Commerzbank sees 40pc jump in profit

City A.M. Reporter
COMMERZBANK bolstered its capacity to repay government financial aid with operating profit in the first quarter that was one-fourth above expectations.

Germany’s second-biggest lender, in which the state owns a 25 per cent stake, posted quarterly operating profit up 40 per cent at €1.1bn (£980m), compared with an average expectation of €890m.

Commerzbank, which unveiled headline results ahead of an official release on 6 May, said all business segments reported positive results.

The lender specialises in financing Germany’s legions of medium-sized companies, which have enjoyed booming demand as the global economy recovers from the financial crisis.

Loan loss provisions fell to €320m, Commerzbank said, though it did not provide year-earlier figures. They stood at €644m in Commerzbank’s first-quarter 2010 financial report.

The results give Commerzbank a good start into discussions with shareholders at the annual general meeting on Friday, where investors are likely to criticise the lender for the dilution they will face when the bank starts repaying bailout money.

Last month, Commerzbank said it planned to raise €8.25bn as part of a two-step process to repay the lion’s share of €16.2bn in state aid by June.