The effects of the ongoing pandemic are still haunting Germany’s second-largest lender, Commerzbank AG, as the banks missed its financial estimates for the third quarter, reporting a loss of €69 million.
The analysts were forecasting the losses for the quarter to be around €49 million. The bank was profitable before the pandemic and reported a profit of €297 million in the third quarter of last year.
The revenue of the lender between July and September saw a yearly drop of 6.8 percent to €2.03 billion, falling short of the estimated €2.06 billion.
The Impact of COVID-19 Remains
The lender highlighted the impact of the pandemic on the banking business and warned on the long-term impact on the economy.
Indeed, the bank’s loan loss provisions due to the pandemic for last quarter upped to €181 million, while in the previous quarter it was €131 million. The overall provisions of loan losses for the quarter more than doubled to €272 million from last year.
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All this is happening when the bank’s current chief, Martin Zielke is also going to step down at the end of this year. Deutsche Bank executive, Manfred Knof will takeover the apex role.
While Commerzbank increased its loan loss provisions, its domestic rival Deutsche Bank is expecting a recovery from the impact of the ongoing pandemic. Notably, most of the European countries are now facing a second wave of the virus outbreak, resulting in a lockdown in many countries.
Commerzbank highlighted that majority of its clients who deferred loans in the first quarter are now paying back their debts. However, the bank remains concerned about the chances of increased bankruptcies in Germany next year.
The impact of the results is clearly reflecting the market performance of the lender, as the price of Commerzbank shares dived to 6 percent on Thursday, as of press time.
Earlier today, Finance Magnates reported on a similar earning miss by Dutch lender ING, which is now planning to cut 1,000 jobs and close offices in South America and Asia to reduce operational costs.