AFP, Frankfurt Am :
Germany’s second-biggest lender Commerzbank said Thursday its profits jumped in 2018, with growth in its client base and ebbing restructuring costs opening the way for a first dividend payout in two years.
Now halfway through a four-year cost-cutting programme launched in late 2016, the group nevertheless had to trim a key profitability objective and fend off questions about pressure from Berlin for it to merge with larger rival Deutsche Bank.
Net profit at Commerzbank was seven times larger than in 2017, at 865 million euros – slightly short of forecasts from analysts surveyed by Factset.
The fatter bottom line only lifted its return on capital employed (ROCE) -a key measure of banks’ profitability – from 0.6 percent in 2017 to 3.1 percent last year, well short of its 2020 target of above six percent.
That goal would have to be revised down to “between five and six percent,” finance director Stephan Engels acknowledged at a Frankfurt press conference.
Commerzbank had bet on interest rates rising in the 19-nation eurozone once the European Central Bank ended crisis-fighting stimulus measures.
“That hasn’t happened” as policymakers plan to keep rates at historic lows at least until late 2019, meaning “the pressure on profit margins has further increased,” chief executive Martin Zielke said.
On the operational level, Commerzbank was able to lift underlying profits eight percent in 2018 to 1.2 billion euros, although revenues fell two percent, to 8.6 billion euros.
The lender with the yellow triangle logo presented its results weeks after a new round of speculation over whether it could merge with Deutsche Bank, the floundering giant whose twin skyscrapers confront Commerzbank’s HQ in central Frankfurt.
Germany’s second-biggest lender Commerzbank said Thursday its profits jumped in 2018, with growth in its client base and ebbing restructuring costs opening the way for a first dividend payout in two years.
Now halfway through a four-year cost-cutting programme launched in late 2016, the group nevertheless had to trim a key profitability objective and fend off questions about pressure from Berlin for it to merge with larger rival Deutsche Bank.
Net profit at Commerzbank was seven times larger than in 2017, at 865 million euros – slightly short of forecasts from analysts surveyed by Factset.
The fatter bottom line only lifted its return on capital employed (ROCE) -a key measure of banks’ profitability – from 0.6 percent in 2017 to 3.1 percent last year, well short of its 2020 target of above six percent.
That goal would have to be revised down to “between five and six percent,” finance director Stephan Engels acknowledged at a Frankfurt press conference.
Commerzbank had bet on interest rates rising in the 19-nation eurozone once the European Central Bank ended crisis-fighting stimulus measures.
“That hasn’t happened” as policymakers plan to keep rates at historic lows at least until late 2019, meaning “the pressure on profit margins has further increased,” chief executive Martin Zielke said.
On the operational level, Commerzbank was able to lift underlying profits eight percent in 2018 to 1.2 billion euros, although revenues fell two percent, to 8.6 billion euros.
The lender with the yellow triangle logo presented its results weeks after a new round of speculation over whether it could merge with Deutsche Bank, the floundering giant whose twin skyscrapers confront Commerzbank’s HQ in central Frankfurt.
