Commerzbank has posted a 52 percent drop in first-quarter net profit amid volatile capital markets and low interest rates.
Germany's Commmerzbank today reported a steep decline in first-quarter earnings, with volatile markets and low interest rates being blamed for hitting its business with German medium-sized companies particularly hard.
In its quarterly report, the bank said: "Given the increased burden in relation with the ECB's further interest rate cut in March and the highly volatile global capital markets, it has become more ambitious to reach the consolidated profit 2015," echoing remarks made last month by former Commerzbank Chief Executive, Martin Blessing.
Q1 Earnings Hit By Market Volatility and Low Interest Rates
Amid a difficult market environment, Commerzbank generated an operating profit of EUR 273 million ($317) in the first quarter of 2016 against EUR 670 million ($777) in Q1 2015, and a net profit of EUR 163 million ($189) against EUR 338 million ($392) in Q1 2015.
Revenues before loan loss provisions declined to EUR 2,314 million ($2,683) compared with EUR 2,785 million ($3,229) in Q1 2015, reflecting a further deterioration in the interest rate environment and a slowing client activity within difficult markets. Operating expenses in the first quarter were EUR 1,893 million ($2,195) compared with EUR 1,957 million ($2,269) in Q1 2015.
Commenting on the results, Stephan Engels, Chief Financial Officer of Commerzbank said: “In view of difficult market conditions and the increasingly challenging interest rate environment, the Bank achieved a reasonable operating profit in the first quarter. The Bank's risk profile is good and with its CET 1 capital ratio at 12.0 per cent, it continues to hold a solid mid-range position among European peers.”
Commerzbank Acknowledges Involvement in Tax Evasion Scheme
It also emerged today that Commerzbank was one of the main culprits in a widely used tax-evasion scheme that has cost Germany EUR 5 billion ($5.78 billion) in taxes since 2011.
Foreign investors are alleged to have exploited a legal loophole, lending shares to German banks who paid less tax on dividend Payments than the investors would have done themselves in so-called "cum-cum" deals. Commerzbank acknowledged it had been trading in "cum cum" situations, whereby foreign investors, who are obliged to pay taxes of 15 percent on dividends from holdings in German equities, regularly lent their shares to German lenders such as Commerzbank just ahead of the dividend due date, taking them back just days after the payments.
The German banks would receive the dividend payments and incur the taxes, but offset them, for example, with losses carried forward, effectively paying no taxes and benefiting by deducting a fee from the foreign investor before passing on the dividend.
Germany's Commmerzbank today reported a steep decline in first-quarter earnings, with volatile markets and low interest rates being blamed for hitting its business with German medium-sized companies particularly hard.
In its quarterly report, the bank said: "Given the increased burden in relation with the ECB's further interest rate cut in March and the highly volatile global capital markets, it has become more ambitious to reach the consolidated profit 2015," echoing remarks made last month by former Commerzbank Chief Executive, Martin Blessing.
Q1 Earnings Hit By Market Volatility and Low Interest Rates
Amid a difficult market environment, Commerzbank generated an operating profit of EUR 273 million ($317) in the first quarter of 2016 against EUR 670 million ($777) in Q1 2015, and a net profit of EUR 163 million ($189) against EUR 338 million ($392) in Q1 2015.
Revenues before loan loss provisions declined to EUR 2,314 million ($2,683) compared with EUR 2,785 million ($3,229) in Q1 2015, reflecting a further deterioration in the interest rate environment and a slowing client activity within difficult markets. Operating expenses in the first quarter were EUR 1,893 million ($2,195) compared with EUR 1,957 million ($2,269) in Q1 2015.
Commenting on the results, Stephan Engels, Chief Financial Officer of Commerzbank said: “In view of difficult market conditions and the increasingly challenging interest rate environment, the Bank achieved a reasonable operating profit in the first quarter. The Bank's risk profile is good and with its CET 1 capital ratio at 12.0 per cent, it continues to hold a solid mid-range position among European peers.”
Commerzbank Acknowledges Involvement in Tax Evasion Scheme
It also emerged today that Commerzbank was one of the main culprits in a widely used tax-evasion scheme that has cost Germany EUR 5 billion ($5.78 billion) in taxes since 2011.
Foreign investors are alleged to have exploited a legal loophole, lending shares to German banks who paid less tax on dividend Payments than the investors would have done themselves in so-called "cum-cum" deals. Commerzbank acknowledged it had been trading in "cum cum" situations, whereby foreign investors, who are obliged to pay taxes of 15 percent on dividends from holdings in German equities, regularly lent their shares to German lenders such as Commerzbank just ahead of the dividend due date, taking them back just days after the payments.
The German banks would receive the dividend payments and incur the taxes, but offset them, for example, with losses carried forward, effectively paying no taxes and benefiting by deducting a fee from the foreign investor before passing on the dividend.
FM's Editor-in-Chief Yam Yehoshua on how the newsroom evaluates stories.
FM's Editor-in-Chief Yam Yehoshua on how the newsroom evaluates stories.
FM's Editor-in-Chief Yam Yehoshua on how the newsroom evaluates stories.
FM's Editor-in-Chief Yam Yehoshua on how the newsroom evaluates stories.
Matthew Smith, Group CEO at EC Markets, speaking at FMLS:24
Matthew Smith, Group CEO at EC Markets, speaking at FMLS:24
Matthew Smith, Group CEO at EC Markets, speaking at FMLS:24
Matthew Smith, Group CEO at EC Markets, speaking at FMLS:24
Finance Magnates Annual Awards 2024 | FM Awards 2024 Highlights
Finance Magnates Annual Awards 2024 | FM Awards 2024 Highlights
🎥Catch the best moments from the Finance Magnates Annual Awards Gala Dinner!
An evening where top names in finance came together to celebrate achievements, enjoy live music, and connect over a memorable dinner. Watch the highlights and feel the energy of our first gala in Cyprus!
Congratulations to all the winners for their dedication to excellence and leadership in the financial industry, including XM, Trading PRO, FP Markets, Deriv, FxPro, LATAM, Headway, ATFX, FBS, AMEGA, EC Markets, Axi
For more information about the 1st Finance Magnates Annual Awards, visit https://bit.ly/3Zb7wNz
#FinanceMagnatesGala #IndustryExcellence #GalaHighlights #FinanceMagnatesAnnualAwards #FinanceMagnatesAwards #CelebratingSuccess #FinanceCommunity
🎥Catch the best moments from the Finance Magnates Annual Awards Gala Dinner!
An evening where top names in finance came together to celebrate achievements, enjoy live music, and connect over a memorable dinner. Watch the highlights and feel the energy of our first gala in Cyprus!
Congratulations to all the winners for their dedication to excellence and leadership in the financial industry, including XM, Trading PRO, FP Markets, Deriv, FxPro, LATAM, Headway, ATFX, FBS, AMEGA, EC Markets, Axi
For more information about the 1st Finance Magnates Annual Awards, visit https://bit.ly/3Zb7wNz
#FinanceMagnatesGala #IndustryExcellence #GalaHighlights #FinanceMagnatesAnnualAwards #FinanceMagnatesAwards #CelebratingSuccess #FinanceCommunity
FMLS:24 | Shaping the Next Era of Financial Evolution
FMLS:24 | Shaping the Next Era of Financial Evolution
Welcome to FMLS:24 – the premier event where influential brands and leaders in trading, payments, fintech, and digital assets come together!
Join over 2,500 industry professionals, engage with 150+ expert speakers, and discover endless opportunities with 70+ top exhibitors. FMLS:24 is where senior executives and decision-makers gather to close deals, forge new partnerships, and strengthen connections with long-term clients.
Whether you’re in finance, technology, or payments, this summit is your gateway to future growth, meaningful collaborations, and industry-leading insights.
👉 Don't miss out – secure your ticket now at https://events.financemagnates.com/ZQEYy0?utm_source=youtube&utm_campaign=fmls24-awareness&utm_medium=video&RefId=MLS%3A24+Video+Promo
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Welcome to FMLS:24 – the premier event where influential brands and leaders in trading, payments, fintech, and digital assets come together!
Join over 2,500 industry professionals, engage with 150+ expert speakers, and discover endless opportunities with 70+ top exhibitors. FMLS:24 is where senior executives and decision-makers gather to close deals, forge new partnerships, and strengthen connections with long-term clients.
Whether you’re in finance, technology, or payments, this summit is your gateway to future growth, meaningful collaborations, and industry-leading insights.
👉 Don't miss out – secure your ticket now at https://events.financemagnates.com/ZQEYy0?utm_source=youtube&utm_campaign=fmls24-awareness&utm_medium=video&RefId=MLS%3A24+Video+Promo
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