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Bank struggles to recover from loans provision
By George Frey |
May 9, 2009, Saturday
|
Print Edition
Print Edition
GERMANY'S Commerzbank AG reported a large first-quarter loss yesterday as the bank, struggling to recover from the effects of the global financial crisis, made provisions for bad loans and investments.
The Frankfurt-based bank said it lost 861 million euros (US$991 million) in the January-March period compared to a net profit of 280 million euos in 2008's first quarter.
However, net interest income, one measure of revenue, was up 70 percent to 1.7 billion euros from just over 1 billion euros in 2008.
The bank had reported a 809 million euro loss in the fourth quarter of 2008, while posting a profit of a mere 3 million euros for the year.
The bank said a detailed forecast for the current year was not possible due to a continued deterioration of the market.
"We have successfully launched the new Commerzbank over the past months and we have laid the foundation to emerge strengthened from the crisis," Eric Strutz, the company's chief financial officer said.
"The synergies created by the Dresdner Bank merger will be realized as expected and beginning in 2011 our customer bank will reap above-average benefits from an economic recovery."
Commerzbank, Germany's second-largest commercial bank behind Deutsche Bank AG, announced the Dresdner Bank deal in August, when Dresdner's parent company, Munich-based insurance and banking company Allianz SE agreed to sell 60 percent of the unit in a deal worth 9.8 billion euros.
But the acquisition and Commerzbank's business since hasn't been able to avoid the financial crisis.
Last year, Commerzbank received 8.2 billion euros in capital from a German government rescue fund and on Thursday the European Commission approved another 10 billion. In return, the government took a 25 percent stake.
The Frankfurt-based bank said it lost 861 million euros (US$991 million) in the January-March period compared to a net profit of 280 million euos in 2008's first quarter.
However, net interest income, one measure of revenue, was up 70 percent to 1.7 billion euros from just over 1 billion euros in 2008.
The bank had reported a 809 million euro loss in the fourth quarter of 2008, while posting a profit of a mere 3 million euros for the year.
The bank said a detailed forecast for the current year was not possible due to a continued deterioration of the market.
"We have successfully launched the new Commerzbank over the past months and we have laid the foundation to emerge strengthened from the crisis," Eric Strutz, the company's chief financial officer said.
"The synergies created by the Dresdner Bank merger will be realized as expected and beginning in 2011 our customer bank will reap above-average benefits from an economic recovery."
Commerzbank, Germany's second-largest commercial bank behind Deutsche Bank AG, announced the Dresdner Bank deal in August, when Dresdner's parent company, Munich-based insurance and banking company Allianz SE agreed to sell 60 percent of the unit in a deal worth 9.8 billion euros.
But the acquisition and Commerzbank's business since hasn't been able to avoid the financial crisis.
Last year, Commerzbank received 8.2 billion euros in capital from a German government rescue fund and on Thursday the European Commission approved another 10 billion. In return, the government took a 25 percent stake.
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