The net result announced Thursday improves on profit of 257 million euros in the same quarter a year ago. And it's far better than the 687 million euros loss recorded in the third quarter when the company had large writeoffs for Greek government bonds.
The Frankfurt-based bank reduced its operating costs by about 18 percent to 1.77 billion euros from 2.16 billion euros a year earlier, crediting the integration of its acquisition Dresdner Bank for creating savings through shared costs. The company's workforce shrank by about 1,000 people to 58,160.
Bad loans fell to 381 million euros from 595 million euros thanks to the relatively robust economy in Germany, where the bank's mainstay business is lending to small and medium-sized industrial companies. Germany saw its economy shrink 0.2 percent in the fourth quarter but growth for the year was a strong 3.0 percent, exports remain strong and unemployment is low.
For all of 2011, Commerzbank's net profit fell to 638 million euros from 1.43 billion euros in 2010 as the bank took losses on the euro zone debt crisis and wrote down its large portfolio of Greek government bonds by 73.6 percent. It said that it had now adequately accounted for losses that would come from an expected debt swap that will reduce the financially prostrate Greek governmen'ts debt burden by cutting the face value of bondholders' investments by 53.5 percent.
Total losses including interest have been estimated by international finance officials at around 70 percent, but Commerzbank said that since the value of the new bonds could not be finally determined, it would use standard market discount rates to value comparable bonds.
The result leaves its holdings at 26.4 percent of their face value.
Commerzbank said it had "made adequate provision for current discernible default risks associated with the European debt crisis" but added that continuing uncertainty makes further losses possible.
CEO Martin Blessing focused on the bank's core business in its key markets, Germany and Poland.
"Our customer-centric business model, which is firmly anchored in the real economy, has proved itself and is also successful in a challenging environment," Blessing said in a statement.
