Commerzbank Q4 Profit Beats, Outlook Positive

by Ike Obudulu Posted on February 14th, 2019

Commerzbank AG (CRZBY.PK) shares were gaining around 5 percent in the morning trading in Germany after the lender reported higher profit in its fourth quarter with improved net interest income. Looking ahead, the bank said it will concentrate on further growth in the core segments, and is targeting higher underlying revenues in 2019.

Amid the challenging market environment, the Bank said it will continue with its growth strategy, and is targeting an average revenue growth of 3 percent per year.

Since the European Central Bank has signaled a reduction of the SREP requirements by 25 basis points, the Bank is targeting a CET 1 ratio of at least 12.75 percent by the end of 2019.

Further, Commerzbank is planning for a cost base below 6.8 billion euros in 2019, while the drag from the risk result is likely to be at least 550 million euros.

The Bank is planning to maintain a dividend for financial year 2019 at a level comparable to that intended for 2018.

Commerzbank added that it will further increase its digitalisation efforts by revamping its head office, which should contribute to a targeted cost base of 6.5 billion euros in 2020.

Stephan Engels, Chief Financial Officer of Commerzbank, said, “We kept our operating expenses below EUR6.9 billion despite high investments. This means we are on track to meet our cost target of EUR6.5 billion in 2020.”

In its fourth quarter, consolidated profit attributable to Commerzbank shareholders climbed 50.8 percent to 113 million euros from 75 million euros last year. Earnings per share improved to 0.09 euro from 0.06 euro last year.

The operating profit was 240 million euros in the quarter, higher than 122 million euros a year ago.

Revenues excluding exceptional items edged down 0.7 percent to 2.15 billion euros from 2.17 billion euros a year ago.

Net interest income was 1.24 billion euros, up 9.3 percent from last year, while net commission income dropped 3.2 percent to 754 million euros.

Private and Small-Business Customers or PSBC underlying revenues totaled 1.19 billion euros, slightly lower than 1.22 billion euros a year ago. The Corporate Clients segment’s underlying revenues dropped to 857 million euros from 896 million euros a year ago.

In Germany, Commerzbank shares were trading at 6.50 euros, up 4.53 percent.

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