Finance

Finance

Commerzbank posts steep loss for second quarter

06 August 2009 17:03 (UTC +04:00)

Baku-APA-Economics. Commerzbank reported a sharp second-quarter loss on Thursday and raised bad loan provisions, while working on integrating the loss-making Dresdner Bank and stressing it would again turn a profit.
Commerzbank, the second-biggest German bank, joined a list of big banks which have unveiled weak results when it posted a net loss of 746 million euros (1.08 billion dollars).
That compared to a profit of 200 million euros in the same period of 2008.
The result was much worse than an average analyst forecast for a loss of 636 million euros compiled by Dow Jones Newswires.
"I cannot be satisfied" with the results, finance director Eric Strutz acknowledged during a telephone press conference.
"But we are advancing by stages, we will become profitable once again," he stressed.
In the first quarter of the year, Commerzbank, in which the state owns a stake of 25 percent, had suffered an even bigger net loss of 861 million euros.
But the third quarter had gotten off to a "good start," Strutz said.
Commerzbank chairman Martin Blessing said in a statement that "2009 will remain a challenging year but we are heading in the right direction."
The bank reported an operating loss of 201 million euros in the three-month period, better than its first-quarter loss of 591 million euros.
The acquisition of Dresdner Bank weighed on the results, forcing Commerzbank to book another 216 million euros in charges from a projected total of around two billion euros.
Blessing said his bank was "running perfectly to schedule with the integration of Dresdner Bank."
But Commerzbank more than doubled provisions against risks and losses to 993 million euros as it braced for loan defaults from recession-hit businesses.
It is also exposed to slumping real-estate markets in Britain, Spain and the United States, Strutz said.
The bank depreciated the value of risky assets by 621 million euros, on top of 5.8 billion euros in write-downs since the beginning of 2008.
"Due to the ongoing difficult markets, a forecast for all of 2009 is still not possible," the statement said.
Other European banks reporting weak results this week included Britain’s state-controlled Lloyds Banking Group, which suffered a first-half loss of 3.124 billion pounds (3.7 billion euros, 5.3 billion dollars).
In Ireland, Allied Irish Bank reported a first-half loss of loss of 872 million euros owing to damage from the Irish property market meltdown and a deep recession.
Italian banking giant Unicredit said its second-quarter net profit fell by 74 percent in the second quarter to 490 million euros, while French peer Societe General said its had lost 52 percent to 309 million euros.
A positive development at Commerzbank was an increase in its Tier 1 ratio, an important indicator of financial health, to 11.3 percent.
To raise badly-needed cash, it sold stakes in the industrial gases group Linde, the airline Lufthansa and the conglomerate ThyssenKrupp, earning 328 million euros in the process, Strutz said.
The bank planned to reimburse 18 billion euros in state aid by 2011 if financial markets stage a strong recovery, the statement added.
Blessing added that lending to German-based companies stood at a record 134 billion euros, amid a controversy over whether commercial banks are squeezing off business credit needed to pull Europe’s biggest economy out of its worst recession since World War II.
Shares in Commerzbank had posted strong gains in early trading, but in midday deals they showed a loss of 1.86 percent to 5.80 euros on the Frankfurt stock exchange, while the DAX index on which they are listed was 0.65 percent higher overall. Source: AFP