COMMERZBANK AKTIENGESELLSCHAFT

Group Management Report
176
120 Commerzbank Annual Report 2011
Overall, income before provisions fell by €158m to €2,234m year on year. Interest income
rose by €65m to €832m due to positive contributions from structured finance business. The
€46m rise to €300m in commission income was due in part to a reclassification of income
from the trade surplus. Trading income fell by €91m to €1,069m due to the tough market
conditions. The significant €190m decline to €30m in net investment income was attributable
to the discontinuation of valuation effects on structured loans.
Risk provisions on lending for 2011 amounted to €146m and related mainly to individual
commitments in business with corporate customers. A positive amount of €27m was reported
in 2010 due to net allocations.
Operating expenses contracted by a significant €128m to €1,505m, particularly as a result
of the synergy effects realised in back-office areas and lower variable remuneration.
Pre-tax profit amounted to €583m, compared with €786m in the previous year.
With average capital employed falling by 21.5% to €3.0bn, the operating return on equity
was 19.3% (prior year period: 20.4%). The cost/income ratio was 67.4%, compared
with 68.3% in 2010.
Main developments in 2011
In a difficult year which saw some dramatic market upheavals, the Corporates & Markets
segment proved again that it is an important cornerstone of the core bank. This could only
be achieved only through the clear customer-focused approach of the Corporates & Markets
business model and a high degree of integration into the rest of the organisation.
The Corporate Finance division reported a successful year and made a solid positive
contribution to segment earnings despite the difficult market conditions. The sovereign
debt crisis, which depressed fixed income markets since the beginning of the year and
deepened as the year progressed, fuelled greater uncertainty, making customers reluctant
to invest in the Fixed Income & Currencies area. Despite this, the division managed to stabilise
earnings during the year. The crisis also spread to equity and commodities markets in
the second half of the year. International equity markets suffered heavy losses in the summer
and were extremely volatile in the second half of the year. Private and institutional investors
showed little appetite for investment, and this had a negative impact on flow business. An
extremely successful first half of the year for Equity Markets & Commodities was therefore
overshadowed by negative market developments in the second half.
We made significant progress in reducing risk assets in order to optimise the use of resources
and in anticipation of regulatory changes. But the focus here was on meeting economic
responsibilities for the real economy in our core markets, which is in line with the objectives
of the Corporates & Markets business policy.