Commerzbank Profit Falls 44 Percent on Writedowns

Commerzbank Profit Falls 44 Percent on Writedowns

Feb. 14 (Bloomberg) -- Commerzbank AG, Germany's second- largest bank, said fourth-quarter profit declined 44 percent on writedowns related to U.S. subprime assets.

Net income fell to 201 million euros ($293 million) from 359 million euros a year earlier, the Frankfurt-based company said in an e-mailed statement today. That beat the 177 million-euro median estimate of 11 analysts surveyed by Bloomberg.

Commerzbank reduced the value of its subprime-related investments by 248 million euros in the quarter, bringing total markdowns for the year to about 585 million euros. The worst U.S. housing market in a quarter century has led to more than $145 billion in writedowns and loan losses at the world's biggest financial institutions.

``The subprime concerns have overshadowed the relatively strong performance of the corporate customer and retail business,'' Britta Paech, who helps manage about $35 billion at Hamburg-based M.M. Warburg, said before the earnings.

The company has declined 28 percent in the last six months, cutting its market value to 14 billion euros. That compares with the 22 percent drop in the Bloomberg Europe Banks and Financial Services Index and an 18 percent slide at Deutsche Bank AG.

``After getting off to a good start we are confident for 2008,'' Chief Executive Officer Klaus-Peter Mueller, who will be replaced by board member Martin Blessing in May, said in the statement. ``If we are spared significant negative surprises, we will again be able to reach our good 2007 results. If markets allow, we can even exceed these results.''

The German bank posted full-year net income of 1.92 billion euros, up 20 percent from a year earlier. It plans to raise its dividend to 1 euro for 2007 from 75 cents a year ago.

BLOOMBERG