In this article
Commerzbank AG will write off the remaining 1.5 billion euros ($1.8 billion) in goodwill on its books and set aside more money for bad loans to reflect persistently low interest rates and the impact of a second lockdown to fight the pandemic.
Bad loan provisions booked in 2020 will amount to at least 1.7 billion euros, including a “top-level adjustment” of 500 million euros for the fallout from the pandemic in 2021, according to a statement on Friday in Frankfurt. That’s more than the 1.55 billion euros that analysts surveyed by Bloomberg were expecting the bank to set aside.
Commerzbank shares fell as much as 4.1% after the announcement and were trading 3.1% lower at 5.53 euros as of 12:09 p.m. in Frankfurt. They have fallen 4.9% in the past 12 months.
Chief Executive Officer Manfred Knof, who took over this month, is preparing to unveil a radical restructuring as the lender struggles to turn a profit. The bank said last month it will set aside 610 million euros in the fourth quarter to cover restructuring costs and in November warned that the outlook for bad loans could worsen depending on how the second wave of the pandemic develops, breaking from peers who have taken a more optimistic view.
“After this balance sheet clean-up, we are well prepared for the road ahead of us,” Knof said in the statement. “Our goal is to make the bank more profitable in the long term.”
Knof, a formerDeutsche Bank executive, is currently finalizing the new strategy before the bank is expected to announce details in the first quarter.
Source: Read Full Article