Commerzbank, Germany's second-largest bank, said Tuesday that its strategy of refocusing on retail and commercial banking was paying off, as bottom-line profits beat expectations in the first quarter. Net profit increased 9.2 percent year-on-year, to 250 million euros ($298 million), the lender said in a statement, well beyond the 182 million forecast by analysts.
Nevertheless, revenues fell 3.7 percent to 2.3 billion euros and operating, or underlying profit tumbled 12.3 percent to 289 million euros. Commerzbank is refocusing on its retail and commercial banking activities, adding 73,000 new customers in its private and small business arm and 1,000 new corporate clients.
Executives see the group on track for its target of adding one million new customers between October 2016 and the end of 2018. Chief executive Martin Zielke said the bank was fulfilling "the core of our strategy: growing our businesses with private and corporate customers and digitalising our business."
In a positive sign for Commerzbank - in which the German state continues to hold a stake of nearly 16 percent after a crisis-era rescue - the group set aside just 77 million euros to cover risks in the first quarter, compared with 195 million euros a year ago. Meanwhile, non-performing loans where borrowers have fallen behind on payments shrank to just 1.0 percent of the total on the bank's books. Commerzbank remains confident it will pay shareholders a dividend for the 2018 financial year. Since 2008, it has only paid a dividend once to shareholders, for the 2015 financial year.
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