FRANKFURT, (Pakistan Point News - APP - 2nd Augst,2016) - Germany's second largest bank Commerzbank warned on Tuesday that its profits in 2016 would be lower than the previous year. "The interest rate environment and persistent customer caution in view of the geopolitical uncertainties will continue to weigh on income despite growth," the bank said in its second-quarter report. Commerzbank has also been forced to set aside more cash to cover non-repayment of loans, with "ongoing difficult shipping markets" -- where it has many borrowers -- an important factor as global trade slows.
The warning comes a week after preliminary second-quarter results showed that the bank's profits had slumped by almost a third compared with a year ago. Shares in the bank plunged more than five percent in early trading on the Frankfurt stock exchange. Investors had already been wary of the stock on Monday after results from European Banking Authority stress tests released Friday evening showed it trailing among 51 of the eurozone's largest financial institutions. Commerzbank emerged from the "adverse" 2018 scenario run by the regulator with a core capital ratio of 7.4 percent -- well below the average of 9.4 percent across the banks tested.