The ratings on Germany-based 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 steady progress in executing a range of strategic and cost-cutting initiatives, which are expected to allow it to further improve its profitability levels in 2005. 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. The bank's overall sound asset quality further improved in 2004 and, barring major surprises, provisioning needs in 2005 are expected to decline further to less than €800
