Germany's Commerzbank said today its net profit fell by 52% in the third quarter in a better-than-expected outcome helped by higher interest rates, though previously flagged problems at a Polish unit weighed.
The lender also maintained its profit outlook for the full year even as its home market faces soaring inflation and a slowing economy.
But it spelled out a grim scenario if Germany resorts to rationing gas during its ongoing energy crisis.
The quarterly profit, while down from last year, is still a healthy sign for Germany's second biggest bank, which is engaged in a €2 billion restructuring programme that has closed hundreds of branches and cut 10,000 jobs.
"We have made great progress in the execution of our strategy and are well on track to achieving our targets," said chief executive Manfred Knof.
Net profit of €195m in the quarter compares with a profit of €403m a year earlier. Analysts had expected profit of €116m on average in a consensus forecast published by the bank.
Some of Europe's largest banks have warned of growing risks as the economy fizzles after posting stronger than expected profits for the third quarter.
Executives at Commerzbank have said they foresee a difficult fourth quarter.
But the bank kept its full-year outlook of a net profit of more than €1 billion, helped by an increase in net interest income, even though prospects for commission income are less rosy, because of turbulence in financial markets.
The biggest drag on the quarter came from neighbouring Poland and its mBank unit. In July, Commerzbank announced it would be affected by a Polish law allowing mortgage borrowers to skip monthly repayments up to eight times until the end of 2023.
In September, it flagged that it would take a hit after the unit booked additional provisions for its Swiss franc loans. The two issues amounted to a burden of about €750m in the quarter.
Commerzbank, which focuses on the medium-sized firms known as Mittelstand that form the backbone of the economy, is a barometer of Germany's health.
In a scenario presented to analysts, Commerzbank said it would potentially need to book an additional provision of up to €600m if the country rations gas, as the bank's corporate clients would faces shortages that affect production.
Any potential provision would be distributed among all its business segments and clients, it said.