/ Key word(s): Half Year Results
- Revenues in first half year of €4.35bn (H1 2020: €4.12bn) reflect robust customer business
- Low risk result of minus €235m in H1 2021 (H1 2020: minus €795m)
- H1 operating result at €570m (H1 2020: minus €74m)
- Net result of minus €394m (H1 2020: minus €107m) includes restructuring charges in the amount of €976m for "Strategy 2024"
- Strong Common Equity Tier 1 ratio of 13.4%
In the second quarter, Commerzbank again generated a positive operating result and achieved a solid operating profit of €570 million in the first half of the year. The Bank benefited from a robust customer business and a low risk result. This contrasted with high one-time charges in the second quarter. Despite these exceptional effects and the booking of a further €511 million restructuring expenses in the second quarter, the Common Equity Tier 1 ratio (CET 1 ratio) remained strong at 13.4% and is even more significantly above the regulatory requirement (MDA).
On the journey to a sustainably more profitable bank, Commerzbank reached further milestones. The business model of the digital advisory bank is beginning to gather pace with the initiated launch of the remote advisory centres and the accelerated adjustment of the branch network. Furthermore, the selection process for the future second management level was concluded on schedule, and the voluntary programme for personnel reduction announced this spring got underway successfully. In line with the requirements of the German Federal Court of Justice, the Bank has also started to actively obtain the consent of their customers relating to price adjustments.
The Bank made further progress on digitalisation. Customers of Commerzbank are now able to conclude securities savings plans in the banking app directly with their smartphone alongside with the purchase and sale of traditional securities. Since the second quarter, foreign currency transactions have also been possible in the Cash Management App, the mobile assistant for Corporate Clients and Small-Business Customers.
The high level of customer orientation of the Bank is reflected in the sustained good customer feedback. All customer groups are very satisfied with the advisory services and the banking apps provided by the Bank.
The Bank is proceeding at pace in relation to its sustainability targets. The planned increase in the volume for sustainable financial products to €300 billion by 2025 at the latest has made good progress. The volume already increased to €141 billion in the first six months. The Bank has further set ambitious targets for its operating segments. The Corporate Clients segment is projected to contribute €200 billion and to thereby support the transformation of its customers. The Private and Small-Business Customers segment will deliver €100 billion in the form of sustainable product offerings.
"We have achieved a solid operating result in the first half of the year. The implementation of the strategy is right on track. We are driving all strategic initiatives forward and we are also ready to make tough decisions if necessary," said Manfred Knof, Chief Executive Officer of Commerzbank.
In the second quarter of the year, Commerzbank generated revenues of €1,862 million (Q2 2020: €2,273 million). The year-on-year increase in underlying net commission income by more than 7% to €852 million (Q2 2020: €792 million) had a positive effect. Underlying net interest income remained nearly unchanged at €1,139 million compared with the first quarter thanks not least to the increased volume of priced deposits. The high one-time effects had an impact on revenues in the second quarter. CommerzVentures, the venture-capital fund of Commerzbank, delivered a positive contribution of around €100 million. A further €42 million came from Targeted Longer-Term Refinancing Operations (TLTRO) of the European Central Bank (ECB). Negative contributions came in particular from provisions of €66 million for the judgement of the Federal Court of Justice relating to price adjustment measures in the Private Customers business as well as provisions of further €55 million for the Swiss francs loan portfolio of mBank. Additional negative impacts resulted from ending the project of outsourcing securities settlement.
The risk result was minus €87 million and is therefore significantly lower year-on-year (Q2 2020: minus €469 million). The loan portfolio remained stable despite the ongoing coronavirus pandemic. This is also illustrated by the continuing low ratio of the non-performing exposure (NPE ratio) at 0.8% (end of March 2021: 0.9%). The additional provision booked last year for coronavirus effects anticipated for 2021 ("top-level adjustment") was unchanged at €495 million at the end of June compared with the previous quarter.
Total costs in the first six months amounted to €3,548 million (H1 2020: €3,403 million). While compulsory contributions at €375 million remained virtually unchanged, the Bank was able to reduce operating costs by €56 million in the first half year. As announced, an exceptional write-off for ending the outsourcing project for securities settlement amounted to €200 million.
Total operating profit in the second quarter amounted to €32 million (Q2 2020: €205 million). Excluding one-off effects, the underlying operating profit was at €208 million. The consolidated profit attributable to Commerzbank shareholders amounted to minus €527 million (Q2 2020: €183 million). Without the booked restructuring expenses of €511 million, Commerzbank would have achieved a virtually balanced net result.
The CET 1 ratio recorded at the end of June 2021 was 13.4% despite the consolidated loss (end of March 2021: 13.4%). The buffer to the regulatory requirement (MDA threshold) of currently 9.4% increased to around 400 basis points due to the AT 1 issuance in June this year.
"In the second quarter, we have kept our Common Equity Tier 1 ratio stable despite the high one-time write-off and restructuring expenses. This again proves that we have a very strong basis for the transformation, and it demonstrates that we are also able to deal with exceptional charges on our way to a sustainably profitable future," said Bettina Orlopp, Chief Financial Officer of Commerzbank.
In the Corporate Clients segment underlying revenues slightly decreased to €758 million compared to the second quarter of last year which was defined by a strong capital market business (Q2 2020: €793 million). The Mittelstand division benefited from a slight increase in loan volumes. The International Corporates and Institutionals divisions reflect normalised capital market business and the strategic focus on capital-efficient business. Overall, the segment generated an operating profit of €244 million (Q2 2020: minus €91 million). In addition to lower costs, the main driver for this result was the positive risk result of plus €13 million (Q2 2020: minus €290 million).
Financial figures at a glance
* Net income from financial assets and liabilities measured at fair value through profit and loss.
04.08.2021 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
|60311 Frankfurt am Main
|+49 (069) 136 20
|MDAX, CDAX, HDAX, PRIMEALL
|Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover, Munich, Stuttgart, Tradegate Exchange
|EQS News ID:
|End of News
|DGAP News Service