Commerzbank has reported an unexpected jump in third quarter profit and said turnaround plans were on track, moving the German government a small step closer to a sale of its 17 per cent stake.

Germany’s second-largest bank, bailed out after the financial crisis, produced a 15 per cent net profit increase, mainly due to fewer problem loans than last year. The bank sold assets more quickly than planned and said losses in problem portfolios were unlikely to rise.

Signs that Commerzbank is returning to health could potentially make it easier for Germany to sell its stake, but the bank’s shares still trade at less than half the roughly €26 price at which the government would have to sell at to avoid losses. Commerzbank itself remained cautious, saying revenue was likely to remain under pressure. – (Reuters)