Germany's Commerzbank pledged to return to profit in 2003 after posting its first ever full-year loss this morning, hit by sliding trading andcommission income and higher bad loan provisions.
But analysts expressed scepticism that the bank, a key lender to small- and medium-sized businesses, would manage to achieve a turnaround because few people expect the creaking German economy to improve much this year."For the current year, the board of managing directors expects a return to profitability, even under adverse conditions," the bank said in a statement."It is impossible to say at such an early stage how high the result will be at year end," Chief Executive Mr Klaus-Peter Mueller added in an analysts' call.Confirming a report on Monday, the bank said its full-year pre-tax loss was €372 million, compared to a small profit in 2001 and expectations of around €312 million euros in a poll of analysts.
The bank did not immediately break out its fourth-quarter earnings, but the 2002 figures implied a worse-than-expected €417 million euros pre-tax loss.
German banks have been struggling in what has been dubbed the worst market environment since World War Two, hammered by soaring bad loan provisions as tens of thousands of small companies go bust and Europe's largest economy falters.
The poor results may weaken Commerzbank's hand in any future merger talks. It has held exploratory discussions about a merger with HVB Group but both banks are now concentrating on seeing through radical restructuring.