Germany's Commerzbank said today it lost €94m in the first quarter of this year after taking heavy charges for future job reductions as the bank tries to turn its business around.
The net loss compared to a profit of €355m in the same quarter a year ago.
Germany's second biggest lender behind Deutsche Bank took €493m in reductions to earnings for restructuring that will include 4,000 to 6,000 job cuts by 2016.
The bank announced the cuts in January and warned in April that it would take a large restructuring charge.
Commerzbank has been on a long road to recovery since it was bailed out in 2009 by the German government, which still owns 25%. The job cuts stem from a programme launched in November to invest in the lender's core business while also reducing personnel costs.
The bank made only €6m in profit for last year due to large writedowns, a performance chief executive Martin Blessing said was not satisfactory.
The bank is raising €2.5 billion by issuing new shares through a capital increase approved at its shareholders' meeting last month. The bank said that currently low interest rates also hurt earnings as interest income fell by €338m, to €1.356 billion from €1.694 billion.
It saw more income from trading securities and made an operating profit excluding the restructuring charges of €469m, although that was down 19% from the figure for the same time last year.
Profit for the rest of this year would be "shaped by ongoing pressure on revenues," the bank said in a statement.
Overall, the bank's income before loan losses fell 4.6% to €2.46 billion. The bank said it was making "excellent progress" in disposing of investments that it no longer considers part of its core business such as commercial property and shipping loans. Non-core assets were reduced by €7.3 billion during the quarter to €143 billion.
"We were able to increase our operating profit in the first quarter despite a very challenging environment with extremely low interest rates, and have made further considerable progress in the consistent reduction of our non-strategic activities," CEO Blessing said in a statement.
He said the company's focus this year was on implementing its turnaround strategy and that "the positive effects from this should increasingly become visible from the coming year onwards."