Despite making preparations to prevent risks from Russia during the invasion of Ukraine, Commerzbank, Germany’s second-largest lender, revealed Thursday that first-quarter earnings had more than quadrupled.
In the first three months of this year, Commerzbank made a net profit of 298 million euros, which is $313 million. This is up from 133 million euros in the same period last year.
The bank’s revenue grew to 2.8 billion euros in the first quarter of 2021, up from 2.5 billion euros in the previous quarter.
The rise is more than what the bank had set aside to protect itself from a “substantial increase” in risk caused by Russia’s involvement in Ukraine.
The bank declared that it would set aside “almost half a billion euros” to cover potential losses “related to Russia.”
The effect was lessened because the bank had less money set aside for risks related to the coronavirus pandemic.
Commerzbank was only doing business with “current German and foreign customers” after banning new operations in Russia.
Following the commencement of the war, the lender lowered its exposure to Russia by 36 percent, leaving it with a liability of “less than 1.2 billion euros” at the end of April.
Commerzbank’s ability to offset costs due to Russia shows “how solid and resilient our customer business is in these tough times,” according to chief financial officer Bettina Orlopp.
According to CEO Manfred Knopf, the improvement proved that the bank’s restructuring program “is working.”
After losing a lot of money during the coronavirus pandemic, the company decided to change how it does business in 2020.
Plans are to lower the headcount from over 40,000 by the end of 2020 to 32,000 by the end of 2024.
The bank reduced its operational expenses by 2% in the first quarter, to 1.4 billion euros.
