The bottom line was a profit of 1.4 billion euros in 2022, after 430 million euros in the previous year, as Germany’s second largest private bank announced on Thursday. Analysts interviewed by the bank had expected a profit of 1.35 billion euros. The operating result was 2.1 billion euros after 1.18 billion euros in the previous year. Bank boss Manfred Knof thus exceeded his goal of increasing consolidated profit to over one billion euros. “This shows that our strategy is working and that we have managed to turn the tide,” explained Knof. “Commerzbank is back.”
For the first time in four years, the bank is proposing a dividend of 20 cents per share. However, analysts had expected a higher payout of 25 cents per share. Since the 2008 financial crisis, the institute has only paid out part of its profits to shareholders in two years – 2015 and 2018. In addition, the Management Board also intends to return money to shareholders through a share buyback program. In total, 30 percent of the profit is to be distributed, and the quota is to rise to 50 percent in 2023. However, the share buyback still has to be approved by the European Central Bank (ECB) as the supervisory authority and by the Federal Finance Agency be approved. This holds the state share in the bank.
Commerzbank boss: There is still a long way to go before all goals have been achieved
After the highest profit since 2007, Commerzbank boss Manfred Knof steps on the euphoria brakes. The billions in profit in 2022 and the likely resurgence of the institute in the German stock index should “not be a reason to get cocky,” said Knof on Thursday when the balance sheet was presented in Frankfurt. “We know that we still have a long and demanding road ahead of us before we reach the goals we have set ourselves and ideally even exceed them.”
Among other things, the Management Board has set itself the goal of increasing the return on tangible equity to more than 7.3 percent after taxes by 2024. Last year, Commerzbank achieved a value of 4.9 percent. In order to make a profit of one euro, the bank only wants to spend 60 cents in 2024. From 2021 to 2022, this so-called cost-income ratio improved from 79.3 percent to 68.6 percent.
The Commerzbank board of directors wants to exceed the 2022 surplus of a good 1.4 billion euros this year. “We are aiming for a significantly higher consolidated result for this year compared to 2022,” affirmed Knof. “And we want to distribute half of that to our shareholders.”
Commerzbank with price jump – Positive interest rate environment, rise to the DAX
Commerzbank shares are again very popular with investors. The annual report was well received on Thursday. The Commerzbank share temporarily rose 7.91 percent to EUR 11.12 in XETRA trading. In the meantime, it rose by a good ten percent to its highest level in almost five years.
Banks across Europe also made a strong showing. The sector was among the favorites in the Stoxx 600 overview with a plus of 1.3 percent. Rising interest rates are currently one of the main drivers for the industry. In the lending business, this means higher income. In addition, since July of last year, financial institutions no longer have to pay interest if they park money with the European Central Bank (ECB), but instead receive interest on it again. “With the return of interest rates, the banks’ profits are also bubbling up,” explained capital market strategist Jürgen Molnar from broker RoboMarkets.
Commerzbank is benefiting from these friendlier framework conditions. In the first reactions, experts praised above all the outlook for the interest surplus in Frankfurt. Analyst Anke Reingen from Canada’s RBC explained that he left market expectations of the bank’s results up significantly. JPMorgan’s Kian Abouhossein also praised the new interest income targets in particular. He sees Commerzbank on the right track. The outlook is strong, wrote Chris Hallam of Goldman Sachs. Therefore, market expectations for the current year are likely to rise.
After Commerzbank earned more than three times as much last year as in the previous year, everything seems to be possible again with dividends and share buybacks, according to Molnar. And with the highly probable return of Commerzbank to the leading index DAX, investors would get an extra bonus on top of that.
Index experts expect the bank to be promoted back into the first German stock exchange league, after the gas manufacturer Linde will soon be dropped out there because of its future only exclusive listing in the USA. The decision as to whether Commerzbank will make it back into the DAX on February 27 will be made by Deutsche Börse on Friday evening. With a rise in the DAX, Commerzbank would be even more in the focus of international investors and analysts in the future.
Despite all the enthusiasm, Commerzbank boss Manfred Knof put on the brakes on the euphoria after the highest profit since 2007. The billions in profit in 2022 and the expected return to the DAX should “not be a reason to get cocky,” said Knof. “We know that we still have a long and demanding road ahead of us before we reach the goals we have set ourselves and ideally even exceed them.”
Investors weren’t really bothered by the somewhat more cautious tones. For them it is a successful week, in which one personal aspect also contributed to their satisfaction. So should ex-Bundesbank President Jens Weidman assume the position of Chairman of the Board of Directors. The control committee unanimously voted in favor of electing Weidmann as its chairman, provided that he was elected to the supervisory board by the annual general meeting on May 31, according to the group. Commerzbank had already made it public in November that Weidmann was the preferred candidate of the outgoing Supervisory Board Chairman Helmut Gottschalk.
With the price increase this Thursday, the plus for Commerzbank shareholders since the beginning of the year is more than a quarter. This puts the share in the front ranks of the MDAX, leaving the European banking sector well behind. Compared to Deutsche Bank, Commerzbank is also ahead by a nose, as the competitor’s paper in 2023 has so far only grown by almost eleven percent.
Frankfurt (Reuters / dpa-AFX)
Leverage must be between 2 and 20
No data
More news about Commerzbank
Image sources: Commerzbank AG