Commerzbank profit jumps
February 12, 2015
In 2014, Commerzbank earned seven times more than in the previous year, with income boosted by lower restructuring costs and a better operating performance.
Germany's second largest lender published its full-year report on Thursday showing bottom-line net profit rising to 602 million euros ($682 million) from a meager 81 million euros a year earlier.
In the fourth quarter alone, net profit jumped by 20 percent to 77 million euros, according to the bank. Underlying or operating profit increased by 40 percent to 1.022 billion euros in the whole of 2014, while full-year revenues slipped by 2.0 percent to 9.092 billion euros.
"We have increased operating profit ... and significantly improved our capital base through our own efforts," said Chief Executive Martin Blessing. "In a challenging environment we have posted further growth, have made more loans and increased market share," he added.
Better prospects, but no dividend
Commerzbank, which received an 18 billion euro ($23 billion) government bailout in 2009, has sold underperforming assets and slashed its balance sheet. Its retail banking business won over 532,000 new clients last year under efforts to increase the segment's operating profit to 500 million euros by the end of 2016.
Moreover, Commerzbank was able to reduce its bad-bank liabilities by 32 billion euros, down 28 percent, as it was able to sell underperforming mortgages and real estate loans to the tune of 20 billion euros.
But the lender's target of reaching a 10 percent return on equity (ROE) - a key measure of a bank's profitability - by 2016, still appears out of reach. In 2014, ROE was 7.3 percent.
Looking ahead, CEO Blessing said the market environment was "likely to remain challenging in 2015." Nevertheless, Commerzbank intended to bring about a further increase in business volume and in revenues from its core banking activities. Operating expenses were set to remain stable at approximately 7.0 billion euros.
Blessing also announced that Commerzbank would not pay a dividend for 2014, making 2007 the last year in which the bank shared profits with investors.
uhe/nz (dpa, Reuters, AFP)