COMMERZBANK AKTIENGESELLSCHAFT

236 Commerzbank Interim Report as of June 30, 2009
into a separate unit. The volatility in the income statement
due to fluctuations in fair value in the public finance port-
folio was reduced significantly by reclassifying sub-portfolios.
The first-time consolidation of Dresdner Bank was
tangibly reflected in individual items in the 2009 income
statement.
Net interest income rose by €283m year-on-year to
€510m. Net interest income in public finance originating
business remained stable in the reporting period. Risk provisions
were affected by ongoing charges for structured
credit exposures and higher defaults and restructurings in
the wake of the gloomy economic environment. Accordingly,
loan loss provisions were up by €385m year-on-year
to €478m. Net commission income increased by €137m to
€180m. Especially fixed income new issue business developed
positively in the first half of 2009. Compared to the
same period last year, the trading result was down by
€827m to –€342m, with positive income in bond and currency
trading in particular overshadowed by impairments
on the ABS book. Even net investment income declined
by €62m to –€163m, mainly as a result of write-downs on
the ABS portfolio. Operating expenses rose by €552m to
€1,109m despite much lower variable compensation. The
interim operating loss was €1,375m, of which by far the
largest portion, €1,144m, came in the first quarter.
The operating return on equity calculated on capital employed
of €7.1bn was –38.5 % (first half year 2008: 2.2 %).
The cost / income ratio was 523.1 % compared to 81.2 % in
the first half of 2008.
CRE still suffering from the bleak state of
commercial real estate markets
National and international real estate markets came under
enormous pressure from the economic environment, and
are not expected to recover this year. Consequently new
approvals for commercial real estate loans contracted to
€698m in the first half compared with €7,620m in the same
period last year. Overall, the Commercial Real Estate segment
had a difficult first six months.
Net interest income rose in the first half of 2009 by 1.5 %
to €487m compared to the first six months of 2008, with
higher credit margins for renewals and new lending. Risk
provisions increased to €507m, which was 45.3 % higher
than the equivalent figure in the first half of 2008. This was
attributable to the heavy write-downs at Eurohypo, particularly
on individual exposures in the US and Spain.
Net commission income fell by 31.5 % to €146m due to
lower new business in all areas. Trading profit increased by
€37m to €39m, while the loss incurred on financial assets
more than halved to –€97m. In the first six months of 2009,
further impairments on RMBS of €94m were charged, but
they were lower than those taken in the same period last
year (€203m).
Operating expenses rose by 5.1 % to €270m. The operating
result deteriorated from –€90m in the first half of
2008 to –€224m.
The operating return on equity calculated on capital employed
of €6.0bn was –7.5 % (first half year 2008: –4.8 %).
The cost / income ratio eased from 49.8 % to 48.8 %.
Others and Consolidation made positive contribution
to the Commerzbank Group’s results
The Others and Consolidation segment reports income and
expenses that are not attributable to the operating segments.
These also include those expenses and income items
that represent the reconciliation of internal management
reporting figures shown in the segment reports with the
Group financial statements in accordance with IFRS. This
segment also contains equity participations which are not
assigned to the operating segments, the remaining international
asset management activities and, since the beginning
of the year, Group Treasury. Operating profit in Others
and Consolidation rose from €32m in the first half of 2008
to €369m due mainly to the planned reduction in nonstrategic
investments. Group Treasury also contributed a
positive result in the first half of 2009.
Key figures of the Commerzbank Group
The Commerzbank Group’s overall operating return on
equity in the first half-year was –6.3 %, compared to 12.6 %
in the first half of 2008. Return on equity based on the
consolidated surplus / deficit – i.e. the ratio of consolidated
surplus / deficit attributable to Commerzbank shareholders
to the average capital employed attributable to them – fell
from 16.4 % to –13.2 %, without taking account of the revaluation
reserve and the reserve from cash flow hedges less
the current consolidated surplus / deficit. The cost / income
ratio – i.e. the ratio of operating expenses to total earnings
before deduction of loan loss provisions – rose from 64.1 %
to 80.6 %.