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GERMANY-BANKING-EARNINGS-COMMERZBANK
Commerzbank sticks to 2018 goals despite profit slump
FRANKFURT AM MAIN, Nov 8, 2018 (BSS/AFP) – Germany’s second-largest lender
Commerzbank said Thursday it was on track to meet its 2018 targets despite a
slump in quarterly profits as the bank presses on with a major restructuring.
The group posted a net profit of 218 million euros ($249 miillion) between
July and September, down 53 percent on the same period a year earlier when it
benefited from one-off earnings related to real estate sales.
The figure nevertheless beat the 208 million euros forecast by analysts.
Commerzbank’s revenues were down 12 percent to 2.2 billion euros year-on-
year, slightly surpassing forecasts.
Hoping to turn the tide after years of disappointing results, Commerzbank
has embarked on a massive overhaul that includes some 10,000 job cuts by 2020
and a shift away from investment banking to retail banking.
The lender said it had “made further progress” in implementing its so-
called “Commerzbank 4.0” plan.
The bank gained 117,000 customers in Germany in the third quarter, keeping
it on course to meet a target set in 2016 of winning a million new clients by
the end of the year.
“This shows that we have the right strategy. We grow in a highly
competitive market,” chief executive Martin Zielke said in a statement.
“However, the environment remains challenging and although we have made a
lot of progress, we still have some work to do.”
While the lender’s private and small business unit saw growth from the new
customers in the third quarter, Commerzbank’s troubled corporate clients unit
continued to feel the sting from intense competition and record-low interest
rates.
Looking ahead, Commerzbank left its forecasts unchanged, expecting higher
underlying revenues at its private banking arm but lower earnings among
corporate clients.
It remains confident it can pay out a dividend to shareholders this
financial year. Since the global financial crisis in 2008, the bank has only
paid a dividend once, for the 2015 financial year.
Commerzbank also confirmed that it is pencilling in costs of 7.1 billion
euros for the full year, partly due to a digitalisation drive as part of the
revamp.
The group, in which the German state continues to hold a stake of nearly
16 percent after a crisis-era rescue, was one of the worst performers in the
last week’s Europe-wide health checks for the banking sector.
The bank was one of 25 lenders who, in the worst-case scenario presented
by the stress tests, would be required to stop paying dividends and instead
build up its capital buffers to weather a severe financial shock.
BSS/AFP/HR/1350