DGAP-News: Commerzbank Aktiengesellschaft / Key word(s): Quarter Results
- Operating profit of EUR314m for first quarter 2017 (Q1 2016: EUR282m)
- Net profit of EUR217m for first quarter 2017 (Q1 2016: EUR169m)
- Revenues before loan loss provisions up slightly at EUR2.4bn (Q1 2016: EUR2.3bn) -
- Common Equity Tier 1 ratio increased to 12.5% (end of March 2016: 12.0%);
- Implementation of 4.0 strategy on track - good customer growth in the first quarter
Commerzbank generated a solid operating profit and further improved its Common Equity Tier 1 ratio in the first quarter of 2017. The implementation of the "Commerzbank 4.0" strategy announced in autumn last year is running according to schedule. The Bank's operating profit improved in the first quarter of 2017 to EUR314 million (Q1 2016: EUR282 million). Revenues before loan loss provisions increased slightly to EUR2,374 million (Q1 2016: EUR2,323 million), although, as expected, there was no repeat of the significant positive one-off effects that occurred in the same quarter of the previous year. Excluding these, revenues rose by EUR116 million year-on-year. This positive trend in revenues is due primarily to a rise in net commission income on the back of higher volumes in securities. Loan loss provisions stood at EUR195 million in the first quarter of 2017 (Q1 2016: EUR148 million). The year-on-year increase in loan loss provisions is due to higher loan loss provisions for ship finance. The non-performing loan (NPL) ratio of just 1.5%, which is still good compared to our European peers, reflects the Bank's healthy risk profile. Operating expenses came to EUR1,865 million (Q1 2016: EUR1,893 million). They already include the whole of the bank levy for 2017, which amounted to EUR171 million. The pre-tax profit stood at EUR314 million in the first quarter of 2017. So after deduction of taxes of EUR77 million and minority interests of EUR20 million, Commerzbank made a net profit of EUR217 million (Q1 2016: EUR169 million). Earnings per share came in at EUR0.17 in the first quarter of 2017 (Q1 2016: EUR0.13).
"Commerzbank had a good start to the new year and achieved a decent operating profit in the first quarter. We are on track with the implementation of our Commerzbank 4.0 strategy. The Private and Small Business Customers segment saw further growth in customer numbers and assets in the first quarter. In the Corporate Clients segment we launched a EUR6 billion credit initiative for German SMEs. But it is also clear that it will take some time for our growth to be sufficient to significantly outweigh the burden resulting from the negative interest rate environment", said Martin Zielke, Chairman of the Board of Managing Directors of Commerzbank.
Common Equity Tier 1 ratio up at 12.5% - risk profile remains very good
"Our Common Equity Tier 1 ratio has gone up to 12.5 percent. This gives us the necessary leeway for investments and restructuring. So we are proceeding according to plan", commented Stephan Engels, Chief Financial Officer of Commerzbank. "Our risk profile remains very good."
In Germany the Bank attracted approximately a net 151,000 new customers in the first quarter, making a gain of 0.3 million customers since it hit its 1 million target early, in October 2016. The loan volume was up 7% year-on-year. The new business in mortgage lending increased again over the same period. The quality of commission income was further improved due to the fact that managed investment products accounted for a larger share of business.
mBank also saw further business growth in the first quarter of 2017, and was able to raise its revenues before loan loss provisions compared to the first quarter of 2016. New business in consumer loans increased by more than 30% by volume over the same period. mBank also gained around 99,000 net new customers in the first quarter of 2017, so that it now has around 5.5 million private and corporate customers in Poland, the Czech Republic and Slovakia.
Operating profit for the Corporate Clients segment was down year-on-year in the first quarter at EUR250 million (Q1 2016: EUR280 million). Revenues before loan loss provisions, after adjustments for valuation effects from own liabilities (OCS) and for counterparty risk in the derivatives business, decreased year-on-year to EUR1,068 million (Q1 2016: EUR1,130 million). The Mittelstand Group division, supported by strong demand for capital market products, maintained stable revenues over the same period, and so was able to offset the burden of the negative interest rate environment. In the International Corporates Group division, clients remained reluctant to engage in capital market activities, while revenues from commercial banking as a whole remained stable. In Financial Institutions, revenues were down on account of the targeted reduction in the number of correspondent banks. Equity Markets & Commodities saw strong client demand for investment products in the first quarter of 2017 due to rising equity markets. The segment's loan loss provisions stood at EUR43 million in the first quarter of 2017 (Q1 2016: EUR56 million). Operating expenses were reduced year-on-year to EUR789 million (Q1 2016: EUR810 million). As part of the Commerzbank 4.0 strategy, a growth initiative was launched in the segment in the first quarter with the aim of extending an additional EUR6 billion in loans to German SMEs.
The outlook remains unchanged: this financial year the Bank will further strengthen its market position and will focus on the implementation of the Commerzbank 4.0 strategy. Investments, P&L including restructuring costs, capital and RWA will be managed in such a way as to keep the CET 1 ratio stable at 12% or above. Commerzbank will aim to keep the cost base stable and book the first part of restructuring charges for Commerzbank 4.0 this year. The Bank expects loan loss provisions for segments Private and Small Business Customers as well as Corporate Clients to remain on the level of 2016, while loan loss provisions in Ship Finance are expected to be in a range of EUR450 million to EUR600 million.
Financial figures at a glance
From approximately 7 am onwards you can find broadcast-ready video material with statements by Stephan Engels at http://mediathek.commerzbank.de/.
|60311 Frankfurt am Main|
|Phone:||+49 (069) 136 20|
|Indices:||DAX, CDAX, HDAX, PRIMEALL|
|Listed:||Regulated Market in Berlin, Dusseldorf, Frankfurt (Prime Standard), Hamburg, Hanover, Munich, Stuttgart; Regulated Unofficial Market in Tradegate Exchange; London, SIX|
|End of News||DGAP News Service|