Commerzbank sees uphill struggle to boost profits in 2019
Germany's second-biggest lender Commerzbank on Wednesday said second-quarter profits were steady, but cautioned any increase in the full-year bottom line looked increasingly out of reach.
Net profit at the Frankfurt-based firm shrank 0.3 percent, to 271 million euros ($304 million), beating forecasts from analysts surveyed by Factset.
Revenues fell back 2.2 percent, to 2.1 billion euros, even as Commerzbank succeeded in boosting turnover from interestbearing products as it continued to add customers.
Looking ahead to the full year, the bank expects "higher underlying revenues" compared with 2018's 8.6 billion euros and "a slight increase in consolidated net-income" from 865 million euros last year, it said in a statement.
But "this target has become significantly more ambitious given the earnings development in the first half of the year, the noticeable worsening of the macroeconomic situation, and the increasingly uncertain geopolitical situation," Commerzbank added.
"Challenges continue to increase for the industry and for us," chief executive Martin Zielke said, even as he highlighted a net gain of 108,000 customers in the retail and small business baning division.
One headwind could intensify as soon as September, as the European Central Bank weighs plunging the interest rate on banks' deposits further into negative territory -- penalising lenders who park cash at the institution.
In April, Commerzbank gave up on a high-stakes potential merger with rival Deutsche Bank, saying it would maintain its independent strategy focused on retail banking and small- and medium-sized business clients.
But Zielke said the bank was considering whether pressing on "might require further investments".
In the second quarter, operating, or underlying profit at Commerzbank fell back 25.5 percent, to 298 million euros, as it set aside more cash to cover potential risks.
And its return on tangible equity -- a key measure of bank profitability -- was flat at 4.3 percent, and short of its 2020 target of "between five and six percent".
Commerzbank's performance should allow it to pay out a dividend at the same level as 2018, at 20 euro cents.