Commerzbank records 84% drop in profit

8 August 2013

Commerzbank has revealed an 84 per cent drop in profit for the second quarter of 2013 as it put money aside to pay for more risky cash loans.

The German bank, which was subject of an €18.2 billion ($24 billion) bailout from the state, confirmed net income dropped to €43 million from €270 million in the period.

Commerzbank has been increasing capital in recent times to help repay the German government and is reducing staff numbers as a result.

Ratings agency Standard & Poor’s cut the firm’s debt rating to A-, which is four levels above junk status, two months ago claiming poor economic conditions mean it will struggle to increase its earnings sustainably.

Dirk Becker, analyst at Kepler Cheuvreux, told Bloomberg: "It was clear the results couldn’t be good and that has happened. Now we see that core banking operations aren’t doing so well either and the trend in loan-loss provisions hasn’t abated."

The bank did not give a specific 2013 outlook, claiming it will be a year of transition.

By Gary Cooper

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