DGAP-Regulatory: Commerzbank: Board of Managing Directors presents strategy and financial objectives 2020 to the Supervisory ...
September 29 2016 - 4:39AM
UK Regulatory
Commerzbank Aktiengesellschaft / Miscellaneous - Urgent Priority
Commerzbank: Board of Managing Directors presents strategy and financial
objectives 2020 to the Supervisory Board
29-Sep-2016 / 10:39 CET/CEST
Dissemination of a Regulatory Announcement, transmitted by EQS Group AG.
The issuer is solely responsible for the content of this announcement.
In response to current market rumours, the Board of Managing Directors of
Commerzbank AG confirms that it has presented Commerzbank's draft strategic
and financial objectives until 2020 to the Supervisory Board for
consideration. No decision has yet been taken with regard to the
implementation of these objectives. The Board of Managing Directors will
decide tomorrow on the strategic objectives after discussions with the
Supervisory Board. The objectives presented are as follows:
By the end of 2020 Commerzbank will have sustainably increased its
profitability. As part of the 'Commerzbank 4.0' strategy, it will
concentrate on its core businesses, digitalise 80% of relevant processes,
and thereby achieve significant efficiency gains. Its business will be
focused in two customer segments, 'Private and Small Business Customers' and
'Corporate Clients'. The Mittelstandsbank and Corporates & Markets segments
will be merged and trading activities in investment banking scaled back.
This will reduce earnings volatility and regulatory risk and will free up
capital to be invested in core client businesses.
In the context of the decision of the new strategy, goodwill and intangible
assets of both Corporates & Markets and Mittelstandsbank will be subjected
to an impairment test. This means that most probably around 700 million
euros would be written off in the third quarter of 2016. Consequently, the
net result would be negative in the third quarter. The write-offs do not
affect the Common Equity Tier 1 (CET 1) ratio. In terms of Operating profit,
Commerzbank is expecting revenues to be approximately the same as in the
second quarter. Loan loss provisions will be considerably higher than in the
first two quarters due to ongoing weakness in the shipping markets. Despite
the goodwill write-offs, Commerzbank is expecting a small net profit for
2016 as a whole. The CET 1 ratio after full application of Basel 3 will be
higher in the third quarter of 2016 than in the previous quarter. The Bank
is expecting its Common Equity Tier 1 ratio to stand at nearly 12% at the
end of the year, provided no significant market distortions occur.
Commerzbank is aiming for a net return on tangible equity (RoTE) of at least
6% by the end of 2020. This target is based on the expectation that the
interest rate environment will remain challenging. Should the interest rate
environment improve, a net return on tangible equity of at least 8% will be
achievable. Commerzbank is expecting revenues for 2020 to total between 9.8
and 10.3 billion euros. The cost base is to be reduced to 6.5 billion euros,
taking the cost/income ratio to below 66%. In a normalised interest rate
environment, revenues could rise to over 11 billion euros and the
cost/income ratio could fall to around 60%.
The Common Equity Tier 1 (CET 1) ratio, after full application of Basel 3,
is expected to stay at around 12% and will be above 12% in 2018 taking into
account currently foreseeable regulatory developments. For 2020 the Bank
expects a ratio of above 13%.
The focus on the core business, with some business activities being
discontinued, and the digitalisation and automation of workflows will lead
to staff reductions amounting to around 9,600 full-time positions. The Bank
will shortly begin preparatory discussions with the relevant employee
representative committees. At the same time, around 2,300 new jobs will be
created in areas of business growth. Hence the net number of jobs shed will
amount to around 7,300 full-time positions.
To cover its restructuring costs in the region of 1.1 billion euros,
Commerzbank will cease dividend payments for the time being and will retain
its full earnings.
Disclaimer
This release contains forward-looking statements. Forward-looking statements
are statements that are not historical facts. In this release, these
statements concern inter alia the expected future business of Commerzbank,
efficiency gains and expected synergies, expected growth prospects and other
opportunities for an increase in value of Commerzbank as well as expected
future financial results, restructuring costs and other financial
developments and information. These forward-looking statements are based on
the management's current plans, expectations, estimates and projections.
They are subject to a number of assumptions and involve known and unknown
risks, uncertainties and other factors that may cause actual results and
developments to differ materially from any future results and developments
expressed or implied by such forward-looking statements. Such factors
include the conditions in the financial markets in Germany, in Europe, in
the USA and other regions from which Commerzbank derives a substantial
portion of its revenues and in which Commerzbank holds a substantial portion
of its assets, the development of asset prices and market volatility,
especially due to the ongoing European debt crisis, potential defaults of
borrowers or trading counterparties, the implementation of its strategic
initiatives to improve its business model, particularly to reduce its ACR
portfolio, the reliability of its risk management policies, procedures and
methods, risks arising as a result of regulatory change and other risks.
Forward-looking statements therefore speak only as of the date they are
made. Commerzbank has no obligation to update or release any revisions to
the forward-looking statements contained in this release to reflect events
or circumstances after the date of this release.
Contact:
Commerzbank AG
Group Communications
Tel.: +49 69 136 - 22830
mediarelations@commerzbank.com
The EQS Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Archive at www.dgap.de/ukreg
Language: English
Company: Commerzbank Aktiengesellschaft
Kaiserstraße 16
60311 Frankfurt am Main
Germany
Phone: +49 (069) 136 20
Fax: -
E-mail: pressestelle@commerzbank.com
Internet: www.commerzbank.de
ISIN: DE000CBK1001
WKN: CBK100
Indices: DAX, CDAX, HDAX, PRIMEALL
Listed: Regulated Market in Berlin, Dusseldorf, Frankfurt
(Prime Standard), Hamburg, Hanover, Munich,
Stuttgart; Regulated Unofficial Market in
Tradegate Exchange; London, SIX
Category Code: MSCU
TIDM: CZB
Sequence Number: 3448
Time of Receipt: 29-Sep-2016 / 10:02 CET/CEST
End of Announcement EQS News Service
507105 29-Sep-2016
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