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Commerzbank posts first-quarter profit despite writedowns

Commerzbank posted operating and net profits for the year's first quarter, and made progress in its continuing efforts to gradually shrink its internal 'bad bank' portfolio of underperforming loans.

Commerzbank CEO Martin Blessing pronounced himself pleased with the trajectory of the bank's balance sheet. On Wednesday, the bank announced its net income position for Q1 2014 is 200 million euros in the money. That's better than Q1 a year ago,when the bank posted a 98 million euro Q1 net loss due to the costs associated with cutting five thousand employees from its payroll.

The Frankfurt-based company posted a first quarter operating profit of 324 million - in line with analysts' expectations, but down 30% from a year ago. The drop was mostly due to weak investment banking results.

The long road back to a clean balance sheet

Germany's second largest bank is gradually recovering after a difficult decade in the 2000s that saw an 18 billion euro emergency equity injection from the German government in December 2008.

Germany’s Commerzbank - A look back

The difficulties stemmed from large losses in shipping loans and mortgage lending, the latter mostly incurred by EuroHypo, a Commerzbank subsidiary. The company is part way through a multi-year restructuring, which has entailed shedding divisions and shrinking its workforce.

The company's internal 'bad bank' portfolio of underperforming loans shrank by 29 percent over the past twelve months, down to 102 billion euros. Its target is to shrink the 'bad bank' portfolio to 75 billion euros by 2016.

nz/hg (dpa, Reuters)

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