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Restructuring costs drag Commerzbank to Q2 loss

Commerzbank AG swung to second-quarter consolidated loss attributable to shareholders of €637 million from a restated profit of €215 million a year earlier, after booking full restructuring expenses for 2017 in the period.

The bank noted that it already booked full restructuring expenses of €807 million for 2017 in its first-half results, following an agreement with employee representative committees in Germany over personnel reductions that form part of its Commerzbank 4.0 business strategy. Commerzbank earlier said it expected to book restructuring charges of about €810 million compared to its original forecast of €550 million in 2017 and the same amount again the following year.

Second-quarter net interest income fell year over year to €1.04 billion from €1.35 billion, while net commission income slightly declined year over year to €779 million from €783 million. Net investment income also decreased, to €34 million from €131 million.

Loan loss provisions were €167 million in the quarter, down from €187 million a year earlier.

The group's nonperforming loans ratio stood at 1.5% at the end of June, compared to 1.6% at 2016-end.

For the first half, the lender reported consolidated loss attributable to shareholders of €406 million, compared to a restated profit of €384 million in the year-ago period. Loss per share for the period amounted to 32 cents, compared to EPS of 31 cents in the same period in 2016. The S&P Capital IQ consensus estimate for normalized EPS was 10 cents.

Return on equity for the half was negative 3.1%, compared to positive 3.0% a year earlier.

As of June 30, Commerzbank's Basel III common equity Tier 1 ratio stood at 13.0% on a fully implemented basis and 13.9% on a phased-in basis, compared to 12.3% and 13.9%, respectively, at the end of 2016. The phased-in leverage ratio was 5.0% at June-end, compared to 5.1% at the end of March, while the fully implemented leverage ratio was 4.6% at June-end, unchanged from March-end.

Risk-weighted assets fell to €178.82 billion at June 30 from €190.53 billion a year earlier, mainly attributable to a decline in risk-weighted assets from credit risks through active portfolio management as well as positive impact from foreign-currency movements.

Commerzbank said it expects its total loan loss provisions to be in the region of roughly €800 million for 2017, with the amount including potential provisioning requirements arising from the consumer loan business, which the bank will take into its own books. The bank also expects a "slightly positive" consolidated result for the year.