Commerzbank's second-quarter operating results beat analyst expectations thanks to lower charges for toxic assets and a profitable quarter for its retail banking and mid-size company lending unit.
Germany's second-largest bank racked up a better-than-expected €201 million operating loss but stopped short of saying it had turned a corner, saying today 2009 would remain challenging.
Losses narrowed compared with the first quarter but widened from €131 million euros a year ago.
Commerzbank's net loss of €746 million was more than analyst expectations of €592 million, thanks to tax charges and an impairment charge for its Eurohypo commercial real estate unit.
Shares rose more than 3 per cent in early trading, making them the second-leading gainer among German blue chips.
Although writedowns on financial investments and trading book losses should have peaked in 2008, they would continue in 2009, the bank said.
Writedowns on the asset-backed securities portfolio fell by almost €1 billion during the second quarter to €173 million, when compared with the first quarter.
It said loan-loss provisions during the second quarter were €993 million and would remain at the same level of 2008 of about €3.5 billion.
Commerzbank said it aims to return €5 billion in state aid provided by German government's resuce fund ahead of time. If market conditions improve it would start to repay the €5 billion by 2011, a year earlier than planned.
The bank had to turn to Berlin for help in weathering the financial market crisis, taking an €18.2 billion capital injection and giving the government a stake of 25 per cent plus one share in exchange.
Commerzbank said the costs for integrating Dresdner Bank, which it bought from insurer Allianz, are expected to be around €2 billion in 2009. It said its core capital ratio had improved to 11.3 per cent.
The bank said it continues to expect to hit its medium-term goal of a 12 per cent post-tax return on equity in 2012.
Reuters