German lender Commerzbank AG (CRZBY.PK) Tuesday reported a loss for its first quarter compared to a profit last year, as it recorded 493 million euros in restructuring expenses related to staff reductions. Provisions for loan losses also increased from last year.
Martin Blessing, chairman of the board of managing directors stated, "...Furthermore, we have begun to implement the planned investments in the future of the Bank...The positive effects from this should increasingly become visible from the coming year onwards."
Pre-tax loss in the first quarter stood at 24 million euros, which included the restructuring expenses. This compares with a profit of 542 million euros in the prior year.
In the middle of last month, the firm had announced that it expected to report a net loss in its first quarter, impacted by one-off effects due to its planned job cuts, which will result in restructuring expenses of about 500 million euros.
In January end, Commerzbank had announced its plan to slash 4000 to 6000 jobs at the Group level until 2016.
In the first quarter, net loss attributable to shareholders was 94 million euros, as against a profit of 355 million euros in the previous year.
Operating profit dropped to 469 million euros from 576 million euros last year, mainly due to deterioration in interest rate environment.
Revenues before loan loss provisions totaled 2.46 billion euros, compared with 2.58 billion euros a year before. Net interest income declined to 1.36 billion euros from 1.69 billion euros last year.
Net commission income was 847 million euros, down from 864 million euros reported last year. Meanwhile, net trading income climbed to 317 million euros from 164 million euros in the preceding year.
Operating expenses were 1.72 billion euros, compared to 1.79 billion euros in the prior year. Provisions for loan losses increased to 267 million euros from 212 million euros a year ago.
Core Tier 1 ratio declined 0.5 percentage points since end of December 2012, to 11.5 percent, mainly due to first-time application of new accounting regulations for pension commitments, the bank said.
Commerzbank continues to assume operating profit for full-year 2013 to be shaped by ongoing pressure on revenues, slightly increasing loan loss provisions and an investment-related increase in costs.
It still expects to maintain a Common Equity Tier 1 ratio, taking into account the transitional regulations of Basel 3, of significantly more than 9 percent.
On Frankfurt's Xetra, Commerzbank shares are currently trading at 11.06 euros, up 2.31 percent.
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