COMMERZBANK AKTIENGESELLSCHAFT

To our Shareholders Interim Management Report Interim Financial Statements
Business and economy
Overall economic situation
231 Business and economy
232 Earnings performance, assets and financial position
237 Forecast
240 Report on post-balance sheet date events
241 Risk Report
Interim Management Report
as of June 30, 2009
Much as in the first quarter, the economies of many industrial
nations are also likely to have contracted in the second
quarter. However, the downtrend has slowed considerably
and there are increasing signs that an end is in sight. Corporate
sentiment has also improved since the beginning of
the year, and positive signals are multiplying even among
hard-line economic indicators such as new orders and
industrial production. The first signs of an incipient upturn
are already emerging out of Asia, and the economy seems
to have at least stabilized in the US and the eurozone.
Inflation rates have in part fallen below zero in recent
months, which is primarily due to much lower energy and
food prices compared to the previous year. However, the
upward pressure on prices resulting from the global recession
has lessened recently even without these goods. Central
banks are continuing their extremely expansive monetary
policy. Key interest rates in the large currency areas are
now nearly at zero, and measures for quantitative easing are
increasingly being taken in order to stabilize the financial
system and support an economic recovery.
Since the beginning of March, the hope for an end to the
economic crisis has also taken some of the pressure off the
financial markets. Share prices and yields on long-term government
bonds have risen markedly since this date, and risk
premiums on the corporate bonds and government bonds of
many eurozone countries and emerging markets have fallen
considerably.
Commerzbank Group impacted by financial crisis and
recession in the first half of the year
As a result of the overall difficulties in the financial markets
and the recessions in Germany and other industrialized
nations, Commerzbank recorded a loss in both the first and
second quarter of 2009. However, the operating loss from
April to June was significantly smaller than in the previous
quarter. The Mittelstandsbank and Private Customers segments
reported a positive contribution to earnings in both
quarters, whereas the Central & Eastern Europe division
was adversely affected by high risk provisions in the first
half of the year due to the severe recession in the region.
Increased risk provisions also meant that the Commercial
Real Estate segment suffered an operating loss. The result
for Corporates & Markets improved significantly in the second
quarter after having reported massive losses for the first
three months of the year. This was on the one hand due to
considerably reduced write-downs on structured securities,
and on the other to improved results from some customerbased
business lines.
The most important event in business policy in the first
half of the year was the completion of the Dresdner Bank
takeover in January. Under the terms of the transaction,
Allianz received around 163.5 million new Commerzbank
shares from a capital increase for non-cash contributions
and Commerzbank became the sole shareholder in Dresdner
Bank, which was subsequently merged into Commerzbank
on 11 May 2009. Since then, further important steps
have been taken in the integration process. For example,
Commerzbank reached an agreement with employee representatives
on integrating the head offices of Commerzbank,
Dresdner Bank and Dresdner Kleinwort in Frankfurt.
At the beginning of May, the EU Commission approved
the second assistance package by the Special Fund for
Financial Market Stabilization (SoFFin) agreed in January,
on condition that we reduce our total assets and spin off
Eurohypo in the next few years. After approval of the capital
increase for SoFFin at the Annual General Meeting, the
increase was then registered, and the silent participations
of both SoFFin (€8.2bn) and Allianz (€750m) were transferred
to Commerzbank. The capital increase was carried
out by issuing roughly 295 million ordinary shares at a price
of €6 a share, giving SoFFin a holding of 25 % plus one
share in the new Commerzbank.
At the beginning of May, the Commerzbank Board of
Managing Directors also decided upon a new Group structure,
according to which the Group will be divided into three
areas from the third quarter onwards: the customer bank,
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