Commerzbank Aktiengesellschaft
Commerzbank: Operating Profit of EUR1.4bn and Improved Capital Ratio
Commerzbank Aktiengesellschaft / Miscellaneous – Urgent Priority
– Operating profit of EUR1,399m for 2016 (2015: EUR1,942m) – Operating profit of EUR337m for fourth quarter 2016 (Q4 2015: EUR384m) – Net profit of EUR279m for 2016 (2015: EUR1,084m) – Revenues before loan loss provisions in 2016 of EUR9.4bn (2015: EUR9.8bn) – Loan loss provisions increased to EUR900m in timely response to the deterioration in the shipping markets (2015: EUR696m); non-performing loan ratio still very low at 1.6% – CET 1 ratio with full application of Basel 3 up at 12.3% as of end of 2016 (end of 2015: 12.0%), exceeding all regulatory requirements – Improved leverage ratio with full application of Basel 3 of 4.8% as of end of 2016 (end of 2015: 4.5%) – Zielke: ‘In 2016 we achieved a solid profit and further improved our capital ratio. However, we cannot yet be satisfied with the quality of our earnings and that’s why we will put every effort into the implementation of our strategy. We have now given ourselves the room for manoeuvre needed for this and can proceed with the transformation as planned. We want to make Commerzbank the most competitive bank in Germany by 2020. We will now work to achieve, step by step, the targets we have set ourselves.’
‘Our Common Equity Tier 1 ratio has gone up to 12.3 per cent and exceeds all regulatory requirements. It means we are ready for the forthcoming charges arising from restructuring costs and regulatory obligations. And the CET 1 ratio is set to remain at or above 12 per cent for the rest of the year’, explained Stephan Engels, Chief Financial Officer of Commerzbank. Engels added: ‘We kept our costs stable in 2016 and were able to fully offset additional external charges.’ Implementation of Commerzbank 4.0 strategy under way Development of the segments The Private and Small Business Customers segment achieved continued growth in the 2016 financial year, both in Germany and at mBank. Its operating profit rose slightly year-on-year by 3% to EUR1,079 million (2015: EUR1,051 million). The figure includes several positive one-off effects which offset the adverse impact of the negative interest rate environment in Germany. In a tough market environment, revenues before loan loss provisions remained stable at EUR4.8 billion (2015: EUR4.8 billion). In Germany the loan volume was 8% up on the previous year, exceeding the market growth rate. Volatility in net commission income was further reduced according to plan by increasing the volume of securities in premium custody accounts and managed accounts. Loan loss provisions decreased by 29% over the same period to EUR119 million (2015: EUR167 million). Operating expenses remained stable at EUR3,621 million (2015: EUR3,627 million). This includes a rise in costs at mBank due largely to the Polish banking tax. In Germany the segment attracted approximately a net 321,000 new customers in 2016. Since the end of 2012 it has gained 1.1 million customers. This means the retail business has met or surpassed all the essential targets it had set itself for the end of 2016. Especially the targets for the operating profit and assets under management have been significantly overachieved. The volume of new business in mortgage lending was roughly the same in 2016 as in the previous year, with a slightly higher margin. Sales of consumer loans increased by 31% in volume terms. mBank also saw further business growth in financial year 2016, and was able to raise its revenues before loan loss provisions compared to the previous year. New business volume in consumer loans increased by more than 20% over the same period. mBank also gained a good 400,000 net new customers, so that it now has around 5.4 million customers in Poland, the Czech Republic and Slovakia. In the fourth quarter of 2016 the operating profit for the new Private and Small Business Customers segment totalled EUR235 million (Q4 2015: EUR227 million). Revenues before loan loss provisions amounted to EUR1,177 million (Q4 2015: EUR1,190 million). The results of the Corporate Clients segment in financial year 2016 were adversely affected by the negative interest rate environment and the reorientation of business operations, though business with SMEs and German large corporates remained stable. Its operating profit was down year-on-year, at EUR1,287 million (2015: EUR1,695 million). The figure for the fourth quarter was EUR360 million (Q4 2015: EUR258 million). The improvement versus the same quarter of the previous year was due in particular to the fact there was a net release of loan loss provisions in the fourth quarter of 2016, whereas in the fourth quarter of 2015 loan loss provisions were still being added to on a net basis. Revenues before loan loss provisions, after adjustments for valuation effects from own liabilities (OCS) and for counterparty risk in the derivatives business, decreased to EUR4.3 billion in 2016 (2015: EUR4.7 billion). The fourth quarter contributed EUR1,083 million in revenues, after adjustments (Q4 2015: EUR1,120 million). The segment registered a marked fall in revenues in financial year 2016 due to the strategic adjustments to the business model. These adjustments are aimed at both improving the segment’s risk position and focussing more on core competencies and client needs. By contrast the Mittelstand Group division succeeded in maintaining its strong market position with overall stable revenues despite the negative interest rate environment. In International Corporates, clients were reluctant to engage in capital market activities, and ECB purchases of corporate bonds reduced fees for bond issuance and margins on corporate loans, while revenues from commercial banking as a whole remained stable. However, despite the tough market environment, capital market business was able to contribute to profits on the debt capital side as well, where stable revenues were recorded. The segment’s loan loss provisions rose to EUR185 million in 2016 (2015: EUR108 million). Operating expenses were down slightly at EUR2,973 million (2015: EUR3,030 million). In the Asset & Capital Recovery (ACR) segment, the portfolios were run down further again in 2016. Exposure at Default (EaD) fell by EUR2.3 billion, taking it to EUR16.2 billion at the end of the year. The operating result was worse than the previous year at minus EUR514 million (2015: minus EUR466 million) on account of the steep increase in loan loss provisions in Ship Finance. The fourth quarter accounted for minus EUR155 million of this operating result (Q4 2015: minus EUR67 million). Revenues before loan loss provisions came out at EUR213 million for 2016 as a whole (2015: EUR76 million), supported by the reinstatement of the value of the Heta exposure in the fourth quarter. Loan loss provisions increased in 2016, due almost entirely to the further deterioration on the shipping markets, to EUR599 million, compared with EUR361 million the previous year. Operating expenses were reduced over the same period to EUR128 million (2015: EUR181 million). In financial year 2017 the Bank will further strengthen its market position and will focus on the implementation of the Commerzbank 4.0 strategy. Investments, P&L including restructuring costs, capital and RWA will be managed in such a way as to keep the CET 1 ratio stable at 12% or above. Commerzbank will aim to keep the cost base stable and book the first part of restructuring charges for Commerzbank 4.0. The Bank expects loan loss provisions for segments Private and Small Business Customers as well as Corporate Clients to be on the level of 2016, while loan loss provisions in Ship Finance are expected to be in a range of EUR450 million to EUR600 million. Financial figures at a glance
2016 figures published in this press release are preliminary and unaudited. From approximately 7 am onwards you can find broadcast-ready video material with statements by Martin Zielke and Stephan Engels at http://mediathek.commerzbank.de/. ***** ***** About Commerzbank *****
The EQS Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. |
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 No.: | 3837 |
End of Announcement | EQS News Service |
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