Commerzbank AG fell as much as 9.4 percent in Frankfurt, the most in almost three months, after market turmoil and a squeeze to margins hurt sales and halved first-quarter profit.
Net income fell to 163 million euros ($188 million) from 338 million euros a year earlier, the Frankfurt-based company said in a statement on Tuesday. Analysts expected profit of 160.5 million euros, according to the median of six estimates in a Bloomberg survey. Revenue before loan-loss provisions dropped to 2.3 billion euros from 2.8 billion euros.
â€œThe quality of the revenue wasnâ€™t quite 100 percent,â€ said Neil Smith, an analyst at Bankhaus Lampe, who recommends investors buy the shares. â€œNet interest income and net commission income are below expectations and the shortfall is being made up by other income, which is generally considered to be lower quality and not necessarily sustainable.â€
Bank earnings globally have been buffeted by the slump in energy prices and cooling growth in emerging markets as investors shied away from trading and other transactions. Commerzbank Chief Executive Officer Martin Zielke, who took over from Martin Blessing on May 1, inherited a lender winding down unwanted assets and contending with record-low interest rates that are squeezing profitability.
Commerzbank shares were down 9.1 percent at 7.36 euros at 11:45 am The stock has dropped about 23 percent this year, while the DAX Index has lost about 7 percent.
Loan-loss provisions for the Q1 dropped to 148 million euros from 158 million euros a year ago.
The decline was caused by an improvement in the quality of the loan book, the stable German economy and the reduction of non-strategic portfolios, according to Commerzbank. Operating profit slumped to 273
from 670 million euros.
In his parting address to shareholders on April 20, Blessing said a â€œslowâ€ start to the year means Commerzbank will find it â€œchallengingâ€ to match last yearâ€™s profit in 2016. Commerzbank has fallen 15.4 percent this year, less than the 17.8 percent decline of the 39-member Bloomberg Europe 500 Banks And Financial Services Index.