COMMERZBANK AKTIENGESELLSCHAFT

232 Commerzbank Interim Report as of June 30, 2009
asset-based finance and the cutback portfolio. The customer
bank will comprise the customer-oriented core business
activities of Commerzbank. Specifically, this includes the
four segments Private Customers, Mittelstandsbank, Corpo-
rates & Markets and Central & Eastern Europe. The asset-
based finance area essentially includes Commercial Real
Estate, Public Finance and ship financing. We will use the
cutback portfolio to move portfolios that we no longer want
into a single separate unit. This includes troubled assets
as well as positions that hold value but no longer match
our business model since they lack a focus on customer
relationships.
Earnings performance, assets and
financial position
When examining the income statement of the Commerzbank
Group, it should be noted that Dresdner Bank was
fully consolidated on January 12, 2009 and is therefore not
contained in the 2008 comparative figures. Upon acquiring
Dresdner Bank for €4.7bn, we indirectly acquired a further
40 % stake in Deutsche Schiffsbank AG. As we now own
80 % in total, Schiffsbank has also been fully consolidated.
By contrast, the cominvest companies that were sold in the
course of the takeover of Dresdner Bank are no longer
included in the consolidation. For more information on the
changes in the group of consolidated companies and details
on the resulting measurement effects pursuant to IFRS 3
and, in particular, the purchase price allocation please refer
to pages 266 to 268 of this report.
At the end of the first half, the balance sheet and income
statement continue to show a mixed picture. On the one
hand, the Commerzbank Group still has a solid capital base
and comfortable level of liquidity and is continuing to
significantly reduce total assets and its risk exposure. Furthermore,
the trend in both net interest income and operating
expenses was favourable. However, as a result of the
financial crisis and global recessionary trends, our income
statement came under significant pressure due to a trading
loss and a sharp increase in loan loss provisions. In addition,
restructuring expenses and ongoing operating
expenses totalling €508m were incurred for the integration
of Dresdner Bank.
Earnings situation still troubled
The initial consolidation of Dresdner Bank clearly impacted
on individual items in the 2009 income statement.
Net interest income rose in the first half of 2009, up
61.0 % year-on-year to €3,530m. The Mittelstandsbank
and Central and Eastern Europe segments in particular
reported good net interest income based on substantially
higher credit margins. However, margins on deposits were
down sharply in all segments. Additional interest income
was generated by investing the silent participations from
SoFFin and Allianz.
In view of the weak global economy in the first half, we
boosted loan loss provisions to €1,837m (net), compared to
€589m in the same period last year. Loan loss provisions
rose sharply in Corporates & Markets, especially for structured
products and LBOs. In the Central and Eastern Europe
segment, we substantially increased loan loss provisions on
account of the region’s extremely poor economic situation.
In the second quarter in particular, loan loss provisions in
the Mittelstandsbank segment saw an anticipated jump on
account of individual exposures to large mid-sized companies.
The Commercial Real Estate segment was affected
principally by isolated cases in the US and Spain.
Compared with the first half of 2008, net commission
income rose by only 24.0 % to €1,797m, faring particularly
badly in the first quarter of 2009 due to market turbulence.
Given this difficult environment, customers across the board
were extremely averse to securities transactions, which was
particularly noticeable in the Private Customers segment.
The sharp drop in new business in Commercial Real Estate
also led to lower net commission income.
The trading result was –€430m for the first six months,
€978m down on the year-earlier figure. This trend mirrored
developments in the capital markets in 2009, with a €523m
loss between January and March, and more favourable
market conditions generating a €93m trading profit in the
second quarter. Overall, customer-driven sales and trading
activities in the first year performed well, aided by our
strong market position in Germany. Our public finance business
reported a trading profit. In particular, the total return
swap on US municipal bonds, which had still generated
losses of around €500m in 2008, was closed out in the first
quarter with a one-off gain of €90m. Nevertheless, these