[FRANKFURT] Germany’s Commerzbank, fending off a possible takeover by Italy’s UniCredit, reported an unexpected 7.9 per cent drop in third-quarter net profit on Thursday (Nov 6) as higher tax rates and costs weighed on earnings.
The lender reported a net profit of 591 million euros (S$888 million) in the quarter ended Sep 30, compared with a profit of 642 million euros a year earlier.
Analysts, on average, had expected a profit of 659 million euros, according to a consensus forecast published by Commerzbank.
The German bank said that its tax rate rose to 36 per cent in the quarter, up from 22 per cent a year earlier. Costs rose 5 per cent in Q3, in part due to higher personnel expenses.
The bank said it had applied for an additional share buyback of up to 600 million euros, and it increased its forecast for 2025 net interest income to 8.2 billion euros, up from eight billion euros earlier.
Italy’s UniCredit has amassed a 26 per cent equity stake in the German lender as it pushes for a tie-up between the banks, despite resistance from Commerzbank management, employees, and the German government.
Commerzbank executives have been trying to convince shareholders of their standalone strategy by delivering healthy earnings.
“We have generated significant momentum over the past 12 months,” CEO Bettina Orlopp said.
The bank announced earlier this year that it would axe 3,900 mostly local jobs to help it deliver more ambitious profit targets as part of its effort to fight off UniCredit’s advances.
