Germany's second-biggest lender Commerzbank missed forecasts for third-quarter profit as losses on commercial mortgages and the costs of integrating Dresdner Bank offset strong corporate lending.
Third-quarter net profit of €113 million was below the €164 million average estimate in a poll of banks and brokerages, though Germany's economic rebound turned it round from a loss of more than a €1 billion a year ago.
Profit in its private customer business declined as it took charges related to the integration of Dresdner Bank, and loan loss provisions for commercial mortgages spiked.
"Asset-backed finance continues to be a burden," the bank said.
The lender's eastern European business dropped to a loss in the third quarter from a small profit in the second quarter. Banks around the world have posted mixed-third quarter results, with large profits at JP Morgan and Goldman Sachs contrasting with losses at Deutsche Bank and Bank of America.
At the same time, Commerzbank benefited from strong business at the Mittelstandsbank, which focuses on lending to medium-sized German companies, and provided an upbeat outlook for the full year 2010 and 2011.
"We are sailing into the next year with a tailwind and assume that the operating profit for 2011 will be higher than that seen in 2010," chief financial officer Eric Strutz said.
Germany has emerged from its deepest post-war recession and is staging a strong export-fuelled recovery, which analysts says remains on track despite a slump in September industry orders. Commerzbank also saw a more benign risk environment than a year ago, leading to lower loan-loss provisions.
"On the whole, we intend to conclude 2010 with a net profit according to IFRS of at least €1 billion," chief executive Martin Blessing said in a statement.
Analysts expect Commerzbank to post a 2010 profit of €1.3 billion.
Commerzbank provided no news on plans for a capital increase, which it may use to repay state money.
Experts have said Commerzbank will likely have to wait for demand for bank shares to recover following Deutsche Bank's recent €10 billion cap hike.
Reuters