Commerzbank sees strong 2022 as quarterly profit trounces estimate
By Tom Sims and Frank Siebelt
FRANKFURT (Reuters) - Commerzbank swung to better than expected fourth-quarter and annual net profit despite a major overhaul, the German lender said on Thursday and painted a rosy picture for its 2022 outlook.
Profit this year will exceed 1 billion euros ($1.14 billion), Commerzbank said, beating analyst forecasts. It added that it would pay a dividend for the year and said share buybacks are possible as early as next year.
Results were partly helped by revenue at its CommerzVentures venture capital funds, commission from its securities trading business and a decrease in provisions set aside to cushion the fallout from the COVID-19 pandemic.
The profitable finish to the full year at Germany's No. 2 bank marks a victory for CEO Manfred Knof, who joined the company at the start of 2021 to carry out a 2 billion euro restructuring programme involving hundreds of branch closures and 10,000 job cuts to get back on a path to profit.
"In the first year of the transformation, we have delivered on our promises. This increases our confidence that we will achieve our ambitious goals for 2024," Knof said.
Still, Knof has a long way to go, with agreements for 4,000 of the planned job cuts still outstanding.
Nevertheless, bank's shares were up 4.9% by 0915 GMT.
Commerzbank reported a fourth-quarter net profit of 421 million euros versus a loss of 2.7 billion a year earlier, which reflected restructuring charges.
That beat the 81 million euros expected by analysts in a poll provided by Commerzbank.
For the full year, the bank swung to a net profit of 430 million euros from a loss of 2.9 billion euros.
A provision made at its Polish mBank subsidiary announced in January was a drag on the fourth quarter.
Ahead of Thursday's outlook revision, analysts had expected the bank to post a profit of about 900 million euros, which would be its biggest since 2015.
The prospect of higher interest ratein s Europe could give a significant lift to interest income, the bank's chief financial officer told analysts.
($1 = 0.8807 euros)
(Reporting by Tom Sims and Frank Siebelt; Editing by Sherry Jacob-Phillips, Jason Neely and David Goodman)