FRANKFURT, Germany (AP) - German bank Commerzbank saw its second-quarter profit slide as it continued to take losses on bad real estate and shipping loans.
FRANKFURT, Germany (AP) — German bank Commerzbank saw its second-quarter profit slide as it continued to take losses on bad real estate and shipping loans.
It said Thursday that it made a net profit of 43 million euros ($57 million) during the quarter, down 84 percent on the 270 million euros it made in the same period a year earlier. The quarterly profit performance also fell short of the consensus of analysts' expectations of 48 million euros as compiled by financial information provider FactSet.
The bank, Germany's No. 2 lender after Deutsche Bank, took losses of 537 million euros for loans that won't be fully repaid in the second quarter, up from 404 million euros in the year-ago quarter. Earnings were also squeezed by extremely low current interest rates. Net interest income fell to 1.63 billion from 1.78 billion a year ago.
The company said the figures included losses on its commercial real estate loan portfolio in Britain and bad loans to build ships. The bank is exiting its commercial real estate and ship businesses and is winding them down in a non-core asset division. It also cited "single cases" of bad loans from its bank serving small and medium sized businesses in Germany.
It reached an agreement in July to sell the 5 billion euro commercial real estate loans in Britain to a consortium comprising U.S. bank Wells Fargo and private equity investor Lone Star Funds. The company said then that the transaction would result in deductions to earnings of 134 million euros in the second quarter and 45 million in the third.
Commerzbank is still working through the difficulties that led to it being bailed out by the German government in 2009. It is 17 percent owned by the German government, down from 25 percent after the bank carried out a capital increase in May.