Commerzbank profits rise despite financial crisis
AFP · 6 Aug 2008, 11:07
Published: 06 Aug 2008 11:07 GMT+02:00
It warned that banking sector turbulence would probably persist until at least the beginning of 2009.
"As a result of the continuing uncertainty in the financial sector and the weakening economy, we expect the market environment to remain volatile," the bank said in a statement. "All in all, the financial crisis has not yet come to a halt and will also negatively influence the second half of the year. This is because we can now feel the effects on the real economy in Europe."
"These in turn have more negative effects rebounding on the real estate markets. Accordingly, real-estate prices in many European markets are likely to fall and loan defaults at banks to rise," it added.
Second quarter profit nonetheless rose by 6.4 percent to €817 million ($1.26 billion), Commerzbank said, compared to forecasts of a loss by analysts polled by Dow Jones Newswires.
The result was boosted by a tax effect that added €386 million to the bank's bottom line. Operating profit fell by more than half to €484 million from more than €1 billion in the same period a year earlier.
Commerzbank wrote down the value of real-estate finance assets by €369 million to reflect persistent housing market turbulence, in the United States in particular. In addition, "loan loss provisions for the first half of 2008 amounted to €589 million compared with €311 million for the same period in the previous year," the statement said.
The bank repeated that it would be "very difficult" this year to match results from 2007, when it had posted a record net profit of €1.9 billion.
"Our goal remains to further expand our stable customer business and aggressively to take advantage of market opportunities," possibly by playing a key role in consolidation of the German banking sector, it said.