Commerzbank has posted a 52 percent drop in first-quarter net profit amid volatile capital markets and low interest rates.
Germany's Commmerzbank today reported a steep decline in first-quarter earnings, with volatile markets and low interest rates being blamed for hitting its business with German medium-sized companies particularly hard.
In its quarterly report, the bank said: "Given the increased burden in relation with the ECB's further interest rate cut in March and the highly volatile global capital markets, it has become more ambitious to reach the consolidated profit 2015," echoing remarks made last month by former Commerzbank Chief Executive, Martin Blessing.
Q1 Earnings Hit By Market Volatility and Low Interest Rates
Amid a difficult market environment, Commerzbank generated an operating profit of EUR 273 million ($317) in the first quarter of 2016 against EUR 670 million ($777) in Q1 2015, and a net profit of EUR 163 million ($189) against EUR 338 million ($392) in Q1 2015.
Revenues before loan loss provisions declined to EUR 2,314 million ($2,683) compared with EUR 2,785 million ($3,229) in Q1 2015, reflecting a further deterioration in the interest rate environment and a slowing client activity within difficult markets. Operating expenses in the first quarter were EUR 1,893 million ($2,195) compared with EUR 1,957 million ($2,269) in Q1 2015.
Commenting on the results, Stephan Engels, Chief Financial Officer of Commerzbank said: “In view of difficult market conditions and the increasingly challenging interest rate environment, the Bank achieved a reasonable operating profit in the first quarter. The Bank's risk profile is good and with its CET 1 capital ratio at 12.0 per cent, it continues to hold a solid mid-range position among European peers.”
Commerzbank Acknowledges Involvement in Tax Evasion Scheme
It also emerged today that Commerzbank was one of the main culprits in a widely used tax-evasion scheme that has cost Germany EUR 5 billion ($5.78 billion) in taxes since 2011.
Foreign investors are alleged to have exploited a legal loophole, lending shares to German banks who paid less tax on dividend Payments than the investors would have done themselves in so-called "cum-cum" deals. Commerzbank acknowledged it had been trading in "cum cum" situations, whereby foreign investors, who are obliged to pay taxes of 15 percent on dividends from holdings in German equities, regularly lent their shares to German lenders such as Commerzbank just ahead of the dividend due date, taking them back just days after the payments.
The German banks would receive the dividend payments and incur the taxes, but offset them, for example, with losses carried forward, effectively paying no taxes and benefiting by deducting a fee from the foreign investor before passing on the dividend.
Germany's Commmerzbank today reported a steep decline in first-quarter earnings, with volatile markets and low interest rates being blamed for hitting its business with German medium-sized companies particularly hard.
In its quarterly report, the bank said: "Given the increased burden in relation with the ECB's further interest rate cut in March and the highly volatile global capital markets, it has become more ambitious to reach the consolidated profit 2015," echoing remarks made last month by former Commerzbank Chief Executive, Martin Blessing.
Q1 Earnings Hit By Market Volatility and Low Interest Rates
Amid a difficult market environment, Commerzbank generated an operating profit of EUR 273 million ($317) in the first quarter of 2016 against EUR 670 million ($777) in Q1 2015, and a net profit of EUR 163 million ($189) against EUR 338 million ($392) in Q1 2015.
Revenues before loan loss provisions declined to EUR 2,314 million ($2,683) compared with EUR 2,785 million ($3,229) in Q1 2015, reflecting a further deterioration in the interest rate environment and a slowing client activity within difficult markets. Operating expenses in the first quarter were EUR 1,893 million ($2,195) compared with EUR 1,957 million ($2,269) in Q1 2015.
Commenting on the results, Stephan Engels, Chief Financial Officer of Commerzbank said: “In view of difficult market conditions and the increasingly challenging interest rate environment, the Bank achieved a reasonable operating profit in the first quarter. The Bank's risk profile is good and with its CET 1 capital ratio at 12.0 per cent, it continues to hold a solid mid-range position among European peers.”
Commerzbank Acknowledges Involvement in Tax Evasion Scheme
It also emerged today that Commerzbank was one of the main culprits in a widely used tax-evasion scheme that has cost Germany EUR 5 billion ($5.78 billion) in taxes since 2011.
Foreign investors are alleged to have exploited a legal loophole, lending shares to German banks who paid less tax on dividend Payments than the investors would have done themselves in so-called "cum-cum" deals. Commerzbank acknowledged it had been trading in "cum cum" situations, whereby foreign investors, who are obliged to pay taxes of 15 percent on dividends from holdings in German equities, regularly lent their shares to German lenders such as Commerzbank just ahead of the dividend due date, taking them back just days after the payments.
The German banks would receive the dividend payments and incur the taxes, but offset them, for example, with losses carried forward, effectively paying no taxes and benefiting by deducting a fee from the foreign investor before passing on the dividend.
Devexperts Teams Up with nuam Exchange to Boost Equity and Derivatives Trading
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
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#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
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20-22 MAY 2024
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#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
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#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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