Commerzbank AG Expects to Close 2020 in Red, Hurt by Wirecard Scandal

The German lender has revised its forecast for 2020, now expects to report a net loss for the year.

Commerzbank AG is no longer anticipating that it will achieve a profit for 2020, the company stated today in its revised outlook for the full-year. According to media reports, this revision has been reduced due to losses tied to the Wirecard AG scandal.

Earlier today Commerzbank published its financial results for the second quarter of 2020, which included the revised outlook. According to an article from Bloomberg, the revision can be attributed to an impact of €175 million from a single case. This case, according to a person familiar with the matter, is Wirecard AG, which filed for bankruptcy.

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As Finance Magnates reported, Wirecard AG, a leading fintech company in Germany, went into insolvency following a multi-year fraud. This resulted in a €1.9 billion hole in its balance sheet.

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Because of this, the bank now forecasts a negative net result for the year, combined with the larger economic impacts from the coronavirus pandemic. For the full year, Commerzbank said that the risk result is expected to be between €1.3 billion and €1.5 billion.

Commerzbank Revenues Increase by 9.5% YoY

Taking a look at the German lender’s financial results for the second quarter of 2020, underlying revenues increased to €2.3 billion. This is 9.5 per cent stronger than the €2.1 billion underlying revenues posted in the second quarter of 2019. Supposedly, the uptick in revenues was driven by significant growth in net commission income.

Across the second quarter of this year, Commerzbank noted operational profits of €205 million. This is a decrease on the €309 million operational profits recorded in Q2 of 2019, by 33.7 per cent. The net operating profit for the most recent quarter was €220 million, which is also a fall of 21.1 per cent.

Commenting on the results, Martin Zielke, Chairman of the Board of Managing Directors of Commerzbank said in the statement: “In the second quarter, we achieved a positive result in spite of the coronavirus and we were able to support our customers in overcoming the consequences of the pandemic. That is the top priority in times like this. We have benefited from the fact that in recent years we have positioned the Bank to be much more robust and more digital.”

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