Despite making provisions to avoid risks from Russia following the invasion of Ukraine, Commerzbank, Germany’s second-largest lender, announced Thursday that first-quarter profits had more than doubled.
Commerzbank reported a net profit of 298 million euros ($313 million) in the first three months of the year, up from 133 million euros the previous year.
The bank’s revenue increased to 2.8 billion euros in the first quarter of 2021, up from 2.5 billion euros in the previous quarter.
The increase surpassed funds set aside by the bank to protect against a “substantial increase” in risk due to Russia’s incursion in Ukraine.
The bank announced that it would set aside “almost half a billion euros” to cover any losses “related to Russia.”
The impact was mitigated by lower reserves for risks associated to the coronavirus epidemic, according to the bank.
Commerzbank was only doing business with “current German and foreign customers” after stopping new operations in Russia.
Following the start of the war, the lender cut its exposure to Russia by 36%, leaving it with a liability of “less than 1.2 billion euros” by the end of April.
Commerzbank’s ability to offset costs related to Russia demonstrated “how sturdy and resilient our customer business is in these trying times,” according to chief financial officer Bettina Orlopp.
According to CEO Manfred Knof, the improvement demonstrated that the bank’s restructuring approach “is working.”
Following significant losses around the time of the coronavirus epidemic, the company decided to revamp its operations in 2020.
Plans are for reducing the staff from almost 40,000 at the end of 2020 to 32,000 by the end of 2024.
In the first quarter, the bank cut its operational costs by 2% to 1.4 billion euros.
Courtesy Bol News