COMMERZBANK AKTIENGESELLSCHAFT

To our Shareholders Interim Management Report Interim Financial Statements
231 Business and economy
232 Earnings performance, assets and financial position
237 Forecast
240 Report on post-balance sheet date events
241 Risk Report
Forecast
The following comments should always be read in conjunc-
tion with the Business and Economy section of this interim
report as well as the Outlook section of the 2008 annual
report.
Future economic situation
The global economic slump should have bottomed out by
the middle of the year. A recovery is expected to take hold
in the second half as the uncertainty triggered by the collapse
of Lehman Brothers gradually dissipates. Companies
are starting to restock their inventories, Moreover, many
countries have launched extensive stimulus programmes
and the drastic interest rate cuts by central banks will
feed through more and more to the real economies. In spite
of these highly stimulative measures the recovery is likely
to be sluggish due to the after-effects of the financial crisis
and the need for companies and consumers in many countries
to reduce debt levels. As a result, official interest
rates should remain at their current low levels for some time
to come.
Future situation in the financial industry
In the first quarter of 2009 many European banks benefited
from the improved environment for their trading operations
and some were able to post better results. However, the
overall environment for banks remains extremely difficult,
and the impact of the global economic crisis will continue
to put pressure on banks’ balance sheets. Commerzbank
expects gross domestic product in the eurozone to shrink by
4.5 % in 2009, followed by marginal growth of 0.7 % in
2010. The lagging negative repercussions of the recession
such as corporate insolvencies and sharply increased unemployment
(Commerzbank forecasts that unemployment
in Germany alone will rise from 3.2 million at end-2008 to
around 4 million at end-2009) will lead to a sharp rise in
banks’ credit risk provisions. Moreover, the financial crisis
continues to take a direct toll. According to a Bloomberg
report of 10 July 2009, write-downs suffered by banks
worldwide as a result of the financial crisis have now
reached $1,042 billion. Up to the end of 2008 European
banks had amassed write-downs of $384 billion according
to the Bloomberg report. The IMF expects banks in the
Eurozone to see further write-downs of $750 billion in 2009
and 2010, while the ECB is forecasting further write-downs
of $283 billion by the end of 2010. These differing estimates
show that forecasts of this kind are currently subject to a
high degree of uncertainty. To offset the erosion in their
capital base and accommodate the more stringent demands
of the market with regard to capital adequacy, banks worldwide
have to date carried out capital increases of some
$1,022 billion, through private placements and public capital
increases as well as capital injections from government.
The banking industry is going through a fundamental reorganization.
While in many cases there is a trend towards
refocusing on the core business, some institutions are
undergoing a re-dimensioning process. In all areas of the
banking business, margins will also need to return to levels
that are commensurate with the risks of the exposures taken
on. The shift in the yield curve could also help to bolster
margins in banking. Even in times of financial crisis and
recession certain business areas in a bank can experience a
temporary boom, as has recently been the case for corporate
bond issuance. However, there are also business areas
within banks that are under structural pressure. On the
financing side, banks will seek to reduce their dependence
on the interbank market, which will translate into continued
intense competition for customer deposits. According to an
analysis by the ECB, it is also likely that banks will scale
back activities that are especially dependent on unsecured
funding.
Financial outlook for the Commerzbank Group
Financing plans
Although the second quarter was a favourable one in terms
of issuance, we expect the capital market environment to
remain strained. We expect funding costs for long-term
capital market issues to remain high due to the ongoing
uncertainty in the market, even if funding spreads have
certainly narrowed significantly from the highs recorded
at the beginning of this year. We managed to secure our
capital market funding target for 2009 of approximately
€20bn – around half of which was through secured issues
237