Europe News

Commerzbank fourth-quarter net profit jumps 51 percent, tops expectations

Reuters with
Key Points
  • Commerzbank beat analysts' expectations for fourth-quarter net profit with a 51 percent jump.
  • The German lender is focusing on a major overhaul to its business.
  • It said on Thursday it would further reduce costs this year as it targets a 3 percent growth in revenue per year.
Commerzbank still cutting 9,600 jobs, CFO says

German lender Commerzbank beat analysts' expectations for fourth-quarter net profit with a 51 percent jump as it focuses on a major overhaul.

The bank said on Thursday that it would further reduce costs this year and next and is targeting a 3 percent growth in revenue a year.

Net profit attributable to shareholders of 113 million euros ($127.43 million) was above the 75.7 million euros expected by analysts in a Reuters poll, and 75 million euros a year earlier.

Shares were indicated to rise 4.3 percent at 0642 GMT.

Germany's second-largest listed bank, still partly owned by the government, is overhauling its business by reducing staff, digitising its back office and expanding its retail customer base.

Berlin worried about decline in German economy as lenders face problems

"Our strategy is right and is working. We are growing in terms of customers, lending volume and underlying revenues. We are making progress," Chief Executive Officer Martin Zielke said in a statement.

The restructuring programme, announced in 2016, is due to be completed in 2020.

Speculation of a merger with larger rival Deutsche Bank has heated up in recent months.

Time is running out for Deutsche Bank to turn around on its own, making a merger with rival Commerzbank more likely, two people with knowledge of the matter said last month.

A major investor has been awaiting market reaction to both banks' earnings over the next couple of weeks before deciding on the need for a merger, a person close to the investor said at the time.

Earlier this month, Deutsche Bank reported a bigger-than-expected loss for the fourth quarter and weakness at its investment bank, overshadowing its first annual profit in four years.

Speaking to CNBC Thursday, Stephan Engel, the bank's chief financial officer said: "I don't want to engage in any speculation on this topic."

In terms of the economic environment, Engel also said: "I'm not concerned about a downturn, I think what we will see is that growth will be a bit slower...but still we are talking growth."