Due to high inflation and economic risks aggravated by Russia’s war in Ukraine, Germany’s Commerzbank is ready for more businesses to collapse in Europe’s largest economy.
According to Handelsblatt, a German business publication, Commerzbank chief executive Manfred Knof anticipates loan loss provisions to climb as the firm works closely with its clients to reduce the impact of commodities’ super cycle on their businesses.
“…we work closely with our corporate customers on the currently difficult issues — such as how to deal with the rising commodity prices and the bottlenecks in the supply chains, but we mustn’t delude ourselves either: the number of insolvencies in our markets will probably increase and with it the risk provisions of the banks,” Mr Knof said.
Despite the fact that Commerzbank, Germany’s second-largest private lender, more than doubled its first-quarter net profits, exceeding analysts’ estimates, the lender’s provision for bad debts more than tripled.
In the three months to the end of March, the lender upped its provisions and writedowns to €464 million ($490 million), up from €149 million a year earlier, citing the ongoing turmoil in Ukraine.
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