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Commerzbank cautious of FY'19 result as Q2 profit slips YOY

Commerzbank AG expects its full-year 2019 net income to increase slightly, but warned that the target has "become significantly more ambitious" given a year-over-year decline in its second-quarter and first-half profits, a worsening macroeconomic situation and an uncertain geopolitical situation.

The Frankfurt-based lender's second-quarter consolidated profit attributable to shareholders slipped to €271 million from the restated €272 million a year ago. EPS was flat over the period at 22 cents, while net return on equity was flat at 3.9%.

Net interest income for the quarter rose year over year to €1.27 billion from €1.19 billion, but net commission income fell to €739 million from €763 million. Net income from financial assets and liabilities measured at fair value through profit or loss narrowed over the same period, to €28 million from €200 million a year ago.

Losses on risk result widened to €178 million from the year-ago €82 million. Commerzbank noted that the losses for the full year should reach at least €550 million.

The bank managed to cut its operating expenses in the quarter to €1.58 billion from €1.64 billion a year ago. Compulsory contributions, which include the European banking levy, contributions to the Deposit Protection Fund and the Polish bank tax, totaled €72 million, up on a yearly basis from €58 million.

For the first half, Commerzbank's attributable profit dropped 26.7% to €391 million from the year-ago €533 million. EPS for the half amounted to 31 cents, compared with 43 cents a year earlier.

The group's Basel III fully loaded common equity Tier 1 ratio was 12.9% as of June-end, compared with 12.7% as of March-end and 13.0% a year earlier. Its Basel III fully loaded leverage ratio, meanwhile, remained at 4.5% over the period.

By 2019-end, the group aims to reach a CET1 ratio of at least 12.75% and to hold its cost base at below €6.8 billion.