Commerzbank shares tank as pre-tax profits almost half and it warns there could be more to come
Shares in Commerzbank have plummeted to their lowest-ever level today, after the bank revealed a slump in profits in its half-year results and warned the current business environment could continue to hamper its performance.
The figures
Pre-tax profits at the bank fell to €575m (£485.8m) for the first half of 2016, down from €1bn the year before.
Meanwhile, revenues before loan loss provisions slipped to €4.5bn, down from €5.2bn, and warned earnings could be further squeezed, thanks to the current state of the market.
Shares in the bank in Germany are currently trading down 8.1 per cent at €5.30.
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Why it's important
Lower for longer interest rates are make it extremely difficult for banks to rake in earnings at the moment, while June's Brexit vote sent shares in banks worldwide plummeting.
Investors have also been less than impressed with the results of the recent European Banking Authority stress test. Although only Italy's Monte dei Paschi had its capital completely eroded in the event of a sharp downturn, Commerzbank did not perform particularly strong.
What Commerzbank said
The bank said in a statement today:
The bank expects the negative rate environment and the adverse markets to further weigh on revenues. Furthermore, the bank will aim to keep its very good risk profile, although loan loss provisions are likely to increase by a moderate amount due to lower releases and continuously challenging shipping markets. Commerzbank intends to keep its cost base stable with exception of additional external burdens