Commerzbank scraps profit target for this year

Commerzbank scrapped its profit target for this year, forecasting a drop in earnings, adding pressure on chief executive Martin Zielke to lower costs further.

Both operating profit and net income will be lower this year, the Frankfurt-based lender said in a statement on Tuesday.

In 2015 Commerzbank posted an operating profit of €1.9 billion and net income of €1.06 billion.

In the second quarter the bank reported a 32 per cent drop in net income, in line with a preliminary release on July 26th.

Record low interest rates and deposit charges, designed to spur economic growth across the euro area, have eroded bank earnings as the cost of holding cash for their clients rises.

With volatile markets clouding revenue prospects, Mr Zielke, who took the helm in May after overhauling the company’s consumer bank, may have to pursue more aggressive cost-cuts.

The bank's two biggest units, consumer and corporate banking, saw negative interest rates cut revenue by a combined €71 million in the second quarter. – (Bloomberg)