(MENAFN- AFP)Germany's second-largest lender Commerzbank on Thursday said net profit fell by nearly half last year as it grapples with a costly restructuring.
Commerzbank's bottom line slumped by 44 percent to 156 million euros ($192 million) in 2017, as it booked more than 800 million euros in charges linked to redundancies under a restructuring plan entailing some 9,600 job cuts by 2020.
"We made good progress in 2017," chief executive Martin Zielke said in a statement.
"However, it also clear that we still have some work ahead of us before we can achieve the profitability we are aiming for."
The net profit figure was in line with analysts' forecasts.
Operating, or underlying, profit came in at 1.3 billion euros ($1.6 billion), down seven percent year-on-year.
Revenues were down 2.5 percent to 9.1 billion euros -- also in line with market expectations.
The group, in which the German government still holds a 15-percent stake, said it would not pay out a dividend for 2017, but added that it expected to do so once again in 2018.
Commerzbank last paid out dividends to shareholders in 2015.
The group also said it was able to improve its core tier-one capital ratio, a key measure of a bank's financial health, from 12.3 percent in 2016 to 14.1 percent.
But the lender revealed little of its outlook for this year, saying only it would "focus on further growth" and on following through with its restructuring plan.
While Commerzbank's 2017 results put it in better shape than main rival Deutsche Bank, which has booked losses for the past three years, it remains less profitable than other big European banks.
- High cost of new business -
The bank is in the throes of a restructuring dubbed "Commerzbank 4.0", which includes a major push into digitalisation and a shift in focus from investment banking to retail clients.
The lender said it had gained over 500,000 retail customers in 2017, although the influx failed to translate into higher revenues, which were largely flat at 4.8 billion euros.
This was partly because attracting the new business cost the bank "between 150 and 250 euros" per new customer, Zielke told reporters in a conference call.
The group's corporate banking business, which lends to many of the "Mittelstand" small- and medium-sized companies that make up the backbone of the German economy, meanwhile added 4,100 new clients.
But the division's revenues slipped 6.5 percent to just under four billion euros, which the bank blamed on "low market volatility".
Commerzbank said it made headway with its efforts to offload bad shipping loans, slimming down the troubled portfolio by 2.2 billion euros to 2.6 billion euros last year.
And it said it was on track to meet its goal of digitising 80 percent of its workflow by 2020, having already automated nearly half of the bank's internal processes by the of 2017.
Commerzbank stock rose 1.4 percent to 12.94 euros around 1240 GMT, topping the Dax index of blue-chip German shares.
MENAFN0802201801430000ID1096445396
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.