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Commerzbank Q2 Profit Down, Says FY View For Profit Growth Ambitious; Stock Dips

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Shares of Commerzbank AG (CRZBY.PK) were losing around 5 percent in German trading after the lender on Wednesday reported a slight drop in profit in its second quarter hurt by lower revenues. Looking ahead, the Bank expects a slight increase in consolidated net income for the 2019, but said the target has become significantly more ambitious.

The profit outlook reflects a trough first-half earnings development, the noticeable worsening of the macroeconomic situation, and the increasingly uncertain geopolitical situation.

Commerzbank said it will continue its growth strategy in 2019 and expects higher underlying revenues than in the previous year.

The Bank is targeting a Common Equity Tier 1 ratio of at least 12.75% by the end of 2019. Further, the Bank is planning to maintain a pay-out ratio for financial year 2019 at a level comparable to 2018.

Martin Zielke, Chairman of the Board of Managing Directors of Commerzbank, said, "Despite all the successes we have made, challenges continue to increase for the industry and for us. This might require further investments. And this is exactly what we are examining and assessing in our current strategy process."

For the second quarter, profit attributable to shareholders declined slightly to 271 million euros from the prior year's 272 million euros. Earnings per share were 0.22 euros, unchanged from last year.

Operating profit was 298 million euros in the second quarter, down from 401 million euros last year, mainly due to the low fair value result and the higher risk result. This was despite progress in the customer business and higher net interest income.

Revenues for the second quarter were 2.129 billion euros, lower than 2.178 billion euros in the previous year. Adjusted for one-off effects, revenues stood at 2.095 billion euros, compared to 2.160 billion euros in the prior year.

The Private and Small Business Customers segment added 108,000 net new customers in the second quarter. The segment's underlying revenues increased from last year. Meanwhile, the Corporate Clients segment's underlying revenues were down

In Germany, Commerzbank shares were trading at 5.43 euros, down 4.91 percent.

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