In the 2004 financial year, the Commerzbank Group made great progress, raising its operating profit by 87% to â¬1,043m. This translates into an operative return on equity of 10.2%. In the final quarter, it achieved a profit of 174m euros thanks to a distinctly positive trading result, representing a clear recovery from its weak previous quarter.
Without the special charges from its Polish subsidiary BRE Bank, which accounted for â¬49m recognized for the most part as operating expenses, the profit for the quarter would have been over â¬220m.
Despite restructuring expenses of â¬132m in the third quarter to cover the repositioning of investment banking, the bank boosted its pre-tax profit to â¬828m â" having posted a loss a year previously. After tax expenses of â¬353m and minority interests (â¬82m) have been deducted, a consolidated net profit for the year of â¬393m remains. The management board proposes that it be used to pay a dividend of 25 cents per share. The remaining amount (â¬243m) is being allocated to retained earnings.
Despite weak credit demand and a slight decline in its risk-weighted assets, the bank achieved a remarkable increase of 7.7% in its net interest income. As loan-loss provisions (â¬836m) could be reduced by more than a fifth â" with conservative valuation standards maintained â" net interest income after provisioning was a strong 27.4% higher than a year earlier. Even without any support from stock markets, net commission income was 5.3% higher. At â¬4,461m, Commerzbank´s operating expenses were within budget, despite the special charge of BRE Bank.
Klaus-Peter MÃ¼ller, Commerzbank´s chairman, said of the figures: âAs promised at the start of the year, we significantly improved our operating profit in 2004 and have made good progress towards achieving higher returns on equity. We have lending risks and costs under control, feel that revenues are picking up, have a solid core capital ratio of 7.5% and a strong balance sheet. It is natural, therefore, that we want to keep our promise and are proposing that our shareholders participate in the progress made in the form of a dividend payment. We remain confident that we can achieve an after-tax return on equity of at least 8% in 2005. A good start in January confirms our expectations.â