November 8, 2018 / 6:42 AM / 8 months ago

UPDATE 2-Commerzbank Q3 profit slump not as bad as feared, prompting share jump

* Q3 net profit 218 mln euros, above expected 211 euros

* CEO says environment remains challenging

* CFO trims 2020 revenue forecast

* Shares rise 5.5 percent (Updates with CFO statements, share price, analyst comment)

FRANKFURT, Nov 8 (Reuters) - Commerzbank’s third-quarter net profit beat forecasts on Thursday despite a sharp year-on-year drop as the German lender focused on a major overhaul, sending shares higher.

Net profit of 218 million euros ($249 million), while down from 467 million euros a year earlier, was above the 211 million euros forecast by analysts in a Reuters poll.

In a note to clients, analysts at Citi called the results “underlying positive”, and Credit Suisse said they represented a “good Q3 update”.

The bank’s shares traded 5.5 percent higher midmorning in Frankfurt, making them the top gainers on Germany’s MDAX index . They are down 29 percent so far this year.

Germany’s second-largest listed bank, still partly owned by the German government, is overhauling its business by reducing staff, digitising its back office and expanding its retail customer base.

“The environment remains challenging and although we have made a lot of progress, we still have some work to do,” Chief Executive Martin Zielke said in a statement.

The restructuring programme, announced in 2016, is due to be completed in 2020.

The bank maintained its outlook for the full year, stating that revenue from private and small business customers would rise from 2017, while revenue from corporate clients would decline.

The lender is slightly revising down its 2020 revenue target of 9.8 billion euros due to factors macroeconomic factors like Brexit and ongoing trade tensions, Chief Financial Officer Stephan Engels said in a call with analysts.

But a consensus forecast of 9.2 billion euros expected by analysts is too low, he added.

$1 = 0.8746 euros Reporting by Tom Sims; Editing by Riham Alkousaa, Gopakumar Warrier and Jan Harvey

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