The ratings on Germany-based Commerzbank AG reflect its sound credit-risk management and the bank's domestic franchise among private and corporate customers, which provides it with a sound and diversified funding base and gradually improved earnings following a prolonged restructuring process, which is nearing completion. The primary negative rating factors remain the bank's still modest core profitability and market position in a highly competitive and structurally difficult domestic market environment and its limited franchise outside Germany, all of which confine the prospects for substantial revenue growth as long as economic growth remains subdued. The bank's overall sound asset quality has steadily improved and, barring major surprises, provisioning needs in 2005 are expected to decline further to less than €750 million from
