Restructuring and job cuts hit profits at Commerzbank
FRANKFURT: Germany’s second-largest lender Commerzbank on Thursday reported sliding profits for 2019, as costs for job cuts linked to its restructuring weighed on the bottom line.
Net profits dropped over 25 percent to 644 million euros, the Frankfurt-based Commerzbank said, although it was able to make a slight improvement in operating profits.
Severance charges for some 4,300 employees worldwide struck especially in the final three months of 2019, as the group slashed its payroll to just over 40,000 people.
After a failed bid early last year to merge with crosstown rival Deutsche Bank, Commerzbank is pressing ahead with restructuring and with digitising more of its internal processes.
The lender added almost half a million new retail and business clients last year, hoping the bigger base will make for fatter profits when eurozone interest rates eventually rise.
Meanwhile it was able to increase slightly the capital buffer regulators require of banks to withstand financial shocks.
“Our strong capital ratio… provides us with more flexibility in the implementation of our strategy and for focused growth,” chief financial officer Bettina Orlopp said in a statement.
With profits weaker, Commerzbank trimmed its dividend this year, to 15 euro cents per share.
Looking ahead to 2020, it expects revenues “at least at the level of 2019”, while costs will be inflated by modernisation of its IT systems. Bosses hope selling off Polish subsidiary mBank will cover the expenses, although according to German media only one prospective buyer is so far in the running. (AFP)