DB - Commerzbank Earnings: Strong Net Interest Income Capital Return Getting Started

2024-02-15 23:24:11 ET

Summary

• Commerzbank delivered 5.2% RoTE in Q4 (2023: 7.7), or 2.2 billion EUR in net income. The bank targets higher profitability in 2024.
• I estimate the bank will deliver 8% RoTe in 2024, helped by releases of top-level adjustments for credit provisions.
• The Company ended 2023 with a CET1 ratio of 14.7%, leaving it ample room to execute more share buybacks in 2024-2025.
• Commerzbank expects the German economy to contract in 2024 and foresees 6% lower net interest income but 4% higher net commission income.
• Given recent outperformance, I reckon the shares are a hold in the near term but remain attractive longer term.

Introduction

I previously covered Commerzbank ( OTCPK:CRZBF ) back in December 2023, highlighting Commerzbank's strategic 2027 plan and its capital return potential relative to its largest peer, Deutsche Bank ( DB ). As expected, the bank is currently executing a 600 million EUR buyback as part of its 2023 capital return....

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