Commerzbank plans first dividend since 2007

Commerzbank has set aside €57m for a dividend payout this year, as it plans to return cash to shareholders for the first time since 2007.

"We are planning for a dividend for the financial year 2015 and are accruing quarterly," Martin Blessing, chief executive, said on Thursday. "However, we have to wait, whether it will be enough at the end of the year."

A return to payouts would be a symbolic moment in the journey back to health of Germany's second-largest lender, which has not paid a dividend since being rescued by the government during the financial crisis.

After huge losses between 2008 and 2011, Commerzbank has been working to improve its profitability and strengthen its balance sheet. Last week it completed a €1.3bn capital raising, which took its core tier one capital ratio - a closely watched measure of financial strength - to 10.2 per cent.

Stephan Engels, chief financial officer, said the bank now plans to increase the ratio "to significantly more than 10 per cent" by the end of this year, and cautioned that building capital had "clear priority" over paying a dividend.

Commerzbank confirmed the results that it published last week alongside its capital raising, saying that it made a net profit of €366m - or €0.32 per share - in the first quarter, up from €200m in the same period a year earlier. Revenues came in at €2.78bn, up from €2.26bn in the first quarter of 2014.

The surge was mainly driven by Commerzbank's investment banking arm and its retail banking business.

Operating profits in the investment bank rose 40.2 per cent to €300m, helped by a strong performance in the fixed income and currency unit, where revenues were up 45 per cent due to higher volatility in foreign exchange markets and higher bond trading activity.

In the retail bank, operating profit climbed 45 per cent to €161m, as Commerzbank sold more wealth management products.

Earnings at Commerzbank's core Mittelstand bank, which lends to the small and middle-sized companies that make up the backbone of the German economy, were essentially flat at €345m. The central and eastern European unit posted an 18.4 per cent rise in profits to €116m.

Commerzbank made steady progress in winding down the assets in the non-core unit it set up in 2012 to house a mixture of shipping, real estate and public sector loans, cutting assets from €84bn at the end of December to €82bn at the end of March.

The bank also said it would take a €200m writedown on its exposure to Heta, the so-called bad bank set up to deal with the stricken Austrian lender Hypo Alpe Adria.

Shares in Commerzbank were down 0.4 per cent at €11.81 in early Frankfurt trading.

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