May 15, 2018 / 5:50 AM / 2 months ago

Commerzbank's first quarter stronger than expected, shares lead gainers

FRANKFURT (Reuters) - Commerzbank (CBKG.DE) on Tuesday reported a smaller-than-expected fall in first-quarter pretax profit and said it had accrued money to resume dividend payments this year, sending shares in Germany’s No. lender up almost 4 percent.

The lender, still partly owned by the government, is restructuring while struggling amid weak markets and slow loan demand.

It reported pretax profit down 12 percent to 289 million euros ($345 million) but topped the 276 million forecasts by analysts.

Commerzbank shares rose 3.9 percent in early trading, making them the best performers among German bluechips .GDAXI.

“The bank aims to resume dividend payments for financial year 2018, and made an accrual of 5 cents per share in the first quarter,” Chief Executive Martin Zielke said in a statement.

FILE PHOTO - Pens with Commerzbank logo are pictured at the bank's annual news conference in Frankfurt February 12, 2015. REUTERS/Ralph Orlowski/File Photo

It would be the first dividend since the 20 cents per share it paid for 2015.

While operating expenses rose, partly due to investment in its digital offering, the bank retained its cost targets.

“We think it is encouraging that the company is sticking to the full-year 7 billion euro (cost) guidance,” Morgan Stanley analysts said in a note to clients.

Revenue fell by 3.7 percent to 2.3 billion euros as competition in Germany and muted client demand for capital market products weighed despite growth in its customer base.

Net profit rose by 9.2 percent to 250 million euros helped by lower tax payments.

Its Common Equity Tier 1 capital ratio declined to 13.3 percent from 14.1 percent at the end of the 2017.

Reporting by Arno Schuetze; editing by Stephen Coates and Jason Neely

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