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 further improve its profitability levels in 2004 even considering seasonal factors that have regularly reduced earnings levels in the second half of the year. The primary negative rating factors are the bank's still modest core profitability and market position in a highly competitive and structurally difficult domestic market environment. Overall asset quality is sound and barring major surprises provisioning needs in
