Commerzbank earnings rise despite subprime write-downs

Aug 6, 2008, 7:00 GMT

Frankfurt - Germany's second biggest bank, Commerzbank AG, reported Wednesday a higher-than-forecast 6.4-per-cent rise in second-quarter net profit despite fresh write-downs resulting from the global financial crisis.

The Frankfurt-based bank said the rise in net quarterly profit to 817 million euros (1.3 billion dollars) was helped along by a tax gain.

However, the bank, which has been weighing up a merger with cross- town rival Dresdner, also went on to warn that tough market conditions could make mean that 2008 earnings could come in lower than last year.

'Due to the continuing market volatility, we reiterate that - without accounting for the tax gain - it could be very difficult to reach the good result of the previous year in 2008,' Commerzbank Chief Financial Officer Eric Strutz said releasing the results.

Commerzbank second-quarter write-downs totalled 420 million euros, including 170 million euros as a result of the US subprime mortgage market crisis.

The bank's second-quarter pre-tax profit fell from 1.08 billion euros in the same period last year to 484 million euros.

Commerzbank said its operating profit rose 11.3 per cent to 484 million euros but came in at 908 million euros when one-off items were included.

A merger with Dresdner Bank would create a new financial powerhouse in Europe and represent a major step towards consolidation in Germany's fragmented banking sector.