Commerzbank posts 'solid' operating profit in first quarter

Commerzbank reported on Tuesday that it generated a “solid” operating profit in the first quarter of 2017, as it further improved its Common Equity Tier 1 ratio.

The Frankfurt-listed bank - Germany’s second largest - said the implementation of the 'Commerzbank 4.0' strategy announced in autumn 2016 was running according to schedule.

Its operating profit improved in the quarter to €314m, from €282m year-on-year, while revenues before loan loss provisions increased slightly to €2.37bn from €2.32bn, although - as expected - there was no repeat of the significant positive one-off effects that occurred in the same quarter of last year.

Excluding those, revenues rose by €116m year-on-year.

That positive trend in revenues was mainly put down to a rise in net commission income on the back of higher volumes in securities, the board said.

Loan loss provisions stood at €195m in the first quarter, compared to €148m a year ago.

The year-on-year increase in loan loss provisions was due to higher loan loss provisions for ship finance, Commerzbank claimed.

It said the non-performing loan (NPL) ratio was 1.5%, which the board explained was “still good” compared to its European peers, reflecting the bank's reportedly healthy risk profile.

Operating expenses came to €1.87bn, falling from €1.89bn in the first quarter of 2016.

Those expenses already included the whole of the bank’s levy for 2017, which amounted to €171m.

The pre-tax profit stood at €314m for the period.

After deduction of €77m in taxes and minority interests of €20m, Commerzbank made a net profit of €217m, improving from €169m year-on-year.

Earnings per share came in at 17 euro cents in the first quarter, up from 13 cents 12 months ago.

“Commerzbank had a good start to the new year and achieved a decent operating profit in the first quarter,” said chairman Martin Zielke.

“We are on track with the implementation of our Commerzbank 4.0 strategy.”

Zielke said the private and small business customer segment saw further growth in customer numbers and assets in the first quarter.

“In the corporate clients segment we launched a €6bn credit initiative for German small-to-medium enterprises.

“But it is also clear that it will take some time for our growth to be sufficient to significantly outweigh the burden resulting from the negative interest rate environment.”