By Tom Sims and Frank Siebelt
FRANKFURT (Reuters) -Germany’s Commerzbank reported an expected dip in second-quarter net profit as net interest income fell and announced plans for a 600-million-euro ($654.48 million) stock buyback.
Commerzbank’s net profit of 538 million euros compared with a profit of 565 million euros a year earlier. Analysts, on average, had expected a profit of 539 million euros, according to a July consensus forecast published by the German lender.
Share prices fell more than 5% in morning trade. Global stock markets have been volatile in recent sessions amid concerns that the U.S. economy could fall into recession.
The profit drop of 4.8% from a year earlier came as net interest income fell and as the bank booked expenses related to a long-standing issue with mortgage loans at its Polish unit and litigation in Russia.
The bank nevertheless confirmed its forecast for a full-year profit of more than 2.2 billion euros, and analysts at Deutsche Bank and JPMorgan called the results “solid”.
Commerzbank, one of Germany’s best-known banks and partially held by the government after a bailout more than a decade ago, spent much of the past years in a major overhaul, slashing its workforce and branch network to restore profits.
The bank said it had sought approval with its regulators for a first tranche of a share buyback programme, and said it plans to apply for a second tranche with its third-quarter results later this year.
“The first half of the year was our best in 15 years,” CEO Manfred Knof said.
($1 = 0.9168 euros)
(Reporting by Tom Sims and Frank Siebelt; editing by Ludwig Burger, Sherry Jacob-Phillips and Ana Nicolaci da Costa)
