Investing.com -- Commerzbank (ETR:CBKG) shares were down on Wednesday following its second quarter results.
At 6:29 am (1029 GMT), Commerzbank was trading 5% lower at €12.52.
The bank reported a net profit of EUR 538 million, slightly ahead of the EUR 539 million expected by analysts. Despite this, the results were met with disappointment as they failed to deliver the anticipated positive surprises.
The results showed a mixed picture. While the operating profit was 2% above expectations, the fair value results and other income were weaker than anticipated.
The bank faced EUR 240 million in provisions for CHF mortgages and EUR 95 million in litigation charges related to Russia. Additionally, loan loss charges amounted to EUR 199 million, surpassing the expected EUR 161 million, said RBC (TSX:RY) Capital Markets.
“While core results were in-line today, the earlier than expected announcement of the first SBB is a positive development.,” said analysts at UBS Global Research.
NII declined by 2% from Q1 to Q2. Corporate client NII dropped by 4.5%, and NII from PSBC Germany decreased by 12%, influenced by higher deposit betas and early mortgage repayments. Although NII in O&C increased by EUR 52 million, the overall NII decrease has raised concerns about future earnings.
Net commission income was in line with expectations but saw a 4% decline from Q1, driven by lower income from PSBC and corporate clients.
Loan losses increased to 20 basis points from 11 basis points in Q1. This included a EUR 110 million negative adjustment due to methodology updates, partially offset by an EUR 87 million release from the transitional liquidity adjustment (TLA).
The CET1 ratio remained stable at 14.8%, matching expectations.
Commerzbank has announced a EUR 600 million share buyback and plans to seek approval for a second tranche after Q3 results.
The bank aims for a payout ratio above 70% for 2024, with total distributions projected at EUR 1.7 billion.