Annual Report 2001 Annual Report 2001 Highlights of Commerzbank Group

annual report 2001 Annual report 2001 highlights of Commerzbank group 2001 2000 1999 Income statement Pre-tax profit (7 m) 43 2,234 1,371 Net profit (7 m) 102 1,342 911 Earnings per share (7) 0.19 2.59 1.83 After-tax return on equity (%) 0.9 12.4 9.3 Cost/income ratio before provisioning (%) 82.4 65.2 68.5 Income statement1) Pre-tax profit (7 m) 43 1,018 1,371 Earnings per share (7) 0.19 1.10 1.83 After-tax return on equity (%) 0.9 5.3 9.3 Cost/income ratio before provisioning (%) 82.4 76.3 68.5 31.12.2001 31.12.2000 31.12.1999 Balance sheet Balance-sheet total (7 m) 501,312 459,662 372,040 Risk-weighted assets according to BIS (7 m) 203,606 220,160 187,709 Equity (7 m) 11,760 12,523 11,141 Own funds (7 m) 23,628 23,653 20,103 BIS capital ratios Core capital ratio (%) 6.2 6.5 6.3 Own funds ratio (%) 10.3 9.9 9.7 Commerzbank share Number of shares outstanding (million units) 541.8 541.8 513.6 Share price (7, 1.1.–31.12.) high 33.60 47.49 36.70 low 14.08 28.05 24.04 Book value per share (7) 21.94 23.48 21.70 Market capitalization (7 bn) 9.47 16.74 18.72 Staff Germany 31,899 31,716 30,557 Abroad 7,582 7,328 4,313 Total 39,481 39,044 34,870 Short/long-term rating Moody’s Investors Service, New York P-1/A1 P-1/AA3 P-1/AA3 Standard & Poor’s New York A-1/A A-1+/AA- A-1+/AA- Fitch IBCA, London F1/A+2) F1/A+ F1+/AA- 1) 2000 figures without proceeds from comdirect bank AG; 2) as of February 7, 2002: A annual report 2001 commerzbank group ”With the first-time application of IAS 39 in connection with our overall accounting, we have met the demand for even greater transparency”. Klaus-Peter Müller April 2002 Chairman of the Board of Managing Directors A bank should and indeed must be primarily a provider of services. Its market success is gauged first and foremost by how well it performs this function. The yardstick is customer satisfaction, to which we at Commerzbank are wholeheartedly committed. Although this formula should be generally valid, for customers, analysts, investors and the broader public the yardstick for success has changed several times over the past few decades. It was often mere size, for instance a bank’s total assets, its total lending and deposits, the number of branches, customers or employees it had. The capital base has also been used as a means of assessing banks’ relative positions. After years of intensive debate on shareholder value, success today is mainly determined by market capitalization, the value of a company on the stock market. This value primarily depends on earnings, though not solely on current income, but rather also on that which is thought likely for the company in the future. In this respect, we have apparently not yet managed to convince the capital markets. Some claim that we lack the necessary size to hold costs down to a competitive level. Others think that the Bank’s profile or identity cannot be distinguished well enough. We take critical comments from shareholders, customers, analysts or the media very seriously. But we are convinced that we should not fall into line with short-lived trends and opinions; rather, we should syste- matically pursue and realize the strategy outlined in our CB 21 project. We want to prove to you – and I am sure that we will – that this Bank is finding its way back onto the path of success, without losing sight of its core goal of a high level of customer satisfaction. Who or what is Commerzbank? We see ourselves as an efficient provider of financial services for demanding private customers in Germany. We are also the creative relationship bank for the successful German Mittelstand, for major corporates and institutions in Europe as well as multinationals from all over the world. This description also defines our core target groups, where we already have acceptable market shares, that can be raised further, however. Above all, we want to be the number one bank for Germany’s strong Mittelstand companies. It was never our ambition to be present as a universal bank every- where in the world. In regional terms, we are concentrating on Germany, where we provide integrated financial services, operating a nationwide branch network to advise and sell our products to all customer groups. In corporate business, we also look upon Western, Central and Eastern Europe as our core market, and North America as well, where we have a long tradition that has above all generated strong earnings. Thirdly, alongside this focus on target groups and regions, we con- sider it necessary to concentrate our range of products. For private customers, we intend to focus primarily on the accumulation and management of assets. It is very important that the Bank is easy to reach, which means that online access also has high priority. Here and in discount brokerage, thanks to our early move in Germany, we have sizeable market shares, which need to be defended and expanded. For corporate clients and institutions, we are concentrating on integrated commercial and investment-banking products and we are strengthening our position as a specialist for debt and risk management. All the measures required for implementing this focused strategy were approved and set in motion last year. We will keep you informed of the progress made. Even more important for you, however, is an answer to the question when Commerzbank will be able to present good earnings figures again and achieve a return in line with market conditions on its equity. Let me briefly look back and remind you that the Commerzbank Group was riding on a wave of success at least until mid-2000. In the first half of 2000, we had achieved all our ambitious goals as regards the return on equity and the cost/income ratio. Admittedly, the business and financial-market setting was favourable at that time. But we are not a fair-weather bank that is incapable of mastering more difficult conditions. It is true that we were hit surprisingly hard by the bad- weather front. Expecting a continued rise in earnings, we had budgeted strong cost increases in autumn 2000, which in view of the dramatic deterioration of conditions on the stock market and the economic setting could no longer be justified last year. Our reaction was prompt and systematic, however. With our cost- cutting offensive, we have been tackling the increase in costs since last year, and the first successes were already registered in the final quarter. In the current year, we intend to reduce overall operating expenses to their 2000 level. These efforts are being flanked by an earnings offensive. The strategic goals presented last year as part of our CB 21 project remain valid; however, some of them have to be adapted to the changed environment. All the measures taken together will be reflected in sinking costs and rising earnings this year. But, in our planning, we have not assumed that substantial support or relief will soon be forthcoming from improved overall economic conditions and more buoyant financial markets. Both of these would be welcome, but we have to be successful in a weaker environment as well. This is why we are persisting with our efforts to reshape the Commerzbank Group as a lean, flexible and modern provider of financial services in the heart of Europe. In the course of this year, the activities of Rheinhyp are to be merged with those of Eurohypo and Deutsche Hyp to form a strong and also internationally active, new Eurohypo. In transaction banking, we are pursuing a highly promising course in our search for cost-reducing cooperation. And in asset management, the focus on core business should see us return to black figures this year. At this year’s Annual General Meeting in Frankfurt-Höchst on May 31, we will inform you of the progress made in this respect. We will also request your approval for certain capital-raising measures mainly designed to improve our commercial flexibility. These points are described in detail in the invitation to the AGM. On account of the especially weak second half of 2001 and the additional expense of restructuring provisions, it was difficult for us to decide upon a dividend payment. In view of the more positive ten- dencies in operative business, we decided to propose payment of a dividend of 70.40 per share. For one thing, this enables us to offer investors a steady return on their investment; for another, it is an expression of our confidence for the years ahead. Commerzbank has an outstanding reservoir of talented and committed employees. Over the past months in particular, we have been able to recruit highly-qualified banking specialists, men and women who gladly identify with us and with our strategic goals. Our work is focused more than ever on our customers, whom we try to satisfy every day afresh. Like all our employees and executives, the Board of Managing Directors approaches the challenges of the current year with confidence and determination. I ask you to continue to place your trust in us. contents Management report Survey of the Commerzbank Group 4 Retail banking and asset management 12 Corporate and investment banking 20 Staff and welfare report 30 Our share, strategy and outlook 34 Risk report 40 Financial statements of the Commerzbank Group 2001 Overview 63 Income statement 65 Balance sheet 67 Statement of changes in equity 68 Cash flow statement 70 Notes 72 Auditors’ certificate 149 Report of the Supervisory Board 150 Boards, membership of other boards, Group managers, branch managers and managers of Group companies Supervisory Board 153 Central Advisory Board 155 Board of Managing Directors 156 Regional Board Members 158 Group managers 159 Managers of domestic main branches 160 Managers of foreign branches 161 Board of Trustees of Commerzbank Foundation 161 Managers of domestic subsidiaries 162 Managers of foreign subsidiaries 163 Regional Advisory Committees 164 Membership of other boards 177 Tables and charts Commerzbank worldwide 28 Structure of the Commerzbank Group 61 Glossary 182 Index 187 Business progress 1968-2001 188 / ideas ahead / By nature, people are creative and inventive.

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