Commerzbank launches roll-out of 'Strategy 2024' and plans to complete first important restructuring steps this year

DJ Commerzbank launches roll-out of 'Strategy 2024' and plans to complete first important restructuring steps this year

Commerzbank Aktiengesellschaft (CZB) 
Commerzbank launches roll-out of 'Strategy 2024' and plans to complete first important restructuring steps this year 
11-Feb-2021 / 07:03 CET/CEST 
Dissemination of a Regulatory Announcement, transmitted by EQS Group. 
The issuer is solely responsible for the content of this announcement. 
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- Closure of a further 190 branches planned in current year 
- More than 80% of headcount reduction already targeted for year-end 2023 
- Return to positive operating profit planned for 2021, operating profit of EUR2.7 billion planned for 2024 
- Resumption of dividend payments planned for financial year 2023 
- CEO Manfred Knof: 'We want to be sustainably profitable and shape our own destiny as an independent force in the 
German banking market' 
As early as this year, Commerzbank intends to complete key restructuring steps announced in its programme 'Strategy 
2024' on 3 February 2021. The aim of the restructuring is to become the direct and advisory bank for Germany and to 
further strengthen its leading position as the Bank for the German Mittelstand and a strong partner for around eleven 
million private and small-business customers. 
After the financial year 2020 was negatively affected by the effects of the coronavirus pandemic and the provision set 
aside for the planned restructuring, the Bank is aiming to return to a positive operating result already in the current 
year. Over the coming four years, costs will be substantially reduced, and profitability will be significantly 
increased on the basis of a detailed implementation plan for the new strategy programme. Commerzbank is targeting an 
operating profit of around EUR2.7 billion and a return on tangible equity (RoTE) of around 7% for 2024. The resumption of 
dividend payments is planned for the 2023 financial year. There is the potential to return overall up to EUR3 billion to 
shareholders in the years 2023 and 2024 in the way of dividends or share buybacks, subject to a successful 
transformation and prior permission of the European Central Bank. 
'We want to be sustainably profitable and shape our own destiny as an independent force in the German banking market,' 
commented Manfred Knof, Chairman of the Board of Managing Directors of Commerzbank. 'To achieve this aim, we need to 
carry out an in-depth restructuring of the Bank over the coming years. Our 'Strategy 2024' represents customer 
centricity, digitalisation, sustainability, and profitability. We will consistently and rapidly implement our plan.' 
As a result of 'Strategy 2024', Commerzbank is targeting a reduction in costs by EUR1.4 billion or around 20% in 2024 by 
comparison with 2020. One third of the envisaged savings are already planned for implementation by 2022. At the same 
time, revenues are expected to remain largely stable - mBank will continue its revenue growth. 
Commerzbank will reduce approximately 10,000 full-time equivalents in gross terms as announced. At the same time, the 
recruitment of around 2,500 full-time positions is planned. This will allow the Bank to further reduce its costs, among 
others for external service providers. In total, the net reduction amounts to around 7,500 full-time positions. The 
necessary framework agreements are expected to be concluded with the Group Works Council until the Annual General 
Meeting on 5 May 2021. 
Private and Small-Business Customers: Increase in profitability 
Commerzbank has defined ambitious goals in both business segments for 2024. It targets a pre-tax return (RoCET) of 25% 
in the Private and Small-Business Customers segment including mBank and a cost-income ratio (CIR) of 59% including 
compulsory contributions. 
The Bank will achieve this by further developing the segment into an attractive combination of a highly efficient 
direct bank and first-class advisory offering. This will combine the strengths of comdirect with the advisory expertise 
of Commerzbank. Commerzbank will reduce the number of branches from the current level of 790 to 450 locations. At these 
branches, customers will receive advice on issues like account, card, and consumer credit, as well as being supported 
in the use of digital offerings. Private and small-business customers with a greater requirement for advisory services 
will receive comprehensive personal support and individual solutions on all issues related to investing and financing 
at 220 of these locations. Commerzbank intends to significantly expand its business with affluent customers and 
small-business customers in Private Banking and Wealth Management. 
Corporate Clients: Significant efficiency gains 
In the Corporate Clients business, Commerzbank is targeting a pre-tax return (RoCET) of 9% based on stringent RWA 
management and is aiming for a cost-income ratio (CIR) including compulsory contributions of 62% in 2024. 
In future, the Bank will focus on the German Mittelstand and large corporates and on international customers with 
German connectivity. Commerzbank will only provide advisory services for further international corporate clients if 
they are operating in selected future-oriented sectors such as mobility, sustainability, communications, life sciences, 
and capital goods. The Bank will continue to maintain its responsibility as a strong financing and hedging partner for 
German companies conducting import and export business around the world. Corporate clients will continue to be offered 
personal advisory services and a network of regional locations. At the same time, an innovative direct bank offering 
for corporate clients will gradually be established with a standardised product and advisory offering. 
Fast implementation of the new strategy 
'Strategy 2024' is underpinned by clearly defined measures and milestones. The implementation plan envisages the 
closure of a further 190 branches over the course of 2021. The Bank will close a further 150 branches in 2022 and 2023 
and establish the central advisory centres for the Private and Small-Business Customers segment. At the same time, the 
Corporate Clients segment will be largely digitalised, the product offering will be streamlined and the presence 
overseas will be adapted to the customer structure. More than 80% of the envisaged headcount reduction is set to be 
completed by year-end 2023. The cost savings are planned to start taking full effect in 2024. 
Provision for planned restructuring and coronavirus crisis negatively impacted 2020 results 
In the financial year 2020, Commerzbank established the foundation for the restructuring. With a charge of EUR814 
million, the Bank booked a substantial proportion of the planned restructuring expenses of around EUR1.8 billion. Apart 
from the restructuring charge, the Bank incurred the impairment of goodwill and other intangible assets of around EUR1.6 
billion, which, however, had no effects on the regulatory capital base. This led to a net result of minus EUR2,870 
million (2019: plus EUR585 million). 
In 2020, the operating business was clearly impacted by the coronavirus pandemic. Commerzbank took EUR505 million 
additional provisions for coronavirus effects ('top-level adjustment') anticipated for 2021. Furthermore, legal 
provisions for foreign-currency loans at mBank were increased by EUR229 million. Together with negative exceptional 
revenue items, this led to an operating result of minus EUR233 million in 2020 (2019: plus EUR1,253 million). 
Despite the net loss, the Common Equity Tier 1 ratio (CET 1 ratio) amounted to 13.2% at the end of 2020 (year-end 2019: 
13.4%) and, with around 370 basis points, remained clearly above the minimum regulatory requirement of 9.5% (MDA 
threshold). 
'We have cleaned-up our balance sheet and made provision for an economic environment that continues to be uncertain,' 
said Bettina Orlopp, Chief Financial Officer of Commerzbank. 'Our comfortable capital position gives us adequate 
financial leeway for the implementation of our 'Strategy 2024' over the upcoming years.' 
Stable underlying revenues - high quality of the loan book 
Excluding the EUR229 million increase in provisions for foreign currency loans at mBank, underlying revenues continued to 
remain almost stable at EUR8,447 million (2019: 8,615 million) This was in particular due to net commission income, which 
the Bank increased by almost 9% thanks to a strong securities business. It more than compensated the burden from the 
interest rate environment. Including negative exceptional items and valuation effects, Group revenues decreased to 
EUR8,186 million (2019: EUR8,639 million). 
Administrative expenses were reduced by 2.4% to EUR6,160 million (2019: EUR6,313 million) through effective cost 
management. This was driven by the net headcount reduction of around 900 full-time equivalents and savings in expenses 
for advertising and business travel and lower depreciation. This contrasted with a further increase of compulsory 
contributions by 13% to EUR512 million. Nevertheless, costs came down overall to EUR6,672 million (2019: EUR6,766 million) 
and were therefore around EUR200 million below the original expectation for 2020. 
Against the background of the global pandemic, the risk result in 2020 rose to minus EUR1,748 million (2019: minus EUR620 
million). This includes negative impacts from the coronavirus pandemic amounting to EUR961 million. The quality of the 
loan book at year-end continues to be high with a non-performing exposure ratio (NPE ratio) of only 1.0%. 
Corporate Clients negatively impacted by coronavirus crisis - Lower effects on private customers 
The Private and Small-Business Customers (PSBC) segment again performed well in its customer business in 2020. Loan 
volumes in the domestic market grew by EUR8 billion to EUR112 billion. The volume of mortgage lending alone increased by 7% 
to EUR86 billion on the back of record high new business volumes. The securities volume experienced strong growth of EUR20 
billion to EUR177 billion, of which net inflows amounted to around EUR12 billion. 

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February 11, 2021 01:04 ET (06:04 GMT)