Commerzbank
Since the start 2016, Commerzbank's shares have declined by about 44%, reducing its market capitalisation to about €6.7bn Reuters

Commerzbank has warned that it will not be able to meet its full-year profit targets as the German bank reported second quarter revenues and profits, which were both lower year-on-year.

According to a bank press release, its group operating profit for the second quarter ended June was €342m (£289.09m; $382.83m), down about 18% year-on-year. Its revenues for the quarter were down 8% on-year to €2.23bn.

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The bank attributed the decline to the negative interest rate environment and the cautious attitude of customers amid macroeconomic and geopolitical uncertainties. It added that these factors would weigh on its revenues for the rest of the year, because of which it would not be able to keep full-year net profits stable at slightly above the €1bn mark.

"German banks particularly hit by negative interest rates as they have a high deposit ratio and we will update the market on how to improve profitability later this year," Stephan Engels, the bank's CFO, was quoted as saying by the Wall Street Journal.

He added that a combination of negative rates and high deposit ratios would affect its annual earnings from next year, reducing €100m from Commerzbank's business that caters to small and mid-sized clients.

This grim outlook comes at a time when eurozone banks, primarily in Italy, are facing problems. Italy's UniCredit and Monte dei Paschi banks both performed poorly in a stress test carried out by the London-based European Banking Authority last month.

Monte dei Paschi turned out to be the biggest loser in the test. It suffered the biggest fall in common equity tier one (CET1), a ratio which acts as a measure of a bank's financial strength. With regards to this ratio, Commerzbank said that its CET 1 capital ratio was down from 12% to 11.5% as of end of June 2016.