Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Article / 02 August 2016 at 10:00 GMT

Germany's second-largest bank hit hard

  • Commerzbank is Germany's second-largest bank after Deutsche Bank
  • It fared poorly in yesterday's stress tests
  • Bank posted weak quarterly numbers today
  • Shares in apparent continual free-fall, but analysts see potential
  • Deutsche Bank no longer part of Eurostoxx 50
Commerzbank Tower in Frankfurt
Getting darker. Commerzbank's famous tower in Frankfurt (right). Photo: iStock

By Clemens Bomsdorf

The grade Commerzbank yesterday received by the European Banking Authority in its adverse financial stress scenario would equal a “pass” in school, but not more. Its core equity Tier 1 ratio (CET1) was 7.4% while its peers averaged more than 1%.

CET1 capital ratio in the adverse scenario by bank in alphabetical order (%) , click to enlarge 

Source: EBA
Today Germany’s second largest bank – after Deutsche Bank – disclosed disappointing quarterly earnings which showed it to be lacking far behind last year’s result. Operating profit was down by roughly a third compared to the same period a year earlier and net profit fell even more. Operating profit and net income for the whole year will be lower than in 2015.

Commerzbank quarterly figures
 Source: Commerzbank

Last year, Commerzbank posted an operating profit of 1.9 billion euros while net income was 1.1 billion euros. “The bank expects the negative rate environment and the adverse markets to further weigh on revenues,” it said in a statement. 

However, that did not help as shares tumbled.

Commerzbank share price since 2011 and overview (click to enlarge)
Commerzbank Overview
Source: Saxo Bank. Create your own charts with Saxo Trader click here to learn more 

But as one can see from the above overview in SaxoTrader, analysts are positive about Commerzbank stock. Let's see whether they change their take after having digested today's news. 

In the meantime, you might want to think about Peter Garnry's European Bank's Dec-2017 call, which he mentioned during yesterday's morning call. Worth mentioning is also the news that has just come in today as well: "Credit Suisse, Deutsche index exclusion another blow to European banks" (read here the full Reuters piece online).

— Edited by Michael McKenna

Clemens Bomsdorf is a consulting editor at


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