Steady growth keeps Commerzbank restructuring ‘on track’
FRANKFURT AM MAIN: Germany’s second- largest lender Commerzbank yesterday reported steady growth in the f irst quarter, saying that it would press on with farranging restructuring plans over the rest of the year.
Net profit increased 28.4 per cent to 217 million euros ( US$ 237 mi l l ion) between January and March compared with the same period last year, the bank said in a statement.
But the group’s revenues grew more slowly, edging up 2.2 per cent to reach almost 2.4 billion euros, while operating, or underlying profit rose 11.3 per cent to reach 314 million.
Revenues would have grown faster had it not been for “significant positive one- off ef fects” in the f irst three months of last year, the statement noted.
Commerzbank had a “good start to the new year and achieved a decent operating profit in the first quarter,” chief executive Martin Zielke said.
The lender’s restructuring drive, which will see it focus more on retail and business customers, was “on track”, he added.
“It is also clear that it will take some time for our growth to be sufficient to significantly outweigh the burden of the negat ive interest rate environment,” Zielke said.
Like other European banks, Commerzbank faces headwinds from the European Central Bank’s ultra low interest rate policy, designed to encourage more lending to the real economy.
Last year net profits plunged 74 per cent last year to 279 million euros.
The group reported that most of its first quarter revenue growth came from higher commissions as clients traded more securit ies with the bank.
Meanwhile, it had to set aside more cash in provisions to cover the risk of loans not being repaid, at 195 million euros compared with 148 million in the first quarter last year.
The bank is especial ly exposed to clients in Germany’s struggl ing shipping sector, but said that its ratio of nonperforming loans was relatively low at 1.5 per cent.
Commerzbank said it had increased its core capital ratio – the size of the buf fer it keeps on hand to weather financial shocks – to some 12.5 per cent, up 0.5 percentage points from the first quarter in 2016.
Looking ahead to the full year, the lender continued to offer no forecast, saying only that it would “further strengthen its market position” whi le focusing on its restructuring plans. — AFP