Com­merzbank re­ports Q2 loss as re­struc­tur­ing bites

Kuwait Times - - BUSINESS -

Ger­many’s sec­ond-largest lender Com­merzbank re­ported a net loss for the sec­ond quar­ter yes­ter­day as re­struc­tur­ing costs hit, but said it still ex­pects to make a profit over the full year.

The Frankfurt-based group booked a net loss of 637 mil­lion eu­ros ($753 mil­lion) between April and June, com­pared with a net profit of 215 mil­lion in the same pe­riod last year. Com­merzbank loaded some 807 mil­lion eu­ros of costs linked to job cuts onto the sec­ond-quar­ter re­sult, part of its strat­egy for a “dig­i­tal trans­for­ma­tion” that will mod­ern­ize its op­er­a­tions.

Mean­while, op­er­at­ing, or un­der­ly­ing prof­its stood at 183 mil­lion eu­ros, on the back of al­most 2.1 bil­lion in rev­enue. Over the rest of the year, the group aims to con­tinue im­ple­ment­ing the plan it has dubbed “Com­merzbank 4.0”.

It aims to dig­i­tize around 80 per­cent of in­ter­nal pro­cesses in the com­ing three years, open an on­line plat­form for con­sumer credit, and deepen its re­la­tion­ships with the “Fin­Tech” (fi­nan­cial tech­nol­ogy) sec­tor of fast-mov­ing in­ter­net star­tups.

Com­merzbank had a “re­strained” sec­ond quar­ter, fi­nance direc­tor Stephan En­gels said dur­ing a tele­con­fer­ence with jour­nal­ists, not­ing that rev­enues had re­mained roughly sta­ble even as the bank had re­cruited more cus­tomers.

Around 500,000 re­tail clients have joined since Oc­to­ber, he said, but they have weighed on prof­its as the bank of­fered in­cen­tives to sign up.

“It will take about 18 months be­fore the new cus­tomers pay off,” En­gels added. Mean­while, Com­merzbank has also signed up more than 3,100 business clients since 2016. And the lender aims to re­duce its loans to the trou­bled ship­ping sec­tor to 3.0 bil­lion eu­ros by the end of the year.

But its rev­enues have been weak­ened by muted per­for­mance on fi­nan­cial mar­kets and low in­ter­est rates. For 2017, Com­merzbank aims for a “slightly pos­i­tive” net re­sult, which will be boosted by some 390 mil­lion eu­ros it ex­pects to make in the sec­ond half from sell­ing off some assets and revalu­ing other hold­ings.

Shares in Com­merzbank were one of the worst per­form­ers on the DAX in­dex of Ger­man blue-chip stocks yes­ter­day, los­ing 1.8 per­cent to trade at 11.01 eu­ros ($13.03) just af­ter 1100 GMT.

This file photo taken on Fe­bru­ary 15, 2017 shows the Com­merzbank Tower in Frankfurt, western Ger­many. — AFP

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