Commerzbank profit beats forecasts as CFO downplays chances of ECB rate hike

CNBC.com with Reuters
Don't think ECB rates will rise in the near future: Commerzbank CFO

Commerzbank beat expectations on Tuesday after it posted a 28 percent increase in first-quarter net profit, benefiting from a positive one-off boost at its asset run-off unit.

Here are some of the highlights:

  • Net profit reached 217 million euros ($236 million), versus analyst forecasts of 107 million euros, according to Reuters
  • Operating profit came in at 314 million euros during 2017's first quarter
  • Common Equity Tier 1 ratio rose to 12.5 percent, compared to 12 percent in Q1 2016

Speaking on the back of the results, Commerzbank's Chief Financial Officer Stephan Engels told CNBC that the first quarter reflected what he'd call a good start to the year.

In its earnings, the bank said its outlook remained unchanged and that it hoped to keep its cost base stable and book the first part of charges related to its current restructuring program during the course of 2017.

Even with a solid start to the year, the bank's chief executive, Martin Zielke, said in a statement that it would take time for the group's growth to be sufficient enough "to significantly outweigh the burden resulting from the negative interest rate environment."

Throughout Europe, banks have been struggling as of late to deal with ultra-low interest rates as they battle to clean up their balance sheets in the wake of the global financial crisis.

Jens Weidmann
Bundesbank president: Did not support further ECB stimulus

Speaking on the current rate environment and adjusting to potential future monetary policy changes by the European Central Bank, the CFO told CNBC that the lender was "interest rate sensitive" and didn't expect to see rates rising quickly over the coming months.

"What is my expectation, I don't think we will see the interest rates really going up on the short and in the too-near future."

"However, yes we – and I think rightfully so – are having a discussion when and how will the ECB possibly change that approach to interest rates," Engels said, adding that he didn't think the firm's operational focus would change if rates went higher.

The ECB left its benchmark interest rate on hold at zero percent at last month's monetary policy meeting, however its president Mario Draghi indicated that downside risks facing the euro zone's economy had shown signs of further decline, and that the cyclical economic recovery of the region was "becoming increasingly solid".

Commerzbank's post-Brexit future

Still focussed on customer base in the UK despite Brexit: Commerzbank CFO

With many market-watchers keeping a lookout to see if any banks will make any strategic or physical moves after Brexit, Commerzbank told CNBC that the lender was still focused on its U.K. customer base.

"Yes, there is a broader discussion on what will happen to the euro clearing and I think there are some first decisions taken by other banks, but our setup, I think, is very much designed to our customer base and will stay unchanged," said Engels.

Following the beat on net profit, shares of Germany's second-biggest listed bank rose near the top of the STOXX 600, climbing over 2.5 percent in early afternoon London trade.