Commerzbank profit plunges on Greek writedown

Germany's second biggest bank, Commerzbank, said Wednesday that its second-quarter net profit shed 93 percent owing to a massive writedown on Greek debt, but maintained its outlook for the full year. Commerzbank reported a net profit of 24 million euros ($34.4 million), compared with 352 million euros in the second quarter of 2010. The bank noted in a statement that it had revalued its holdings of Greek debt, resulting in a depreciation of 760 million euros, an action taken by other German banks and insurance companies in the second quarter as well. But Commerzbank maintained its full year outlook of an operating profit "well above the figure achieved in 2010," or 1.39 billion euros. That depended however on "the implementation of the package of measures to tackle the European sovereign debt crisis" decided by eurozone leaders on July 21, the statement said. Operating profit came to just 55 million euros for the second quarter of 2011, but climbed to 1.2 billion for the first six months of the year, the data showed. Another positive sign was the sharp reduction of provisions for risky loans, which fell to 278 million euros from 639 million in the year-earlier period. In Commerzbank's core operations, operating profit leapt to 2.1 billion euros in the first six months of the year, from 1.1 billion in the same period of 2010. The bank's core tier one ratio, a measure of its ability to weather exceptional shocks to the financial sector, stood "at a comfortable 9.9 percent" as of June 30, the statement said.