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Commerzbank AG CBK

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Commerzbank Reports Second-Quarter Loss Driven by Multiple One-Offs

Niklas Kammer, CFA Equity Analyst

Analyst Note

| Niklas Kammer, CFA |

No-moat Commerzbank reported a loss of EUR 527 million in the second quarter versus a profit of EUR 133 million last quarter. This poor performance was driven by multiple one-off items affecting profitability negatively on balance as well as restructuring charges. Commerzbank decided to end a securities settlement outsourcing project, which materially affected results this quarter. Within other income, Commerzbank booked a loss of EUR 222 million compared with a EUR 73 million loss last quarter, primarily driven by provisions related to this event. Additionally, the bank wrote off EUR 200 million flowing through its cost base. On an underlying basis, results were OK, but not great. Net interest income was flat at EUR 1.1 billion. Net commission income declined 10%, but off an out-of-trend strong performance last quarter. Loan losses came in at EUR 87 million versus EUR 149 million a quarter ago. The bank now expects loan losses below EUR 1 billion for the full year, suggesting another EUR 765 million in second-half 2021. Finally, Commerzbank booked another EUR 511 million in restructuring charges. On a positive note, however, Commerzbank has now done most of the heavy lifting in terms of restructuring-related charges. Out of the EUR 2.1 billion anticipated to achieve its 2024 strategic goals, only EUR 170 million remains. As such, below-the-line pressure on Commerzbank’s earnings should start to ebb materially over the next few quarters. We maintain our fair value estimate of EUR 6 per share.

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Company Profile

Business Description

Commerzbank operates primarily in Europe. Germany, the group’s home country, contributes about 70% to total income. The bank operates two business segments: private and small-business customers as well as corporate clients. In its private and small-business segment, the group runs its branch business, a mobile bank with a focus on the Polish market, an online broker, and an asset manager for physical assets. Its corporate client business provides cash management and trade finance solutions to small and medium-size enterprises and large corporates.

Frankfurt, 60261, Germany
T +49 6913620
Sector Financial Services
Industry Banks - Regional
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 38,671