The second largest German commercial bank Commerzbank reported high-than-expected quarterly results. The bank increased its customers and benefit from the sale of assets. The net profit of Commerzbank decreased by 5.2% to 183 million EUR, as the bank has set aside more money for problem loans in the shipping industry. The finance results are higher than the expected profit of 170.3 million EUR.
The ratio of common equity Tier I (CET1), which is a key indicator of financial strength, rose by half a percentage point. The amount of funds set aside for credit losses was in line with expectations, but strong increase of CET1 was a pleasant surprise, according to the analysts.
In response to low interest rates and tighter regulations, the CEO of the bank said in September that it plans to cut 9,600 jobs, suspends dividend and shrink securities trading. This is the biggest reform at Commerzbank since the financial crisis. Over the next four years the Board of Directors plans to increase the customer base of individuals with 2 million people.
Shares of Commerzbank depreciated with 1.55%.
The unit for private and small corporate clients added about 140,000 new customers in the fourth quarter. During this period, the operating profit of this division growing by 3.5% yoy, after the reduced costs offset falling revenue. Unit corporate clients reported a jump of 40% in operating profit.
The planned restructuring measures, including job cuts would have to cut costs to 6.5 billion EUR and thus cost profit to fall below 66% by 2020. Commerzbank does not intend to resume the payment of dividends, while not held the majority of staff cuts in 2019. The negative interest rates decreased net interest income to gross 277 million EUR.