Commerzbank, which said it's forgoing its dividend to invest in the core business, reported profit that missed analysts' expectations on losses from non-core assets and a decline in consumer banking earnings.

Third-quarter net income was €78 million compared with a loss of €687 million a year earlier, the Frankfurt-based lender said in a statement today.

Germany's second-largest bank last night said dividend payments for 2012 and 2013 are "unlikely" as it prepares to invest more than €2 billion in its core bank and reduce "non-core assets" by more than 40 per cent by 2016.

Banks are restructuring their operations amid changing market conditions of less trading activity while being forced to hold more capital by regulators.

"Despite the overall difficult market conditions we have achieved a solid result in the core bank," Martin Blessing, chief executive officer, said in a statement today.

Commerzbank's core capital ratio remained at 12.2 per cent compared with the second quarter and was higher than the 9 per cent stipulated by the European Banking Authority.

The bank's stock has advanced 16 per cent since the beginning of the year, giving the lender a market value of €8.8 billion.

Commerzbank is winding down more than 30 per cent of its balance sheet by exiting shipping, real estate and public finance to reduce risk and capital requirements while forgoing revenues from those areas.

Bloomberg