Commerzbank reports Q2 loss as restructuring bites
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.