Germany's second-largest lender Commerzbank said Wednesday it was sticking to full-year forecasts for 2019 even as profits halved in the first quarter, after merger talks with rival Deutsche Bank fell through. Net profits were down 54.2 percent year-on-year, at 120 million euros ($134 million), the group said in a statement, adding that a signficantly higher tax bill was largely to blame.
Operating, or underlying profit was down 5.6 percent at 244 million euros, on revenues down almost three percent at 2.2 billion. Growth in the bank's net interest income as it acquired more customers and assets nevertheless allowed it to absorb the higher costs from new EU regulations known as Mifid II, introduced last year. Executives from both Commerzbank and Deutsche Bank walked away from merger talks late last month, saying the business case for a tie-up was not strong enough.
That leaves the lender with the yellow triangle logo to press on with its solo strategy focused on retail banking and small business clients, which added 123,000 new customers over the quarter. "Business with our clients remains on a positive track," said chief financial officer Stephan Engels, also highlighting the corporate sector's "resilience" in a "very competitive environment" in the first quarter, when it added 800 clients.
Commerzbank, which remains almost 16-percent owned by the German state after a crisis-era rescue, stuck to its full year forecast that revenues will be higher than in 2018 and it hopes to hold costs below 6.8 billion euros. The group also aims to offer shareholders a dividend of 20 cents per share for the year, the same level as in 2018.
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