Germany's second largest lender Commerzbank AG on Monday posted a 113 million euro ($159 million) profit for the third quarter, helped by lower loan losses but still below analysts' expectations.
The third quarter gain followed a loss of euro1.06 billion for the year-ago period and was helped by a 33 percent drop in the amount of cash set aside to cover bad loans, to euro621 million.
However, the profit was smaller than expected by analysts, sending Commerzbank shares down 3.7 percent to 6.38 euros in morning Frankfurt trading.
Commerzbank took part in the German government's financial-sector bailout program and is around 25 percent owned by the government.
It returned to profitability in the first quarter this year, and the bank said it now expects to post a net profit of at least euro1 billion this year, based on international financial reporting standards. Commerzbank lost 4.5 billion euros in 2009.
"Thus we are returning to profitability one year earlier than expected," said Chief Executive Martin Blessing. "We have not yet reached our targets and will continue to lower risks and reduce total assets as planned in 2011. At the same time we want to achieve selective growth in the core bank."
Commerzbank posted an operating profit of 116 million euros in the third quarter, compared to 122 million euros in the same quarter last year. For the first nine months, the bank said operating profit was up to 1.13 billion euros from a loss of 696 million euros in the first nine months of 2009.
Looking ahead, CFO Eric Strutz said that "revenues have increased and costs are under control" and predicted operating profit will rise in 2011 on increasing profits from Dresdner Bank integration and in its private customers segment.
Commerzbank bought Dresdner from Allianz SE in 2009.
"We are sailing into the next year with a tail wind and assume that the operating profit for 2011 will be higher than that seen in 2010," he said.
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