Frankfurt-based Commerzbank is Germany's second biggest lender
Frankfurt - AFP
Commerzbank shares nosedived on Tuesday after Germany's second biggest lender warned that low interest rates and the difficult market environment meant it would be challenging to hold profits steady this year.
Commerzbank shares were the biggest losers at the start of trade on the Frankfurt stock exchange, shedding more than seven percent in an overall market that was down by around one percent.
"The financial figures for the first quarter were not favourable. They signalled a difficult start to the year," said LBBW analyst Ingo Frommen.
Commerzbank said that its net profit fell to 163 million euros ($188 million) in the period from January to March from 388 million euros a year earlier.
And underlying, or operating, profit dropped to 273 million euros from 670 million euros on a 16.9-percent decline in revenues to 2.3 billion euros, the statement said.
The declines "reflected a further deterioration in the interest rate environment and a slowing client activity within difficult markets," Commerzbank said.
Looking ahead to the full year, the bank warned that "in view of the subdued nature of the first quarter, it will be more challenging to reach the net profit posted in 2015."
Commerzbank said it would "continue its strategy of increasing market share."
The group will "intensify its efforts to mitigate the effects stemming from the negative interest rate environment. Without taking into account additional external burdens, the aim is to keep the cost base stable," it continued.
Last year, Commerzbank booked net profit of 1.06 billion euros, enabling it to resume paying a dividend to shareholders.