COMMERZBANK AKTIENGESELLSCHAFT

To our Shareholders Corporate Responsibility Management Report Risk Report Group Financial Statements Further Information 127 183
127 71 Business and overall conditions
135 79 Earnings performance, assets and financial position
147 91 Segment performance
183 127 Asset Based Finance
137 193 Our employees
143 199 Report on events after the reporting period
144 200 Outlook and opportunities report
Asset Based Finance
The Asset Based Finance (ABF) segment comprises the Commercial Real Estate (CRE), Public
Finance (PF), Ship Finance (S) and Asset Management and Leasing (AML) divisions. Nearly all
CRE and PF activities are carried at Commerzbank’s subsidiary Eurohypo AG. AML comprises
the activities of our subsidiary Commerz Real AG. Ship Finance consolidates the ship financing
of Commerzbank and our subsidiary Deutsche Schiffsbank AG.
The asset-based lending strategy in the Asset Based Finance segment is geared towards
optimising the existing portfolio, which means downsizing balance sheet volume, reducing
risk positions and moving towards profitability for the portfolio.
The effects of the European sovereign debt crisis were acutely felt in 2011. As a result, we
had to make write-downs on our Greek government bond portfolio, which impacted heavily
on the segment’s earnings. Reflecting the global economic slowdown in the past year, business
on the international real estate and shipping markets was also very mixed. Some markets
continued to improve, whereas in others – such as the Spanish real estate market, for
example – conditions remained difficult.
Performance
Asset Based Finance
2011 2010 Change in
€m
%/%-points
Income before provisions – 2,432 925 .
Loan loss provisions – 907 – 1,584 – 42.7
Operating expenses 572 609 – 6.1
Operating profit/loss – 3,911 – 1,268 .
Capital employed 5,398 6,276 – 14.0
Operating return on equity (%) – 72.5 – 20.2 – 52.2
Cost/income ratio in operating business (%) . 65.8 .
Table 7
Against the backdrop of the developments set out above, the ABF segment reported an operating
loss of €–3,911m in 2011, compared with a loss of €–1,268m in 2010.
As a result of the European sovereign debt crisis, income before provisions was also negative
at €–2,432m, compared with income of €925m in the prior year. Net interest income
amounted to €1,021m, down 12% from the previous year because of the accelerated portfolio
downsizing and higher funding costs. Compared to last year, commission income fell by
20.5% to €260m, due mainly to lower levels of new business. After being negative at €–78m
in 2010, trading income rose to €123m, due in particular to the valuation of derivatives in
accordance with IAS 39. Net investment income amounted to €–3,799m, notably as a result
of write-downs on our Greek government bonds. Losses on disposals were also incurred in
connection with our forced risk reduction in the Public Finance portfolio.
› Note 44 – Segment reporting
Page 242 ff.
Group Management Report