Commerzbank to take 490 million euro Q3 hit due to mBank unit

Reuters

Published Sep 27, 2022 01:09PM ET

FRANKFURT (Reuters) -Germany's Commerzbank (ETR:CBKG) said on Tuesday it would take a 490 million euro ($471 million) hit to its third-quarter operating profit after its Polish mBank unit booked additional provisions for its Swiss franc loans.

The German lender said it nevertheless still expected to reach its net profit target of more than 1 billion euros for the full year.

Frankfurt-listed shares of Commerzbank, which is in the midst of a costly restructuring that involves cutting 10,000 jobs and closing branches, were down 5.5% after the news.

The issue, which has affected banks across Poland, stems from more than a decade ago, when mortgage customers took out loans in Swiss francs to take advantage of low Swiss interest rates, only to face far higher costs when the value of the Polish zloty slumped.

Polish courts have been deciding how the loans can be treated, including what banks can charge in interest for the loans, creating uncertainty for banks and their bottom lines.

"Despite the new burden in Poland, we are maintaining our earnings target for the full year 2022 in view of the strong overall revenue development," said Commerzbank's finance chief Bettina Orlopp.

Commerzbank had attempted to sell mBank but abandoned the effort after an auction petered out in 2020.