Commerzbank 4.0: simple – digital – efficient Winning in the German Retail Banking Market 10 May 2017 Commerzbank AG | Michael Mandel | Member of the Board of Managing Directors | London
Commerzbank 4.0 simple – digital – efficient Achieving profitable growth and gaining market share Customers Net interest / commission income (GER*; € m) (GER*; m) 12.4 3,607 NII - deposits 3,331 12.2 562 NII - loans / other 705 NCI 1,301 1,066 916 11.0 1,744 122 1,560 308 486 Y/E 2012 Y/E 2016 1Q17 2013 2016 1Q17 Assets under Control Loans to private customers – growth ( GER*; € bn ) vs. market 348 338 7 Source: Bundesbank 266 104 102 6 81 82 81 4 60 3 3 2 155 162 125 Y/E 2012 Y/E 2016 1Q17 Commerzbank* German market Deposits Loans Securities CAGR (%) 12-16 CAGR (%) 14-16 2016 (%) *: Segment Private and Small Business Customers, excl. mBank; 1 Commerzbank AG | Michael Mandel | Member of the Board of Managing Directors | London | 10 May 2017 Commerzbank: PSBC excl. Small Business Customers, mBank
Commerzbank 4.0 simple – digital – efficient Commerzbank 4.0 – our strategy to accelerate growth Net new New Small Business Customer segment Customer growth Highly successful marketing campaigns ONE platform Partnership banking expanded Multi-channel Platform ‘ONE’ Innovative & digital Simplified product portfolio Products Digital product range DCRM Digital Customer Multi-Channel = Relationship Flagship / City branch formats rolled-out Digital & Personal Management Client-centric advisory model 2 Commerzbank AG | Michael Mandel | Member of the Board of Managing Directors | London | 10 May 2017
Commerzbank 4.0 simple – digital – efficient … and we are delivering! › Own digital consumer finance platform › New ‘ CobaHyp ’ platform for mortgages › New branch strategy developed › New product bundle for Small Business › Platform ONE rolled out in branches Customer segment, e.g. offering for founders › Online broker OnVista acquired › Digital Asset Management with Robo-Advice › Partnership banking boosted, e.g. with Tchibo, › Implementation of Advanced Analytics › Mobile mortgage app Rewe, Amazon Prime, Lufthansa 2013 - 2016 1Q17 2017 2018 - 2020 › Platform ONE rolled out in customer › Simplified and digital product offering in place service center › Platform ONE available in all channels › Digital offering extended, e.g. Direct Debit › Client-centric advisory model › Dedicated Small Business Customer business Card and PremiumFondsDepot › 3 Flagships and 4 City branches opened model implemented 3 Commerzbank AG | Michael Mandel | Member of the Board of Managing Directors | London | 10 May 2017
Commerzbank 4.0 simple – digital – efficient Strong digital capabilities are the backbone of our growth strategy We go ONE: our vision of multi-channel Digital CRM revolutionizes customer banking interaction Online Leads / Non- Mobile + customers Digital customer CRM Self- Hotline Service Branch › Milestone in our multi-channel banking strategy – › Effective tool to meet client expectations and one bank and intelligently cross-linked sales reduce churn rate with promising results in pilots › Improved levels of customer satisfaction reduced channels › ONE is the first step to providing all channels with client losses by 25% › 10% more products sold online per client identical data Superior digitalization strategy leads to lower churn and higher sales 4 Commerzbank AG | Michael Mandel | Member of the Board of Managing Directors | London | 10 May 2017
Commerzbank 4.0 simple – digital – efficient Customer growth strategy is based on sound economics Net new customers Customer characteristics All Clients (GER*; k) (Commerzbank*) New Clients (2013-16) 63% 151 146 58% 51% 49 47% 39 39% 68 62 35% 59 54 14% 11% Ø 1Q13- 1Q16 2Q16 3Q16 4Q16 1Q17 Ø Age Kunden- Payment Online / Loan 4Q15 kompass account Mobile Banking New customers show better characteristics than existing client base › Commerzbank 4.0 strategy is bearing fruit – customer growth has significantly accelerated since 4Q16 › Younger new clients with higher online banking affinity underscore our digitisation strategy › New customers show a higher credit product penetration – empirically securities business follows over time *: Segment Private and Small Business Customers, excl. mBank; 5 Commerzbank AG | Michael Mandel | Member of the Board of Managing Directors | London | 10 May 2017 Commerzbank: domestic branch business
Commerzbank 4.0 simple – digital – efficient Quality of our client base improving over time Favourable profile of existing client base New clients – i ncreasing ‘affluent’ share (2016; source: FMDS) (Commerzbank*) Commerzbank* Affluent clients German population (Ø) Other clients ~3.250 18% 3,4 2016 76% 24% ~2.800 2,8 21% 79% 12% 2013 Financial Net # of banking Wealth > Household products 50 € k Income ( € ) used Commerzbank clientele have above-average income and wealth *: Commerzbank: domestic branch business 6 Commerzbank AG | Michael Mandel | Member of the Board of Managing Directors | London | 10 May 2017
Commerzbank 4.0 simple – digital – efficient New customer earns about the same revenues as an existing customer within two years Ø Revenue per Ø enue per new new cus customer* tomer* (in € ) 2013 2014 2015 2016 Year 1 New Year 2 Year 3 Year 4 customers 94 243 268 280 2013 New Year 1 Year 2 Year 3 customers 94 294 319 2014 New Year 1 Year 2 customers 96 337** 2015 New Year 1 customers 83 2016 New customers earn their acquisition costs ( € 150-250) in the second year *: domestic branch business, excl. income from deposits 7 Commerzbank AG | Michael Mandel | Member of the Board of Managing Directors | London | 10 May 2017 **: includes 57 Euro not directly customer specific revenues
Commerzbank 4.0 simple – digital – efficient Growth potential from both new customers and existing clientele › Largely cost free current Revenue € per customer* 1 Perspective account as anchor 1.000 2 Loans 2020 product offers sizable cross-selling potential in 39% lending and securities 750 › Rising loan volumes 2 28% almost fully offset 500 declining deposit margin – Securities 2 commission income from securities drives revenues 250 3 Deposits › Deposit base offers 3 Size of bubble 1 Payments 13% 20% sizable revenue potential represents 0 proportion of if interest rates normalize – no change expected revenues 0 25 50 75 until 2020, however Customer penetration (%) Current account means owning primary banking relationship *: domestic branch business 8 Commerzbank AG | Michael Mandel | Member of the Board of Managing Directors | London | 10 May 2017
Commerzbank 4.0 simple – digital – efficient Innovative digital product offering in place Consumer finance now Commerzbank branded › After split of Joint Venture ~ € 3bn consumer loans are transferred to own platform @ › Interest income replaces commission income Security business pipeline › Attractive products to come in 2017 Digital Asset- › Funds based advisory mandates – funds without front-end fee Management › Digital Asset Management – incl. Robo-Advice (first at comdirect) Mobile Mortgage App › Range of digital services supporting mortgage lending › App offers budget calculation, search engine, valuation of property, full digital financing Yesterday > 400 – Tomorrow < 150 products › Simplification of product portfolio reduces complexity and raises efficiency › Focus on competitive strengths such as security business and rapidly growing consumer & mortgage lending › Portfolio already streamlined by > 100 products by 2Q17 9 Commerzbank AG | Michael Mandel | Member of the Board of Managing Directors | London | 10 May 2017
Commerzbank 4.0 simple – digital – efficient Digital consumer loans represent an important growth driver Consumer Cons umer finance inance new bus new busines iness › High margin product with strong volume olume growth potential in low rate ( € bn) 6.0 environment › Everywhere - 24 hrs / 7 days › Started in branches in April, 1 complete roll-out by end of June – fully integrated into ONE › Online in H2 2017, in digital 2 2.3 end-to-end format – offered also to Small Business customers › Product variations for Point 3 of Sale ( POS ) and car financing by year-end 2017 2016 2020e 10 Commerzbank AG | Michael Mandel | Member of the Board of Managing Directors | London | 10 May 2017
Commerzbank 4.0 simple – digital – efficient Our multi-channel banking approach – the future is digital and personal ~ 1,000 branches – but different First cost-efficient City branch opened in December 2016 City Flagship branch City branch City City branch branch City „ONE“: one branch platform for Flagship all channels City branch Promising customer response – even higher NPS and rising online banking penetration › Up to 30m customers could loose their branch in coming years – two-thirds prefer a bank with branches › We will keep our countrywide branch network – our answer: intelligent mix of Flagship & City branches › Flagships focus on high quality advisory service, cost- efficient City branches cover 96% of clients’ needs 11 Commerzbank AG | Michael Mandel | Member of the Board of Managing Directors | London | 10 May 2017
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