Commerzbank net profits lifted in Q1 by tax effect

2018-05-16 09:43

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Germany's fourth largest financial institute Commerzbank witnessed a jump in its net profits during the first quarter (Q1) of 2018 due to a favorable tax effect, the Frankfurt-based bank revealed on Tuesday.

Although Commerzbank's operative profit fell by an annual rate of twelve percent to 289 million euros (344.5 million U.S. dollars) in Q1, a low quarterly tax burden still resulted in an increase of net profits by nine percent to 250 million euros during the same period.

The Dax-listed bank had only recorded disappointing total net profits of 156 million euros in 2017, a development which it attributed to costs associated with a wave of lay-offs and wider corporate restructuring efforts.

In spite of recent headwinds, chief executive officer Martin Zielke expressed confidence on Tuesday that his bank was finally on a course towards higher profitability again.

"We are growing in our core business and are digitalizing our business model," a statement by Zielke read.

Zielke reiterated that Commerzbank was planning to pay out a substantial dividend to investors again in 2018 in spite of difficulties stemming from a persistent low interest rate environment.

He highlighted strong growth in the number of German customers by 712,000 since the announcement of a new strategy to place a greater focus on private banking.

However, the CEO also noted that it would take time for a bigger customer base to translate into better earnings as well. This circumstance also helped explain why gross revenue fell slightly to 2.3 billion euros in Q1 compared to 2.39 billion euros during the same period last year.
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