Commerzbankmisses target as losses leap

Steve Dinneen
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Germany’s second-biggest lender Commerzbank missed forecasts for third-quarter profit yesterday as losses on commercial mortgages and the costs of integrating Dresdner Bank offset strong corporate lending.

Third-quarter net profit of €113m (£97.5m) was below the €164m average estimate in a analyst’s poll, though Germany’s economic rebound turned it round from a loss of more than €1bn a year ago.

Banks around the world have posted mixed third-quarter results, with large profits at JP Morgan and Goldman Sachs contrasting with losses at Deutsche Bank and Bank of America.

Commerzbank saw a more benign risk environment than a year ago, leading to lower loan-loss provisions.

Germany has emerged from its deepest post-war recession and is staging in a strong export-fuelled recovery, which analysts say remains on track despite a slump in September industry orders.

“We continue to see Commerzbank as the restructuring story in the European banking market which should benefit most from the recovery of the German economy,” said Equinet analyst Philipp Haessler, who has an “accumulate” rating on the stock.

Commerzbank capitalised on strong business in the third quarter at its Mittelstandsbank unit, which focuses on lending to medium-sized German companies. Yet the lender provided a 2010 outlook below market expectations, saying it expects net profit of at least €1bn, against the average analyst estimate of €1.3bn.

“The outlook for 2010 is rather disappointing in our view,” said DZ Bank analyst Matthias Duerr. “Compared with a net profit after nine months of €1.17bn, this could suggest a loss in the fourth quarter in our view, which clearly would be disappointing.”