Shares of Commerzbank AG (CRZBY.PK) were declining around 2 percent in the morning trading after the German lender reported Wednesday a loss in its second quarter, compared to profit last year, hurt by significant restructuring charges and weak revenues. Looking ahead, for fiscal 2017, the Bank is expecting a slightly positive net result.
Martin Zielke, Chairman of the Board of Managing Directors of Commerzbank, said, “We have booked the provisions for the personnel reductions early and in full and have made further progress in the implementation of our strategy. We are ahead of target for client growth, partly because we have invested. However, it will take a while for this client growth to be reflected in revenue growth. In our two transformational years 2017 and 2018, we are thereby laying the foundations for a sustainably higher profitability.”
For the second quarter, net result was a loss of 637 million euros, compared to profit of 215 million last year. Loss per share was 0.50 euro, compared to profit of 0.18 euro a year ago. Pre-tax loss was 624 million euros, compared to profit of 311 million euros last year.
The latest results were hurt by restructuring charges of 807 million euros, compared to 40 million euros a year ago. The company said the charges this year were lower than the originally expected charges of around 1.10 billion euros, split between 2017 and 2018, due to the personnel reductions already implemented, staff turnover, and expected efficiencies in staff transfers and replacements.
The operating profit for the second quarter came in at 183 million euros, down from 351 million last year, due to slower markets.
Loan loss provisions stood at 167 million euros in the quarter, down from 187 million euros a year ago.
Revenues for the second quarter amounted to 2.07 billion euros, lower than prior year’s 2.24 billion euros. In the Private and Small Business Customers segment, revenue declined to 1.11 billion euros from 1.23 billion euros a year ago.
The company’s net interest and trading income declined to 1.243 billion euros from 1.272 billion euros last year.
For fiscal 2017, the Bank expects the result of the second half of the year to benefit from positive exceptional revenue items of more than 390 million euros stemming from sales and revaluations.
Commerzbank said it is well on track with the implementation of its “Commerzbank 4.0” strategy and has further improved its Common Equity Tier 1 ratio.
The Bank aims for a CET 1 ratio of…