Commerzbank, Germany's second-biggest lender, said it would set aside slightly more money for bad loans this year as the economic environment deteriorates.
"In 2012 we fulfilled the prerequisites for the realignment of the Bank. Initial measures are taking effect, but one thing is clear,there is a long way to go," Chief Executive Martin Blessing said on Friday.
Earlier this month, Commerzbank posted a slump in 2012 net profit to 6 million euros ($8 million) from 638 million a year earlier.Its loan loss provisions rose to almost 1.7 billion euros from 1.4 billion.
The bank, which received an 18 billion-euro government bailout at the height of the financial crisis, has warned that more charges are yet to come. It will take a hit of around half a billion euros in the first quarter of 2013 from a move to cut 4,000 to 6,000 jobs by 2016.
Recent data showed that Germany's economy shrank in the fourth quarter more than at any time since the height of the 2009 financial crisis and may have underperformed the wider euro zone for the first time since then.
Most economists, however, expect Germany's economy to grow, albeit weakly, in the first quarter of the year.
Commerzbank said it expected a decrease in uncertainty to lead to a revival of the German economy early in 2013 already and saw a chance of strong growth in 2014.
It did not provide a more detailed outlook on its 2013 earnings. In November, it lowered its 2016 return on equity (RoE) target to roughly 8 percent at group level, setting a goal below the industry's average cost of capital of 10-12 percent.