* Q4 net loss 1.86 bln eur vs Reuters poll avg 1.36 bln eur

* Q4 loan loss provisions 1.32 bln eur vs 638 mln yr-earlier

* Says 2010 difficult, expects to reach profitability 2011

* Commerzbank shares trading 1.3 percent lower

(Adds CEO comments, share price)

Commerzbank said it expected 2010 to be a difficult year after posting a worse-than-expected fourth-quarter loss, hit by weak trading results and higher loan loss provisions.

Germany's second-largest bank said on Tuesday its results would still improve significantly this year and it expected to return to profitability in 2011 at the latest.

Commerzbank said the core retail bank and the investment banking business focused on midsized German companies would be profitable this year.

However, it was still uncertain about the 2010 performance of its restructuring unit, which contains subprime-related toxic assets and parts of real estate finance arm Eurohypo.

The bottom line of the whole group will only be in the black if the development of the economy and the financial markets will be very positive in 2010, Chief Executive Martin Blessing said.

At 0832 GMT, Commerzbank shares were trading down 1.3 percent against the blue-chip DAX index, which was up 0.7 pct.

After requiring an 18 billion euro bailout, the European Union told the bank it had to shrink its assets by 900 billion euros, a target which the bank said had been achieved three years ahead of schedule.

LOSS BIGGER THAN EXPECTED

Commerzbank's 1.86 billion euro ($2.53 billion) fourth-quarter net loss missed the average estimate of 1.36 billion euros in a Reuters poll of analysts. [ID:nLDE61I23Z].

Loan loss provisions for the quarter widened to 1.32 billion euros, from 638 million euros in the same period a year earlier due to its exposure to the weak German economy and real-estate related assets. Analysts had seen that figure at 1.35 billion euros.

Commerzbank said loan loss provisions would fall in 2010.

The bank completed the acquisition of rival Dresdner Bank in January 2009 at the height of the fallout from the collapse of U.S. investment bank Lehman Brothers. It said the takeover would continue to weigh on earnings in 2010, with additional charges expected to be about the same as 2009 levels.

The integration has already reaped 661 million euros in cost synergies in 2009, it said.

The bank said it still aimed to make an operating profit of more than 4 billion euros a year from 2012.

For 2009, Commerzbank posted a net loss of 4.5 billion euros, including a 1.9 billion euros in costs related to the integration of Dresdner.

The bank said its Tier 1 capital ratio stood at 10.5 percent at the end of the fourth quarter. ($1=.7340 Euro)

Commerzbank European union Germany