Commerzbank returns to profit, revenues slump

Commerzbank, Germany's second-biggest lender, said on Thursday it returned to profit last year after suffering massive loses in 2012, but it warned the environment would remain difficult this year.

Commerzbank returns to profit, revenues slump
Commerzbank's headquarters in Frankfurt-am-Main. Photo: DPA
Commerzbank said in a statement it booked net profit of €78 million in 2013, compared with a loss of €47 million a year earlier.

But operating profit slumped to €725 million euros from €1.17 billion euros a year earlier.
All sources of income were lower, with overall revenues falling 5.9 percent to €9.269 billion.
Of the different revenue components, net interest income was down 5.2 percent at €6.148 billion and net commission income slipped one percent to €3.215 billion.
Net trading income showed a loss of €82 million and net investment income was down 79 percent at €17 million.
Chief executive Martin Blessing described 2013 as a "year of transition".
He said: "We have attained a solid operating profit in both the group and the core bank. As announced, we have invested in our growth and, at the same time, further lowered our costs. We have been able to implement as scheduled what we had planned for 2013."
The bank said it had set aside €1.747 billion in loan-loss provisions, up 5.2 percent over a year earlier.
At the same time, operating expenses fell by 3.3 percent to €6.797 billion.
Commerzbank had made progress "considerably more quickly" in its reduction of non-core assets and "we have increased the core capital ratio to nine percent one year earlier than planned," Blessing said.
On top of this, the bank had repaid in full the silent participations of the German government and Allianz, and further strengthened its capital base.
Looking ahead, Commerzbank said revenues would "still probably be impacted as a consequence of the low interest-rate environment and the low level of investment activity on the part of companies".
This year, loan loss provisions should be lower than the overall figure for 2013 and operating expenses "should not exceed €7 billion," the bank added.

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German online bank N26 shutters US service

German online bank N26 said Thursday it was closing its operation in the United States next year, as regulators in Europe place the "fintech" start-up under increased scrutiny.

The N26 logo on a bank card.
The N26 logo on a bank card. Photo: picture alliance/dpa | Christophe Gateau

N26’s 500,000 customers in the US would be able to use their services until January 11th, 2022, the bank said in a statement, after which it would cease to operate in a market it first entered in 2019.

Instead the Berlin-based operation would “sharpen its focus on its European business”, where it already operates in 24 countries and is exploring expansion into more eastern European markets.

N26 said it would also look to launch new “investment products in the coming year” to sit along side its current account service.

Founded in 2013, N26 offers free, online-only banking services to around seven million clients and is one of Germany’s most high-profile financial technology or “fintech” firms.

In October, the bank raised $900 million from private investors, and announced a plan to hire a further 1,000 employees to reinforce its product development, technology and cybersecurity teams.

READ ALSO: German online bank N26 to create 1,000 jobs

At home, N26 has been in the crosshairs of the German banking watchdog BaFin since 2018 after a local news media investigation found that it was possible to open account with forged IDs.

Earlier in the month, the regulator said it was upping its oversight operations at N26, appointing a special representative to monitor the bank’s progress towards solving issues in “risk management with regard to IT and outsourcing” identified by BaFin.

The regulator also limited the number of new customers N26 could take on to 50,000 a month until the shortcomings were addressed.

N26 was already being monitored by BaFin over failures in the start-up’s anti-money laundering system.

BaFin issued N26 with a 4.25-million-euro ($4.8-million) penalty earlier this year in connection with around 50 “suspicious transactions” the bank failed to report promptly enough.