COMMERZBANK AKTIENGESELLSCHAFT

To our Shareholders Interim Management Report Interim Financial Statements
VI. Summary outlook
231 Business and economy
232 Earnings performance, assets and financial position
237 Forecast
240 Report on post-balance sheet date events
241 Risk Report
Private Customers
Economic conditions look set to improve slightly in the
second half of 2009. However, even if the possible economic
growth materializes, it will not be strong enough to prevent
another surge in unemployment in 2010. The dramatic
economic slump in 2008 / 2009 means that company insolvencies
will have risen sharply by the end of 2009 and will
not fall significantly in the years that follow. We expect the
insolvencies to start impacting on the Private Customers
segment as early as 2009 (in particular as regards corporate
customer lending and consumer loans business) and, owing
to the typical lag effects in the retail portfolio, expect a
significant increase in provisions for possible loan losses
in 2010, including those on residential mortgage loans.
Mittelstandsbank
The global recession is clearly having a severe impact on
the German economy and left its mark on the Corporates
Germany core portfolio in the first half of the year. The fiscal
policy measures introduced by the government have so far
only been able to counteract the negative trend in specific
areas. The rating development is increasingly negative
owing to credit downgrades for borrowers. As a result
we anticipate a further need for restructuring and an increasing
number of insolvencies. A larger percentage of the
credit margin will be consequently be consumed by risk
costs, creating a need for higher gross margins.
Central and Eastern Europe
We believe that the economic crisis will reach its peak in
Central and Eastern Europe in 2009. The region remains an
attractive growth market in the medium term, but until GDP
growth and employment return to a stable uptrend, we are
taking a cautious approach to lending growth and are concentrating
on cherry picking.
Corporates & Markets
For 2009 as a whole, we are expecting the adverse economic
conditions to result in further increases in risk densities.
Owing to the deterioration in borrowers’ credit quality,
which is beginning to feed through after a time lag, rating
migrations are expected to remain negative. With the
secondary markets still lacking liquidity, portfolio reduction
opportunities are limited.
Commercial Real Estate
Given the severity of the financial and economic crisis, we
have to assume that real estate markets are in for an extended
period of correction. On the financing side, we can
provide loans for investments with an attractive risk /return
profile here. In the current environment, investment volumes
are likely to stay at a modest level for the time being.
A relaxation / stabilization of the shipping markets is not
expected until the economies of industrialized nations show
a sustainable recovery. Our focus will remain on restructuring
existing loans.
Market and liquidity risks
The economic environment has stabilized significantly and
there are signs of a return to modest growth in the second
half of 2009. However, there is still an enormous amount of
uncertainty and dips cannot be ruled out. In this difficult
market environment, priority will continue to be given to
consistently reducing credit spread-sensitive exposures
(especially the PRU) and limiting risk across all portfolios.
Given the new Commerzbank’s solid liquidity position
and the excess liquidity in the market resulting from the
central banks’ expansive monetary policy, no liquidity
bottlenecks are expected.
Asset-backed securities
The 2009 financial year will bring further high charges in
Commerzbank’s ABS portfolio, as the very poor performance
of US non-prime RMBSs and US CDOs of ABSs has
spread to other asset classes such as CMBSs and European
RMBSs due to the worsening recession in the US and the
major European economies.
The unchanged illiquidity in the secondary markets for
ABSs is presenting great challenges to our planned €26.3bn
reduction of the ABS portfolios identified as critical. Given
the circumstances, we do not expect a quick reduction of
this exposure in 2009.
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