Commerzbank AG said Wednesday it fell to a big loss in the fourth quarter, hurt by more provisions for bad loans and writedowns on debt, and warned that 2009 would be a difficult year, AP reported. Germany's second biggest bank lost ¤809 million ($1 billion) in the October-December period compared with a profit of ¤201 million the year before. The bank, which has sought help from a German government fund, blamed the development on more debt-related writedowns and setting aside provisions for bad loans, including securitized mortgages in the U.S. commercial market. «Caused by the worsening developments and the deteriorating economic environment since the end of the summer, we were not longer able to escape the effects of the global downturn during 2008,» Chief Executive Martin Blessing said in a statement. «The fourth quarter was one of the most difficult ever for Commerzbank,» said Blessing, who is guiding the bank's acquisition of rival Dresdner Bank AG. Also plaguing the bank's books was a ¤1.1 billion decrease in revaluation reserves, a figure driven by what the bank said were the «widening spreads among various Western European government bonds in the wake of the collapse of U.S. investment bank Lehman Brothers and the Iceland moratorium. Its loan loss provisions also resulted in a charge of ¤25 million for the entire year. Net interest income rose 36 percent to ¤1.3 billion in the quarter compared with ¤971 million a year earlier. The bank attributed this to improved business in its private and commercial customer areas as well as the famed German Mittelstand, the family run businesses that form the backbone of the German economy. Despite the quarterly loss, investors did not punish the bank, sending its shares up 0.18 percent to ¤2.83 in Frankfurt trading. For all of 2008, the bank posted a profit of a mere ¤3 million compared with ¤1.9 billion the year before, while net interest income rose slightly to ¤4.7 billion compared to ¤4 billion. Looking ahead, Chief Financial Officer Eric Strutz said that difficult conditions would persist for the Frankfurt-based bank, which has received some ¤18.2 billion in government money to boost its capital. «We had a good start in January 2009, mainly driven by net interest income and trading profit,» he said in a statement, adding that the bank faces more economic tumult. «But we have to be realistic: 2009 will be another very difficult year.» To that end, the bank will not pay a dividend for 2008 unlike 2007, when it paid a ¤1 a share dividend.
