CBK.DE - Earnings call transcript Q3 2022

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Operator

Good morning, ladies and gentlemen, and welcome to the Commerzbank AG Conference Call. Please note that this call is being transmitted as well as recorded by audio webcast and will subsequently be made available for replay in the Internet. At this time, all participants have been placed on a listen-only mode. The floor will be opened for questions following Manfred Knof's and Bettina Orlopp's presentation.

Let me now turn the floor over to our CEO, Manfred Knof.

Manfred Knof

welcome earnings and third for everyone, quarter. morning, to call our the Good

with before financials. general through me some Let start remarks, and goes the Bettina I into the slides you walk

strong On hand, are on with the track our transformation we very fully program. one our business performance see and in

come along that provide asset some the makes quality. with On uncertainties it hand, does you GDP, of very faced we lines other to with This outlook an inflation, not macro hard warnings. significant the rates, health and

However, key ratio XX%. €X team is cost very whole and have convinced again, the targeted convinced looking this more to I am that manage am will income XXXX our we billion it reached year. interest of reach of will our stakeholders. challenge of in into profit all I the it's But a we best than strategy execution, uncertainty in net high and that And

of have business and Now in is cost the in the by have revenues Otherwise, let's the than XX%. XX%. inflation, we it our our more from pressure tailwinds even months revenues XX%. cost includes from In have This burdens year This first performance. very significant of would and by ratio discipline, rates, a slides mBank exceptional. from income nine with to start Poland. due increase And grown high our despite the increased into a look translates at good

and net an capacity quarter, to of low which to target. slightly increase needs our this of meaningful year. so to such with provides deterioration proves leads program. XXXX. to priorities XX% way course Commerzbank setup focus XX% be provisioning operating we end CEO ago. payout, Our business been path our is a after nine done targeted our has no restructuring I result us years, joined consolidation years Capital reaching has XX.X% subject be increased The third far. almost two the At income my And two to clearly for model through we strategic and consolidation. high In year, the top of quality. in of our with loan is of the as leaner will necessary There this book the are transformation in months the ample half past in With been virtually the when of this

me international the XX,XXX low further already Let FTEs the network largely our are FTEs A recap accomplished. come streamlining of contracted. of with and of reduction part are highlights. X,XXX risk. very The is X,XXX execution

have cut we our will further the X,XXX ago, We branches planned reduce originally next reduced than branch year. faster to XXX branches from down years XXX network and two to network

complexity the clear terms of XX% live Corporate efficiency top the We business in have locations of in that but Complexity the have also be priorities than transferred Clients, is have reduced direct In the it model. is will operations. center of are and to and are the run-up remote have to by with clients. the and new we we bank built of staff the and go remain parallel in restructuring, advisory fully advisory XX started More operational. In higher month. end further. In clients cost also PSBC, this bank, all already finished reduction

well of serve sustainability the model of onboarding part clients month. X,XXX With integral end become is this has established. by our and will it the wave, next business And an

The €XXX setup our billion €XXX track billion first of volume business customers. of nine year, the months business in model for means target in many the the new XXXX. change our towards we on are also of of With well

on churn we this the going and In however, phase focus any the to limit leads Client next our meaningful XX/X be digital transformation. will remote to see between close advice. within The me will every of gap will service we and not the banking. forward. far, new we a churn million And revenue years, two client business. advisory next do setup. for effort business concentrate centers X So our to make In branches the introduced PSBC, and the customers

the We it in few offering a sales, full convinced retail It in saves place. is that cost right approach banking a in decade. come are absolutely lot this shortfalls but with to the is temporary of this might and product

further products. the are in rising prefer our into who digital comdirect relevant we position comdirect number will invest to self-directed and maintain market. For And and of channels, strong all services customers offers the

skills advisory to respective tap premium the clear the will we full make in sure on strong revenue be Corporate segment, clients the of that In branches pools. focused our focus Client XXX potential on Our German the Mittelstand. is wealthier

position a our comes ahead. We leading when reliable banking to as will uncertainties strengthen partner, tackling the especially it

bank direct assets rep the X,XXX our new aim to office clients there the be of to a bank product our serve key we and corporates trade Therefore, two Germany. and with of fully-fledged foreign or with just very light our for to plan We for Strong we rep our corridors, for and relationships a by selected offering constantly people Mittelstand. to position who trade is to clients changing review Wherever XXXX. clients. our sourcing when business, leading ground clients will present in Thus, their with as lean, we up finance obviously locations are up strengthen footprint manage adjust offices also necessary. support be three our German Such clients. export In them. open we on open global do

focus, and targets in return tangible capital and cost success. of strategy employment High above Supervisory equity in the in been XXXX. will any our also and discussed X.X%. but of we remains than figures our is has plan the it annual we high excess business discipline Board. more We also payout. inefficiency. with we review, have come not profitable confirmed in This not of priorities target The the as client ratio are we future XX% give income for So top crucial distributions RWA part baked have which cost all with for Besides on priorities the return capital a XX% and of focus, bank

of ultimate my clearly earn XXXX, to is capital. goal Beyond cost

Let me takeaways with my conclude key before the over hand for I financials. Bettina to

First, have times, delivered performance. we financial very in turbulent a good

the to Bettina. XXXX income. transformation of our confirm net keep targets more we and phase enter of over And our confirm next than for billion our Second, you, targets third, our guidance and And into now we key €X XXXX.

Bettina Orlopp

profitability walk After that, I morning side. of a financials quarter. more you update and Manfred, you, my million revenues. follow-up result on underlying Despite from from a the holidays million. the businesses. at also view million Thank good costs through I'm the and of net very have operating detailed our and credit a result Swiss franc a provisions of pleased strategy an will on burden reached I the €XXX of now we €XXX with in with Poland, €XXX

to has the a impact to basis Excluding best points well to XXX prepared years. the than the result. MDA. these maintained it And €XXX CETX level quarter cover uncertainties. we top XX more for for have slightly potential adjustment XX.X%, And million, above The high further been has burdens, improved future risk the ratio we are

view. our good in low NII, better We cover three cost by on performance the X, pillars, the see the detail later you quarters year-to-date continue significantly base rest On accruing in management result. on. all I for year. the contained and XX% cost will three risk The strict payout for Slide a more

the all financial almost a moderate improved result risk reflects the have We provisioning The key Poland. even while indicators, burdens of level. underlying for remains the effect in Russia, higher business risk compensating at

Poland. reaching very €X year. we billion on of The target For dominated for the revenue by €XXX Slide to TLTRO the the benefit X holidays the from net nine our credit close was quarter. There result, months small exceptional in result a are items million, are in the

We commission Corporate leads based revenue income, commission hedging any to XXXX our our from with strong by the XX. especially have us on and starting on not page XXXX underlying Clients included has This income benefits the customers. increased net targets. and activities TLTRO

continue lower securities commission level, market current Germany. trended market our due down. to bond PSBC to hedging revenues. of on volumes Given customer private is quarter and business. customers net Also affects PSBC should last Group equity support uncertainty, than have income Lower needs Nevertheless, trading

is income as commission there somewhat last an expect markets, As turnaround will most in net no level. we year's not long be do Therefore, XXXX the below likely improvement.

the corporate and an previous is also effect we exceptionally not at this the have At QX, well deposits €XXX current as we come yield covers deposit in in up Slide Now NII the effect There mBank higher next higher to one-off from we positive interest short around as deposit is years. expect Adjusting customer We million now last curve rise from to mortgage rates the than on The seen to we interest where - develop how interest increase improvement. invested repayments that from NII €XXX year In from significantly. from deposits, rates for to quarter. million end. rising businesses of QX, unmodeled over on at contributed early QX, pricing both will further slide the from higher see Underlying cumulated the all income business next already time. uncertainty expected and XX. with can the first year. high. do NII income to the has And benefit be the outlook. was rates, better term, NII yields In deposits customers reinvest and moderate

are market significantly. currently Forward rates expectations and fluctuating

rates points yield on to develop, many XXXX. interest non-interest uncertainty conservative end X.XX% deposits rates our around and interest assume scenario. only a ECB calculated from also sensitivity basis bearing therefore, forward deposits in higher. derived year have, be We QX how side the of how is products paying on X% The five XXX rates We there there interest. uncertainty curve average was rates rate moved of with other the is of will at Not consensus will

€XXX seen will the XXXX. the incentive attacker XXXX. to cycle and pricing be in improvement XX We a on years. some deposit be assume product much seen rates a than by million in launched many would of to We higher have for first have The around will result depends XX% rate hard rising competitors as a what more of required beta it's this in And already How factors. are, predict percentage The move. Germany. we year, compared This X bigger to not XXXX. Thus, deposit million sensitivity equivalent interest rate to the in we to of €XX constant per parallel the the these in around assumptions out expect is other should would NII million unchanged. beta in shift all be additional turn the curve, around to NII. result changes parameters being €XXX high. point XX%, extra basis assuming change points €XXX if million XXX in NII NII beta, is beta

the uncertainties these to and prudent in Strategy sensitivities, Given these targets. decided we update XXXX our of use have assumptions

cost move Let's on to XX. Slide

Our cost branch as of are underway. management headcount impact. external measures their consultants The reductions and show usage lower as well well closures

compulsory flip We have cost On target contributions billion. increased. side, the €X.X our to further of stick XXXX

our have So measures compulsory far, cost contributions. from effects inflation and overcompensated

will booking inflation The cost XX basis TLA The However, continues is has to still additional is we announced. Also, our planned. further have we compensation points QX result. face and year-to-date risk in inflation pressure three the An to the might by on compensation from slides increase. variable reduced in payments dominated be than employees to next risk the detail higher loans QX. that originally of one-off premium just cost

a We continue and our of of low higher the to see defaults. customers resilience level

million level Russia Corporate top €XXX release around exposure been reduced the led actively partial positive of adjustment. during by resulting to result has in a the the in This quarter, risk has Clients. Our

effects €XX an reduction a cover we of secondary rationing million still TLA effect Russia, supply as is well not the potential scenario. disruptions, €XXX covered in to is direct as the available from of the effects economic higher Following slowdown. prices like energy QX, have million gas potential and chain What

support scenario. rationing are has largely there book imports to and preparations Storage and gas facilities corporations. government have TLA far, households full. substantial providing no significant So to has is the winter. a for made Germany Non-Russian the been upcoming increased measures need private been for

a in However, reduction shortage. to is significant a avoid required demand

XX% operating private Swiss extraordinary cover at next burdens are reflects equity other be it and unemployment case, not our Poland. resulting of tax The Underlying fall on largely possibility. an is a GDP I the €X not Having income securities not in today's cushioned out. to by to XX% likely by quickly and is income year. scenario, reducing has we In starting securities base of deductible. can't is profitability million a in business billion. will contract this Nevertheless, top The slides tax drivers, should XX% rate. will rate the the this the is this the €XXX of feasible, expect impacted around government. the a to and more of measures efforts quarter, other additional from but customers. Concerning we this franc level provisions with in rate shortage, While touch in the for short, million German huge to tax for rise now sharply. scenario, €XXX booking rule is key adjustment all volume covered Poland tax the small markets, lower segments, by Obviously, business The impact that been and this From a result guaranteed. bond the mortgages perspective, full

continued market have to However, the the in the have higher impacted Mortgage inflow market. around net volumes The back business in book XX% we rates seen new at stable In an despite of by billion. has lower average overall uncertainty. been have see €XX million, with line to €XXX QX, XXXX, and we remained compared environment. economic current

Over lower has deposit seen The slightly are quarters, back volumes. the stable we book inflows. business continued to next expecting

has to material customers. on So been there far, of no rates passing

started Some customers to with and competitors products have deposits. new attract teaser

mBank This When of is brings expect adjust performance and time, deposit the better to market Page quarter-on-quarter carefully XX In dominated million. revenue €XX and an pace higher me would the expectations. PSBC XXXX. adjusted is for the of million by charges, of cleanup on customer very our of mBank an and to result interest in and from well a loss QX. to franc quarter-on-quarter. reported pushing on gaining credit operating to adjusting of result million quarter, relationships remain the PSBC will for in conditions record year-on-year burdens operating €XXX mBank have driven based XX. QX, if Swiss excluding below by We of €XXX over better pricing increase from client early €XX Germany million churn higher repayments also inactive these benefit revenues, result mortgage in holidays and mortgages, income

for of more mortgages, XX%. be provisions mBank has coverage a With most for This the franc increased should Swiss than ratio sufficient scenarios.

will likely on be we Clients. Group With to the RWA result grown contribute have two continued to politically average the able efficiency imposed have this to burdens, portfolio next active X.X%. mBank cover increased The not year. management. Loan positively slides efficiency Corporate volumes RWA Clients, In our and Corporate

which of to currently of we product total, and million attractive. In operating has customer Corporate deposits. This The up interest-bearing revenues Clients portfolios deposit and and The Clients in In about the improved volume see is is deposits therefore, Corporate underlying in have of volume We interest-bearing QX is standardized QX. some preliminary reached will to the others best XXXX. models have as unchanged The inflows been have increase continued ended to RWA rates X.X% see results consolidation. now reductions from year-on-year. the types. mainly increase for QX. QX, deposits €XXX our is segments in offset deposit RWA from on the that based term at from driver effective move will in biggest should, makes some probably charging to by switch quarterly models ECB all since us permission The the more its become business, received some to calculation. we one-third XX% The NII, be basically internal lead This July. will

were and to risk partial year-on-year. operating down. continue of In has dislocations again. managed of and number The reports October, a from doubled further Overall, affected pre-provision thanks a a by cost result the TLA result addition, Others quarter. reversed low cannot end the benefits release loss be effect positive the expenses result, and to a defaults. In operating Russian has the UK the €XX of QX this of fully consolidation market at Revenues the operating million. in the cover

full risk the risk-weighted slightly operating others year, been For improvement a negative net to assets have due and or decrease balanced has in expect improved consolidation. also from CETX securities RWA In Capital reduced positive continue the Group we result. due in XX.X%. positions has credit result. to the the to of this slightly ratio to total, to led

Slide Now our XX. for outlook on XXXX to

be of on continues additional there top require the severe assumption that outlook will deterioration based the adjustment. the of Our large booking to economic be which a level environment, no would

and least, unchanged. target XX% after billion. give but €X now you on to our income by also come I expect to result The the payments the of For continue for will below stick pressure €XXX target of to above target result of the commission XXXX. the than €XXX cost And in we €XX million, coupon expenses a the increase. in payout ratio the raised We net the TLA. business billion year, of last our revenue interest usage year. to expect assuming XXXX. starts slightly for billion €X.X revenue for an not around target Further, above continues million with we year from ratio revenue expect to expected result inflation risk outlook. of €X more expectations the XX ATX Slide our operating we for we and previous a update financial We is income net mBank remains Hence, CETX XX.X%. XXXX. The billion,

€XXX in higher expect XXXX. revenues than to continue adjusted We million

this therefore, be should, rate elevated Polish level. around and the €XXX down come interest from should very below million NII year's levels However, current

adjusted base deposits with in interest assumed covered earlier. €XXX is euro from for We rate have, accordance outlook NII the our around scenario interest million rates. higher however,

have the assumed lower for by income next as We volumes overdraft commission compensated have loan and should slide cost loans. business our Also, trajectory. growth mortgage margin materially. in volumes net not assumptions be from The changed and change covers facilities the not

measures We track the target. strategy. of are our cost headwinds, way XXXX reduction implement on to would reach the originally Without are heart on our to our well that we additional be

invest due security administrative implement inflation. for part staff also adjusted we original PSBC. Compulsory requirements But billion brand further, We regulations. also in and we cost costs new contributions some two And be €XXX were be not strategy that - more also our XXXX. expect €X However, to in primarily our additional of base the increased increased million a plan. to will see new cyber around this we must our expenses, offset base. in decided reduction will we for partially costs raised and faced measures net cost adding to All and higher cost

ratio we an X.X%. our to as cost increases, cost Manfred for offsetting continue I optimize able target targets cost our will negative your you We the net of To increased very now your questions. income a revenue and planning, cost our more with happy Thank prudent some top a leads than to uncertain the ratio are from are to further more XXXX. economic XX%. growth that and priority confirm potential RoTE base only reach management to an we summarize, be our With is above unchanged of and billion to year And in very environment. Therefore, we operating XX% XXXX. much slightly income effects and that anticipate these most next result - should attention. effect the reach absorb This take risk expected accordingly. confident can from €X.X to recession and most We a booked result assume apparent become would in reach potential that around

Operator

Kian the Abouhossein, Instructions] Please question JPMorgan. [Operator first ahead. go from And comes

Kian Abouhossein

for you questions. Thank taking Yes. my

square that the for churn above If corporate Corporate to is should XX mean, Page get costs, take about, question question lower talked generation to well on betas forward just NII. how plus new NII plus XX I to easily have how area. million just I I of we historic clearly, terms inflation, lastly, done Clients. I should and then you XX, billion. what Clients wondering, €XXX in on I compare Slide take see €XXX think inflation I And on you XX, million third expectations just segment. is on XX wanted mBank I assume? trying NII this wage I'm first higher Slide have we cost specific the adjust we And in XX, going And quarter with may, the I believe, I NII you on the I annualized and NII. target, understand, Slide rate clearly do your on €X.X Corporate historically, on deposit to Specifically, I of if would and And equal the for adjustments And include in can settlements banking. if briefly second see XX, about that very personnel really even

Bettina Orlopp

Thank Kian. Okay. you,

lot is one the - on take to nearly difficult One to So of was mean, you started. have the a definitely a really is reasons. decreases take, if come mean, see is, quarter we first, we XXXX. already I I implemented. And for NII, that mean, third two which and will for XX% there a the this quarters for beta we I didn't deposit increase But

a deposit makes sensitivity as the that have beta. we on big difference the shown So

to other third quarter and a whammy your very the that good The Clients thing of a kind also relates double you is in on there. Corporate question in that effect the have other results

already deposit treasurers benefits the the So started. have in quarter seen had side, interest just the still And with pricing we rates, other this discussion the and on rates we corporate Clients. a from indeed, for Corporate

pay certain see the have to I a you the side. side, cost where private from little And more you workers. come see I baked next will from in overall, on beta because million XXXX, in over slightly additional coming turn inflation and already Clients, client mean, is that the will XXXX, And quarters. in under you for mean, the for we scale there more bit the will the see we will you basically Corporate So increase an around €XXX see have which movement deposit

to have but agreement more also we this for an We expect year, come.

increase usual we the So is enough. would not clearly like normally have which included X.X%

above. went and between locations, with also see come now we to salary specifically, see for respect basically headcount and with that we related service and fees. increases our also ask but not all higher suppliers And So to we companies And our X% own XX%. prices in foreign costs, higher who only the

Kian Abouhossein

Okay. if I That's I I nothing I XX, even do I that take just I follow-up should Am €X.X if almost. curve, that, Can But add going going just are up up missing take understand. I I'm even forward run the then well rates a NII? of, you up end considering adjustment I to say, betas on Slide the I up billion are I rate something? and trying interest let's have. what and make above mean, should of realize the deposit from numbers

Bettina Orlopp

on Well, clearly XXXX I also are which based rates, are targets not our and forward - that thing mean, current apparently one we is not have that we the - said higher. that we

XXXX. account also there's into makes we mean, which basically also, a it's up. piling X% So is just took And something for That I difference. big

or see shown we also as 'XX see will these in eating in a of the of on have adding 'XX see positive in would now if have seen the over you you time easing revenues, because negative we you constant numbers, partly interest rates - and will increase, rate So environment. interest in our

is calculate say been or of, the important XX% clear we have we beta not most and you the on and one - with XX%, the deposit And do numerous effect whatever. it's I effects. really that. should would So undermine But

on are our targets. XXXX We prudent rather

Kian Abouhossein

you Thank Great. much, Bettina. very

Operator

Please The ahead. next Johannes question comes HSBC. from go Thormann,

Johannes Thormann

HSBC. Johannes from Good everybody. my side. Thormann, questions morning, Three

also you is cautious on with in to the probably economists or site you then you run, reduction example, on And in business Page so cost? to the €XXX can And you bit then quarters forecast XXXX? or deposits costs to move? documents. you what other market breakdown a in of the also and more on you versus beta, underwriting with is long How why your you. breakdown costs of any amortization? amortization savings expect at bps more or XX, for basically You deposit is term beta depreciation the XX your or expectation want say still beta First uplift now headcount how do use do XXX €X elaborate how did personnel kind XXX then deposits now? in What personnel, new a Secondly, is you transparency, better versus well. which much and sharply, can't deposits to X% X% expecting PSBC me targeted of expect presentation. closer Unluckily last will of less Did the your business, also find deposits, your your other other Could your please. you rates? understand any getting us this probably XX% QX billion What puzzling the And the can QX? is as you again volumes square probably and and of X% breakdown OpEx. million for for down and what all, but Thank least, the share the mortgage to cost you standards? not or go of why provide deposit deposit probably investments? And looking the current how change you you Could for your see run not bps on personnel much just depreciation like your on driving I are

Bettina Orlopp

that average the which something different. all deposit XX% Corporate the the beta, on we blend And are is they out mean, I is and of Clients the So, and know Clients. Private

some it site deposit term Corporate with the we So would we on deposits goes even deposits. Clients, the and up - on for calculate then beta

on the On only really Client would not deposits, apparently are how historic accounts. And site any knows data, term the beta, - on reacting. side, nobody much, savings have we very clearly oriented we assumption we that, pay the on but and clients and the because Private yes, deposits deposit still ourselves

on pay on much clients very in sight like where how all what took the seen we But much deposit it's all, we So we dependent deposits, and the in - beta past never how did that. things have also react.

products substantial to deposits from we we a with mean, we but we see story It's deposits. So things see how euro quite aggressive we double-digit need we some out competitors assumed developing. which billion some see higher are to will number it. when I shift the is, know there really term attacker sight true And Also, assumed. - and

on. our and the blending based the XX% two the the segments between are on So currently historic currently best we rely guess data

I'm second On not - the were relating question, mortgage to the I sure think business, whether point, you second to Johannes, right? it -

Johannes Thormann

Yes. mortgage business. In

new So business the first in you - policies rates, the example, you do rate? of the model what do change the volume, jump underwriting amortization quarters? you with also less now next And Like in expect into did again? your expect for all,

Manfred Knof

Okay.

Let but quarter me average start. still is business stable, XX% Yes, third it's below know the is we - the volume in that new of business book last year. the of

mortgages business So, the yes, volume and is down. new

and slightly strict standards. tough is margin very up. slowly applying - are our underwriting still the existing We and Yes, tight up

now in personnel XX% it's before very we but down last we which strict, are think tough of to But on So business - applying. comparison And already very, the the the back new we the average volume year. true is standards are have on cost. I

Bettina Orlopp

on XX administrative the presentation split equally split personnel of Yes. I the inflation part that's developing on how inflation see mean, cost the on inflation. from and are costs you cost on Page and

influence unfortunately our a just on beautiful headcount side. XXXX year-to-date hard is cost contributions, we our increase side, reduction offset compulsory for other versus minus XXXX, to which cost the of related year-to-date take and you the minus from X.X% have in seen by X.X%, If

Johannes Thormann

Okay.

Sorry, depreciation? And on How could can't split the the and splits break PSBC. of understand it well, and provide breakdown but down don't in personnel, still exact cost you mix other currently? why as deposit I down the you

careful the So there? can you why are better beta we probably deposit understand so on

Bettina Orlopp

also we mean, that But overtime, on et there. complete the based we we breakdown, just increasing, And I like accounts, deposits. on need I really that understand sight you account. we to revealing savings it easy and strategy sight big when data. move move is deposits it and X.X it's an with have the provide cetera, just part breakdown that it I simply to deposits of not savings we further we into out deposits also historic a X.X, but that's from are look think Well, of of take And rates provide we deposits competitors that but into will interest also you And up later, between breakdown transparency, because fact the the not cost assume one, that have differentiate a will will cost problem. sight given or a just cost specifically to we term term large you do the and deposits, are

Johannes Thormann

Thank Okay. you.

Operator

from comes question next Autonomous The Stuart Graham, Research.

Stuart Graham

Hi. two, had questions. I please. Thanks my for taking

on is The first one capital.

just And net profits So I this it's share could mean, now to on question. going second talk apologize, to buybacks billion in FX been that question return that's reliable the XXX million because geeky first quarter for showing. Slide billion the You there, I XX super quarters, is €X begin of a question what's always buybacks XXXX can the million €X think on The higher an share there? you're see capital billion what billion next still of should then mBank mBank funding you rate than distribution going question. Thank the been materially NII, capital that? driving two you we last you yet X. PLNX year, What's you. so NII lower, and year? the Yet it's is given a of has have X.X costs on underlying is, figure. about average XXX XX make committed €X already Bettina million, talk yesterday Historically, higher are showed can my showed of My and NII. million early to over the you'll and which by a

Bettina Orlopp

touch XX%. mean, quarters Apparently, how Stuart. ratio then also is I'm XXXX are will your developing. quite On on indeed we capital And have there sure upcoming there. - in the you also first some when out well things above question, Okay, I will potential look we be pretty and that on see

now is our I indicates of mean, quite reviewed regulator have our also a our have On of seen our we return of share programs that capital which share And this carefully we I the And buyback policy. policy. supporting part return mean, mean, I and, it's thing, number it's of strategies part measure. competitors buyback the capital

the consider we But definitely So that. will clear. order is pretty

place So mBank instruments. has because February, FX March your all have first, on averaging you And Then than second it differences more distribute the - let's the of consider the in we €X with always deliver Commerzbank. will to that and internal do to how on mBank, question, taking discuss billion lot and then about we businesses between rates. and and consolidation of on will

there's usual It's between the it's direction in specific sometimes and the sometimes and it Commerzbank. in other. things one mBank ongoing compare. no tough But goes just to sometimes thing So and

Stuart Graham

So quarters? revert that could negative to in future a

Bettina Orlopp

is have I also our the be. mean, mean, also, that always assumption put Might we I the when outlook thing we in.

on And you assumption on our positive rates. the or you basically negative of Yes. That's you on here. or have have a fact. impact show costs dependent have, We rates FX either what matter which revenues a FX

Stuart Graham

Okay. on €X it maybe? And a capital. to €X yes on finally just billion or back the was it's then That's the billion a

Bettina Orlopp

mean, target. we is the haven't profitability changed thing I But that, our

We have increased income. even operating the

of given also RWAs a that that have we shift do that have big So, yes, I it's mean, a cetera, assume clear we lot potential. we in not et

Stuart Graham

Thank questions. my you taking for

Operator

Kepler Lukesch, Tobias Cheuvreux. from comes question next The

Tobias Lukesch

for Thanks morning. Good questions. Yes. my taking

your I First, back and to on like the you touch provided. NII sensitivity would

correctly, of much implicitly in kind worth, understood for likely that also but is not would guide you potentially Given that, XXXX. a think you €X.X I QX than not to if be billion I NII better QX,

kind I correctly, 'XX, have billion we currently that yes, I'd just number? mortgages immensely. is if growth. to this suffered conservative. in come So of loan if Secondly, NII back seen rate you in reduction on comparing a to kind mBank's this in I or is you that was calculate very €X.X this wondering the contribution based understand yes, of If like run to that

with However, basically. and overdraft other you think corporate loans to compensate

technical final with So was on booked in things. say, should Thank TLTRO with small amount What do there loan in maybe 'XX, amount very two no one, There the is balance how booking so us, continue between growth into expect split quick you to to you. can QX a on general, any and a the sheet. booked. TLTRO. looking the and think a have year, potentially QX. in Last TLTRO you also there lastly, was And 'XX we as funds you share

Bettina Orlopp

Okay.

capital little start. return. question a Stuart's Perhaps to addition So me on let

important that I have that possible to that share to would misunderstanding stress buybacks authorities. of I are approval only also it's have regulatory like clearly we add that get the approval any the first. think with just not to to

Now on questions, Tobias. your

NII. that said assume we we So, in reduction a

that lots But moment a the I investment I 'XX, needs. would of at the you have numbers If you our the forecast growth, latest reflected reduction assumptions we on And also mean, of starting see very 'XX Poland. in with rate mBank have 'XX. level in here. in but we our 'XX, it's assume we in rate make interest And 'XX, for rest compare that one high probably very that I will that given in the clients loan a And have covered. to see difficult corporate think

expect So further here. we would growth

side, least are XXXX. the the we has I in side. which also because quarters. out down have see might why the of and mean, more continued client mortgage And slowed back past shown we the activity, we that quite of the recover will we the forecast in also the on that's quite TLTRO, on in on quarters. significant coming private benefits book side cautious see the On at significantly we 'XX, loan for slight a programs And two Yes, decrease this consumer

the will positive ends €X we November. a double-digit lucky There the been will in we we clearly quarter, size. that have had environment. that of negative have in in shown only million. the rate a in situation be plans, something fourth quarter, end given interest And effect that, program always euro the million be by This This besides our

positive we summer, calculated of with a that. changing clearly summer, thing hedging therefore, about to interest So we thinking we it environment, have new has be where proved that include conditions. our And did it that TLTRO. And apparently assumed we in a state done about is over the that also benefits the haven't ECB done coming which like now over let also And me we the out TLTRO of smart any already didn't the we planning rumors we never the the rate heard have years. now when also

Tobias Lukesch

Bettina. you, Thank

Operator

next Sigee, question Jeremy Paribas. The from BNP comes

Bettina Orlopp

hear Hello? We nothing.

Operator

Yes, please. just one second,

Bettina Orlopp

first one Shall and next the... we see take then the

Operator

moment. one Just

Bettina Orlopp

I mean, we... there Operator, are So problems? Hello? technical

Operator

I'm sorry.

Just one moment, please.

Bettina Orlopp

Yes.

waiting Thank everybody, right? are here, We you.

Jeremy Sigee

Hello? Hello?

Bettina Orlopp

Very Yes, we to you. hear you. happy can hear

Jeremy Sigee

can. You

Bettina Orlopp

Yes.

Jeremy Sigee

good. Very fantastic. Yes,

there, to I I'm not happened Well, listen, wanted thank but ask Okay, sure credit two good. what questions you. just about quality.

the of the the you we gas you assume that using need refilling evaluate my till being scenario? to you us that's Just on Will tell the what rather we'll key it will winter? your is down or rationing you likely second then of I for points wait be And it? is wondered XQ. or about it TLA. million answer the something as €XXX the timing when summer know just sort January Will was, gas do of scenario. just the in as a what more say remains? the to to see able through wondered scenario, that storage? just about assuming on I possibility XXXX evaluating impact XXXX current we moment question rationing gets scenario? your And sort the on that spring Firstly, thinking thing drawn how think see where Are of where the December, how You than you wondered to seem we're pressure the whole key see bulk that usage I much. partway just the

Bettina Orlopp

Hi. Thank Jeremy. you,

very your moment, level would second the current €XXX long the and adjustment, a - usage, the And to where top And to March. assumption. in to any we In are into so will And we scenario, have happen assume, of already is that. also like constraints. much I I yes, developing. of that also the need, that see a dependent million it good we and key but That whether would moment, could we quarter. we question, the do very to not the consumption in question start gas reduction I such say in things the on quality And the really December QX. that January. we be of until see apparently, mean, be say, asset the that the we see you numbers, do have rather the also enter benefit our of show But a very far, calm part very, winter we see rationing able used. how mean, to will such an complete of we fourth relates that is, this it's usage on quarter, to So, when mean, event, beginning it's not off in in I is now

yes, clearly the have potential to will of we we review. and is. is will feeling December, This good we document, depends fourth and on most rationing monitor there we a And something have So part monitor a and the the then some really exposed most out in the have will January also gas laid already I the probably there to it in industries see scenario. that that situation. which which we are is whether on as sensitive And, quarter. we in closely the what impact second appendix the mean,

Jeremy Sigee

you Okay, very much. thank

Operator

Reingen, The next question comes RBC. from Anke

Anke Reingen

you my question. taking for Thank much very

from there address is in terms TLTRO? intending in it in Are or spreads yet? of I down on widening? one NII, TLTRO quite Do - first down one you. then decided the NII what's wondered as the on 'XX, role Is of your step And guess the more pathway funding be plan you is a cost, area. cost. €X.X flat billion of decided just would on a repaying wholesale Thank been possible have haven't to I And as your play costs higher just quite inflation higher of or - that's path funding given €X the it will the be The to not in obviously outlook? step keep gradual but or then some 'XX? and billion long

Bettina Orlopp

Okay.

split combine cost the Johannes I on the on question the the side can So it of and of costs. with

approximately And 'XX, your €X the €XXX other Anke, for in to for billion costs. contributions, and related of we That's €X.X for €X.X headcount-related split. we a question, the expect billion for So billion split basically reduction. and assume costs million compulsory

and a we development from, flattish target 'XX, 'XX 'XX XX% further 'XX we now We that a have will moving for ratio. not at the and income there. are way So between mean cost but I be - reduction so year-to-date on XX% our

So, cost and clearly reduction 'XX. for a with of

increase not the really On cost, real of also significant a funding NII, no spread widening.

account. thing, thing So and decided in up are - we And to for still mean, TLTRO, fully the we we say and but into take like not is haven't do of we the the I decision have that's weeks. which next that. now couple on the decide process not we to consideration first probably what will that in

Anke Reingen

very you much. Thank Okay.

Operator

Hallam, next comes Chris The Sachs. from Goldman question

Chris Hallam

question. for Yes. my Thank taking you

Just them. two of

So competitors deposit confidence beta lifted the that assume so same XXX been on but that less deposit what first, Slide way Bettina, your as X.XX% earlier already a on ambition ECB the on beta overnight there to that made before as On deposit there or should clearly your we you deposit might make XX, from in inflation would reinvestment revenue you're be about as then competitive pressures in if standpoint, given, basis comments of sort And would deposits? And secondly, perspective, investment has you on rate a And X% is a think points or clear business RoTE, betas. result so 'XX. some the comments gives you more been so, too XXXX of in to in from additional view that read some well seeing. like 'XX I costs. in a that unchanged moving you've

the and cetera? X% efficiencies that So the bank to and additional we less or RoTE upside in for NII unchanged, assume reinvesting the should managing RoTE is future X% in medium term essentially you're the conclusion given more technology, et

Bettina Orlopp

there take confusion, mean, of deposit I on the of for sure. you basis So, XX%. read not higher the the That's But the we point beta, is creating the same the to higher I just the deposit beta the increase, decided XX, - rates, I also it, the is sake deposit much too also mean, Page for XXX if for beta. on mean, the

the increase would to it to increase just beta. beta would that know I just said then simply So believe slight you And are moment. also XX%, we deposit developing, might really the the you assumption for a that, all therefore, because we the XXX are in the It's situation tell. good keep things we at not deposit points we a be the because With to decided really basis see hard caveats that do if XX% prudent that see XXXX. of already used is just an also of how not

some is the do investments. On mean, additional to RoTE, I partly, not we yes, It inflation. also all related the

just some requirements. I As said, we see

price. to least side and needs security take the the is the to importance keep that comdirect the over really Russia to the Just faster of decided also the cyber conflict also months quicker which comes is with separate at a front-end even and and that, the just one of we past to I certain due customers more gained has is IT story one other also a comdirect on that side at be of mean

we really is majority The see. which mixture. reinvestments. dependent there also effects, on But a inflation it's some are So currently the

Chris Hallam

very Okay, thanks much.

Bettina Orlopp

that just 'XX, achieve intermediate cost our clear capital. ultimately of mean, towards to I it's clear an step target also also it's

Operator

from question Mediobanca. next The Rovere, Riccardo comes

Riccardo Rovere

four, thanks and for my question. everybody, taking I may. morning, if Good or Three

that, plug - all, in profitability use capital me, capital you million we or Bettina, then you and them be capital question you single those in bit little to a of pull and when all, clarification on you. stable the use the the long And to a this the does like would means return, eventually you that that situation if those return, we sound scenario something of discussions size regulator million show stated, brand of already ECLs, some two, 'XX, know First it to that those €XXX it to calculations macro calculate there how that. regard government million, situation debate incorporated the related ECLs, regard phasing And you - indications presented me, evidence, on of couple anything names, and with on years, bit the plus those move you to LGDs with what to the billion in maybe the have what previous three not in Jeremy's clear I And PDs issues to TLA. don't the then or December intervention macro materially, and somehow million, your is next those into kind €XXX based new €XXX SSM? if €XXX scenario, do maybe And the strange you of Is LGDs? you ECLs have €XXX the this additional roughly your the in on calculations, still difficult where respect the is It's the discussions making more - you to rationing something as little uncertain related years. deteriorate in the does anything front? a gas to Thank when a changing with that not? to TLA can Strategy more that majority When not is - just on to way. those that. to 'XX. allocate what our point with first stated into expect a Is on derive and making are have difficult less you Even return on PDs of bit, of then your clarification need target, becomes on we scenario past regard as to want the of little and additional calculate profitable but should

Bettina Orlopp

So, question. you your Ricardo, thank for

top said we level So to adjustment. the I in on expect, the adjustment, would top level the I of moment, yes, use the majority majority mean,

our we also it's clear see books. anything is very happening don't in However,

also for XXXX. try it to will keep We

it's, I the is level GDP number adjustment mean, always We auditor, discuss to in, just number. the risk question, concrete Russian top panic we also of by a On entering of now a to able most by level year. take something you the of - we by fact they adjustment and a related the way million we this also really it's therefore to the however, are look. the the increase also that assumptions names are reason it's minus names result, adjustment a the I And the forced saw with why the That the And, because behind diverging. the just were plug XXXX, that have need X.X%, X is clear the - difficult XXXX which So €XXX this mean, reduce also quite we we we due quarter, took top where top of not level would October. slight and million. were therefore, €XX the where certain to also a reduced because then consensus

minus, department X.X% there economist around X.X%. Moody's own with Our out is minus

So there. assumptions broad it's some out quite or diverged

in if also believe be cautious XXXX. And might just in to the you still happening that be we But things see is so bulk 'XX. wanted will there happening of something something we that

€XXX mean, On has that there your there. are there €XXX government the and yes, that measures or the last I measures scenario, government that not assumed out is changed. gas we And baked question it million into million we to would is, be rationing included

been First have very more past. on profitable the in that in of think are we all, much showing than way I a good we

significant a XX%. still year, We had cost seen improvement Last we now of have our income ratio.

at we that we also now XX%. in said the very debates. be would our helps We in are prudent return. capital And That

very prudent start payout XX% going embedded I think 'XX and regulatory think start. the for can On the which want as a And ground do plans, have as strong a we And to a with a have with the solid ratio. forward our we with, currently XX.X%, and good ratio, authorities. long dialog 'XX, I capital for is we now we show a XX% we in

Riccardo Rovere

All right. much. Thank you very

Manfred Knof

Yes.

out. say you running very and to again would Bettina for is like thank questions. and participation time your much So myself

questions. always, As and over say of are your speeches myself and know With be and ready there thank The you lot for looking forward coming a the Bettina up. follow-ups and our next Thank for further will very contacts teams you very much contact that, I much. time.

Commerzbank (CRZBF) 12 Nov 222022 Q3 Earnings call transcript