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Commerzbank swings to net profit in Q2 but sees higher costs

[FRANKFURT] Germany's Commerzbank said on Tuesday that it returned to a higher than expected net profit in the second quarter, as the lender focuses on a major overhaul and slightly revised its guidance for 2018.

The bank raised its cost target for this year to around 7.1 billion euros (S$11.20 billion) from a previous 7.0 billion. It also said that revenues for its corporate clients would be lower in 2018 than last year amid what the bank called "intense competition".

Net profit came to 272 million euros in the three months through June, beating the 227 million euros average forecast by analysts in a Reuters poll.

In the same quarter last year, the bank posted a loss of 640 million euros.

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The bank, still partly owned by the German government, is in the midst of an overhaul program. Germany's second-largest lender after Deutsche Bank is reducing its staff while focusing on digitising its back office and expanding its retail customer base.

"Our growth initiatives are already working," Chief Executive Martin Zielke said in a statement. "Of course, it will take some time for them to take full effect".

REUTERS