Commerzbank, the second largest bank in Germany after HM Deutsche Bank, what ended in June was a difficult quarter. But, incredibly, the biggest losses are not related to the effects of the pandemic, but to the Wirecard scandal, the German fintech accused of rigging the budget to cover a billionaire hole.
Let's get to the numbers. In the second quarter, the loans granted to Wirecard they forced Commerzbank to set aside losses of 175 million euros, given that last June the debtor declared himself insolvent. The figure far exceeds Loan losses caused by the coronavirus pandemic, which in the same period stood at the same level 131 million euro.
As regards the other budget items, between April and June operating profit of Commerzbank plunged 34% year on year, to 205 million, while the net profit it fell 21%, to 220 million. The two results are better than analysts forecast, but the Bank has already warned investors that, after the profit of 644 million recorded in 2019, the 2020 financial year will close in the red, given that - in all likelihood - credit losses and restructuring charges are set to increase.
“The effects of the coronavirus pandemic and continued challenging conditions continued to have a significant impact on our earnings performance in the first half of 2020,” Commerzbank said in a note, adding that this year's credit losses between 1,3 and 1,5 billion euros, an increase compared to the previous estimate which spoke of a gap between 1 and 1,4 billion.
Moreover, in this period Commerzbank is also going through a serious crisis from the point of view of internal leadership, given that last month the managing director, Martin Zielke, either the chairman of the supervisory boardStefan Schmittmann they announced their intention to step down.
