Commerzbank beats second quarter profit forecast but sees higher costs
Revenue from corporate customers noted lower in 2018 amid ‘intense competition’
Germany’s second-largest bank, still partly owned by the German government, is overhauling its business by reducing staff, digitising its back office and expanding its retail customer base
Germany’s Commerzbank sounded cautious after beating second quarter profit forecasts on Tuesday, saying costs would be higher than expected this year and it was facing “intense competition” for corporate clients.
Germany’s second-largest bank, still partly owned by the German government, is overhauling its business by reducing staff, digitising its back office and expanding its retail customer base.
It reported a net profit of €272 million for April-June, reversing a €640 million loss a year ago when it was hit by restructuring costs.
While those costs are not as heavy this year, the bank lifted its estimate for operating costs for the full year, to around €7.1 billion from a previous €7.0 billion, citing continued investment in technology.
Revenues from its corporate clients would be lower in 2018 than last year amid what the bank called “intense competition”.
Commerzbank’s shares were trading down 1.8 per cent, after falling more than 3 per cent in early trade.
“Our growth initiatives are already working,” chief executive Martin Zielke said in a statement. “Of course, it will take some time for them to take full effect.”
The restructuring programme, announced in 2016, is due to be completed in 2020.
The bank said that it was on target to pay a dividend for 2018 of 20 cent per share, its first dividend since 2015. – Reuters