The bank plans to shelve dividend payments through the financial year 2023, and return up to €3bn to shareholders in the years 2023 and 2024
Commerzbank has reported a net loss of €2.7bn for the fourth quarter of 2020, compared to a net loss of €97m for the same quarter in the previous year.
The firm reported a net interest income of €1.15bn for Q4 2020, an 11.8% decrease compared to €1.30bn for the same period in the previous year.
The bank reported net revenues of €3.21bn, compared to €3.36bn for the corresponding quarter in 2019.
The bank reported its common equity tier 1 ratio (CET 1 ratio) of 13.2% at the end of 2020, compared to 13.4% for the year-end 2019, which remained above the minimum regulatory requirement of 9.5%.
Commerzbank said that the financial year 2020 was negatively affected by the effects of the Covid-19 pandemic and the provision set aside for the planned restructuring.
Commerzbank board of managing directors chairman Manfred Knof said: “We want to be sustainably profitable and shape our own destiny as an independent force in the German banking market.
“To achieve this aim, we need to carry out an in-depth restructuring of the Bank over the coming years. Our ‘Strategy 2024’ represents customer-centricity, digitalisation, sustainability, and profitability. We will consistently and rapidly implement our plan.”
The bank announced its plans to shelve the dividend payments till the financial year 2023, and return up to €3bn to shareholders in the years 2023 and 2024.
The company targets a cost reduction of around €6.5bn, with increasing investments and initial cost measures from the transformation.
The bank intends to rapidly implement its restructuring programme, which includes axing of 10,000 jobs, that affects every third job in Germany.
Also, to reduce the number of its branches from the current 790 to 450 locations, by closing 340 branches across Germany, by 2024.
Commerzbank estimated the restructuring expenses to be €1.8bn and intends to finance completely using existing funds.
Commerzbank chief financial officer Bettina Orlopp said: “We have cleaned-up our balance sheet and made provision for an economic environment that continues to be uncertain.
“Our comfortable capital position gives us adequate financial leeway for the implementation of our ‘Strategy 2024’ over the upcoming years.”