First-quarter profits fall at Commerzbank

Germany's Commerzbank saw profits and revenues ease during the first-quarter, despite a jump in customer numbers.

The Frankfurt-based bank said revenues of €2.16bn, compared to €2.22bn a year earlier, had been dented by “exceptional items and valuation effects”. Pre-tax profits fell 25.3% to €225m while operating profits declined 5.6% to €244m.

On an underlying basis, revenues in its private and small business customers unit and in the corporate clients arm saw “slight” year-on-year increases, however. Commerzbank added net 123,000 new private and small business customers during the quarter.

Martin Zielke, chairman of the board of managing directors, said: “Our growth with customers and assets is enabling us to strengthen our revenue base, thereby compensating the effects from low interest rates and margin pressure.”

Chief financial officer Stephan Engels added: “Even in a very competitive environment, the first quarter is proof of the resilience of our corporate clients business and an example of what is possible. The challenge now is to build on this progress.”

Commerzbank expects full-year underlying revenues to be higher than the previous year, while costs are forecast to come in below €6.8bn.

Merger talks between Commerzbank and larger domestic rival Deutsche Bank, which would have created the eurozone’s second-largest lender and were backed by the German government, were abandoned last month, with both sides citing too many associated risks.

However, Commerzbank is still seen as a target for European banks, with both Italy’s UniCredit and Holland’s ING thought to be interested.

RBC Capital Markets said the first-quarter numbers did not indicate the failed merger talks had a negative impact on the business, pointing instead to “new customer acquisitions, strong loan growth and new customers being profitable within 18 months”.

But the bank’s analysts also conceded: “The overview of the ‘seasoning’ of customers does for some years, however, show a decline in revenues per customer compared to customers of the previous year.”