016 9M 2015 Q3 2015 Net interest and 4,126 1,508 1,274 4,951 1,469 trading income Provisions for -610 -275 -187 -584 -146 loan losses Net commission 2,379 777 781 2,595 825 income Net investment 257 94 131 -106 -39 income Current income on 142 79 14 46 15 companies accounted for at equity Other income 96 -21 40 69 47 Revenues before 7,000 2,437 2,240 7,555 2,317 loan loss provisions Operating 5,328 1,733 1,702 5,413 1,719 expenses Operating profit 1,062 429 351 1,558 452 or loss Impairments of 627 627 - - - Goodwill Restructuring 97 57 40 94 28 expenses Pre-tax profit or 338 -255 311 1,464 424 loss Taxes 161 14 58 489 158 Consolidated 96 -288 215 891 235 profit or loss attributable to Commerzbank shareholders Earnings per 0.08 -0.23 0.17 0.75 0.19 share (EUR) Cost/income ratio 76.1 71.1 76.0 71.6 74.2 in operating business (%) Operating RoTE 5.3 6.4 5.3 8.1 6.8 (%) Net RoTE (%) 0.5 -4.5 3.4 4.8 3.7 Net RoE (%) 0.4 -4.0 3.0 4.3 3.3 CET 1 ratio B3, 11.8 11.8 11.5 10.8 10.8 fully phased-in (%) Leverage Ratio, 4.5 4.5 4.4 4.1 4.1 B3 fully phased- in (%) Total assets (EUR 513 513 533 568 568 bn)***** From approximately 7 am onwards you can find broadcast-ready video material with statements by Chief Financial Officer Stephan Engels at http:// mediathek.commerzbank.de/. ***** 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. With the two business segments Private and Small Business Customers, as well as Corporate Clients the Bank offers a comprehensive portfolio of financial services which is precisely aligned to the clients' needs. Commerzbank finances more than 30 per cent of Germany's foreign trade and is the unchallenged leader in financing for SMEs. The Commerzbank subsidiaries Comdirect in Germany and M Bank in Poland are two of the world's most innovative online banks. With approximately 1,000 branches 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 almost 9.8 billion Euro with approximately 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, 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. --------------------------------------------------------------------------- 04.11.2016 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. The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.de --------------------------------------------------------------------------- Language: English Company: Commerzbank Aktiengesellschaft Kaiserstraße 16 60311 Frankfurt am Main Germany Phone: +49 (069) 136 20 Fax: - E-mail: [email protected] 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 End of News DGAP News Service --------------------------------------------------------------------------- 517401 04.11.2016
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