Commerzbank 1Q profit drops 54 percent
FRANKFURT, Germany—Commerzbank AG, Germany's second-biggest bank, said Wednesday that its first-quarter profit slid 54 percent because of more write-downs related to the U.S. subprime mortgage crisis and said it may miss its targets for 2008.
The Frankfurt-based bank said it earned euro280 million (US$434.8 million) in the January-March period, compared with euro609 million a year ago, but still managed to beat the euro270 million (US$419.3 million) that analysts polled by Dow Jones Newswires had forecast.
The bank said it wrote down investments, including subprime-linked securities, by euro244 million (US$378.8 million) in the quarter, bringing its total amount to euro827 million (nearly US$1.3 billion) since the subprime crisis roared to life last summer.
In response, the bank said in a statement that it would cut its risk exposure in corporate and markets business, along with real estate, public finance and treasury dealings.
Chief Executive Klaus-Peter Mueller said it might be "very difficult to reach the good result of a year ago" when the bank earned euro1.92 billion (US$2.98 billion), compared with euro1.6 billion in 2006.
The bank said its net interest income slipped to euro1.02 billion (US$1.6 billion) in the first quarter, compared with euro1.05 billion last year, while its net commission income fell to euro732 million (US$1.1 billion) from euro847 million. Its trading profit fell to euro173 million (US$268.6 million) from euro301 million last year.
Its much-observed operating profit fell by more than half to euro435 million (US$675.4 million) from euro908 million a year earlier.
Although one of Germany's largest banks, Commerzbank is relatively small compared with its European peers and derives most of its earnings from its home market.
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