COMMERZBANK AG 
FRANKFURT (Reuters) - Germany's Commmerzbank (>> Commerzbank AG) warned its investors to expect little from 2016 as it reported a steep drop in first-quarter earnings, sending its shares tumbling.
Net income dropped by half to 163 million euros (128.01 million pound), in line with analysts' expectations, as volatile markets and low interest rates hit its business with German medium-sized companies particularly hard.
Shares were down 9.1 percent by 1015 GMT in a wider market that was 1.7 percent weaker.
"Is has become significantly more ambitious to reach the (1.06 billion euro) net profit seen in 2015," Chief Financial Officer Stephan Engels said told analysts.
He echoed remarks made by former Chief Executive Martin Blessing last month. Martin Zielke took over from Blessing on May 1.
Commerzbank, which faces criticism for helping investors exploit tax loopholes in Germany, will stop offering such tax deals in anticipation of new legislation, Engels said.
"You can assume that we have prepared for this draft law since the start of the year and have adjusted our business accordingly," Engels said.
Commerzbank's French rival BNP Paribas (>> BNP PARIBAS) on Tuesday reported a 10 percent increase net income as lower provisions for bad loans on the back of a gradual economic recovery in Europe helped offset a slump at its corporate and institutional bank.
Commerzbank's Mittelstandsbank -- which caters to Germany's raft of small and medium sized companies -- reported a 43 percent slump in operating profit to 209 million euros as deposit margins narrowed and provisions for bad loans increased.
"It is pretty clear that the German market currently tries to reprice," Engels said, adding that credit demand from corporate clients remained weak, while their deposits -- on some of which Commerzbank is losing money -- have increased year-on-year.
Operating profit at its investment bank fell 72 percent to 70 million euros after an exceptionally strong first quarter last year, weighed down by weak capital markets, which have also hit rivals.
(Reporting by Arno Schuetze and Jonathan Gould; Editing by Maria Sheahan and Louise Heavens)
