Commerzbank: loss of EUR 101 mln during third quarter

The Commerzbank Group is posting a result on ordinary activities (before restructuring expenses) of minus EUR 101 mln for the third quarter of 2002 (previous year: EUR -279 mln). For the January-September period, a positive pre-tax profit of EUR 45 mln remains.

The quarterly result was dominated by non-recurring income of 721m euros from the deconsolidation of the former Rheinische Hypothekenbank. However, this was not used to boost profits but rather to cover write-downs on investments and securities, following impairment tests.

Provisioning was increased to 436m euros in the third quarter. For the year as a whole, the Board of Managing Directors expects a need for value allowances in the order of just over 1.3bn euros. In view of the extreme market volatility, they see no point in forecasting the result for 2002 as a whole. The bank`s cost-cutting offensive is proceeding according to plan: after nine months, operating expenses were already 9.9% lower than a year previously. Due in part to the deconsolidation of Rheinhyp, the core capital ratio (BIS) improved substantially to 6.7%. The bank`s overall own funds ratio now stands at 11.5%.

In order to bring investment-banking capacity into line with lower demand, the Board of Managing Directors has resolved to scale down the relevant activities considerably in overseas financial centres. This will affect roughly a quarter of the staff in investment banking. In the related back-office areas, at least 150 jobs will be shed.

(source: Commerzbank)

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