FRANKFURT (Reuters) - Commerzbank (CBKG.DE) beat quarterly profit forecasts on Thursday, lifting its shares in pre-market trade, but the German lender said it needed to do more to get back to sustainable growth.
“We cannot yet be satisfied with the quality of our earnings,” Chief Executive Martin Zielke said in a statement.
Commerzbank's shares rose 2.4 percent to the top of Germany's blue-chip index .GDAXI in pre-market trading.
Germany’s second-largest lender behind Deutsche Bank (DBKGn.DE) reported a fourth-quarter net profit of 183 million euros ($195 million), beating analysts’ average forecast for 154 million euros.
Revenues were flat at 1.3 billion euros, in line with expectations, held back by low interest rates and weak loan demand from German companies.
Commerzbank did not provide guidance for 2017 earnings but said it aimed to keep its cost base stable.
It expects to set aside the same amount of money as in 2016 to cover bad loans at its retail and corporate bank, but sees provisions for bad shipping loans rising to 450-600 million euros. In 2016, it hiked group provisions by a third to 900 million euros, mainly due to its shipping industry exposure.
In a sign of the crisis being suffered by shipping firms due to a glut of vessels and sluggish global trade, the world’s largest container shipping group Maersk (MAERSKb.CO) reported a $2.7 billion quarterly loss on Wednesday.
Operating earnings at Commerzbank’s cash cow Mittelstandsbank unit, which caters to the German economy’s backbone of small and medium-sized companies, were up quarter-on-quarter as provisions fell.
The retail bank saw flat operating profit due to pressure on its deposits business, where negative interest rates weighed, despite cost cuts and higher customer demand for mortgages.
The bank announced in September it would cut more than a fifth of its workforce and suspend its dividend as it tackles the challenges of weak profits and a shift to online banking.
($1 = 0.9365 euros)
Editing by Maria Sheahan and Mark Potter