1 > Nine-month report 2012 Sights set firmly on growth and result
2 > Key figures of comdirect group Change in % Customers, assets under custody and key products comdirect group* Customers number 2,742,466 2,630, Custody accounts number 1,706,438 1,683, Total assets under custody in million 47,912 41, of which: portfolio volume in million 36,384 30, of which: deposit volume in million 11,528 10, business-to-customer (B2C) business line Customers number 1,692,941 1,632, Custody accounts number 799, , Current accounts number 870, , Tagesgeld PLUS ( call money plus ) accounts number 1,316,338 1,235, Total assets under custody in million 27,288 24, of which: portfolio volume in million 15,863 14, of which: deposit volume in million 11,425 10, Credit volume in million business-to-business (B2B) business line Customers number 1,049, , Custody accounts number 906, , Total assets under custody in million 20,625 16, of which: portfolio volume in million 20,522 16, of which: deposit volume in million Orders and order volume Q1-Q3 Q1-Q3 Executed orders number 13,106,096 13,641, of which: B2C number 6,552,321 6,929, of which: B2B number 6,553,775 6,711, Average order activity per custody account (B2C annualised)** number Order volume per executed order (B2C)** in 4,712 5, Earnings ratios Q1-Q3 Q1-Q3 Net commission income in thousand 125, , Net interest income before provisions in thousand 117, , Administrative expenses in thousand 173, , Pre-tax profit in thousand 72,839 78, Net profit in thousand 53,932 57, Earnings per share in Return on equity before tax (annualised) 1) in % Cost/income ratio in % Balance sheet key figures Balance sheet total in million 12,248 11, Equity in million Equity ratio 2) in % Regulatory indicators under Basel II 3) Risk weighted assets 4) in million Eligible amount for operational risks in million Core capital in million Own funds for solvency purposes in million Own funds ratio 5) in % Employees figures Employees number 1,161 1, Employees full-time basis number 1, , *) B2C: comdirect bank AG; B2B: ebase GmbH **) Excluding CFD trades 1) Pre-tax profit/average equity (excluding revaluation reserve) in the reporting period 2) Equity (excluding revaluation reserve)/balance sheet total 3) These figures are calculated on the basis of internal calculations; publication is voluntary and based on national implementation conversion and the figures are not reported to the Supervisory Authority 4) Risk weighted assets in accordance to Section 10c of the German Banking Act (KWG) (intragroup receivables are zero weighted) 5) Own funds for solvency purposes/(risk weighted assets x eligible amounts for operational risks)
3 FOREWORD 1 Dear Shareholders, The comdirect group remained on course in the third quarter. Despite increased investment in growth in the third quarter, we have our sights set firmly on our pre-tax profit target of 85m to 90m for The framework conditions are still challenging. Even though events in recent weeks point to a small reprieve in the ongoing euro crisis, with the ECB rescuing the euro, the bailout system deemed constitutional, Europe s banks passing the stress test and the DAX climbing to a two-year high, negative factors continued to prevail for our business operations. The ongoing fall in money market interest rates is weighing on the deposit business, while declining order numbers show that many private investors do not yet trust the brighter mood in the capital market and are holding back on investments. The comdirect group achieved a solid result in these unfavourable and difficult circumstances. At 72.8m at the end of the first nine months, pre-tax profit is down 7.4% on the previous year. As expected, net commission income was significantly lower than the high figure achieved in the first three quarters of the previous year. Net interest income slightly surpasses the respective figure for 2011, but the momentum has notably slowed over the course of year. The quarter also deserves to be called solid, because we maintained our growth course and further increased the tempo at the same time. Net fund inflows in deposits stand at some 860m in total since the start of the year, with almost half attributable to the third quarter. This shows that if you offer convincing products and services, you can achieve growth even in a low interest rate environment. The best example of this is our fee-free current account with satisfaction guarantee, which we have enhanced once again with the innovative Visa card, a credit card providing secure contactless payments as well as an SMS info service. In addition, the comdirect mobile app was significantly expanded and moreover can now be used on all smartphones. With the transparent and comprehensible offering of a modern full-service bank, we are also attractive to those customers who have so far not been open to the idea of direct banks. We also intend to secure our leading position in online brokerage in Germany through special offers for ambitious traders. Since the third quarter we have been providing an augmented information offering which now also includes real-time prices for all stock exchanges in
4 2 Germany. Investment in growth has also paid off here. In the B2C business line, increases were recorded in both the number of custody accounts and the portfolio volume, where alongside ongoing net investments, the rise was also boosted by price effects. In my opinion, the fact that the comdirect group has achieved a record level of assets under management of almost 48bn in the midst of the euro crisis demonstrates the resilience of our business model and high level of confidence on the part of our customers. Finding the balance between a self-explanatory, quasi barrier-free range of products for all banking customers and ever more efficient and faster trading and information platforms for sophisticated investors: this will continue to be the key challenge facing the comdirect group in the future and will shape our development in the years to come. comdirect is and remains a growth company, but one that at the same time places high demands on its profit performance in the short term. Sincerely yours, Dr. Thorsten Reitmeyer
5 INTERIM MANAGEMENT REPORT 3 > Interim management report as of 30 September 2012 Market environment Overall assessment of market environment Developments in the economic framework conditions were once again largely unfavourable for the comdirect group in the third quarter. Many private investors refrained from new investments despite increasingly friendlier stock markets and this affected the number of orders and resultant commission in brokerage. The further fall in money market interest rates and returns in the bond market continued to tightly constrain the interest margin in banking, even after the intervening adjustments in terms and conditions. However, the low interest rate environment had a positive impact on the demand for building finance. Macroeconomic framework conditions Framework conditions for banking Preliminary figures suggest that the slowdown in the global economy continued in the third quarter. In response to this, central banks are maintaining a policy of cheap money, but in the long term this could stoke inflation and hamper the propensity to save on the part of private households. Following the 25 basis point cut in the key lending rate to 0.75% by the European Central Bank in July, there was a significant slide in three-month EURIBOR as well which stood at 0.22% on 30 September. At 0.70% on average for the first nine months of the year, it has almost halved compared with the respective figure for 2011 (1.36%). It is thus becoming increasingly difficult to generate an adequate interest margin under these framework conditions. In the bond markets, the situation notably eased in September following the announcement by the European Central Bank (ECB) that it would buy the bonds of beleaguered euro countries on an unlimited basis if necessary in order to rescue the euro. While interest rates for triple A states persisted at historically low levels, spreads for countries with lower credit ratings reduced sharply. Yields have also fallen on corporate bonds. This environment meant that it was only possible to reinvest maturing securities at less favourable interest rates. Consequently, the Treasury portfolio, which focuses on high ratings, was characterised by overall declining yields. Framework conditions for brokerage The measures taken by the ECB in the third quarter of 2012 to combat the euro crisis have led to an increasingly friendly mood in the equity markets. The confirmation that the European Stability Mechanism (ESM) is constitutional also had a positive impact. At 7,216 points, the DAX was up 12.5% on the middle of the year. Despite rising prices, trading activity decreased in the third quarter. In terms of value, the trading volume in the German spot market (XETRA and Frankfurt) fell by 6.3% compared with the second quarter of By comparison with the previous year (first nine months), the number of orders relating to equities was down by 17.4%. Orders for exchange traded index funds funds (ETF), commodities (ETC) and notes (ETN) were down by 20.0%. In derivatives trading, stock exchange turnover was 27.5% lower than the respective figure for The stock exchanges in Stuttgart (Euwax) and Frankfurt (Scoach) had to record losses in the first and third quarter in particular. The retail funds included in the BVI figures recorded inflows of 10.4bn in the period January to August 2012, primarily as a result of a good performance by bond funds. Hybrid funds and property funds were also up, while equity funds, money market funds and guaranteed funds in particular suffered considerable losses.
6 4 To summarise, market developments were predominantly unfavourable for generating order commission in the reporting period. However, commission on portfolio holdings in funds business was positively influenced by the movement in prices. Framework conditions for advice The market situation for Baufinanzierung PLUS building finance advice remains positive. comdirect s Building Finance Sentiment Index, which is calculated in conjunction with opinion research institute Forsa, stood at points at the start of September (July 2012: points). A value greater than 100 indicates a high level of willingness to take out building finance loans. According to a Forsa survey carried out on our behalf, in August 2012 one in two Germans expected property prices to continue to rise. Industry framework conditions During the reporting period, the direct banking market was dominated by fierce competition. Active traders were wooed with attractive terms and conditions, especially flat fees, which adversely affected profitability in brokerage. In our opinion, growth potential is currently offered primarily by branch bank customers. They are becoming increasingly open to the idea of direct banks, but only if the product offering, terms and conditions, service quality and security standards are all equally convincing. Number of orders on Deutsche Börse* (in billion) Q2 12 Q3 12 9M 11 9M 12 Source: Deutsche Börse AG ETF/ETC/ETN Equities * XETRA and Frankfurt Stock Exchange Business performance and earnings situation at the comdirect group Overall assessment of business performance and earnings situation In the third quarter, the comdirect group again remained on course to reach its pre-tax profit target of 85m to 90m for 2012 as a whole. As forecast, earnings in the third quarter were significantly down on the figures for the first half of the year. In addition to the downturn in net interest and commission income, this was primarily due to the rise in administrative expenses, reflecting our investment in growth. Allocations to provisions were also higher following the switch from Visa debit card to a credit card with weekly debiting (see page 8). Despite the crisis-ridden environment, the year-on-year trend in earnings was stable. Net interest income was still up on the previous year; in the third quarter, pleasing growth in deposits and adjustments to terms and conditions partly offset the impact of declining market interest rates. With regard to net commission income, we made up for some of the decrease in trades with higher commission from our funds business and payment transactions. The stable development in earnings is due to the consistent implementation of our growth strategy (see annual report 2011, pages 38 to 39), which is reflected in the rise in the number of customers and net inflows in customer accounts and custody accounts. At the end of September, assets under management reached the highest level in the company s history. Business performance Our long-term investment in growth also had a positive impact in the third quarter. The number of customers rose by 20.7 thousand in the period July to September, almost twice as fast as in second quarter. Strong growth in our direct banking business has more than compensated for the slight decline in end customers in B2B business. At the end of September, the comdirect group had 2,742.5 thousand customers, around thousand more than at the end of 2011 (2,630.5 thousand).
7 INTERIM MANAGEMENT REPORT 5 Number of customers of comdirect group (in thousand) Total assets under custody of comdirect group (in billion) , ,610 1,633 1, Customers B2B Customers B2C Deposit volume Portfolio volume In the B2C business line, we have increased the number of customers in the year to date by 60.5 thousand, or 3.7%, to 1,692.9 thousand (year-end 2011: 1,632.5 thousand). The third quarter accounts for 47% of this rise. We have been actively promoting our current account with satisfaction guarantee, and since most customers opening this account did so in combination with a Tagesgeld PLUS account, both products recorded correspondingly strong growth. In the B2B business line, the number of end customers fell slightly again as a result of persistent weak demand for funds in the third quarter. However, by comparison with the year-end, ebase recorded a substantial rise of 5.2% to 1,049.5 thousand customers (year-end 2011: thousand). Assets under custody in the comdirect group reached a record level of 47.9bn as of 30 September 2012, up 15.2% on the figure at the end of 2011 ( 41.59bn). Of this, 36.38bn was attributable to the portfolio volume. The rise of 17.8% versus the end of 2011 ( 30.88bn) stemmed more or less equally from net fund inflows and price effects. With 1.71 million custody accounts (end 2011: 1.68 million), the comdirect group remains the market leader in online securities business for modern investors in Germany. Earnings situation At the end of the first nine months, pre-tax profit for the comdirect group totals 72.8m (2011: 78.6m). The decline of 7.4% was due to development in the third quarter: the quarterly result was down by 30.0% to 19.7m compared with the previous year s very strong figure ( 28.2m), which was characterised by a large number of trades. In addition to weaker net commission income, this was essentially because of higher provisions (see page 6) and the modest increase in administrative expenses. Compared with the first nine months of 2011, at 250.4m earnings (before provisions) were almost on a par with the previous year s figure ( 249.8m). Of this, 119.9m (previous year: 106.7m) was attributable to income generated by the deposit business and managing the Treasury portfolio: net interest income, the result from financial investments, trading result and the result from hedge accounting. Due to the decline in net commission income, this share of the comdirect group's total income advanced from 42.7% to 47.9%. While the development in earnings was largely stable, there was a slight increase in administrative expenses of 1.8%. This produces a rise in the cost/income ratio to 69.1% (previous year: 68.1%). Based on the pre-tax profit and the average equity in the reporting period (excluding the revaluation reserve), the return on equity amounted to 18.6% in the reporting period (previous year: 21.7%). The net profit for the period after tax stands at 53.9m (previous year: 57.5m) which equates to earnings per share of 0.38 (previous year: 0.41). In addition to the net profit for the period, the comprehensive income of the comdirect group of 97.9m (previous year: 36.6m) includes the change in the revaluation reserve. This reflects changes in the value of the Treasury portfolio resulting from market price fluctuations.
8 6 Pre-tax profit of comdirect group (in million) Earnings after tax per share (in ) Q2 12 Q3 12 9M 11 9M 12 Q2 12 Q3 12 9M 11 9M 12 Net interest income and provisions Despite a further fall in market interest rates, net interest income before provisions in the third quarter almost matched the level of the second quarter at 37.4m. The downturn in income was countered by a similar size decrease in expenses, which reflects the reduction in deposit interest rates. Net interest income for the first nine months amounted to 117.1m, up 6.2% on the previous year ( 110.2m). At 4.4m, expenses for provisions were significantly higher than in the previous year ( 1.0m). The rise was essentially due to the credit lines granted via the new Visa card (see page 8). In the third quarter, we therefore recognised provisions for possible loan losses. After provisions, net interest income stood at 112.7m (previous year: 109.2m). Result from financial investments The result from financial investments of 2.8m stems primarily from reallocations within the special funds. The previous year s figure ( 2.4m) was dominated in particular by losses on disposals and impairments on securities. Trading result and result from hedge accounting The result from hedge accounting of 2 thousand (previous year: 6 thousand) reflects the measurement effects from effective fair value hedges. These relate to the hedging of individual positions in the Treasury portfolio against a loss in value using interest rate swaps. As of 30 September the nominal volume of these interest rate swaps amounted to 118m. There was no trading result to report, as unlike the previous year ( 1.1m), no financial derivatives were used outside hedge accounting to manage the interest book. Net commission income Despite the lower number of trades in the B2C business line, net commission income in the third quarter was slightly up on the second. The decline in order commission was more or less balanced out by higher commission on portfolio holdings in funds business and on payment transactions. However, compared with the first nine months of 2011 ( 140.7m), net commission income decreased by 11.0% to 125.3m. This is because of extraordinarily active levels of trading in the previous year due to the crisis. Moreover, a greater share of trades in the current year was executed at reduced order fees, for example in CFD trading or as part of flat-fee campaigns. Other operating result At 5.2m, the other operating result significantly outstripped the previous year s figure ( 2.4m). The main reason is the cancellation of a service agreement with Commerz Direktservice GmbH, which is now no longer active at our Quickborn location. comdirect received compensation for the use of technical infrastructure, although a small extraordinary write-down was recognised here. Furthermore, the reversal of provisions and accruals led to higher earnings contributions than in the previous year. The other operating result also includes a payment from a sales partner.
9 INTERIM MANAGEMENT REPORT 7 Net commission income and net interest income (in million) Administrative expenses (in million) Net interest income before provisions Net commission income Q2 12 Q3 12 9M 11 9M Q2 12 Q3 12 9M 11 9M Depreciation Other administrative expenses Personnel expenses Administrative expenses Administrative expenses recorded only a slight increase on the previous year ( 170.1m) by 1.8% to 173.1m. This is primarily due to the modest rise in other administrative expenses. The increase of 1.9% to 110.0m at the end of the first nine months was due to higher communication and consulting expenses. The trade-related decline in settlement costs was more than offset. At 51.5m, personnel expenses almost matched the respective figure for The slight rise stems from the increase in the number of employees (see page 13). Depreciation includes the above extraordinary write-down on technical infrastructure and was consequently up by 0.4m at 11.6m. B2C business line Business development in brokerage Securities trading Our customers acted cautiously and held back from investing in securities in the third quarter. Due to the pronounced selling trend for bonds and funds, as well as cautious development in equities, the comdirect Brokerage Index remained below 100 points in the period July to September. For options and certificates, buying and selling was broadly balanced. comdirect s flat-fee offering in LiveTrading for these types of securities was once again very popular and consequently was extended until the end of The flat-fee terms and conditions were made even more attractive at the same time. The information offering for traders was also improved: real-time prices are now shown free of charge along with the number of securities available at these prices for all German stock exchanges, which now also include Tradegate Exchange. Furthermore, we upgraded the ETF Informer to include additional information. In July we introduced the button prescribed by law which draws users attention to the obligation to pay for securities transactions. Overall, we executed 6.55 million orders in the first nine months of 2012, 5.4% fewer than in the previous year. Very active CFD trading accounted for around 18% of trades. Securities turnover totalled 25.27bn, corresponding to a decline of 30% year-on-year.
10 8 Portfolio volume The portfolio volume in the B2C business line increased substantially in the third quarter. As of 30 September 2012, the portfolio volume amounted to 15.86bn, surpassing the level at the end of the year ( 14.32bn) by 10.7%. The rise stemmed more or less equally from net fund inflows and price effects. The portfolio volume is attributable to thousand (end 2011: thousand) custody accounts. We have thus gained around 16 thousand custody account customers since the start of the year. Business development in banking Deposit business In banking, comdirect once again stepped up the growth tempo by comparison with previous quarters. Our feefree current account with satisfaction guarantee continues to be the engine of growth in our banking offering. The number of current accounts was up by 95.5 thousand on the end of 2011 (774.5 thousand) at thousand. There was an increase too in the number of Tagesgeld PLUS accounts, usually opened in conjunction with a current account, which rose to 1,316.3 thousand (end 2011: 1,235.8 thousand). Among other things, ongoing strong demand here is due to a further improvement in the features offered by the current account. These include expanding mobile banking as well as the new Visa card, which provides enhanced convenience and security for payment transactions. For example, since July customers have been able to use the comdirect Visa card for contactless payments worldwide with the new Visa paywave function. This allows customers in Germany to pay for smaller purchases up to 25 without a signature or PIN. In addition to the highest encryption standard, the new Visa card offers additional service and security features. With weekly debiting that turns the previous debit card into a credit card and offers the maximum level of transparency for purchases, the innovative savings function for change and an SMS info service which sends the cardholder an SMS free of charge if transactions exceed 200 or are made in a different country, comdirect has created a credit card that is unique in the banking market. Online shopping too is now easier and safer with the comdirect account. As of September, customers are also able to use the fee-free internet payment system giropay. This means customers transact their payment exclusively with comdirect, while the goods are despatched immediately on the basis of the bank s payment guarantee. In mobile banking we have further developed our app for the iphone and ipad and data from money transfer slips can be entered into the money transfer mask by photo. comdirect s mobile app is now suitable for all mobile operating systems including Android. The functions have also been extended and for smartphone users now include access to the integrated ATM search and comprehensive market information. Executed orders B2C (in million) Portfolio volume B2C (in billion) Q2 12 Q3 12 9M 11 9M
11 INTERIM MANAGEMENT REPORT 9 Deposit volume B2C (in billion) Number of current accounts and Tagesgeld PLUS accounts (in thousand) , , , Tagesgeld PLUS accounts Current accounts As a result of the growth in deposits in current and call money accounts, the deposit volume at comdirect bank rose by more than 400m in the third quarter despite the intervening adjustment in deposit interest rates in line with market developments. We recorded a moderate decline in volumes in fixed-term and time deposit accounts. As of 30 September 2012, the deposit volume amounted to 11.43bn and was therefore 8.1% higher than the level at the end of 2011 ( 10.57bn). Lending and placement business The volume of utilisation of loans against securities and draws on overdraft facilities by our private customers amounted to 171m, down by 9.4% on year-end 2011 ( 189m). This was essentially due to the decrease in loans against securities. The modest rise in the third quarter is attributable to the new Visa card: transaction amounts are no longer debited daily but on a weekly basis, which means that customers are granted a short-term, interestfree credit. comdirect acts as an intermediary for building finance and consumer loans. Both offerings therefore had no impact on the bank s lending volume. Business development in advice Historically low interest rates and the stable economic situation in Germany continued to ensure strong demand for building finance offerings. The volume of building finance placed was almost on a par with the previous year at 325m at the end of the first nine months. Here we currently work with more than 250 financing partners. In addition to telephone and face-to-face local advisory services provided in the building finance offices in Berlin, Frankfurt/Main, Hamburg and Munich, the online live advice service launched in 2011 contributed significantly to this success. comdirect came first in the instant loan category in the building finance test carried out by finance magazine uro. At the end of the quarter, our Anlageberatung PLUS investment advice service was being used by around 2,000 customers (end 2011: around 1,800 customers). Assets under advice totalled 151m.
12 10 Earnings situation in the B2C business line The difficult market situation in banking and brokerage is reflected in the business line s result. At 65.1m, pre-tax profit was down 9.6% on the previous year ( 72.0m). The cost/income ratio increased from 66.4% to 67.7%. The earnings components related to the comdirect group s deposit business net interest income, trading result, result from financial investments and the result from hedge accounting stem mainly from the B2C business line. As in previous financial reports, for further details please see the explanation of these items at comdirect group level (see page 6). The decline in net commission income from 109.3m to 91.0m primarily reflects the decrease in trades. This effect was only compensated to a small extent by higher commission on portfolio holdings and on payment transactions. As at comdirect group level, the other operating result was influenced by the termination of a service agreement (see page 6). The increase in administrative expenses stems primarily from higher communication and consulting expenses. B2B business line Business development in the B2B business line Custody account customers and portfolio volume In the first nine months of 2012, the number of custody account customers climbed by 0.8% to thousand (end 2011: thousand), in part due to the takeover of custody account management for Generali Investments Deutschland. The slight downturn in the third quarter is attributable in particular to the difficult sales situation in investment funds. By comparison with the number of customers, there was a disproportionately high increase in the portfolio volume to 20.52bn (end 2011: 16.56bn). The rise results from net fund inflows and price effects. With development of the ebase Managed Depot custody account for standardised asset management complete, ebase has further expanded its product range in the first nine months of the year. Such standardised product solutions are very popular with independent financial advisers, including as a result of tighter liability regulations. The ebase Managed Depot custody account facilitates a needs-based approach through five different investment strategies: conservative, balanced, opportunistic, value-oriented and yield-oriented. All investment strategies are managed by ebase on a standardised basis with recommendations from experienced financial market professionals as sub-advisers. The Institute for Asset Accumulation (Institut für Vermögensaufbau (IVA) AG) supervises the portfolios through ongoing risk monitoring and carries out regular certifications. Accounts and deposit volume At 103m, the deposit volume was lower than at the end of 2011 ( 134m). The main reason for this is the adjustment of our basic terms and conditions in line with the movement in market interest rates. The interest rate sponsoring campaign of one partner was successful, but has meanwhile ended and consequently had only a marginal impact on the figures as of the quarterly reporting date. As of 30 September 2012, around 82% of the deposit accounts were attributable to settlement accounts linked with the custody account. Overall, the number of deposit accounts increased from 68.6 thousand at year-end 2011 to the present level of 81.3 thousand. ebase finished the development of an online-type account with extended payment transaction functions in the third quarter. As of October, the settlement accounts linked with the custody account are being replaced by the new Konto Flex account, which can feature a credit line and overdraft facility in line with partners' requirements. Proceeds from fund sales are automatically credited to the account; the funds thus remain in the information and management operations of the B2B partners.
13 INTERIM MANAGEMENT REPORT 11 Earnings situation in the B2B business line Pre-tax profit in the B2B business line increased to 7.7m (previous year: 6.6m). By comparison with expenses, there was a disproportionately high rise in earnings which increased to 35.4m (previous year: 32.2m) and marginally improved the cost/income ratio in the business line to 78.2%. The climb in net commission income of 8.9% to 34.2m essentially stems from growth in the funds volume. As a result of the declining deposit volume, net interest income fell slightly short of the previous year's figure. The other operating result increased due to the charging on of costs for IT services to partner companies. Total assets under custody B2B (in billion) The rise in administrative expenses to 27.7m (previous year: 25.6m) was attributable to the increase in other administrative expenses and personnel expenses. Other administrative expenses include higher advisory services and IT costs in conjunction with product-related development projects as well as connecting customer portfolios. Furthermore, the partial liquidation of some open-ended property funds led to processing-related costs. Higher personnel expenses stem from the increase in the number of employees and salary adjustments. Financial situation and assets of the comdirect group The Treasury department of comdirect bank ensures adequate cash holdings at all times and manages the liquidity. Customer deposits are invested in the money and capital markets. Here the Treasury department carries out a significant share of the investments with companies in the Commerzbank Group. Claims on Commerzbank AG and other selected subsidiaries of the Commerzbank Group as well as the securities of these companies are comprehensively collateralised via a general assignment agreement. There are also five special funds that are included in the comdirect group s accounts. The comdirect group does not carry out any own account trading. The use of derivative financial instruments is restricted to the hedging of interest rate risks from debt securities and interest book management in the Treasury portfolio. Investments At 8.7m, investments by the comdirect group were down on the previous year ( 10.0m), which reflected investments in software in the B2C business line and ebase s relocation. On balance, net investment of the comdirect group amounted to 2.9m (previous year: 1.2m). Balance sheet structure of the comdirect group At 12.25bn, the balance sheet has increased by 7.6% versus the end of This growth stemmed from a similar size rise in the deposit volume. The deposits are mainly reinvested through promissory notes, which are shown in claims on banks. These were up 10.0% on the figure at year-end 2011 ( 6.71bn) to 7.38bn, but changed only slightly in the third quarter. Most of the increase in deposits in the third quarter was invested in bonds and debt securities and the volume here rose by 10.2% compared with the end of 2011 ( 3.86bn) to 4.26bn. Financial investments include a minor amount of retail funds and equities. Claims on customers fell in the reporting period from 224.7m to 194.6m, particularly as a result of the decline in the utilisation of loans against securities. The deposits of private customers accounted for 94.3% of the financing side of the balance sheet (end 2011: 94.2%). Liabilities to customers totalled 11.54bn (end 2011: 10.72bn).
14 12 Equity amounted to 566.1m (end 2011: 547.3m). The decrease in equity capital resulting from payment of the dividend in the second quarter was more than compensated by the increase in the revaluation reserve as well as the net profit achieved in the first nine months of the year. Cash flow statement The negative cash flow from operating activities of 84.9m (previous year: 211.8m) stems especially from the reduction in the credit balance at Deutsche Bundesbank, compared with an increase in the cash reserve in the previous year. The cash flow from investment activities amounted to 8.7m (previous year: 9.6m). The dividend distribution in May 2012 resulted in a cash flow from financing activities of 79.1m (previous year: 59.3m). The share comdirect shares benefited from the positive trend in the equity markets in the third quarter. The share price was up by around 9.0% on the level at the end of June, closing at 7.76 on 28 September. Development of comdirect share price to (in ) comdirect share Jan Feb March April May June July Aug Sept SDAX Daxsector Financial Services Performance Index Source: Bloomberg; indices normalised to the comdirect share price as of year-end 2011 Taking the dividend payment into account, our shareholders achieved a total return of 11.2% in the first nine months of 2012, compared with gains of 13.2% by the SDAX and 19.5% by the DAXsector Financial Performance Index. At 44.2 thousand on average, the number of units traded per day was below the corresponding figure for At the end of September, the market capitalisation totalled 1,095.9m. Our active Investor Relations included participating in roadshows in London and Zurich as well as the German Investment Conference in Munich.
15 INTERIM MANAGEMENT REPORT 13 Data and key figures of the share 9M 2012 Data German securities code no ISIN code DE Stock exchange code COM Reuters: CDBG.DE Bloomberg: COM GR Stock exchange segment SDAX Number of shares issued 141,220,815 no-par-value shares Designated sponsor Commerzbank AG Shareholder structure 80.53% Commerzbank AG 1) 19.47% Free float Key figures 9M 2012 Average daily turnover in units XETRA Frankfurt Other stock exchanges Opening quotation XETRA ( ) 7.46 Highest price XETRA ( ) 2) 8.86 Lowest price XETRA ( ) 2) 6.81 Closing quotation XETRA ( ) 7.76 Market capitalisation ( ) 1,095.9m Earnings per share 0.38 TSR 3) 11.2% Dividend yield 4) 7.5% 37,322 3,835 3,063 44,220 1) Indirectly 2) Daily closing quotation 3) Sum of the share price increase and dividend in relation to the share price as of the end of the previous year (annualised) 4) Based on the dividend paid for financial year 2011 and closing quotation at year-end Employees The number of employees increased to 1,161 in the first nine months of 2012 (end 2011: 1,148). In the B2C business line, new jobs were created particularly in IT in order to ensure and continually improve on the swift implementation of innovations. At the end of the third quarter, the number of employees in the B2C business line amounted to 938 (end 2011: 926 employees) and 223 in the B2B business line (end 2011: 222 employees). Number of employees of comdirect group Business line B2B Business line B2C Risk report As of 31 August 2012, the overall risk position (economically required capital with a confidence level of 99.91% and a risk horizon of one year) of the comdirect group amounted to 169.8m (end 2011: 235.2m). This corresponded to a utilisation level of the overall limit of 39.0% (end 2011: 54.2%). The limit utilisation level was non-critical both with respect to the aggregate risk and individual risks throughout the reporting period. The comdirect group s risk-bearing capacity also remained consistent under stress conditions.
16 14 The economically required capital for market risks continued to decline and as of 31 August 2012 stands at 61.6m (end 2011: 83.8m). The continual decrease in market risks is due in particular to the consistent reduction of the volume of bank bonds from stricken countries in the eurozone (so-called PIIGS nations). The successful implementation of this strategy has significantly limited the credit spread risk. Credit risks were also limited by rigorously reducing the exposure to European bank bonds and a strict policy of refraining from reinvestments in PIIGS nations. Despite rating migrations in the wake of the European sovereign debt crisis, the total CVaR only rose to 72.1m as of 31 August 2012 (end 2011: 61.1m). As of 30 September 2012, less than 0.1% (end 2011: 0.6%) of the balance sheet total was attributable to Treasury positions in the PIIGS nations. These positions are continually and closely watched as part of our intensive monitoring. We are continuing to pursue our strategic objective of reducing those positions which are subject to intensive monitoring through selective disposals and maturities. The economically required capital for operational risks amounts to 20.3m as of 31 August 2012 (end 2011: 38.5m). The decrease versus the end of 2011 essentially stems from the comparatively low historical OpRisk losses at comdirect, which are taken into account by Commerzbank's new AMA model. Lower deviations between target/actual values also led to a slight drop in the economically required capital for business risk which stood at 15.8m as of 31 August 2012 (end 2011: 24.6m). Model risk was identified as an additional material risk category for comdirect as of the start of financial year 2012 and is limited as part of the risk-bearing capacity analysis. Model risk describes the risk of losses from the early close-out of financial investments in response to earlier and higher than forecast customer deposit outflows. The risk remained at a low and non-critical level for the entire reporting period (March 2012: 18.1m; June 2012: 8.8m). As a result of the steep fall in interest rates in the capital market in particular and continual growth in deposits at comdirect, the model risk, which was already low, recorded a further substantial decrease from the second quarter onwards. Based on the confidence level of 99.91% consistently used in the risk-bearing capacity analysis, at the end of August 2012 the model risk stands at 0m. Detailed information on risk management, controlling and reporting as well as the risk categories of the comdirect group can be found on pages 89 to 98 of the 2011 annual report, while note (56) regarding the risk reporting of financial instrument is on pages 150 to 154. To summarise, the comdirect group has enough of a risk buffer to certainly withstand even lengthy weak market phases. From today s perspective, there are no realistic risks in evidence that could threaten the continued existence of the comdirect group. Outlook and opportunity report The comdirect group will continue to pursue its growth strategy in the fourth quarter. Consequently we are forecasting a significant rise in marketing expenses compared with the previous quarters. At the same time, we confirm the pre-tax profit target for financial year 2012 of 85m to 90m that we set at the end of June. This target is below the pro-forma record result of the previous year ( 98.8m). The earnings forecasts are based on the expected rise in administrative expenses, as well as stable net interest income for the full year. This presumes that there will be no further material changes in the situation in the money and bond markets for the rest of the year. Nevertheless, risk factors in the bond market could adversely affect the performance of our financial investments.
17 INTERIM MANAGEMENT REPORT 15 The earnings contribution in brokerage is heavily dependent on the trend in the number of trades and therefore cannot be accurately predicted for the remaining weeks of the year. Even if the rise in prices should lead to an upturn in equity and funds business, net commission income will be below the previous year s exceptional figure. In line with current assessments, we expect further settlement of the positive ruling in the appeal proceedings in financial year 2011 to have a moderately positive effect on after-tax profit. Apart from that, we essentially confirm the assumptions and expectations indicated in the outlook and opportunity report in the 2011 Group management report (pages 99 to 102 of the annual report). In the B2C business line, comdirect made the offering for banking customers even more attractive with numerous product initiatives in the third quarter. Coupled with a higher level of advertising in the fourth quarter, we expect positive effects for new business and a rise in the number of customers. Our current account with satisfaction guarantee remains the central growth driver and the focus of our advertising campaigns in the future as well. We expect to see ongoing growth in brokerage, especially in CFD and ETF business. As before, in the B2B business line, ebase will continue to pursue its objective of supporting the business models of its cooperation partners with a comprehensive spectrum of tailored and B2B-type banking and brokerage products and services. The priority remains to further develop partner-specific custody account and account solutions for the market segments in which ebase already operates, as well as for the new non-financials target group. Marketing for the new ebase Managed Depot custody account started in October. The financial situation and assets of the comdirect group are not expected to vary significantly from the position as of 30 September For the remaining weeks, we anticipate that the investment volume will match the average level for previous quarters. Supplementary report No major events or developments of special significance have occurred since the reporting date of 30 September 2012.
18 16 > Income statement Income statement of comdirect group according to IAS/IFRS 1.1. to to thousand Interest income 204, ,547 63,258 70,912 Interest expenses 87,819 85,309 25,830 31,560 Net interest income before provisions 117, ,238 37,428 39,352 Provisions for possible loan losses 4,413 1,041 3, Net interest income after provisions 112, ,197 33,993 38,878 Commission income 212, ,467 71,456 77,369 Commission expenses 87,506 84,753 29,726 27,107 Net commission income 125, ,714 41,730 50,262 Results from hedge accounting Trading result 0 1, ,088 Result from financial investments 2,838 2, ,364 Administrative expenses 173, ,138 60,413 59,092 Other operating result 5,221 2,379 3, Pre-tax profit 72,839 78,619 19,733 28,196 Taxes on income 18,907 21,070 5,359 7,738 Net profit 53,932 57,549 14,374 20,458 Undiluted/diluted earnings per share 1.1. to to Net profit (in thousand) 53,932 57,549 14,374 20,458 Average number of ordinary shares (number) 141,220, ,220, ,220, ,220,815 Undiluted/diluted earnings per share (in ) > Statement of comprehensive income Statement of comprehensive income of comdirect group according to IAS/IFRS 1.1. to to thousand Net profit 53,932 57,549 14,374 20,458 Changes in the revaluation reserve after tax 43,938 20,998 13,103 6,073 Comprehensive income 97,870 36,551 27,477 14,385 Net profit and comprehensive income for the reporting period are attributable in full to the shareholders of comdirect bank AG.
19 INTERIM FINANCIAL STATEMENTS 17 > Balance sheet Balance sheet of comdirect group according to IAS/IFRS Assets thousand as of as of Cash reserve 355, ,849 Claims on banks 7,381,073 6,711,938 Claims on customers 194, ,691 Financial investments 4,256,527 3,861,587 Intangible assets 28,676 30,579 Fixed assets 10,805 11,790 Current income tax assets 1,777 4,091 Other assets 19,002 5,896 Total assets 12,247,616 11,378,421 Liabilities and equity thousand as of as of Liabilities to banks 5,696 3,244 Liabilities to customers 11,544,644 10,723,015 Negative fair values from derivative hedging instruments 5,884 4,496 Provisions 40,003 41,157 Current income tax liabilities 14,432 14,527 Deferred income tax liabilities 14,621 2,996 Other liabilities 56,282 41,718 Equity 566, ,268 Subscribed capital 141, ,221 Capital reserve 223, ,296 Retained earnings 92,350 92,350 Revaluation reserves 55,255 11,317 Consolidated profit ,084 Net profit from 1.1. to ,932 Total liabilities and equity 12,247,616 11,378,421
20 18 > Statement of changes in equity thousand Subscribed Capital Retained Revaluation Group Total capital reserve earnings reserve 1) result Equity as of , ,296 59,671 30,717 59, ,218 Net profit 111, ,763 Changes in revaluation reserve 19,400 19,400 Total comprehensive income 19, ,763 92,363 Profit distributions 59,313 59,313 Allocation to reserves/transfer from reserves 32,679 32,679 0 Equity as of , ,296 92,350 11,317 79, ,268 Net profit 53,932 53,932 Changes in revaluation reserve 43,938 43,938 Total comprehensive income 43,938 53,932 97,870 Profit distributions 79,084 79,084 Equity as of , ,296 92,350 55,255 53, ,054 For information: statement of changes in equity from 1.1. to thousand Subscribed Capital Retained Revaluation Group Total capital reserve earnings reserve 1) result Equity as of , ,296 59,671 30,717 59, ,218 Net profit 57,549 57,549 Changes in revaluation reserve 20,998 20,998 Total comprehensive income 20,998 57,549 36,551 Profit distributions 59,313 59,313 Equity as of , ,296 59,671 9,719 57, ,456 1) Pursuant to IAS 39 In financial year 2012, dividend payments totalling 79,084 thousand (previous year: 59,313 thousand) were distributed to shareholders of com direct bank AG. This equates to a payment of 0.56 per share (previous year: 0.42). In financial year 2012, comdirect bank did not make use of either the existing authorisations of the annual general meeting to purchase own shares for the purpose of securities trading pursuant to Section 71 (1) No. 7 German Stock Corporation Act (AktG) or of the resolutions of the annual general meeting authorising the purchase of own shares pursuant to Section 71 (1) No. 8 German Stock Corporation Act (AktG) for purposes other than securities trading.
21 INTERIM FINANCIAL STATEMENTS 19 > Cash flow statement thousand Cash and cash equivalents as of , ,967 Cash flow from operating activities 84, ,782 Cash flow from investment activities 8,695 9,642 Cash flow from financing activities 79,084 59,313 Cash and cash equivalents as of , ,794 Cash and cash equivalents correspond to the balance sheet item cash reserve and include cash on hand and balances held at central banks. The cash flow from operating activities is essentially determined by the taking in of customer deposits and their reinvestment in the money and capital markets. The cash flow from investment activities results from the acquisition and disposal of tangible and intangible assets. The cash flow from financing activities stems from the dividend distribution by comdirect bank AG to its shareholders. > Notes Administrative expenses 1.1. to to thousand Personnel expenses 51,508 50,973 17,683 18,176 Other administrative expenses 110, ,006 38,281 36,781 Marketing expenses 38,254 39,686 12,800 13,793 Communication expenses 6,311 4,406 2,613 1,938 Consulting expenses 9,323 6,982 3,322 2,355 Expenses for external services 28,186 29,264 10,620 10,127 Sundry administrative expenses 27,961 27,668 8,926 8,568 Depreciation of office furniture and equipment and intangible assets 11,590 11,159 4,449 4,135 Total 173, ,138 60,413 59,092