Commerzbank Pledges Revenue Growth, Abandons Job Cuts Target

(Bloomberg) -- Commerzbank AG vowed to restore revenue growth after posting its weakest fourth quarter in four years as competition for corporate clients weighs on Chief Executive Officer Martin Zielke’s turnaround plan.

Revenue for the group declined 3.3 percent to 2.04 billion euros, the Frankfurt-based lender said Thursday. “Commerzbank will concentrate on further growth in the core segments, and is targeting higher underlying revenues in 2019,” the bank said.

Key Insights

• The retail business saw revenue decline 2.1 percent from a year earlier. Zielke, a former retail banker, has added a million new clients, mainly in the retail business, since announcing his strategy in late 2016, by offering cash incentives to new customers.
• At the corporate clients unit, which caters to the small and mid-sized companies that are the backbone of Germany’s export-driven economy, revenue slumped 9.5 percent. The business has suffered from intense competition as well as an economic slowdown that’s weighing on corporations.
• The bank is abandoning a job cut target, saying it expects headcount of more than 38,000 by 2020. The previous goal was to bring it to 36,000.

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• The challenging revenue situation had already forced the company last quarter to say it will probably fall short of its revenue target for 2020.
• Fourth-quarter net income soared 51 percent to 113 million euros from 75 million euros, helped by higher net interest income.
• The bank confirmed its intention to pay a dividend of 0.20 euros per share for 2018. It would be the first dividend since it paid one for 2015.

To contact the reporter on this story: Steven Arons in Frankfurt at sarons@bloomberg.net

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Christian Baumgaertel

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