Commerzbank beats earnings expectations

BERLIN: Germany’s second biggest lender Commerzbank yesterday posted better than expected earnings for the second quarter, although it expects slightly higher costs for the full year as it pushes on with restructuring. In the three months ending June, the bank recorded net profit reaching 272 million euros, well above the 213 million euros forecasted by analysts.

The result was a sharp improvement from a loss of 640 million euros during the same period a year ago when the bank was forced to book significant charges due to a restructuring plan that included redundancies for 9,600 posts. However, the bank now sees costs rising slightly to 7.1 billion euros for the full year from 7.0 billion forecasted previously, due mainly to investments in its digitalization drive.

“Given the intense competition, particularly in corporate clients, we have slightly adjusted our outlook. Our growth initiatives are already working. Of course, it will take some time for them to take full effect,” said Commerzbank’s board chairman Martin Zielke.

The bank still believes that it can pay out a dividend to shareholders for the financial year. Since the global financial crisis in 2008, it has only paid a dividend once to shareholders, for the 2015 financial year. Commerzbank had been struggling since it had to be bailed out by the German government, which is still a shareholder with a stake of about 16 percent.

Shares in Commerzbank shed 1.6 percent to 8.80 euros at 1125 GMT, underperforming the DAX bluechip index that was up nearly one percent. Commerzbank’s stock has lost 30 percent of its value since the start of the year, giving it a market capitalization of just over 11 billion euros-lower even than some of the companies listed on Frankfurt’s mid-size MDAX index. — AFP