Commerzbank AG Expects to Close 2020 in Red, Hurt by Wirecard Scandal
Commerzbank AG is no longer anticipating that it will
achieve a profit for 2020, the company said in its revised outlook for the
full-year this Wednesday. According to media reports, this revision has been
reduced due to losses tied to the Wirecard AG scandal.
Earlier today Commerzbank published its financial results
for the second quarter of 2020, which included the revised outlook. According
to a report from Bloomberg, the revision can be attributed to an impact of €175
million from a single case. This case, according to a person familiar with the
matter, is Wirecard AG, which filed for bankruptcy.
As Finance Magnates reported, Wirecard AG, a leading fintech
company in Germany, went into insolvency following a multi-year fraud that
resulted in a €1.9 billion hole in its balance sheet.
Because of this, the bank now forecasts a negative net
result for the year, combined with the larger economic impacts of the
coronavirus pandemic. For the full year, Commerzbank said that the risk result
is expected between €1.3 billion and €1.5 billion.
Commerzbank revenues increase by 9.5% YoY
Taking a look at the German lender’s financial results for
the second quarter of 2020, underlying revenues increased to €2.3 billion. This
is 9.5 per cent stronger than the €2.1 billion underlying revenues posted in
the second quarter of 2019. The uptick in revenues was driven by significant
growth in net commission income.
Across the second quarter of this year, Commerzbank noted
operating profit of €205 million. This is lower than the €309 million operating
profit recorded in Q2 of 2019 by 33.7 per cent. Net operating profit for the
most recent quarter was €220 million, which is also lower by 21.1 per cent.
Commenting on the results, Martin Zielke, Chairman of the
Board of Managing Directors of Commerzbank said in the statement: “In the
second quarter, we achieved a positive result in spite of the coronavirus and
we were able support our customers in overcoming the consequences of the
pandemic. That is the top priority in times like this. We have benefited from
the fact that in recent years we have positioned the Bank to be much more
robust and more digital.”
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