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Commerzbank Profit Plunges; Says EBA Capital Target Surpassed

5/9/2012 2:17 AM ET

Commerzbank AG (CRZBY.PK) on Wednesday said its first-quarter profit fell from last year, amid weak trading and increased market valuation of liabilities.

On the positive side, the lender has already surpassed the original capital target of 5.3 billion euros set by the European Banking Authority by about 1.1 billion euros as of March 31.

Martin Blessing, Chairman of the Board of Managing Directors of Commerzbank, said, "Despite challenging markets we have made a solid start to 2012 and have not only achieved the EBA capital target earlier than demanded, but even surpassed it"

First-quarter operating profit plunged to 584 million euros from last year's 1.14 billion euros. The results included a negative effect of 158 million euros from the increased market valuation of liabilities. In the previous year, results benefited from one-off gain of 358 million euros from the measure to improve the capital structure.

Adjusted for one-off effects, operating profit is at a stable level with the strong opening quarter of 2011, Commerzbank noted.

Profit attributable to shareholders plunged to 369 million euros from 985 million euros a year ago, as net interest income decreased over 17 percent to 1.43 billion euros.

Net trading income reduced to 457 million euros from 519 million euros. Net commission income was also 17 percent lower at 843 million euros.

Those declines were partially offset by lower loan loss provisions and operating costs. Loan loss provisions dropped to 212 million euros from 318 million euros and operating expenses were reduced to 1.8 billion euros from 2.2 billion euros.

Revenues before loan loss provisions plunged to 2.59 billion euros from 3.62 billion euros due to the positive one-off effect last year and increased market valuation of the Bank's own liabilities as well as the de-risking in non-core areas.

All the segments of the Core Bank were profitable. Operating profit slipped slightly in Private Customers segment, as revenues continued to be impacted by the major reservation on the part of customers in the securities segment and low interest rates.

CFO Stephan Engels said, "For the year as a whole we are aiming for loan loss provisions of a maximum of EUR 1.7 billion. We also have the costs firmly under control. We are on the way to overachieve our cost guidance of EUR 7.6 billion for the year as a whole."

The lender continues to aim for a solid operating profit for 2012 in the Core Bank.

The stock fell 3.35 percent to close at 1.53 euros on Tuesday on a volume of 39.13 million shares.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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