New Commerzbank Credit Rating

Commerzbank has been assigned a Senior Debt Rating of AA- (Double A minus). For 1999, Commerzbank’s consolidated pre-tax profits rose 10.6%. The increase in the bank’s after-tax income was more subdued, stemming from a higher tax charge (after an unusually low level in 1998). In 1999, the bank’s revenue stream benefited from sizable growth in net commission income and higher trading results, while growth in net interest income was modest. Within total commission income, the strongest areas of growth were in the underwriting and asset management businesses. In 1999, the bank was able to reduce loan loss provisions by 22% due to lower international provisions. Growth in operating expenses was quite high, stemming from greater personnel costs (particularly in investment banking) and surging information technology costs. In 1999, the bank’s Tier I ratio remained steady while the Total BIS ratio improved. For 1Q00, Commerzbank’s pre-tax profits rose 27% from 1Q99, reflecting continued strong growth in net commission income, moderately lower loan loss provisions, and higher trading profits. Overall, Commerzbank remains on a sound financial footing, but its strategic position in a consolidating European banking market remains a question.


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