Commerzbank, Germany's second-biggest bank, said today that the euro zone debt crisis and losses on its investments in Greece slashed profits in half in 2011.
Commerzbank said its bottom-line net profit fell by 55.4% to €638m in 2011. Operating profit fell even more sharply, plunging 63.4% to €507m.
"2011 was characterised for Commerzbank by a successful first six months and difficult market conditions in the second half of the year," said chief executive Martin Blessing.
Nevertheless, "despite the massive charges resulting from the European sovereign debt crisis, we attained a net profit of €638m," the bank insisted.
"In the light of the stable economic situation in the core markets Germany and Poland, revenues before loan loss provisions of the core banking division increased by 14% to €12.4 billion," he said.
Commerzbank said it wrote down the value of its holdings of Greek sovereign bonds to 26%, meaning that the division that manages those holdings, the asset-based finance division, booked an operating loss of €3.9 billion in 2011. The core banking division, by contrast, "more than doubled operating profit to €4.5 billion."
Looking ahead, chief executive Blessing said Commerzbank "is on track and is strategically well positioned. In 2012, we intend to continually improve our operating profitability and further reduce risks."
The high degree of uncertainty associated with the European sovereign debt crisis "will, however, continue to pose challenges for us," Blessing warned.
But with Commerzbank's focus on the core markets Germany and Poland, "we are well prepared to meet these challenges," the chief executive said.
"For this reason, we assume that the core banking division will again post a solid operating profit in 2012," he added.
