Wednesday 12 November 2014

Commerzbank report Q3 2014

Commerzbank, Q3, 2014, front page

Share price was up around 1.5% on the day of publishing but has been drifting downwards ever since and generally the German banks are still being, and justifiable so, treated poorly by the stock market. Oh, and the woman is still on her bicycle so the development speed for Commerzbank have still not increased beyond bicycle speed. Where is the Ferrari I wonder?

For the report in full please go here and to see the previous summary that I made please see Commerzbank report Q2 2014.

There are some interesting things in the key figures below. For instance what caught my eye was the C/I that is almost up at 75% now so the cost to income increased with almost 3% during the running 9 months. Do not forget a good bank are down at even below 50% on this value and the shameful Deutsche Bank are running around 90%. All the capital ratios have also become worse since last year. This means they have started to remove the snare a little which is causing larger earnings but is also what lead to many of the problems in the first place. I would prefer to see a bit more snare on and lowered earnings but a healthier bank. I do not see that today. They have also kept decreasing their work force in Germany and increased it abroad. I see every here and there in Berlin old offices from Commerzbank that are standing empty.

Commerzbank, Q3, 2014, key figures

Looking at the quarter revenue we see that things are pretty much stable and fluctuating between 1.1 to 1.7 billion. Happily the profit has started to increase slightly but maybe there will be a need for another restructuring position... future will tell.

Commerzbank, Q3, 2014, quarter, income statement

With the running nine month income statement we see that revenue is down with a total of -9.5%. Happily they have countered that by also decreasing the interest expenses by -12.4%. Besides from that the operating expenses have increased since 2013. Without the big restructuring cost in Q1 2013 Commerzbank would have had a pre-tax profit of 641 million € so the progress from then to now is in my eyes not very impressive.

Commerzbank, Q3, 2014, income statement

Conclusion: Commerzbank is still doing poorly with high C/I ratio, dropping revenue and low earnings. By the look of things they have increased risk as an attempt to increase earnings. It often fails especially since there are no correlation between the two so when they start to discuss risk and the increased risk taken it really makes me worried concerning what they are up to. I will remain as a shareholder for now.

If you want to find out a bit more about Commerzbank then please see analysis of Commerzbank 2014.


Eighth Wonder Investing said...


Thanks for a nice blog!
I must say I agree, I really thought they should come back much faster but here we see it takes time, but I really hope they will.

Have been doing an internship for CBK for 6 months and from my perspective the culture and everything is great there, the only missing the numbers now.

Best regards,


Fredrik von Oberhausen said...

Thank you!

Did you make that internship in Germany?

The reason for why I ask is because they have kept cutting jobs in Germany which tend to lead to unhappy and unproductive employees unless you manage to selectively clean out the rotten eggs that is...