Commerzbank AG (CBK) Earnings Call Transcript & Summary

Please note that this call is being transmitted as well as recorded by audio webcast and will subsequently be made available for replay in the Internet. [Operator Instructions] The floor will be open for questions following Bettina Orlopp and Carsten Schmitt's presentation. Let me now turn the floor over to our CEO, Bettina Orlopp.

Good morning, everyone, and welcome to our earnings call. Carsten and I are pleased to present the results for the first half of a truly remarkable year for Commerzbank. We again achieved record results in an especially demanding environment. This achievement is a credit first and foremost, for our clients and our people. The continued partnership and unwavering trust of our clients deserve our sincere appreciation and the dedication and commitment of our outstanding team, both in Germany and abroad are the foundation of our success. Our performance demonstrates the fundamental resilience of our business model and the focused execution of our team, even by navigating the complexities of a public takeover discussion at a mixed macroeconomic backdrop. Geopolitical tensions continue to create uncertainty and the volatility in energy prices with its impact on inflation has added another layer of complexity. Let's dive right into the figures that prove the momentum of our financial development. In the first half of 2026, we generated strong revenues of EUR 6.5 billion, a significant increase of 7% year-on-year. Our enhanced operating leverage is average is evident as our operating results grew by an even stronger 14% to EUR 2.7 billion. This operational strain translates directly into a record net result of EUR 1.8 billion for the first 6 months, a 40% increase compared to the previous year which included restructuring charges for our momentum strategy. The favorable development is the result of a consistent and successful strategy execution. Our cost discipline remains a cornerstone of this success. The cost income ratio improved significantly to just 53%, including compulsory contributions. The net return on tangible equity reached an excellent 12.6%, which is a tangible proof of our capital efficient and profitable business model. All this is built upon a CET1 ratio that remains strong at 14.4%, even after accounting for significant capital distribution. This brings me to our capital return policy, which remains a central pillar of our equity story and a key driver of shareholder value. Our strategy comes with a full commitment to a total payout of 100% until our CET1 target of 13.5% is reached. For 2026, this translates into a planned capital return of EUR 3.2 billion, representing an attractive total yield of 8%, and we are already acting on this commitment. Just last month, we applied for a new share buyback of up to EUR 1.2 billion as a key component of payout for this year. The ECB has already approved our application. And as soon as the German Finance Agency approved as well, we will do the final preparation to actually start the program. Alongside the share buyback, we are planning a higher dividend for 2026. We are targeting a dividend share of at least 50% of the total capital return. Looking ahead, our path is clear. As our profitability continues to grow, we see a credible trajectory to increasing the total yield to 11% in 2028 and an even more compelling 14% by 2030. This is the financial translation of our momentum strategy, a clear and unwavering focus on creating sustainable and attractive shareholder value. Our strong performance is underpinned by a German economy that despite all headwinds shows resilience. Due to the slightly improved GDP figures for the last quarters, we lift our expectation from 0.6% to 1% GDP growth for the full year 2026. While sentiment in the Mittelstand remains cautious, we have seen an improvement of the EFO index and a surprisingly good development of new orders in the second quarter, which could signal a pickup in activity. Furthermore, the latest ECB lending survey indicates an improving demand for credit from corporates and the German government has launched important reform initiatives for the pension system and the labor market. These initiatives could provide further tailwinds when implemented short term. This increases our confidence to reach our outlook 2026, which we already raised in May. And includes a targeted return on tangible equity of around 12% and a cost/income ratio of 53%. Our momentum targets also remain fully in place, providing a clear trajectory for profitable growth and increasing efficiency. It shows a steady improvement in our net LTE targets towards 70% in 2028 and 21% in 2030, while our cost/income ratio is planned to improve to 43%. This future path is built on a solid track record of successful transformation. At the end of this year, we will have improved our profitability by approximately EUR 3 billion since 2021 and will consistently have exceeded our ambitious financial targets. Market has clearly rewarded this performance, as you can tell from our share price, which rose by more than 600%. And this brings me directly to our management priorities. The first and most important one is to execute our strategy with continued discipline. Momentum in 2030 is working. It is delivering, and it is a benchmark against which any alternative must be measured. Our focus is on further development of the business model and the consistent delivery of strong financial results. Second, we will further drive performance. This means leveraging our excellent client franchise and the deep trustful relationships our teams have built over many years. It also means sustaining the high motivation of our employees who are the backlog of our success. And third, we will protect value. As Management Board, we are committed to acting in the best interest of all our stakeholders. This includes constructive strategic discussions with UniCredit. The clear objective is to maximize value and to ensure the long-term success of Commons Bank. The key accelerator of our progress and the central element of our momentum strategy is artificial intelligence. We are moving this speed and position from initiatives to concrete proof points that realize tangible value. To recap, we are targeting cumulative investments in AI of around EUR 600 million through 2030, which are expected to generate a value contribution of approximately EUR 500 million per annum by 2030. In the second quarter, we made significant progress. We have completed the rollout of AI tools like MS Copilot and Google Gemini to all employees and launched a dedicated AI Academy to foster the culture of digital innovation. Our AI-powered agent assist is now available to around 2,800 employees, enhancing the quality and efficiency of client interactions in our remote advisory and call centers. Furthermore, AI is helping us to modernize our IT landscape. In the first half of 2026 alone, we decommissioned 10% of all IT systems. For us, AI is not a distant version. It is a core driver of our transformation, delivering tangible results already today. The strong group performance is driven by the strength of our client business. In Corporate Clients, we have once again proven our position as the clear #1 in Germany. The latest finance survey named us the leading Mittelstandsbank and the Best Bank for Corporate clients overall. This is a testament to our strong costful client relationships. Our success is built on deep client orientation are locally established and a globally networked franchise and market-leading products. This is exemplified by our successful expansion of commodity products, but we have started to support our clients with the trading of physical gas. Furthermore, we expanded our offering for Mittelstand's clients who use our direct banking services. Overall, we are the partner of choice for the German Mittelstand and we are continuously investing to defend and expand this leadership position. Our private and small business customer segment also shows an excellent momentum. The key driver here is our securities business, which is significantly boosting our fee income. We achieved a strong 10% growth in net commission income in PSBC Germany. This growth is fueled by strong client activity. Discretionary portfolio management volumes grew by an impressive 20% year-on-year to around EUR 25 billion. The total securities volume held by our clients increased by 16% to EUR 285 million. And at comdirect, the number of trades increased by 5%. This success is consistently validated by external recognition. For the ninth consecutive year, we were named the best branch-based bank and with Comdirect the best direct bank in Germany. This proves that our 2-brand strategy is the right approach to serve the needs of our clients. Now I would like to turn to the takeover offer from UniCredit. The offer period has ended and the results speak a clear language. UniCredit has reached access to almost 50% of voting rights. Also, the offer was not supported by impendent shareholders. Only 2.7% of our institutional and retail investors tendered their shares and a large portion of the shares tendered was most likely borrowed by UniCredit linked financial institutions. However, we had to navigate the way forward. This requires a professional level of collaboration to develop a common path that reflects the emerging shareholder structure, including technicalities when it comes to legal and financial topics. Hence, we have started talks on this, which is in the genuine interest of both UniCredit and Commerzbank as we are both determined to create value for our shareholders, clients and employees. I'm optimistic that step-by-step, we can find common ground on governance and also on the business model. The governance framework is clear, any structural changes such as the domination agreement require a qualified majority of at least 75% of the world at our Annual General Meeting. This is key for the realization of major part of synergies while always considering the rights of minority shareholders. Beyond this, only full ownership via squeezeout provides a clean path towards exercising full combo. The Management Board and the Supervisory Board of Commerzbank has a fiduciary duty to all shareholders. We will continue to work in the best interest of all our investors and to protect the rights of our minority shareholders. Our mandate is to ensure that the value generated by Commerzbank benefits all of you. This leads me to the conclusion that besides Momentum 2030, only a joint approach has the potential to create value for all stakeholders. Our momentum strategy represents a proven, reliable and highly attractive plan with limited execution risk. It is a tangible road map to substantial value creation. In contrast, the Commerzbank unlocked approach presented by UniCredit is in our firm opinion based on incomplete outside infra information and assumptions in terms of value creation and comes with significant execution business. Moreover, it does not reflect value-accretive business, especially when it comes to our international network. Therefore, our position is clear. We are ready for constructive discussions towards a jointly developed solution and realistic value creation assumptions. This will avoid costly misunderstandings of the Commerzbank business model. Let me summarize my key takeaways for you today. First, we achieved a record H1 result, and we fully confirm our guidance and targets. We are a bank that delivers. Second, we continue to focus on the disciplined implementation of our Momentum strategy. This is our plan for delivering reliable shareholder value with low execution risk. And third, we are ready to find a constructive solution with UniCredit, and we will always work in the best of all stakeholders. Our shareholders continue to benefit from our strong delivery and the strategic optionality that comes with the current situation. And with that, I'm happy to hand over to Carsten, who will guide you through the detailed financials.

Thank you, Bettina, and a warm welcome also from my side. Bettina has set out the strategic picture. We are performing well. Momentum 2030 is progressing, and we generate effective shareholder returns. Since 2021, we have consistently improved our performance and delivered on our commitments. This quarter is another step on that journey. In Q2, we have continued to make progress where it matters. Revenues are up and costs are managed in line with our target cost/income ratio while increasing investments. Continuously improving this positive operating leverage is at the heart of our Momentum 2030 strategy. The risk result continues to be well contained, and the capital ratio remains strong. With these positive developments, we have achieved our best ever quarterly operating result of EUR 1,367 million. We are delivering these results in a letter part of interest rate environment, especially in Poland, and facing ongoing geopolitical headwinds. This demonstrates the strength of our franchise, the resilience of our business model and the progress we are making in executing our strategy. With a net royalty of 12.5% in the quarter, we are firmly on course to reach our 12% target for the year. I will now go through the line items in more detail, starting with revenues. Revenues are up 9% year-on-year, and the uplift is broad-based. Net commission income has again grown by 7% compared to last year. The strongest contribution came from PSBC Germany. The net interest income of EUR 2,059 million is up slightly compared to Q1 and basically stable compared to last year. This is in line with our expectations, and we anticipate a pickup in the second half. In contrast, the fair value result is up EUR 92 million year-on-year and EUR 21 million compared with Q1. This mainly reflects the impact of lower interest rates, particularly in Poland and to a lesser extent, in the Eurozone. Other income, excluding mBank's FX loan provisions was also higher. The EUR 19 million year-on-year increase mainly reflects tax-related effects and realization gains -- the quarter-on-quarter improvement was additionally driven by nonrecurring hedge results and the seasonally higher dividends from participations. The next 2 slides cover the fee income. Net commission income is up 7% year-on-year, supported by all customer segments, underlining the quality of our revenue growth. A very healthy 6% increase in corporate clients was driven by cash management, trade finance and capital markets. Bond market activity remained particularly strong and continued the momentum we saw in Q1. Net commission income growth in PSBC Germany was an excellent 11% year-on-year. The securities business was the main driver. This includes both advisory business at Commerzbank and transaction-based business at ComDirect. Payments also developed well, supported by the account fee increases introduced last year. We expect the contribution from this source to normalize over the coming quarters. Overall, the growth demonstrates the strength of our franchise across all customer groups. I will now move to interest income on Slide 19. The net interest income reflects 2 opposing effects, business growth and lower Central Bank rates. Net they have largely balanced out this quarter. Looking at the segments in corporate clients, higher loan and deposit volumes resulted in a healthy increase of the net interest income of 7% year-on-year. In private and small business customers, Germany, NII grew by 10% year-on-year based on the ongoing improvement of the profitability of deposits. At mBank, the picture is different. Lower policy rates in Poland more than offset higher volumes. As a result, net interest income declined. However, this was compensated by a better fair value result from rate hedging activities. Adding the 2 lines line items to them, this results in EUR 9 million higher rates related revenues at mBank year-on-year. The story is similar in others and consolidation were year-on-year lower net interest income is partially offset in the fair value result. On the next 2 slides, I will go through the volume development. Quarter-on-quarter deposits were overall stable in PSBC Germany and corporate clients. Corporate clients have attracted EUR 2 billion additional site deposits, while PSBC Germany has seen a decline in call money by EUR 2 billion. Competition for coal deposits remains very intense in Germany. We therefore saw some outflows of highly rate-sensitive deposits to competitors offering TSA rates above 3%. We stay disciplined and continue to prioritize profitability. In the loan business, PSBC Germany had stable volumes, while clients has sustained its very substantial volume expansion, keeping it well ahead of target. More details will follow on Slide 21. The last 12 months, Corporate Clients achieved a remarkable average loan growth of EUR 17 billion or 16%, there of EUR 8 billion in the first half of 2026. This level of loan growth reflects the strength of our franchise and the trust our clients place in us. Demand from our clients remains largely international. Encouragingly, we have recently seen relatively more activity within Europe. We are also seeing the first signs of a recovery in Germany, albeit coming from a low level. With institutionals, we have increased revenues throughout the last 12 months despite a lower growth in trade finance. Overall, we are encouraged by the trajectory of the loan business. Expectation is that the slight trend of more European demand can be maintained and are cautiously optimistic for a pickup in Germany. This brings me to our NII outlook for 2026. We confirm our outlook for NII of around EUR 8.6 billion. So far, we have only seen a slight increase in H1 compared to H2 of last year. In the second half, we expect a noticeable pickup. Rates in Poland, which were a drag in the first half should stabilize and the NII increase in mBank. The contributions from the replication portfolio will increase with further rollovers. The expected higher ECB rates will be beneficial, and we anticipate further volume growth. With all these drivers moving in the same direction, we are confident that the net interest income will increase over the coming quarters and reach around EUR 8.6 billion for the full year. As discussed previously, the replication portfolio provides a significant structural tailwind and will add EUR 400 million to EUR 600 million NII every year until 2030. Updated projections are included in the appendix. And now to costs on Slide 23. Group costs are realigned with our momentum in 2030 targets. We continue with significant investments where it matters while keeping a firm group on efficiency. In the group, excluding mBank, we increased investments by 12% and further expanded our shoring and sourcing activities. We have added staff in a few key areas while also absorbing salary increases and costs related to our employee share program. Despite these investments, costs in the group, excluding mBank remained flat. The increases were offset by active cost management, lower burns from equity-based compensation and the nonrecurrence of a one-off from last year. mBank has continued investing in its business but also had to absorb higher compulsory contributions. Overall, we are well on our way to reach our target of a cost income ratio of 53% this year of 51%, excluding compulsory contributions, an improvement of 4 percentage points from last year. The risk result came in at EUR 202 million. This is fully in line with our expectations and outlook. Default rates in Germany are edging up slightly. However, most of the increase relates to small service sector companies where our exposure is limited. When looking at the default rates in the German Mittelstand, trends are broadly stable with only a very moderate uptick. The portfolio remains highly resilient with an unchanged nonperforming exposure ratio of only 1.1%. We have maintained our approach to overlays, and there has been no material change in the outstanding amounts. Year-to-date, the increase of the risk result was only around EUR 44 million, however, given the ongoing geopolitical uncertainties, including the conflict in the Middle East, we maintain our full year guidance of a risk result of around EUR 850 million. This concludes the view on the key line items. Slide 25 summarizes the drivers of the EUR 898 million net results. The tax rate was 28% in the quarter. For the full year, we expect a tax rate close to 30%, mainly driven by a higher corporate tax rate in Poland. As I've covered the main development in the segments already, I will now jump straight to Slide 30 and the development of RWA and capital. In Q2, we have around EUR 3 billion higher RWA quarter-on-quarter due to the expanding loan business in mBank and the assets in the liquidity portfolio of treasury in others and consolidation. RWA from higher volumes in corporate clients were more than offset by a new SRT. Capital is slightly higher as the OCI increased. In line with our capital return policy and commitment of a 100% payout ratio, we have reserved the full net result after AT1 coupon payments amounting to EUR 1.7 billion for distribution. Thereof, part will be utilized for the share buyback of up to EUR 1.2 billion. That has already been approved by the ECB. The CET1 ratio is therefore 14.4%. And in Q2, we have applied for an adjustment of the scope of our internal credit risk models. We expect ECB approval in Q3. Once implemented, the change should lead to a significant reduction in RWA. Based on our current calculations, the impact should be in the mid- to high single-digit billion range and gradually materialize by the end of Q2 2027. This will further strengthen our capital position and support profitable growth. Depending on the timing and final approval, this may reduce the volume of SRTs we issued this year. And now to the outlook. We are firmly on track for another record year and confirm our unchanged outlook for the year. We expect total revenues of approximately EUR 13.2 billion based on strong NII and NCI growth. We maintain our outlook for the risk result of around EUR 850 million. Based on costs of around EUR 7 billion, we target a cost income ratio of approximately 53%. We confirm our net results targets of at least EUR 3.4 billion, leading to a net return on tangible equity of around 12%. And we confirm our plan for a payout ratio of 100% after AT1 coupon payments and expect our CET1 ratio to be above 14% at year-end. To summarize, the unchanged outlook and the record results clearly confirm our financial strength and potential. We will continue to deliver. And with that, I conclude the presentation. Thank you for your attention. And Bettina, and I are now happy and looking forward to answer your questions.

[Operator Instructions] The first question comes from Tarik El Mejjad from Bank of America.

First, on the deal with -- clearly, the change is on here in regards to the credit and it's good to see as could remove that dead lock, sorry. Your red lines were the valuation and strategy of Commerzbank and locked, especially on the international markets deleveraging. So what will these stocks would include that you have post Q2? And how far are you ready to compromise on the strategy on that specific point? And also in Q2 results, credit, CEO mentioned that on the restructuring cost, EUR 2 billion, EUR 3 billion will be booked in Commerzbank accounts, possibly as soon as '27. Is that something that you can have a say or a choice on that? And should we start to adjust our numbers on that regard? And second question is on the mix of cash and share buyback. You announced up to EUR 1.2 billion. Should we expect another tranche of buyback or the remainder will be mostly in the form of dividend?

Yes. I mean, indeed, what we now need to do is to sit down and develop a joint solution. And I think it starts with exchanging views on what we see what the strengths are -- we also have some technical details to clarify, but we also need to work out how we collaborate in the current situation with credit having a little bit less than 50%. But I think still we should we should identify areas where we can already create value in a joint approach. And then probably we also should think a little bit about a target midterm. And I mean, I think we should start the dialogue and then we will come back whenever we have a solution. I think that is a better way than the other way around and being now very transparent on what we shall not wish. When it comes to restructuring costs and what has been said by credit, I think it's outside in assumptions. And I mean, we don't know any details, and it's very clear that we, as a management board, but also a Supervisory Board, our mandate is to protect the institution to protect the interest of our stakeholders. So we can't actually also do not take any directions from a controlling shareholder, but we have to follow our own strategy. And that is, for the time being, momentum 2030. We also have restructuring costs, which we still need to book to keep that in mind. We will do that a little piece probably this year and that's included also in our guidance and more to come in 2027, very much dependent on where we stand then with the negotiations with the workers' council and the rest very much depends on energy has and the results of any talks between UniCredit and Commerzbank. When it comes to the mix of our cash and share buyback in our dividend policy, I assume they have been to subtle in our color coding. So we have now the first trends of the share buyback up to EUR 1.2 billion, where we very quickly received the ECB approval and just wait for the finance agency to follow. We will look as we have done in the past years we will talk to our investors and then decide on the final mix. It's very clear and we said that also beforehand that we will increase the share of dividend because that is also the feedback that we received from investors that they want to see more dividends. So you can assume that at least 50% of the capital return will consist of dividends.

Next question comes from Benjamin Goy from Deutsche Bank.

You reiterated income guidance assumes a pickup in run rate about EUR 100 million. Now you mentioned a couple of points why this should be the case in particular rates, which seems to be hopefully given. Just wondering where do you think are still the moving parts in terms of volume growth or deposit betas where there could be a surprise or you have actually good visibility to a much better run rate in the second half and going into '27?

Benjamin, thanks for the question. Yes, as you rightly say, first half of the year actually was EUR 4.1 billion run rate of the NII, therefore it stable compared to the previous quarters despite lower rates and we've already seen as we expect the impact of lower rates, especially in Poland in the first half of the year. So for the second half of the year with the current Polish rates expectation being flat, we rather expect a positive impact from mBank given the volume growth that we are seeing. The biggest part in the uptick of the run rate of our NII in the second half will come from the replication portfolio. which will continue to actually roll into higher rates and, therefore, gain more traction. And then lastly, with the beta being stable, broadly in the portfolio and volume growth expected on the deposit loan side towards the end of the year, we expect a slight impact from that. And then lastly, concluding with the ECB rate hike that we just saw and the landscape that we have ahead of us that should clearly also support that stronger trajectory in H2. And therefore, we are confident to reach the EUR 8.6 billion in total for the full year.

And maybe a second question, if I may. Have you seen -- I mean, the numbers are ongoing and you don't see an impact from your new large shareholder. Is there anything you noticed from an early indicators, call it, RFPs in corporate clients or wealth management in June, July?

No. I mean, luckily not. As I said also in my speech, I mean, we are very grateful for the trust and the loyalty of our clients, which is clearly supported by the high resilience and commitment of our team members who are out there to serve our clients. And actually, rather the contrary, I mean, look, on our loan growth volume, which has been 16% up, look at our volume growth and securities volumes, specifically the discretionary portfolio management which is part of advisory, which is up 20%. We are in the lucky situation that clients value our business model, our value proposition and therefore, are loyal, and we intend to keep it like that, but it's indeed an effort if you have a lot of noise outside.

Question comes from Jeremy Sigee from BNP Paribas.

You gave some quite mix. Sorry, I don't know if you can hear me. The question...

Jeremy, can you just start again because I think you -- we didn't hear the beginning of your talk.

I think I started talking before I was put into the call. Two questions, please. Number one, you talked about German corporate sentiment, and you gave some slightly mixed comments. So there were some positive including new orders, but you also noted some areas of weakness in sentiment. So could you just expand on that topic a bit more from your conversations with all customers, particularly in Mittelstand? What are the strong points? What are the weak points. And then my second question on the unit credit situation. I appreciate you need to talk to them and you need to form a joint view. Do you have any stage from your point of view, on what are the most promising areas among their proposals or among what they can bring in terms of cooperation?

Okay. Thank you, Jeremy. So first, on sentiment. Indeed, I would say it's kind of a mixed bag, as I said. So when you talk to corporate clients I mean they clearly see the reforms taken by the government, however, and they appreciate that. However, they want to have more and faster. That is the story on that. And if you look on the investment side, we see a lot of investments happening the unfortunate thing so far is that still a large part of the investments take place in Europe or even abroad or in the U.S. . And then clearly, you have a lot of volatility as we speak. So you have a good number when it comes to order data. If you have good numbers when you have come to sentiment, but then on the other side, you still have the energy price situation. You still have the ongoing Middle East war. And now we have this new complexity space like that, which is the ongoing heat in Europe and the results of that. So it's basically yes, it's stable and -- but we expect to see more recovery in the coming quarters, specifically when we really see for these positive results of the reforms kicking in and the sentiment further improvement and improving and hopefully also the end of the Middle East conflict. When it comes to your second point, I mean we will need to sit down and to talk, but we clearly will how to see whether we can join forces on specific things on large investment programs, which are not bringing us in difficulties because of the competitive situation we will definitely need to compare products and value propositions, whether we can strengthen each other on that. And then clearly, at a certain point in time, we should also talk and see whether we can create any synergies by combining operations in the midterm target picture. So very much the things you would expect when two banks come together both very successful.

And the next question comes from Chris Hallam from Goldman Sachs.

On the RWA -- can you hear me now?

We can hear you, Chris.

So just 2 questions on RWA. On the RWA efficiency measures, would there be any offsetting impact from the output floors in late years, i.e., with the approvals you receive take you below 72.5% of standardized in which case you need to give some of that back as the output floors kick in? And then second, you said on the RWA approval measures, they may reduce the SRTs you do this year. Is that I guess, is the overlap on the specific RWAs, i.e., the bucket you'd approval for is what you had amounted for SRT? Or is that just you're solving for an overall capital tailwind from RWA management? Or is lower SRTs part of sort of the quid pro quo for the ECB approval. So anything just to understand that overlap? And then if you could also comment on how you see SRT pricing today. .

Yes, Chris, let me start with the second question on the RWA release that we are expecting once the model change has been approved. So approval, as we stated, we expect during Q3 and then we have a time line until Q2 next year in which we gradually see these release coming in. We did not have these incorporated in the original figures for Momentum 2030. So you could see those coming in on top and providing and giving us optionality, quite frankly, in how we're managing RWA and generally our book. So it could have an impact on SRTs, but mostly on timing in terms of us having more flexibility in when we would go for relief of RWA and hence, also for capital. When it comes to RWA -- sorry, to SRT pricing, we actually did an SRT in Q2. We had around EUR 2.2 billion in relief. And as we already expected, when we had our conversations in the last quarter, pricing at the moment is quite favorable for this. So we were slightly better off than the originally planned for 100 basis points per RWA. So we saw slightly more favorable pricing in the market. And regarding your first question, on the RWA relief and the expectation in line with the output flow. That's actually a pretty good question apparently. The end game, if you want, so for this is not yet final, especially when we're looking at the impact on unrated corporates, generally, I think we can rather look optimistically into this, and we will revert once we have more clarity on the impact.

And the next question comes from Máté Nemes from UBS.

I have 2 questions, please. The first 1 is just a follow-up on the IRB scope changes. Could you clarify which areas the scope ranges pertain to? And what would be the approximate benefit here? And secondly, a question on deposits. We've seen some PCBS deposit decline in the second quarter, you also highlighted that some fast-moving deposits, site accounts move to competitors. Could you comment broadly on the competitive nature in the market? And what does that do to liability margins? Have you changed anything on commercial strategy and how you intend to protect your liability margins while reaching higher deposit levels or higher volumes that you care also alluded to when talking about the NII outlook.

I mean the deposit competition is very high as we speak. I mean, we have new entrants on the scene very attractive offerings offering partly 4% and stuff like that, that's not profitable from our standpoint. So we -- a valid situation, we also accept the fact and that's also embedded in our planning that we let certain deposits go because, as you know, this is -- it's a certain group of clients which we have specifically the ones who are more digital native. So it's also specifically for us at Comdirect who are jumping around to say it like that. And I'm looking for the best interest rate for -- and therefore, it was a clear decision from our side not to participate in these offers and to compete against that and have that also in our own planning included. We will, however, also go out now with certain combined products both for Commerzbank as for Comdirect, how this runs, but it's more really a more midterm thinking of gaining clients to also stay with us tools to do bring their complete banking relationship to us than just only focused on the so-called interest rate surface.

Yes. And third question regarding the model changes. I mean, Watson scope is broadly the corporate book, but it's only part of the model, so partly addressing the book. The majority of the effect is coming from Commerzbank AG. We also expect a slight effect coming from mBank, but that's effectively the changes are wishing now.

Can we go for the next question?