Monday, February 04 14:59:07
Commerzbank posted a worse-than-expected quarterly loss today that was saddled by heavy writedowns and said more charges would follow as it slashes up to 6,000 jobs.
Germany's second-biggest bank revealed a fourth-quarter net loss of 720 million euros, much worse than the 295 million expected. Coming just months after Commerzbank cut its medium-term profit forecasts, to the detriment of its tax bill, Monday's announcement sent the bank's shares tumbling.
"The negative trend of earnings disappointments continues," DZ Bank analyst Christoph Bast said, adding the large amount of writedowns was a surprise.
In November Commerzbank lowered its 2016 return on equity (RoE) target to roughly 8 percent at group level, setting a goal below the industry's average cost of capital of 10-12 percent.
As a result the bank is now unable to make full use of losses carried forward to reduce its tax bill and had to write down 560 million on deferred tax assets for the fourth quarter.
The lender also booked charges of 185 million euros related to the sale of its Ukrainian Bank Forum unit and by end-2012 increased provisions for bad loans by 21 percent to 1.7 billion.