* Shares jump to 22 month high in early trading
* Increases 2016 target for capital to 10 pct
* To reduce NCA portfolio to 75 bln euros by 2016
* CEO waives bonus as says results not yet good enough
* Q4 pretax profit at 89 mln euros vs 225 mln loss year ago
(Adds CEO waives bonus, quotes, updates shares)
By Arno Schuetze and Thomas Atkins
FRANKFURT, Feb 13 Commerzbank said its
turnaround plan was running ahead of schedule, allowing it set
more ambitious targets for improving its capital position and
shedding weaker assets, and easing investor fears it might need
to raise more cash.
Shares in Germany's second-biggest lender, which also posted
a small profit for the fourth quarter of 2013, rose more than 3
percent to a 22-month high on Thursday.
Nonetheless, Chief Executive Martin Blessing still waived
his bonus, saying 2013 earnings were not convincing enough.
Commerzbank was one of the highest-profile casualties of the
global financial crisis after an expansion drive backfired, with
the German government spending around 18 billion euros ($24.5
billion) on a bailout of the bank.
It has since been cutting costs and selling assets in a bid
to return to health and Blessing said that restructuring was
gaining traction, with the bank turning a corner in 2013.
"2014 is year one - after the year of transition," he said.
The bank said its core tier 1 capital ratio - a key measure
of financial strength used by regulators - improved to 9.0
percent at the end of 2013 and it set new a target to reach more
than 10 percent by 2016.
While less than the 10.3 percent of rivals BNP Paribas and
Lloyds at the end of 2013, it is well above the 7.6 percent that
Commerzbank posted in 2012.
The German bank also said efforts to wind down its non-core
asset (NCA) portfolio, a "bad bank" split off as part of its
restructuring, were proceeding more quickly than expected.
It now aims to reduce the unit to 75 billion euros by 2016
from an earlier target of 90 billion, benefiting from a recovery
in asset prices.
"My concern was that there could be another cap hike. This
concern was wiped away with the numbers on the non-core asset
reduction," said Christian Hamann, analyst at Haspa.
At 1130 GMT, Commerzbank shares were up 2.8 percent at 13.76
euros, making them the top gainers among European rivals
and bringing to almost 70 percent the amount Commerzbank stock
has risen in the past six months.
BAD TO GOOD
Since mid-2013, Commerzbank has struck several deals to
reduce its exposure to assets such as commercial real estate and
"The wind-down unit slowly is getting into a dimension where
it is not as frightening anymore as two years ago," Metzler
analyst Guido Hoymann said.
Commerzbank's non-core assets stood at 116 billion euros at
the end of 2013, comparing with 289 billion in 2008.
Last week it announced the sale of $1 billion in bad Spanish
property loans in a bid to clean up its balance sheet and free
up capital ahead of European banking health checks.
Profit improved at the bank, mainly due to higher investment
banking and retail income as well as lower loan-loss provisions
in its non-core asset portfolio.
Blessing said that although Commerzbank swung to a modest 78
million euro net profit for 2013 after a 47 million euro loss
last year, he felt he was not entitled to a bonus.
"If there is no profit then I don't think it's right,
independent of whether the goals were reached, for the CEO to
receive variable compensation," said Blessing, who last received
a bonus for 2007.
He added he would have considered accepting the payment if
group net profit had been over 100 million euros for the year.
Commerzbank's 64 million euros net profit in the fourth
quarter beat analysts' average forecast for 25 million euros.
The lender lost 726 million in the year earlier period.
However, operating profit in its cash-cow business - the
Mittelstandsbank which caters to Germany's raft of medium-sized
companies - fell as the bank needed to set aside more cash to
cover potential bad loans.
Levels of provisions overall are normalising after the
Germany's economic success in 2012 allowed the bank to reclaim
bad-loan reserves it had set aside during the financial crisis.
($1 = 0.7359 euros)
(additional reporting by Jonathan Gould and Andreas
Doernfelder; Editing by Mark Potter)