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FRANKFURT — Germany's Commerzbank AG reported Friday a large first quarter loss as the bank, struggling to recover from the effects of the global financial crisis, made provisions for bad loans and investments.
The Frankfurt-based bank said it lost euro861 million ($991 million) in the January-March period compared with a net profit of euro280 million in the first quarter of 2008.
However, net interest income, one measure of revenue, was up 70 percent to euro1.7 billion from just over euro1 billion in the first quarter of 2008.
The bank had reported a euro809 million loss in the fourth quarter of 2008, while posting a profit of a mere euro3 million for the full year.
The bank said a detailed forecast for the current year is not possible due to a continued deterioration of the market.
"We have successfully launched the new Commerzbank over the last months and we have laid the foundation to emerge strengthened from the crisis," Eric Strutz, the company's chief financial officer said in a statement.
"The synergies created by the Dresdner Bank merger will be realized as expected and beginning in 2011 our customer bank will reap above-average benefits from an economic recovery."
Commerzbank, Germany's second largest commercial bank behind Deutsche Bank AG, announced the Dresdner Bank deal in August, when Dresdner's parent company, Munich-based insurance and banking company Allianz SE agreed to sell 60 percent of the unit in a euro9.8 billion deal.
But the acquisition and Commerzbank's business since hasn't been free and clear of the financial crisis.
Last year, Commerzbank received euro8.2 billion in capital from a German government rescue fund and on Thursday the European Commission approved another euro10 billion. In return, the government will take a 25 percent stake.
In terms of divisions, Commerzbank said it saw an 82 percent increase in first quarter net interest income in its private customers division, to euro594 million compared with euro326 million in the first quarter of 2008.
However, because of factors including interest rate fluctuations, loan loss provisions, and "difficult overall conditions," the division's operating profit fell 62 percent to euro48 million from euro127 million in the first quarter of 2008.
The Mittelstand division, which specializes in banking for medium sized companies, nearly doubled its net interest income, to euro573 million from euro287 million. The division's operating profit of euro339 million was the bank's biggest earnings contributor for the quarter.
Commerzbank said the corporates and markets division saw net interest income more than double, to euro219 million from euro105 million in the first quarter of 2008.
The corporates and markets division however reported an operating loss of euro1.2 billion compared with an operating profit of euro2.2 billion a year earlier because of effects including write-downs on the asset-backed securities portfolio and higher loan loss provisions.
Shares of Commerzbank were nearly 4 percent higher at euro6.04 in Frankfurt morning trading.
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