Commerzbank Dividend Back in the Black

Germany's second-biggest bank on Monday announced its first dividend since the outbreak of the financial crisis in 2007, and reportedly moved to extend the contract of its CEO, as profit more than tripled on business with the country's small- and mid-sized exporters.
Martin Blessing, Commerzbank's CEO, has reason to celebrate.

 

Commerzbank, Germany’s second-largest bank, said Monday it was on track to pay its first dividend since  2007 as the country's small- and mid-sized business sector helped the bank almost triple profit in the second quarter.

Profit from April through June rose to €280 million ($307 million) from €100 million a year earlier. Pretax profit rose 50 percent to €385 million in the period from €257 million a year earlier.

The bank, which was partially privatized by the German government after the crisis, said it planned to pay its first dividend since 2007. The bank has announced plans to pay €0.10 per share.

Martin Blessing, who has been chief executive at Commerzbank since 2009, says today’s results reflect the bank’s progress since the outbreak of the crisis.

“The significant increase in operative profit is a clear proof that Commerzbank has managed a turnaround,” he said.

The bank profited primarily from an increase in private clients business and a low rate of credit defaults.

The prosperous German economy has added to the bank’s success. On top of that, U.S. investors bought €2.9 billion worth of mortgages from Commerzbank over the past weeks.

Analysts were not surprised by the good results, although many had forecast less positive results.

I think the bank overcame most of its problems from the past. Capital is no longer a problem, there seems to be a positive turnaround on the operating level, and they’ll pay dividends again. Stefan Bongardt, Analyst, Independent Research

In the first half of 2015, net profit more than doubled to €646 million from €300 million in the first half of 2014.

Stefan Bongardt, an analyst at Independent Research in Frankfurt, Germany's largest independent analyst company, said the second-quarter profit was 4 percent more than what his team had forecast.

“I think the bank overcame most of its problems from the past. Capital is no longer a problem, there seems to be a positive turnaround on the operating level, and they’ll pay dividends again," Mr. Bongardt told Handelsblatt Global Edition.

But he warned that the bank still has a long way ahead.

Commerzbank shares rose 2.3 percent in Frankfurt on the news, the biggest rise in the German DAX, which opened 0.1 percent lower at 11,294.66 p0ints.

Germany’s Frankfurter Allgemeine Sonntagszeitung reported that Mr. Blessing will be offered a new contract after his current one ends in October 2016.

In publicly traded companies it is common to renew contracts one year beforehand. A spokesperson for Commerzbank did not want to comment on the newspaper’s report.

It goes without saying that the positive results are a reflection of good work from Mr. Blessing, who has been with Commerzbank for 14 years.

In recent years, the 52-year-old has had to deal with a lot of criticism. Commerzbank’s share price cratered after the crisis and is trading at roughly €12 per share, down from a pre-crisis high of €263.

The German government was forced to inject €18.2 billion into Commerzbank to rescue the bank during the crisis.

 

Yasmin Osman and Elisabeth Atzler are banking correspondents for Handelsblatt in Frankfurt and Düsseldorf. Franziska Scheven and Sarah Mewes are editors at Handelsblatt Global Edition in Berlin. To contact the authors: [email protected], [email protected], [email protected] and [email protected]