Commerzbank: Further provisions for mBank loans
Jun 23, 2023 @ 6:41pm
Commerzbank, a German banking institution listed in the Dax, announced on Friday in Frankfurt that it will have to shoulder additional million-euro burdens for its Polish subsidiary, mBank. This comes as mBank is required to make additional provisions for its Swiss franc loan portfolio, amounting to approximately 342 million euros. The impact of this will be reflected in Commerzbank’s operating result for the second quarter.
Despite this setback, Commerzbank still aims to achieve a significantly higher consolidated result for 2023 compared to the previous year. However, the bank acknowledges that this goal is contingent upon the further development of mBank’s Swiss franc loans and assumes that Germany will only experience a mild recession. Currently, mBank’s provisions for legal risks associated with the Swiss franc loans stand at around 1.7 billion euros.
The news of further burdens from the Polish subsidiary did not come as a surprise to many experts. Consequently, the announcement had a relatively calm impact on the stock exchange. The Commerzbank share did not experience further decline on the Tradegate trading platform. However, in Xetra main trading, which concluded shortly after the publication of the announcement, the stock had already lost nearly six percent.
The provisions for mBank loans highlight the challenges faced by Commerzbank in managing its subsidiary’s loan portfolio. The bank remains optimistic about its overall performance for 2023, but the outcome will depend on various factors, including the stability of mBank’s Swiss franc loans and the economic conditions in Germany.
How much additional funding does Commerzbank need to allocate for mBank’s loan provisions?
Commerzbank faces additional provisions for mBank loans
Commerzbank, a German banking institution, announced on Friday in Frankfurt that it will need to allocate additional funds to cover its Polish subsidiary, mBank. This comes as mBank is required to make extra provisions for its Swiss franc loan portfolio, totaling around €342 million. The impact of this will be seen in Commerzbank’s operating results for the second quarter.
Despite this setback, Commerzbank still aims to achieve a significantly higher consolidated result for 2023 compared to the previous year. However, the bank acknowledges that this is dependent on further developments with mBank’s Swiss franc loans and assumes that Germany will only experience a mild recession. At present, mBank has set aside approximately €1.7 billion for legal risks associated with the Swiss franc loans.
The news of additional burdens from the Polish subsidiary did not come as a surprise to many experts. As a result, the announcement had a relatively calm impact on the stock exchange. Commerzbank’s share price did not experience further decline on the Tradegate trading platform. However, in Xetra main trading, which concluded shortly after the announcement’s publication, the stock had already dropped by nearly six percent.
The need for provisions for mBank loans highlights the challenges faced by Commerzbank in managing its subsidiary’s loan portfolio. The bank remains optimistic about its overall performance for 2023, but the outcome will depend on various factors, including the stability of mBank’s Swiss franc loans and the economic conditions in Germany.
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Commerzbank should carefully reassess its loan portfolio as the need for additional provisions for mBank loans arises. Prudent risk management and thorough evaluation are crucial to safeguarding the bank’s financial stability in the face of potential future challenges.
Commerzbank’s need for additional provisions for mBank loans is concerning, highlighting potential risks and potential impact on their financial stability. It’s crucial for them to address these issues swiftly to safeguard their overall performance and ensure investor confidence.