Germany's Commerzbank AG on Thursday confirmed its net loss widened in the third quarter due to higher provisions for bad loans and as it continued to restructure in the wake of the financial crisis.
Commerzbank, based in Frankfurt, said it lost euro1.06 billion ($1.6 billion) in the July-September period, nearly four times the euro285 million it lost in the third quarter of 2008.
However, net interest income, one measure of revenue, rose 46 percent to euro1.77 billion from euro1.21 billion.
The results were in line with preliminary estimates released earlier this week.
The company increased its loan loss provisions in the third quarter — to euro1.05 billion from euro628 million a year earlier — and expects to do so again for the rest of the year and into 2010, as it braces for more bankruptcies and rising unemployment.
Loan loss provisions in the first nine months of the year amounted to euro2.89 billion, up from euro1.22 billion in the year-ago period. By the end of September, Commerzbank's loan default portfolio stood at euro20.7 billion.
Commerzbank, the country's second biggest lender after Deutsche Bank AG, said it had exceeded its funding target for the current year and that it had reduced its refinancing needs for 2010.
It was also able to reverse four quarters of operating losses, posting an operating profit of euro122 million.
It said that as a result of normalizing financial markets, it had returned some euro10 billion in unused guarantee commitments from the German government's bailout package.
Commerzbank took part in the German government's financial-sector bailout program and is around 25 percent owned by the government.
"We were also able to especially reduce risks further as could be seen in the lower levels of risk-weighted assets and total assets in the portfolio restructuring unit, corporate and markets and asset based finance segments," Martin Blessing, the bank's chief executive wrote in his note to shareholders.
"Our efforts and the overall improvement in our situation were also reflected in price rises in the capital market in the third quarter, not only for the fixed-income products we issued but also in our rising share price," Blessing said.
The bank's net loss for the first nine months stands at euro2.7 billion, compared with nine-month net income of euro812 million in 2008.
Shares of Commerzbank were 3.5 percent lower at euro6.98 in Frankfurt morning trading.
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