REG-Commerzbank Aktiengesellschaft Commerzbank with strong start to the year – best quarterly net result in more than 10 years
15/05/2024 06:15
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Commerzbank Aktiengesellschaft (CZB)
Commerzbank with strong start to the year – best quarterly net result in
more than 10 years
15-May-2024 / 07:02 CET/CEST
The issuer is solely responsible for the content of this announcement.
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• Operating result significantly increased to €1.1 billion in first
quarter (Q1 2023: €875 million) – net profit rose to €747 million
(Q1 2023: €580 million)
• Revenues increased to €2.75 billion thanks to strong customer business
and continued favourable interest environment (Q1 2023: €2.67 billion)
• Corporates Clients segment with a record quarter, Private and
Small-Business Customers segment benefited from seasonally strong
securities business and deposit growth
• Costs down to €1.6 billion (Q1 2023: €1.7 billion) – cost-income-ratio
significantly improved to 58% (Q1 2023: 65%)
• Moderate risk result of minus €76 million proves high quality of loan
book
• CET1 ratio further increased to 14.9% (end of Q4 2023: 14.7%)
• Outlook for net interest income in 2024 improved to around €8.1
billion; other targets for current financial year confirmed
• Bank confirms targeted pay-out ratio for 2024 of at least 70%
In the first quarter of 2024, Commerzbank achieved its best net result in
more than ten years. The Bank increased its operating result by around 24%
to €1.1 billion and improved its net profit by around 29% to €747 million.
This was driven by a strong customer business and the continued favourable
interest rate environment. At €2.1 billion, net interest income equalled
that of the previous quarter and was close to the record result from the
third quarter of 2023. Net commission income increased both year-on-year
and quarter-on-quarter. Costs went down further in the first quarter. The
risk result remained at a moderate level in a challenging economic
environment.
Commerzbank has successfully completed its capital return for the 2023
financial year. At the Annual General Meeting on 30 April 2024, the
shareholders voted in favour of the proposed dividend of €0.35 per share.
As promised, the Bank has returned a total of around €1 billion to its
shareholders, which comprises the dividend payment of around €415 million
and the second share buyback programme with a volume of around
€600 million which was completed in March.
“We deliver on our promises. We got off to a very good start this year.
The strong customer business and the excellent result in the first quarter
support our goal of increasing our profit in 2024,” said Commerzbank CEO
Manfred Knof. “We are continuing to make good progress in implementing our
strategic plan until 2027. Particularly in terms of revenue, it’s becoming
increasingly clear that our customer-centric business model is bearing
fruit even in a challenging economic environment. In this regard, the most
recent acquisitions in Asset Management and in the payment transaction
business will start to contribute to commission income over the course of
the year.”
Commerz Globalpay GmbH, the joint venture between Commerzbank and Global
Payments, received regulatory approval at the end of April. Commerzbank’s
participation was completed at the beginning of May. Sales activities of
the joint offering of digital payment products are about to start soon.
Commerz Globalpay GmbH will offer small-business customers, among other
services, the opportunity to accept mobile payments without an additional
card reader using the smartphone-based app “GP tom”.
On its way to achieving its strategic goals, Commerzbank reached an
important milestone regarding IT consolidation in its Corporate Clients
business in the first quarter. By completing the migration of its booking
platform for currencies and commodities, the Bank has significantly
simplified its IT infrastructure. Since 2020, Commerzbank has reduced the
total number of IT applications for capital market trading by 40% leading
to reduced complexity and improved usability. The saved costs will be
reinvested to improve price and product offerings for clients even more in
the future.
As the bank for Germany, Commerzbank aims at offering every customer the
right product for their individual financial needs. This is underlined by
the Bank’s new Germany-wide brand campaign, which was launched today.
Performance in the first quarter: Strong customer business boosts revenues
In the first quarter of the year, Commerzbank increased its revenues by 3%
to €2,747 million (Q1 2023: €2,668 million), benefiting from a continued
strong customer business and the ongoing favourable interest rate
environment. This enabled Commerzbank to more than compensate for the new
provisions for legal risks from foreign currency (FX) loans at mBank
totalling €318 million (Q1 2023: €173 million). At €2,126 million, net
interest income was 9% higher year-on-year (Q1 2023: €1,947 million) and
on the same level as in the previous quarter (Q4 2023: €2,126 million).
Driven by the seasonally strong securities business, Commerzbank increased
its net commission income to €920 million year-on-year as well as
quarter-on-quarter (Q1 2023: €915 million, Q4 2023: €798 million).
The Bank is keeping costs on track despite ongoing inflationary pressure.
Total costs declined by around 8% to €1,588 million in the first quarter
of 2024 (Q1 2023: €1,724 million). The main driver was the decrease in
compulsory contributions to €91 million (Q1 2023: €260 million). This is
mainly due to the significantly lower European banking levy, as the target
volume of the European Single Resolution Fund was reached last year. At
the same time, operating expenses rose slightly to €1,496 million
(Q1 2023: €1,464 million). However, this is largely attributable to higher
costs at mBank resulting from investments for future business growth and
foreign currency effects. Operating expenses excluding mBank were nearly
on the same level as in the previous year’s first quarter. General salary
increases were offset by active cost management. The cost-income-ratio
decreased considerably to 58% in the first quarter (Q1 2023: 65%) being
below the target of around 60% for the full year 2024.
The Bank’s risk result once again remained at a moderate level at
minus €76 million in the first quarter, despite the challenging economic
environment (Q1 2023: minus €68 million). It was driven by few single
cases and releases, which proves the high quality of the loan book. This
is also reflected in the consistently low non-performing exposure ratio
(NPE ratio) of only 0.8%. The Bank’s exposure in Russia was further
reduced. The Top-Level Adjustment (TLA) slightly decreased
quarter-on-quarter due to recalculations in both customer segments. A
total of €423 million (Q4 2023: €453 million) continues to be available
for secondary effects from supply chains, uncertainties from inflation,
and the impact of the current restrictive monetary policy.
In total, the Bank increased its operating result by around 24% to
€1,084 million in the first three months of 2024 (Q1 2023: €875 million).
Net profit after taxes and minority interests also rose significantly to
€747 million (Q1 2023: €580 million), marking the best quarter for the
Bank in more than ten years. The last time net profit had been higher was
in the first quarter of the 2011 financial year.
The Bank’s Common Equity Tier 1 ratio (CET1 ratio) rose to 14.9% as of
31 March 2024 (31 December 2023: 14.7%, 31 March 2023: 14.2%). This gives
Commerzbank a very comfortable buffer of 455 basis points to the
regulatory minimum requirement (MDA threshold), which is currently around
10.3%. The return on tangible equity (RoTE) improved to 10.5% (Q1 2023:
8.3%) due to the seasonally strong quarter. This puts the Bank well on
track to achieve its target of at least 8% for the full year.
“The significantly improved earnings power and the high CET1 ratio
underpin our plan to further increase the pay-out ratio,” said CFO Bettina
Orlopp. “We will continue to focus on a combination of dividend payments
and share buybacks. If the second quarter develops as expected, we plan to
apply to the ECB and the German Finance Agency for the next share buyback
on the basis of the first half-year results.”
Segment development: Continued strong performance in both customer
segments
The Corporate Clients segment once again performed very well across all
client groups in the first quarter. It boosted its revenues by around 13%
to a record of €1,224 million (Q1 2023: €1,079 million). Net commission
income increased by around 8% to €361 million. (Q1 2023: €334 million). At
€713 million, net interest income was around 14% higher year-on-year
(Q1 2023: €627 million). However, due to the ongoing shift from sight to
term and call deposits, it was below the previous quarter (Q4 2023:
€741 million) while the deposit volume remained stable. The segment’s
operating result reached a record of €661 million (Q1 2023: €541 million,
Q4 2023: €508 million), benefiting from the continued low risk result and
a decrease in costs.
The Private and Small-Business Customers segment increased its revenues in
Germany to €1,166 million in the first quarter (Q1 2023: €1,146 million),
benefiting from the seasonally strong securities business, continued
deposit growth, and the positive effect from, at Group level neutral,
adjustment of deposit models in the fourth quarter of 2023. Net interest
income rose by around 10% to €661 million (Q1 2023: €603 million). At
€489 million, net commission income was around 12% higher than in the
previous quarter (Q4 2023: €438 million) but remained slightly below that
of the first quarter of 2023 (Q1 2023: €511 million). This was due to
one-off effects at the real asset subsidiary Commerz Real in the first
quarter of 2023. Excluding these one-off effects, Commerz Real’s earnings
remained almost stable at €47 million in the first quarter of this year.
Overall, the segment’s operating result in Germany improved significantly
by 46% to €423 million (Q1 2023: €289 million).
Customer deposits in the segment in Germany rose to €166 billion on a
quarterly average (Q1 2023: €150 billion) totalling growth of around €9
billion in the first three months of the year (Q4 2023: €157 billion). The
shift of funds into interest-bearing products continued. The lending
volume was stable year-on-year at €125 billion and the average mortgage
volume also remained almost unchanged at €95 billion in the first quarter.
New business showed a positive trend compared to the end of 2023: New
contracts picked up significantly in the first three months of the year.
The securities portfolio rose to a volume of €230 billion at the end of
the quarter (Q1 2023: €202 billion) due to the strong stock market
performance.
The Polish subsidiary mBank again showed a strong operating performance in
the first quarter. Despite provisions for legal risks from FX loans of
€318 million (Q1 2023: €173 million), mBank generated revenues of
€341 million (Q1 2023: €356 million). In total, mBank contributed
€82 million to the operating result of the Group (Q1 2023: €100 million).
The main driver was the strong net interest income, which was up by around
19% to €583 million (Q1 2023: €488 million). Excluding the burdens from
the provisions for legal risks from FX loans, mBank would have further
increased its operating result to €400 million in the first quarter
(Q1 2023: €273 million). This would have been the best result in its
history.
Outlook: Annual targets for 2024 confirmed
Commerzbank maintains its outlook for the 2024 financial year. The Bank’s
target is to have a net profit above the previous year, which is, however,
subject to the future development of Swiss franc loan burdens at mBank.
Regarding net interest income, the Bank now targets around €8.1 billion
for the full year. The aim for net commission is 4% growth. Commerzbank
targets a cost-income-ratio of around 60% for the current year. The Bank
aims for a risk result below minus €800 million for the full year assuming
usage of TLA. The CET 1 ratio will be higher than 14%.
The Bank intends to further increase the pay-out ratio. Having used a
total of 50% of the net profit for the 2023 financial year for dividend
payments and share buybacks, Commerzbank’s target is to return at least
70% of the profit to its shareholders for the current financial year but
no more than the net profit after deduction of AT1 coupon payments in
accordance with its capital return policy.
Financial figures at a glance
in €m Q1 Q1 Q1 24 vs. Q4 Q1 24 vs. FY
2024 2023 Q1 23 2023 Q4 23 2023
in % in %
Net interest income 2,126 1,947 + 9.2 2,126 + 0.0 8,368
Net commission income 920 915 + 0.5 798 + 15.3 3,386
Net fair value^1 – 53 – 72 + 26.2 – 202 + 73.6 – 359
Other income – 246 – 122 – 313 + 21.3 – 933
Total revenues 2,747 2,668 + 3.0 2,409 + 14.0 10,461
Revenues excl. exceptional 2,719 2,655 + 2.4 2,434 + 11.7 10,438
items
Risk result – 76 – 68 – 10.8 – 252 + 70.0 – 618
Operating expenses 1,496 1,464 + 2.2 1,557 – 3.9 6,006
Compulsory contributions 91 260 – 64.9 59 + 55.2 415
Operating profit or loss 1,084 875 + 23.8 542 + 100.0 3,421
Restructuring costs 1 4 – 86.2 4 – 86.9 18
Pre-tax profit or loss 1,083 871 + 24.4 537 3,403
Taxes 322 279 + 15.5 166 + 94.1 1,188
Minorities 14 12 + 16.9 – 24 – 10
Consolidated profit or loss^2 747 580 + 28.8 395 + 89.0 2,224
Cost-income-ratio in 54.5 54.9 64.6 57.4
operating business excl.
compulsory contributions (%)
Cost-income-ratio in 57.8 64.6 67.1 61.4
operating business incl.
compulsory contributions (%)
Operating RoTE (%) 14.1 11.8 7.0 11.3
Net RoTE (%)^3 10.5 8.3 5.2 7.7
Net RoE (%) 10.1 8.0 5.0 7.4
CET1 ratio (%)^3 14.9 14.2 14.7 14.7
Leverage ratio 4.6 4.8 4.9 4.9
Total assets (€bn) 552 497 517 517
^1 Net income from financial assets and liabilities measured at fair value
through profit and loss.
^2 Net profit attributable to Commerzbank shareholders and investors in
additional equity components.
^3 2023 reduced by pay-out accrual and potential (fully discretionary) AT1
coupons – Q1 2024 excluding net profit.
Press contact
Kathrin Jones +49 69 9353-45687
Svea Junge +49 69 9353-45691
Sina Weiß +49 69 9353-45738
Investors’ contact
Jutta Madjlessi +49 69 9353-47707
Michael Klein +49 69 9353-47703
About Commerzbank
Commerzbank is the leading bank for the German Mittelstand. In addition,
the Bank is a strong partner for around 25,500 corporate client groups and
almost 11 million private and small-business customers in Germany. The
Bank’s two Business Segments – Private and Small-Business Customers and
Corporate Clients – offer a comprehensive portfolio of financial services.
Commerzbank transacts approximately 30% of Germany’s foreign trade and is
present internationally in more than 40 countries in the corporate
clients’ business. The Bank focusses on the German Mittelstand, large
corporates, and institutional clients. As part of its international
business, Commerzbank supports clients with a business relationship to
Germany, Austria, or Switzerland and companies operating in selected
future-oriented industries. In the Private and Small-Business Customers
segment, the Bank is at the side of its customers with its brands
Commerzbank and comdirect: online and mobile, in the advisory centre, and
personally in its branches. Its Polish subsidiary mBank S.A. is an
innovative digital bank that serves approximately 5.7 million private and
corporate customers, predominantly in Poland, as well as in the Czech
Republic and Slovakia.
Disclaimer
This release contains forward-looking statements. Forward-looking
statements are statements that are not historical facts. In this release,
these statements concern inter alia the expected future business of
Commerzbank, efficiency gains and expected synergies, expected growth
prospects and other opportunities for an increase in value of Commerzbank
as well as expected future financial results, restructuring costs and
other financial developments and information. These forward-looking
statements are based on the management’s current plans, expectations,
estimates and projections. They are subject to a number of assumptions and
involve known and unknown risks, uncertainties and other factors that may
cause actual results and developments to differ materially from any future
results and developments expressed or implied by such forward-looking
statements. Such factors include the conditions in the financial markets
in Germany, in Europe, in the USA and other regions from which Commerzbank
derives a substantial portion of its revenues and in which Commerzbank
holds a substantial portion of its assets, the development of asset prices
and market volatility, especially due to the ongoing European debt crisis,
potential defaults of borrowers or trading counterparties, the
implementation of its strategic initiatives to improve its business model,
the reliability of its risk management policies, procedures and methods,
risks arising as a result of regulatory change and other risks.
Forward-looking statements therefore speak only as of the date they are
made. Commerzbank has no obligation to update or release any revisions to
the forward-looking statements contained in this release to reflect events
or circumstances after the date of this release.
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Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
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ISIN: DE000CBK1001
Category Code: QRF
TIDM: CZB
LEI Code: 851WYGNLUQLFZBSYGB56
Sequence No.: 321504
EQS News ID: 1903299
End of Announcement EQS News Service
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