COMMERZBANK SEES LOWER OPERATING PROFIT THIS YEAR
  Commerzbank AG &lt;CBKG.F> management
  board chairman Walter Seipp said that from the present
  viewpoint the bank must expect 1987 full operating profit to be
  lower than in 1986.
      In the first two months of the year, partial operating
  profit -- excluding trading on the bank's own account -
  declined, he said, without giving details.
      The interest surplus fell 2.8 pct compared with 2/12ths of
  1986 results, while the commission surplus, because of the
  quiet stock exchange business, fell back still more strongly.
  By contrast the personnel and fixed asset expenses increased.
      German banks do not report full operating profit. But Seipp
  said last year the figure for the first time had topped one
  billion marks for the parent bank, and the group result was
  around 50 pct higher than this.
      Commenting on 1986, Seipp said, "we were able to raise the
  full operating profit...Slightly above the record result of
  1985 because own account profits increased slightly."
      He gave no concrete details but added that in January and
  February, good own account trading profits meant that the drop
  in full operating earnings was more modest than that in the
  partial operating figure.
      The bank would, as a result, be more profit-oriented in
  future, developing, for example, more into investment banking,
  keeping a tight rein on personnel costs and dampening
  expenditures on fixed assets.
      Turning to 1986 results, Seipp said by year end there had
  been a strong growth in business volume.
      Over the year business volume rose by 9.9 pct to 93.2
  billion marks compared with 1985, Seipp added.
      Group balance sheet volume rose by 8.0 pct to 148.15
  billion. It would have been around five billion marks higher
  still if currency relationships had remained unchanged.
      In the parent bank, the interest surplus rose nine pct in
  the year, while the interest margin held roughly at 1985's 2.56
  pct despite pressure on credit rates.
      The surplus on commission business, which had soared by a
  quarter in 1985, rose by 11.6 pct last year thanks almost
  exclusively to growth in securities commissions, Seipp said.
      Personnel expenditure was up 11.9 pct last year, at more
  than 1.5 billion marks. Fixed asset expenditure rose by 9.6 pct
  to more than 650 mln.
      As a result, the parent bank partial operating profit rose
  by 3.2 pct to 752 mln marks.
      Parent bank tax payment rose to 244 mln marks last year
  from 233 mln in 1985.
      Seipp said extraordinary earnings included a "high
  two-figure million" in profit from the sale of the bank's AEG AG
  &lt;AEGG.F> shares to Daimler-Benz AG &lt;DAIG.F> during the latter's
  majority stake purchase booked last year.
      The ability of the bank to write off depreciations in
  credit business against profits from securities trading and
  earnings on the sale of stakes had been utilised, as in prior
  years, to its full extent.
      Because of numerous insolvencies at home, by far the
  largest part of the provisions were set aside for individual
  write-downs from domestic business. Abroad, the circle of
  problem debtor countries rose last year, although the ratio of
  credit exposure to provisions improved further.
      Seipp said that because about half the group's exposure to
  problem nations was in dollars, the bank had swapped into
  dollars individual provisions hitherto held primarily in marks.
      "This means that no open currency positions exist any longer
  on the amount of the provision that is made against an actual
  default," he added.
      Despite the increase in concern over debtor nations in the
  last few weeks, he said, the international banking community is
  better armed than it was against payment problems.
      All banks had significantly strengthened their capital
  base, most European banks had made considerable provisions
  against bad debts while goverments and central banks were
  better prepared for unforseen difficulties.
      He described debt-equity swaps as a very interesting new
  approach to indebted nations' problems. There was a lot of
  interest in direct investment via an equity participation in
  Latin America, particularly from West German firms.
  

