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1.

Commerzbank Balance Sheet (Euro million)

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Assets

Cash reserve 8,466 7,429 7,652 7,881 8,118 8,361 8,612


Claims on banks 54,343 51,657 53,723 55,872 58,107 60,431 62,849
Claims on customers 148,514 138,438 144,668 151,901 159,496 167,471 175,845
Provisions for loan losses (5,376) (5,510) (4,960) (5,194) (5,440) (5,698) (5,967)
Positive fair values from derivative hedging instruments 3,131 2,552 2,667 2,800 2,940 3,087 3,242
Assets held for dealing purposes 117,192 87,628 87,628 87,628 87,628 87,628 87,628
Investments and securities portfolio 84,558 87,842 87,842 87,842 87,842 87,842 87,842
Goodwill 1,040 690 580 470 360 250 140
Other intangible assets 111 112 112 112 112 112 112
Fixed assets 2,505 2,063 2,063 2,063 2,063 2,063 2,063
Tax assets 5,995 6,038 6,038 6,038 6,038 6,038 6,038
Other assets 1,655 2,646 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Total assets 422,134 381,585 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!

Liabilities

Liabilities to banks 114,984 95,249 98,106 101,050 104,081 107,204 110,420


Liabilities to customers 95,700 100,000 103,000 106,090 109,273 112,551 115,927
Securitised liabilities 92,732 83,992 87,352 90,846 94,480 98,259 102,189
Negative fair values from derivative hedging instruments 5,696 5,932 6,199 6,509 6,834 7,176 7,535
Liabilities from dealing activities 83,238 67,017 67,017 67,017 67,017 67,017 67,017
Provisions 3,528 3,307 3,307 3,307 3,307 3,307 3,307
Tax liabilities 3,664 4,495 4,495 4,495 4,495 4,495 4,495
Other liabilities 3,285 2,911 2,911 2,911 2,911 2,911 2,911
Subordinated capital 9,237 8,381 8,381 8,381 8,381 8,381 8,381
Minority interests 1,262 1,213 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Total liabilities 413,326 372,497 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Subscribed capital 1,378 1,545 1,545 1,545 1,545 1,545 1,545
Capital reserve 6,131 4,475 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Retained earnings 3,268 3,286 3,286 #VALUE! #VALUE! #VALUE! #VALUE!
Revaluation reserve (769) 1,240 1,240 1,240 1,240 1,240 1,240
Measurement of cash flow hedges (1,248) (1,236) (1,236) (1,236) (1,236) (1,236) (1,236)
Reserve from currency translation (6) (219) (219) (219) (219) (219) (219)
Consolidated profit/loss 54 0 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Treasury stock 0 0 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Shareholders funds 8,808 9,091 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Total liabilities and shareholders funds 422,134 381,588 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!

Bad debt provisions

Opening provision for loan losses 5,376 5,510 4,960 5,194 5,440 5,698
Provision for year 1,084 1,131 1,185 1,241 1,300 1,361
Amounts utilised and other changes (950) (1,785) (1,068) (1,118) (1,171) (1,226)
Closing provision for loan losses 5,376 5,510 4,856 5,077 5,317 5,569 5,832
Provisions/claims on banks and customers (%) 2.65% 2.90% 2.50% 2.50% 2.50% 2.50% 2.50%
Annual provision/claims on banks and customers (%) 0.65% 0.57% 0.57% 0.57% 0.57% 0.57% 0.57%
2. Commerzbank Profit and Loss Account (Euro million)

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Interest received 18,032 11,767 11,672 12,339 13,049 13,795 14,578


Interest paid (14,899) (8,991) (8,607) (8,832) (9,064) (9,304) (9,552)
Net interest income 3,133 2,776 3,065 3,507 3,985 4,491 5,027
Provisions for possible loan losses (1,321) (1,084) (1,131) (1,185) (1,241) (1,300) (1,361)
Net interest income after provisioning 1,812 1,692 1,933 2,322 2,744 3,191 3,665
Commissions received 2,416 2,505 2,580 2,658 2,737 2,819 2,904
Commissions paid (296) (369) (380) (391) (403) (415) (428)
Net commission income 2,120 2,136 2,200 2,266 2,334 2,404 2,476
Net result on hedge accounting (56) 40 0 0 0 0 0
Trading profit 544 737 737 737 737 737 737
Net result on available for sale investments (11) 291 297 297 297 297 297
Operating expenses (5,155) (4,511) (4,133) (4,496) (4,875) (5,260) (5,650)
Other operating result 938 174 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Operating profit 192 559 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Amortization of goodwill (108) (110) (110) (110) (110) (110) (110)
Profit before exceptional items 84 449 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Exceptional items (247) (2,325) 0 0 0 0 0
Restructuring expenses (209) (104) 0 0 0 0 0
Profit before taxation (372) (1,980) #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Taxation 103 (249) #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Taxation rate (%) 27.7% -12.6% 39.9% 39.9% 39.9% 39.9% 39.9%
Profit after taxation (269) (2,229) #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Minority interest in profit (29) (91) #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Profit attributable to ordinary shares (298) (2,320) #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Transfer from capital reserve 352 2,320 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Consolidated profit/loss 54 0 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Ordinary dividends payable 0 0 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Retained profit/loss 54 0 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Payout ratio 0.0% 0.0% 70.0% 70.0% 70.0% 70.0% 70.0%

Year end shares outstanding 529.9 594.4 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Weighted average shares outstanding 533.6 544.2 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Earnings per share -0.56 -4.26 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Dividends per share 0.00 0.00 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
3. Commerzbank Balance Sheet Drivers

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Assets

Cash reserve -12.2% 3.0% 3.0% 3.0% 3.0% 3.0%


Claims on banks -4.9% 4.0% 4.0% 4.0% 4.0% 4.0%
Claims on customers -6.8% 4.5% 5.0% 5.0% 5.0% 5.0%
Provisions for loan losses 2.5% -10.0% 4.7% 4.7% 4.7% 4.7%
Positive fair values from derivative hedging instruments -18.5% 4.5% 5.0% 5.0% 5.0% 5.0%
Assets held for dealing purposes -25.2% 0.0% 0.0% 0.0% 0.0% 0.0%
Investments and securities portfolio 3.9% 0.0% 0.0% 0.0% 0.0% 0.0%
Goodwill -33.7% -15.9% -19.0% -23.4% -30.6% -44.0%
Other intangible assets 0.9% 0.0% 0.0% 0.0% 0.0% 0.0%
Fixed assets -17.6% 0.0% 0.0% 0.0% 0.0% 0.0%
Tax assets 0.7% 0.0% 0.0% 0.0% 0.0% 0.0%
Other assets 59.9% #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Total assets -9.6% #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!

Liabilities

Liabilities to banks -17.2% 3.00% 3.00% 3.00% 3.00% 3.00%


Liabilities to customers 4.5% 3.00% 3.00% 3.00% 3.00% 3.00%
Securitised liabilities -9.4% 4.00% 4.00% 4.00% 4.00% 4.00%
Negative fair values from derivative hedging instruments 4.1% 4.50% 5.00% 5.00% 5.00% 5.00%
Liabilities from dealing activities -19.5% 0.0% 0.00% 0.00% 0.00% 0.00%
Provisions -6.3% 0.0% 0.00% 0.00% 0.00% 0.00%
Tax liabilities 22.7% 0.0% 0.00% 0.00% 0.00% 0.00%
Other liabilities -11.4% 0.0% 0.00% 0.00% 0.00% 0.00%
Subordinated capital -9.3% 0.0% 0.00% 0.00% 0.00% 0.00%
Minority interests -3.9% #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Total liabilities -9.9% #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Subscribed capital 12.1% 0.0% 0.0% 0.0% 0.0% 0.0%
Capital reserve -27.0% #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Retained earnings 0.6% 0.0% #VALUE! #VALUE! #VALUE! #VALUE!
Revaluation reserve -261.2% 0.0% 0.0% 0.0% 0.0% 0.0%
Measurement of cash flow hedges -1.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Reserve from currency translation 3550.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Consolidated profit/loss na #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Treasury stock na #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Shareholders funds 3.2% #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Total liabilities and shareholders funds -9.6% #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
4. Commerzbank Profit and Loss Drivers

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Interest received/average earning assets 2.99% 3.09% 3.19% 3.29% 3.39% 3.49%
Interest paid/average interest-bearing liabilities 1.20% 1.20% 1.20% 1.20% 1.20% 1.20%
Growth in commissions received 3.68% 3.00% 3.00% 3.00% 3.00% 3.00%
Growth in commissions paid 24.66% 3.00% 3.00% 3.00% 3.00% 3.00%
Growth in trading profit 35.48% 0.00% 0.00% 0.00% 0.00% 0.00%
Profit on investments/investments 0.34% 0.34% 0.34% 0.34% 0.34% 0.34%
Operating expenses/interest and commission income 117.84% 100.00% 98.00% 96.00% 94.00% 92.00%
Other operating result/total assets 0.04% 0.04% 0.04% 0.04% 0.04% 0.04%
Minority interest in profit 4.08% 13.34% #VALUE! #VALUE! #VALUE! #VALUE!
5. Commerzbank end 2003 economic capital (Euro billion)

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RWA 140.8
Market risk (trading book) 0.8
Market risk (banking book) 0.7
Market risk (equity holdings) 2.9
Credit risk 4.3
Operational risk 0.9
Business risk 0.5
Total 10.1
Diversification effects -2.2
Economic capital after diversification effects 7.9
Tier I capital 10.3
Implied surplus 2.4
Economic capital/RWA (%) 5.61%
6. Commerzbank Regulatory Risk Weighted Assets and Capital Ratios (Euro million)

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Total book assets 422,134 381,585 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Risk weighted assets (RWA) 160,190 140,829 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Risk weighted assets/total assets 37.95% 36.91% 37.43% 37.43% 37.43% 37.43% 37.43%

Minimum Tier 1 ratio (%) 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
Regulatory minimum total capital ratio (%) 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%

Core capital
Equity capital in balance sheet 8,808 9,091 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Minority interests 1,262 1,213 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Goodwill (1,040) (690) (580) (470) (360) (250) (140)
Adjustments 2,661 643 643 643 643 643 643
Tier I capital 11,691 10,257 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Core capital ratio 7.30% 7.28% 5.61% 5.61% 5.61% 5.61% 5.61%
Target capital ratio 5.61% 5.61% 5.61% 5.61% 5.61% 5.61%
Target capital 7,900 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Surplus capital 2,357 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!

Supplementary capital
Core capital 11,691 10,257 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Subordinated capital 9,237 8,381 8,381 8,381 8,381 8,381 8,381
Adjustments (1,475) (513) (513) (513) (513) (513) (513)
Tier II capital 19,453 18,125 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Tier III capital 209 125 125 125 125 125 125
Total capital 19,662 18,250 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Total capital ratio 12.27% 12.96% #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
7. Commerzbank Equity (Euro million)

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Share price (Euro) 15.32


Par value (Euro) 2.60

Equity issued 0 0 0 0 0
Equity bought back #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!

Shares issued 0 0 0 0 0
Shares bought back #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
8. Commerzbank Performance Ratios

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Income margin -5.67% -47.23% #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!


Income/opening total assets 1.16% 1.38% #VALUE! #VALUE! #VALUE! #VALUE!
Return on opening total assets -0.55% #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Opening shareholders' funds/total assets 2.09% 2.38% #VALUE! #VALUE! #VALUE! #VALUE!
Return on equity -26.34% #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!

Cost/income ratio 98.13% 91.84% 78.51% 77.89% 77.15% 76.28% 75.31%


9. Commerzbank cost of equity

Current cost of equity:


Risk free rate 4.02%
Equity risk premium 4.00%
Beta 1.17
Current cost of equity 8.70%

Market capitalisation 9,106


Surplus capital (2,357) -25.88%
Target capitalisation 6,749 74.12%

Proforma Beta 1.58


Proforma cost of equity 10.33%
10. Commerzbank Valuation (Euro million)

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Terminus assumptions:
Assumed long term growth rate 2.00%
Assumed long term ROE 10.33%

Inputs from forecasts:


Profit after taxation #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Cash flow to/(from) equity #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Retained earnings #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Opening shareholders' funds 9,091 #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Return on opening shareholders' funds #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! 10.33%
Cost of equity 10.33% 10.33% 10.33% 10.33% 10.33% 10.33%
Implied residual income #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!

Discounted cash to equity value:


NPV five year free cash flow #VALUE! #VALUE!
NPV terminal value #VALUE! #VALUE!
Value of shareholders' funds #VALUE! #VALUE!
Shares issued (million) 594
Value per share (Eur) #VALUE!
Share price 15.32
Premium/(discount) #VALUE!

Residual income valuation:


Opening shareholders' funds 9,091 #VALUE!
PV five year residual income #VALUE! #VALUE!
PV terminal value (ex incremental investment) #VALUE! #VALUE!
PV terminal value (incremental investment) #VALUE! #VALUE!
Value of shareholders' funds #VALUE! #VALUE!
Shares issued (million) 594
Value per share (Eur) #VALUE!
Share price 15.32
Premium/(discount) #VALUE!