COMMERZBANK has said it will post higher earnings in 2011 and start to repay its bailout money as a rebounding German economy lifted profits at its core businesses, including investment banking.
In 2010, Germany’s second-biggest lender posted net profit of €1.43bn (£1.21bn), above expectations of €1.3bn.
Commerzbank’s core Mittelstand business, which focuses on lending to mid-sized German companies, posted a record result for 2010, and the investment banking and portfolio restructuring units benefited from a favourable market environment, write-backs and lower risk provisions.
Commerzbank also said it expects to see a further decline of at least €200m in loan loss provisions this year, giving the bank leeway for the repayment of the state’s non-voting capital contribution, called silent participation.
German state bailout fund SoFFin injected €16.4bn of so-called silent participations, and took a 25 per cent stake in Commerzbank during the financial crisis.
“We intend to reduce the silent participations by a significant amount as early as 2011,” chief executive Martin Blessing said yesterday, without specifying by how much.
City A.M. Reporter