Frankfurt: Commerzbank’s second-quarter net profit more than doubled thanks to strong retail banking activities, and the German lender announced its first dividend since 2007.
Germany’s second-biggest bank reported a €280 million (Dh1.12 billion or $307 million) net profit for the three months through June on Monday, beating analysts’ forecasts, and announced a dividend of 10 cents per share for the first half of the year.
“The substantially improved operating profit in the first six months of the year is clear testimony to the successful turnaround,” Chief Executive Martin Blessing said in a statement.
Commerzbank, a household name in Germany which finances more than a third of the nation’s exports, is more than half way through a four-year recovery plan. It has not paid a dividend since 2007 as it focused on cost cuts and shrinking its balance sheet.
The shares were indicated 2.2 per cent higher in pre-market trading, while Germany’s blue-chip index was seen 0.3 per cent lower.
Commerzbank’s retail banking activities benefited from a strong mortgage financing business in a booming German real estate sector. It also attracted 68,000 new customers.
The bank’s main cash cow, dubbed Mittelstandsbank, which caters to Germany’s raft of medium-sized companies, saw operating profit rise 9 per cent as it put aside less money to cover potential bad loans.
Commerzbank’s investment bank saw earnings decline amid reduced trading activity and low interest rates.
Analysts had expected Commerzbank’s net profit to reach €256 million.
Chief Financial Officer Stephan Engels said the group was still aiming to increase revenues and market share in 2015 despite headwinds.
“The framework conditions for the banking sector are difficult and will remain so in the foreseeable future,” he said.
The bank’s capital strength as measured by the core tier 1 ratio improved by one percentage point quarter-on-quarter, reaching 10.5 per cent, including money set aside for the dividend payment.
That was helped by its €1.4 billion cash call in April, after it agreed to pay $1.45 billion to settle an investigation into alleged violations of US sanctions against countries such as Iran and Sudan.
