Commerzbank forecasts 2020 loss from Wirecard, coronavirus writedowns
FRANKFURT: Commerzbank expects a writedown on loans to collapsed payments firm Wirecard and fallout from the coronavirus crisis to result in a loss for the year, compounding the challenges already facing Germany’s second-largest bank.
The partly state-owned bank, which has been targeted by activist US private equity fund Cerberus, is trying to regain its footing after the exit last month of its CEO and chairman and years of setbacks since the financial crisis.
Commerzbank said in a statement yesterday that given provisions and charges for restructuring it anticipated a loss for the full year. The bank had previously said its goal of turning a profit in 2020 was “very ambitious”.
The 150-year-old bank’s grimmer outlook follows a 21% fall in net profit in the second quarter and an increase in expectations for charges for credit losses for the full year.
“The effects of the coronavirus pandemic and the ongoing difficult economic conditions have persisted in the year to date and continued to have a significant impact,” Commerzbank said.
Net profit in the April-June quarter of €220 million (RM1.09 billion) was down from €279 million a year earlier, but was above a consensus forecast of €95 million and saw Commerzbank’s shares rise by 4.3% to €4.74 at 0856 GMT.
Analysts at Jefferies said the second quarter is likely to be the only profitable one after Commerzbank said provisions for credit losses had risen to €469 million from €178 million.
Some €175 million related to Wirecard, which collapsed last month after an accounting scandal. – Reuters