CRZBF - Commerzbank AG (CRZBF) Q4 2023 Earnings Call Transcript
2024-02-16 00:10:18 ET
Commerzbank AG (CRZBF)
Q4 2023 Earnings Conference Call
February 15, 2024 03:00 ET
Company Participants
Manfred Knof - Chief Executive Officer
Bettina Orlopp - Chief Financial Officer
Conference Call Participants
Kian Abouhossein - JPMorgan
Borja Ramirez - Citi
Stuart Graham - Autonomous Research
Benjamin Goy - Deutsche Bank
Mate Nemes - UBS
Jeremy Sigee - BNP Paribas Exane
Tobias Lukesch - Kepler Cheuvreux
Vishal Shah - Morgan Stanley
Chris Hallam - Goldman Sachs International
Jochen Schmitt - Metzler
Rohith Chandra-Rajan - Bank of America
Anke Reingen - RBC
Timo Dums - DZ Bank
Riccardo Rovere - Mediobanca
Presentation
Operator
Hello, and welcome to the Commerzbank AG Conference Call regarding the Fourth Quarter Results 2023. [Operator Instructions] The floor will be open for questions following Bettina Orlopp’s and Manfred Knof’s presentation.
Let me now turn the floor over to our CEO, Manfred Knof.
Manfred Knof
Good morning, everybody. 2023 was a great business year for Commerzbank. We have made significant strategic progress and reached a very good financial result. We delivered on strategy 2024, 1 year early. The restructuring of the bank is accomplished. And we have materially improved profitability. Our new business model is in place and geared towards revenue growth. This is most important when looking at the next phase of our strategy.
Costs have been managed strictly in line with our cost-income ratio target. The teams have proven their ability to manage their resources while they have delivered on their strategic priorities. For 2023, we aim to distribute €1 billion capital to our shareholders. That is exactly what we promised when we set up our capital return policy. On ESG, we committed ourselves to an ambitious path towards net-zero and firmly anchored the green transformation in our strategy.
Let me underline the strong performance in 2023 with some key financial figures for the group. Our net result increased by more than 50% and came in at €2.2 billion. The main driver for this growth was an 11% increase of revenues which equals €1 billion. At the same time, costs were successfully managed despite inflation pressures. Combined with our increased revenues, this led to a significant reduction of the cost-income ratio of 7 percentage points. The 61% in 2023, we have nearly met our target of 60% for 2024. The low level in cost of risk with only 23 basis points have again proven the high quality of our loan book. This low level comes with virtually no support from any releases of our top-level adjustment. Hence, we have started the year 2024 with a remaining TLA of €453 million, providing us with lots of comfort for potential future challenges. Bottom line, we achieved a return on tangible equity of 7.7%. This good return has been achieved at a high CET1 level of 14.7%, which already fully reflects the 50% payout ratio for 2023. We plan to distribute the payout to shareholders by means of a €600 million share buyback, that is currently being executed and a dividend proposal to the AGM of €0.35 per share, totaling €1 billion of capital return for the year 2023.
Back in November, we presented to you our strategic plan for 2027 with the ultimate goal to earn our cost of capital. The major driver for our planned revenue growth is net commission income. With the restructuring behind us, this is where we focused highest amount of management attention. Acquisitions and partnerships will help on this journey and contribute to the ambitious growth targets we have set....
Commerzbank AG (CRZBF) Q4 2023 Earnings Call Transcript