GERMANY - Commerzbank faced its first ever annual loss as it posted its full year figures for 2002.
Germany’s third largest listed bank returned a pre-tax loss of -E373m in 2002, compared to E43m for 2001, blaming economic stagnation, stock market plunges, and charges from write-downs, provisioning and restructuring costs.
The news will do little to allay investor fears of a German banking crisis, as the nation looks set to dip into its second recession.
Net interest income fell by almost 13% (E3.1m) and net commission income declined by 7% (E2.1m). The bank also suffered a drop of E1.7bn in revenues. At the same time, it pointed to the wave of insolvencies in Germany for a sharp increase in provisioning - which was in line with forecasts - at E1.32bn. But operating expenses were reduced by just over E700m , or 12%, to E5.15bn, beating expectations.
The net result on investments and securities included large write-downs and income from the sale of the bank's 3.9% interest in French group Crédit Lyonnais. All the same, the negative revaluation reserve was E532m lower than at the end of September, reaching -E750m at year-end. Core capital ratio rose to 7.3% according to the Bank for International Settlements.
Nevertheless, Commerzbank chairman, Klaus-Peter Müller, declared the group’s intentions to get “back in the black even if conditions remain adverse”, adding that “[Commerzbank] will achieve a turnaround, unless the economy collapses altogether and the risks get entirely out of control.”
As a gesture towards its 360,000 shareholders, the bank proposed a dividend of 10 cents per share.
Commerzbank, which is already culling some 4,300 jobs by the end of year, is set to prune 425 front-office jobs in its investment banking operations in New York, Tokyo and Singapore, as it refocuses on Europe. Some 900 personnel are being shed in the retail branch business.
The objective of all these measures, according to Müller, is to push costs below E5bn by the end of the year and by no more than E4.5bn by December 2004.
*Rival German group Deutsche Bank will be posting its results tomorrow (Friday).
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