COMMERZBANK AKTIENGESELLSCHAFT

We assume that Germany will fare better than most other countries within the eurozone in
the next two years, and this will be for the same reasons as before, i.e. its competitiveness
has improved considerably in the past few years and there is less need to consolidate gov-
ernment finances. As a result, the German economy should start to pick up by spring at the
latest, provided that renewed intensification of the sovereign debt crisis does not trigger another
huge wave of uncertainty. Nonetheless, it will likely be a modest recovery. GDP is forecast
to rise only slightly in 2012 as a whole, so the employment market is not expected to
improve any further. In fact, unemployment is predicted to rise slightly. In our core scenario,
the German economy will probably be back in tune with its potential growth rate in 2013.
Even if the sovereign debt crisis does not escalate, it is still expected to have a massive
impact on capital markets in 2012. This is firstly because the existing major risks should
make the ECB in particular, but also many other central banks, adopt a rather more expansive
course. Most countries are unlikely to implement any interest rate hikes in the near future;
in fact, inflation rates worldwide are expected to fall. And because the crisis is unresolved,
it is anticipated that demand for secure investments, such as Bunds and US
treasuries, will remain high. This means that yields on these investments will not rise very
much in the coming year. The euro is likely to remain under pressure from the unresolved
problems in the currency union and depreciate further against the US dollar, in the coming
year at least. On the equity markets, the somewhat improved economic data should help provide
momentum, but even here, the uncertainty generated by the crisis will limit upside
potential.
Exchange rates
31.12.2011 31.12.20121 31.12.20131 Euro/US-dollar 1.31 1.25 1.28
Euro/Sterling 0.86 0.83 0.80
Euro/Zloty 4.45 4.30 4.20
1 The figures for 2012 and 2013 are Commerzbank forecasts.
Future situation in the banking sector
The outlook for the banking sector worsened in 2011, and we do not expect any improvement
in 2012 either. In Europe, economic trends are expected to weaken in 2012, with economic
performance lower than in 2011. The sovereign debt crisis will continue to cast a
shadow, prompting all euro countries to consolidate their budgets and implement savings
programmes. The crisis also shows how closely governments and banks are interlinked. The
ECB will remain the most important source of funding for many banks. The banking environment
will be dominated by fluctuations on the capital markets, a continuing low interest
rate environment, higher capital requirements and possibly greater regulation. Tighter capital
adequacy requirements for banks as a result of increased regulation will continue to hamper
the sector for the foreseeable future.
Financial Statements and Management Report 2011 41