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Commerzbank 2018 Net Result Surges

German lender Commerzbank AG (CRZBY.PK) posted a net result attributable to shareholders of 865 million euros for 2018 compared to 128 million euros in 2017. The earnings significantly improved on the back of the successful growth in both core segments.

The operating profit for 2018, at 1.245 billion euros, was 97 million euros higher than the previous year's figure of 1.149 billion euros.

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."

Group revenues stood at 8.570 billion euros for 2018 compared to 8.764 billion euros in the prior year. The Bank increased its underlying revenues by a total of 441 million euros to 8.648 billion euros in 2018 compared to 8.208 billion euros last year. This shows the quality of revenues has been substantially improved. In 2017, revenues were boosted by exceptional items and valuation effects of 557 million euros, whereas in 2018, these effects amounted to minus 78 million euros. This revenue swing was largely compensated for by the growth in the segments' operating business.

Revenues after adjustment for exceptional items were up 5% year-on-year despite margin pressure.

Commerzbank noted that it will concentrate on further growth in the core segments, and is targeting higher underlying revenues in 2019. Since the European Central Bank has signalled a reduction of the SREP requirements by 25 basis points, the Bank is targeting a CET 1 ratio of at least 12.75% by the end of 2019.

The Bank said it 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. The Bank will continue with its growth strategy, and targets an average revenue growth of 3% per year. 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.

The Board of Managing Directors proposes dividend of 20 cents per share for
financial year 2018.

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