Commerzbank Profits Slump on Restructuring Costs in 2017
Germany's second-largest lender Commerzbank said Thursday that net profit fell by nearly half last year as it grapples with a costly restructuring.
Commerzbank said in a statement that its net profit 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: we have advanced the digitalisation of the bank and have grown strongly," said chief executive Martin Zielke.
"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 analyst 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".
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 bank said it had won 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 because of "higher investments in digitalisation and regulatory charges".
Meanwhile, 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, 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".