Sound credit risk management; Solid franchise in Germany; and Restructuring efforts have started to bear fruit. Highly competitive market environment in Germany; Commerzbank's weakened profitability and modest capitalization; and Limited geographical diversification outside Germany. The ratings on Commerzbank AG reflect its sound credit-risk management, which compares favorably with many domestic peers, and the bank's domestic franchise among private and corporate customers, which provides it with a sound and diversified funding base. The ratings also reflect Commerzbank's progress in executing a range of strategic and cost-cutting initiatives, which are expected to allow it to achieve modest operating profits in 2003, and to gradually further improve its profitability levels in a less severe operating environment. As Standard&Poor's does not expect
