Commerzbank could end up with a bigger loss from investments related to U.S. subprime mortgages than it had first expected, Chief Executive Klaus-Peter Mueller said on Thursday.
The bank had previously told investors it would put aside roughly 80 million euros ($111.9 million) to cover losses from about 1.2 billion euros of debt products it bought that included subprime mortgages.
But Mueller shied away from reiterating that estimate, instead flagging a potentially bigger fallout, as Reuters had reported earlier this week.
"Possible additional losses resulting from the subprime crisis will not have a significant impact on our dynamic development from today's point of view," Mueller said ahead of an event in Frankfurt for its investors.
He said Germany's second-biggest listed lender would be able to make its profitability goal of a net return on equity of 12%. This would not, however, include one-offs such as a heavy loss from subprime investments.
Commerzbank shares lost initial gains on the news and were nearly flat at 28.91 euros, still outperforming a 1.8% decline in the DJ Stoxx European bank index.
Mueller's comments follow an unexpected warning from the head of Deutsche Bank that its third-quarter profit will suffer after what he said were mistakes in the crisis triggered when high-risk U.S. home borrowers failed to make mortgage payments.
Germany had been hit hardest in Europe by the storm that this caused in credit markets.
Although attention has moved to Britain, where the government has guaranteed deposits at troubled mortgage lender Northern Rock, investors remain nervous that there could be worse to come in Europe's biggest economy.
A bigger subprime bill could threaten Commerzbank's pledge to significantly beat its profit target for the year and put a fly in the ointment for what sources have said will be Mueller's last year as chief executive.
The bank has said a return on equity of more than 12% was equivalent to a net profit of 1.5 billion euros.
It made almost 1 billion euros excluding one-off items in the first half, but said weaker market conditions in the second half could weigh on results.