In the second quarter, Commerzbank said its net profit slumped 93 percent to €24 million from €352 million in the year earlier period as it took a €760 million hit on its holdings of Greek government debt.
For the rest of 2011, the bank's results will depend on "the implementation of the package of measures to tackle the European sovereign debt crisis and the absence of any further escalation of the current situation," a statement said.
An ambitious 2012 target of an overall operating profit of more than $4 billion has not been abandoned but appears much less likely now.
It is "still conditional upon stable markets, which we are presently only seeing to a restricted extent owing to the sovereign debt crisis," it said.
"A return to more stable markets is dependent on how the current crisis develops," it added.
The bank said that on the positive side, its second quarter provisions for risky loans fell to €278 million from €639 million a year earlier.
Its core tier one capital ratio, a measure of its ability to weather exceptional shocks, stood "at a comfortable 9.9 percent" of assets as of June 30, the statement said.
The partly state-owned bank said it expects a 2011 operating profit "well above the figure achieved in 2010" on its core operations -- private customer services, lending to small- and medium-sized enterprises, activities in central and eastern Europe, and corporate banking and market operations.
But an internal 'bad bank' where Commerzbank has quarantined risky assets, and structured finance operations that transfer risks on such things as the securitisation of mortgage loans, are not taken into account in the forecast.
With core earnings of €2.1 billion for the first half, Commerzbank has already surpassed the 2010 figure of almost €2 billion.
In May, Commerzbank forecasted a 2011 operating profit significantly more than the previous year's level, which was €1.4 billion, and for the first half it chalked up €1.2 billion.
However, most of that came in the first quarter, with operating profit slumping to just €55 million in the three months leading up to June.
In morning trade on the Frankfurt stock exchange, Commerzbank shares gained 1.12 percent while the DAX index on which they are listed was up 1.30 percent overall.