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Corporate Reports

Commerzbank logs solid 2013 profit, makes progress on toxic asset sale

German lender Commerzbank is back in the black, logging a higher-than-expected net profit in 2013. The stricken lender, bailed out by the German state in 2009, has also reported progress in shedding toxic assets.

Commerzbank returns to profit

Commerzbank had increased net profit, further reduced balance sheet risks and boosted its equity ration quicker than planned, Germany's second-largest lender announced February 13 when it released its 2013 corporate report.

Net profit surged to 78 million euros ($106 million) in the year, comparing favorably with a net loss of 47 million euros in 2012.

The result was achieved in spite of a drop in operating profit to 725 million euros from 1.17 billion euros a year earlier, the bank said.

Describing 2013 as a year of transition, Commerzbank Chief Executive Martin Blessing said the bank had seen important successes in implementing its strategic agenda.

“We have invested in our growth and, at the same time, further lowered our costs,” he added.

Blessing also noted that it had been able to set aside 1.7 billion euros in loan-loss provisions, and had repaid in full silent participations made by the German government and the Allianz insurance company.

In 2009, Berlin took a 25 percent stake of Commerzbank after providing 18.2 billion euros in a government bailout. The rescue was necessary because Commerzbank faced bankruptcy in the wake of the 2008 financial crisis as its investments in ship-building funds and property assets had gone awry.

Toxic assets lower

Last year, Commerzbank was able to lower its exposure to defaulting assets, reducing its toxic securities by 35 billion euros to 116 billion euros. Originally, Commerzbank stashed away toxic non-core assets worth 160 billion euros in an in-house ‘bad bank' under efforts to sell them off over time.

In 2013, the target of a reduction to 126 billion euros was overachieved, Commerzbank said, as it was able to sell off a big real estate portfolio, as well as shipping loans and sovereign debt holdings.

In an outlook for 2014, the lender said it hoped to reduce its loan-loss provisions further and keep its expenses in check at 7 billion euros. The global banking sectors would continue to suffer from a low-interest environment and weak corporate activity, it added.

uhe/jlw (AFP, Reuters, dpa)

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