Commerzbank AG share price up, reports better-than-expected Q3 results

Commerzbank AG reported tripled net profit for the third quarter, beating analysts expectations, due to strong performance by its private customers and corporate units.

Commerzbank, Germanys second-largest lender, stated a net profit of €225 million for the three months ended September 30, tripling last years profit of €75 million. Analysts polled by Bloomberg projected €185.5 million for the recent quarter.

The company, which is 17% owned by the German government, reported an operating profit in its core bank of €593 million in the third quarter, an increase compared to the €375 million year-to-year. However, the surge was offset by the €250-million operating loss stated at its bad bank unit, which resulted in an overall group operating profit of €343 million, exceeding three times the €103 million in 2013s Q3.

The bank said it enjoyed some success in winding down its bad bank unit by cutting down its assets to €88 billion, down from €92 billion at the end of June.

CEO Martin Blessing pointed out that Commerzbanks recent pass of the European Central Banks stress tests is a sign that the lender has turned the corner and is operating well.

“The good results of the ECBs comprehensive assessment is testimony to the successful restructuring of Commerzbank over the past few years and confirms that we are on the right track with our efforts both to reduce our non-strategic portfolios and to expand our customer-focused business model” he said.

The corporate division of the bank said it reached an operating profit of €158 million, almost doubled from the €85 million in the third quarter of 2013. In its other unit, Private customers, the company reported a continued growth and an operating result of €121 million, nearly triple compared to last year. Both units performed well, despite a typically weak seasonal third quarter, which was offset by increased volatility in interest rates and currency markets which fostered client demand.

Its Mittelstandsbank unit also reported better results, but not as much. The division gained 4% in operating profit to €363 million.

Commerzbank AG gained 1.44% on Wednesday and closed at €11.98 in Frankfurt. On Thursday the stock gained 1.17% to €12.12 by 10:35 GMT, marking a one-year increase of 30.06%. The lender is valued at €13.64 billion. According to the Financial Times, the 29 analysts offering 12-month price targets for have a median target of €12.25, with a high estimate of €18.80 and a low estimate of €7.30. The median estimate represents a 2.25% increase from the last close price of €11.98