The result was still higher than expected by analysts. After nine months, the MDAX-listed bank has almost reached its profit target for the year as a whole, which envisages net income of more than EUR 1 billion.
According to the announcement, Commerzbank earned 195 million euros in the period from July to September after 403 million in the same period last year. Analysts had expected 116 million euros in a consensus published by the bank itself. After nine months, the bank has already earned 963 million euros. Operating profit decreased in the quarter by 40 percent to 282 million euros.
Revenues fell 5.9 percent to 1.89 billion euros. At the end of September, Commerzbank reported additional provisioning at the Polish subsidiary M-Bank in connection with its Swiss franc portfolio of EUR 490 million. This canceled out the significantly higher net interest income, which rose by 44.5 percent.
For loans at risk of default, the bank set aside 84 million euros in the quarter after 22 million in the same period last year.
Loan loss provisions should remain at around EUR 700 million for the year as a whole. Total costs are expected to remain unchanged at 6.4 billion euros. In addition, the bank continues to anticipate higher income than in the previous year. For the most part, the analysts see the targets as achievable. When it came to risk provisioning, however, they expected significantly more.
Commerzbank increases earnings and profit target for 2024
Commerzbank is making progress with its group restructuring planned for 2024 and is becoming more confident. As the bank announced, it raised the medium-term targets for earnings and operating profit. Due to inflation, however, it has to make cuts when it comes to costs. At the downsizing the bank is on schedule and wants to close more branches than originally planned.
Thanks to the development of customer business and interest rate increases, Commerzbank now expects income of 10 billion euros for 2024. So far, she had promised 9.1 billion. The operating result is now expected to be 3.2 instead of 3.0 billion euros. Because of inflation, the bank now sees the costs at the end of its strategy program at 6.0 instead of 5.4 billion euros. CFO Bettina Orlopp announced three months ago that the previous cost target could not be achieved.
However, nothing will change in the targeted cost/income ratio of 60 percent. This means that the bank would have to spend 60 cents for one euro of income. The return on equity (ROTE) is still seen at more than 7.3 percent.
Commerzbank is in the second year of its corporate restructuring, which is accompanied by a gross reduction of 10,000 jobs and a significant thinning out of the branch network. According to the quarterly report, the job cuts are well advanced with around 8,350 agreed departures, mainly in Germany. The reduction of a further 1,100 full-time positions is to be regulated in the coming quarters.
The branches were reduced to the original target of 450 locations faster than expected. The bank is now targeting 400 branches by 2023.
“We have made great progress in implementing our ‘Strategy 2024’ and are well on the way to achieving our goals,” said CEO Manfred Knof. “The next phase is about tapping the earnings potential in both customer segments even more consistently while maintaining strict cost discipline.”
In XETRA trading, the Commerzbank share temporarily fell by 4.03 percent to EUR 7.92 after it had looked like gains before the market opened.
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