...VR Drives IDR: Commerzbank AG's (CBK) Issuer Default Ratings (IDRs) are driven by its standalone credit quality as expressed by its Viability Rating (VR). The ratings reflect the bank's moderate profitability, improved asset quality, sound progress in de-risking and reduction of non-core assets, adequate capitalisation as well as stable funding and liquidity. Profitability Under Pressure: CBK's results weakened in 1H16 after improving in 2015, driven primarily by a modest performance of the Mittelstandsbank and Corporates & Markets units. Low interest rates, competition, challenging market conditions and subdued client activity have hampered revenue generation. Losses attributable to legacy assets have declined in recent years but will remain a drag on performance. CBK expects the legacy assets to generate a cumulative operating loss of up to EUR1.1bn in 2017-2020. New Strategy Bears Execution Risks: CBK presented a new strategy at end-3Q16 that focused on cost-cutting, digitalisation and...
