REG-Commerzbank Aktiengesellschaft Commerzbank improves full-year outlook – Results after nine months ahead of plan
06/11/2024 06:15
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Commerzbank Aktiengesellschaft (CZB)
Commerzbank improves full-year outlook – Results after nine months ahead
of plan
06-Nov-2024 / 07:03 CET/CEST
The issuer is solely responsible for the content of this announcement.
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• Revenues increased to €8.2bn at end of September thanks to strong
customer business (9M 23: €8.1bn)
• Loan volume of corporate clients in Mittelstand business increased by
3 % to €62bn in Q3
• 9M net commission income up 4% to €2.7bn
• Net interest income after nine months at consistently high level of
€6.3bn despite rate cuts
• 9M costs stable at €4.8bn – cost-income ratio at 59%
• Operating result after nine months almost stable at €2.8bn despite
decreasing interest rates
• 9M net result up 5% to €1.9bn
• Risk result after nine months at minus €529m – non-performing exposure
ratio remains low at 0.9%
• High CET1 ratio of 14.8% (9M 23: 14.6%) expected to rise to around 15%
at year-end and underpins potential for capital return
• Outlook for full year: net result target of around €2.4bn confirmed –
targets for net commission income and net interest income raised
• Third share buyback: buyback of first tranche of around €600m approved
– applied for approval for second tranche of up to €400m
“We are convinced that we will increase our net result again this year.
The customer business developed very well in the third quarter. We are
particularly pleased with the growth in net commission income. This shows
that our growth initiatives are increasingly paying off, thanks to the
very consistent implementation of our strategy. This helps us to cushion
the effect of decreasing interest rates and to broaden our revenue base
for the future.”
Bettina Orlopp, CEO
Commerzbank has improved its outlook for the 2024 financial year after the
first nine months: net interest income and net commission income developed
better than anticipated in the third quarter, which is why the Bank is
raising its targets for both key figures. The Bank also confirms its
forecast for 2024 of achieving a higher net result than in 2023. It
anticipates a net result of around €2.4bn after reaching €2.2bn in the
2023 financial year. This means the Bank is once again heading for a
record profit for the full year. In the third quarter, growth in net
commission income accelerated to around 8% compared to the same quarter of
the previous year. Growth in the securities business and asset management
as well as in the syndication business and trade finance had a
particularly positive effect. In contrast, net interest income fell
slightly due to the European Central Bank’s (ECB’s) recent interest rate
cuts, but the Bank benefited from the continuing high volume of deposits.
Despite the economically challenging environment, the credit volume in the
Corporate Clients segment rose to €100bn in the third quarter. In the
Mittelstand alone, the loan volume increased by 3% compared to the
previous quarter to €62bn. The loan book remains robust. Between January
and September, revenues rose to a total of €8.2bn. With €1.9bn after taxes
and minorities, the Bank earned 5% more in the first nine months of this
year than in the same time of the previous year.
The Bank continued implementing its strategic initiatives in the third
quarter. A few weeks after successfully acquiring a majority stake in
Aquila Capital, the Bank started the distribution of Aquila products with
the launch of the European long-term investment fund (ELTIF) “AC One
Planet”. The demand from Commerzbank customers for this long-term fund,
which invests in pioneering projects in the field of renewable energy, is
very high. The Bank is also expanding its offering for
ultra-high-net-worth individuals and family offices, substantiating
Commerzbank’s growth ambitions in this segment. The relevant skill sets
and highly specialised departments will be brought together in a separate
division. In addition to the existing services in Berlin, Düsseldorf,
Frankfurt am Main and Munich, the Bank is also establishing two new
locations in Hamburg and Stuttgart for comprehensive advisory services for
this customer group.
The Bank is also continuing to implement its strategic plans abroad. To
further strengthen its technological development, Commerzbank has opened a
new “IT factory” in Malaysia. Commerzbank is furthermore making good
progress in its commitment to sustainability: growth in the Green
Infrastructure Finance division, which focuses on project financing for
renewable energies and other green infrastructure, already exceeded the
record year 2023 after nine months. Between January and September, net
growth in the financing volume amounted to around €1.1bn (full year 2023:
€1bn).
“Our figures and our strong customer business emphasise that our strategy
is paying off. Even in an environment of decreasing interest rates, we are
delivering stable revenues and strong results. We believe we have great
potential for growth, particularly in asset management and wealth
management. In the lending business, we want to continue to grow in the
Mittelstand business”, said Bettina Orlopp, Commerzbank’s CEO. “To further
increase the Bank’s profitability in the coming years and create
sustainable value for our shareholders, we are currently working hard on
upgrading our strategy for the coming years. The results will be presented
on 13 February 2025.”
Strong customer business: growth in commissions almost offsets decline in
interest income
Driven by the ongoing strength of customer business, Commerzbank’s
revenues remained at a high level in the third quarter at €2,735m
(Q3 2023: €2,755m) – despite provisions of €227m for legal risks from
foreign currency loans at Polish subsidiary mBank. The Bank benefited from
accelerated growth in net commission income of around 8% to €894m (Q3
2023: €831m), to which both customer segments contributed. As anticipated,
net interest income fell slightly to €2,048m (Q3 2023: €2,166m, Q2 2024:
€2,078m) as a result of the interest rate cuts, but remained at a high
level. Between January and September, revenues increased to €8,150m
compared to the same period last year (9M 2023: €8,052m).
Total costs increased only slightly in the third quarter to €1,594m
(Q3 2023: €1,549m). Compulsory contributions rose to €64m (Q3 2023: €45m).
Again, this was caused by the higher contributions to the Deposit
Insurance Fund due to the increase in covered deposits. Operating expenses
were also slightly higher than in the previous year at €1,530m (Q3 2023:
€1,504m). This was primarily due to higher costs incurred by mBank as a
result of investments in future business growth and foreign currency
effects. Other drivers were general salary increases in Germany, higher
accruals for share-based variable compensation as a consequence of the
strong rise in the Commerzbank share price and the increased cost base
since the acquisition of Aquila Capital in June. These effects were
partially offset by active cost management. Between January and September,
costs fell by a total of around 1% to €4,780m. The cost-income ratio was
at 58.7% (9M 2023: 59.7%).
The risk result totalled minus €255m in the third quarter (Q3 2023: minus
€91m). It includes around minus €147m from methodology updates, of which
minus €97m alone are intended to cover climate and environmental risks. In
the ongoing economically challenging environment, the loan book proved to
be overall robust, with three large individual cases impacting the risk
result by minus €130m. The non-performing exposure ratio (NPE ratio) was
at low 0.9% (Q2 2024: 0.8%). The Bank’s Top-Level Adjustment (TLA)
decreased by €94m due to reassessment. Taking into account the reduction
in the TLA, the Bank still has €242m (Q2 2024: €336m) available mainly to
cover expected secondary effects from geopolitical crises and
uncertainties from inflation. After nine months, the risk result was at
minus €529m (9M 2023: minus €367m).
Overall, the operating result in the third quarter totalled €886m
(Q3 2023: €1,116m). Between January and September, it remained almost
stable at €2,841m (9M 2023: €2,879m). Net result after taxes and minority
interests totalled €642m in the third quarter (Q3 2023: €684m), improving
by 5% to €1,926m after nine months (9M 2023: €1,829m). The Bank is
therefore well on track to achieve its target of generating a higher
profit for the financial year 2024 than in the previous year.
Commerzbank’s Common Equity Tier 1 ratio (CET1 ratio) was 14.8% as of 30
September (30 June 2024: 14.8%, 30 September 2023: 14.6%). The Bank
continues to have a very comfortable buffer of 451 basis points to the
regulatory minimum requirement (MDA threshold), which currently is 10.31%.
Commerzbank has significant potential to return capital to its
shareholders. The return on tangible equity (RoTE) was 8.7% in the third
quarter (Q3 2023: 9.6%) and improved to 8.8% between January and September
(9M 2023: 8.6%). After nine months, the Bank is on track to achieve its
target of at least 8% for the full year.
“We are consistently implementing our plans for the return of capital. We
have applied for the second tranche of our share buyback to the ECB and
the German Finance Agency. By further sharpening the financial targets of
our Strategy until 2027 in September, we have also made it clear that we
will improve our profitability beyond our original plans. This will enable
us to return even more capital to our shareholders in the coming years”,
said Bettina Orlopp.
Segment performance: mBank more than doubles its operating result
The Corporate Clients segment generated revenues of €1,121m in the third
quarter (Q3 2023: €1,172m). After nine months, revenues were 5% higher
compared to the same period of the previous year, totalling €3,541m. Net
commission income rose by around 5% to €345m in the third quarter compared
to the same quarter of the previous year. The syndication business and
trade finance developed particularly strongly. Net interest income,
however, fell, as anticipated, to €629m (Q3 2023: €718m, Q2 2024: €678m)
because of the recent interest rate cuts. The credit volume increased to
€100bn in the third quarter despite the challenging economic environment
(Q2 2024: €99bn, Q3 2023: €97bn). The segment’s operating result totalled
€412m (Q3 2023: €645m) and largely reflects the increased risk result in
the third quarter. After the first nine months of the financial year, the
operating result, which totalled €1,623m, was almost on the same level as
in the previous year (9M 2023: €1,637m).
The Private and Small-Business Customers segment (PSBC) in Germany
recorded stable revenues of €1,044m in the third quarter (Q3 2023:
€1,045m), despite the decline of interest rates. In the first nine months
of the year, the segment’s revenues increased to €3,276m (9M 2023:
€3,240m). As anticipated, in the third quarter net interest income fell to
€537m (Q3 2023: €596m). However, the decline could largely be offset by a
significant increase in net commission income by 8% to €472m as well as
valuation effects at the real estate subsidiary Commerz Real. The
continued strength of the securities business had a positive effect on net
commission income. Driven by the positive trend in the stock markets, the
securities volume rose further to €238bn by the end of September
(end of June: €233bn). The segment’s average deposit volume was stable in
the third quarter at €174bn (Q2 2024: €174bn) as well as the loan volume
at an average of €125bn (Q2 2024: €125bn). The volume of mortgage loans
also remained unchanged at €96bn (Q2 2024: €96bn). The segment's operating
result of €251m (Q3 2023: €298m) reflects, amongst others, the acquisition
of Aquila Capital in June as well as increased expenses for the deposit
guarantee scheme. After nine months, the result was 11% higher compared to
the same period last year at €985m (9M 2023: €885m).
The Polish subsidiary mBank continued its dynamic growth in customer
business. Revenues increased by a strong 40% to €485m in the third quarter
(Q3 2023: €346m), despite further provisions for legal risks for foreign
currency loans totalling €227m (Q3 2023: €234m). Between January and
September, mBank’s revenues increased by one-third to €1,239m (9M 2023:
€929m). In the third quarter, net interest income rose to €609m (Q3 2023:
€561m), driven by the continued strong deposit and lending business. Net
commission income also increased further, rising by around 13% to €91m.
mBank contributed €203m to the Group’s operating result in the third
quarter, more than twice as much as a year ago (Q3 2023: €89m). Without
the impact of the legal risks associated with foreign currency loans and
“Credit Holidays”, the operating result would even have risen to €404m in
the third quarter (Q3 2023: €323m). In the first nine months of the year,
mBank was able to more than double its operating result to €432m compared
to the same period last year (9M 2023: €175m).
Outlook 2024: targets for net commission and net interest income as well
as CET1 ratio raised
After the first nine months of the year, Commerzbank confirms its profit
target for the full year 2024: with a net result of around €2.4bn, it is
targeting a higher net result than in the 2023 financial year. The outlook
is subject to the future development of burdens from Russia and foreign
currency loans at mBank. Based on the strong results of the third quarter,
the Bank is raising its forecast for net interest income from around
€8.1bn to around €8.2bn for the full year. Net commission income also
developed better than planned: the Bank now anticipates that net
commission income will exceed the previous year’s figure by more than 5%.
Previously, the Bank had anticipated net interest income to rise by 4%. On
this basis, the Bank assumes revenues totalling €10.9bn. Commerzbank now
anticipates a CET1 ratio of around 15%. Previously, it had assumed a ratio
of more than 14%. Commerzbank is still aiming for a cost-income ratio of
around 60% for the current year. The Bank expects a risk result lower than
minus €800m for the full year assuming usage of TLA.
The Bank remains committed to its capital return plans and planned share
buybacks: for this financial year, Commerzbank is aiming to return at
least 70% of net result to its shareholders – but not more than the net
result after deduction of AT1 coupon payments. On 4 November, the Bank
decided to start its third share buyback programme soon. Previously, the
German Finance Agency and ECB had given their approval for the first
tranche of €600m. As planned, Commerzbank has applied to the ECB and the
German Finance Agency for the second tranche of up to €400m, based on the
third quarter results. By strengthening the financial targets of its
Strategy until 2027 in September, the Bank is increasing its capital
return potential.
Financial figures at a glance
Q3 24 9M 24
in €m Q3 2024 Q3 2023 vs Q3 23 Q2 2024 9M 2024 9M vs 9M
(in %) 2023 23
(in %)
Net interest income 2,048 2,166 – 5.5 2,078 6,251 6,242 + 0.1
Net commission 894 831 + 7.6 879 2,693 2,587 + 4.1
income
Net fair value – 67 – 67 + 0.7 – 4 – 124 – 157 + 20.8
result^1
Other income – 140 – 175 + 19.9 – 284 – 670 – 621 – 7.9
Total revenues 2,735 2,755 – 0.7 2,668 8,150 8,052 + 1.2
Revenues excl. 2,753 2,727 + 0.9 2,815 8,287 8,003 + 3.5
exceptional items
Risk result – 255 – 91 – 199 – 529 – 367 – 44.4
Operating expenses 1,530 1,504 + 1.7 1,524 4,550 4,449 + 2.3
Compulsory 64 45 + 43.6 75 230 357 – 35.5
contributions
Operating result 886 1,116 – 20.5 870 2,841 2,879 – 1.3
Restructuring costs 2 6 – 72.5 1 4 14 – 74.7
Pre-tax result 885 1,109 – 20.2 869 2,837 2,865 – 1.0
Taxes 197 405 – 51.4 289 807 1,022 – 21.0
Minorities 46 20 42 103 14
Consolidated 642 684 – 6.2 538 1,926 1,829 + 5.3
result^2
Cost-income ratio in 55.9 54.6 57.1 55.8 55.3
operating business
excl. compulsory
contributions (%)
Cost-income ratio in 58.3 56.2 59.9 58.7 59.7
operating business
incl. compulsory
contributions (%)
Operating RoTE (%) 11.3 14.6 11.3 12.2 12.7
Net RoTE (%)^3 8.7 9.6 7.3 8.8 8.6
Net RoE (%) 8.3 9.2 7.1 8.5 8.3
CET1 ratio (%)^3 14.8 14.6 14.8 14.8 14.6
Leverage ratio 4.4 4.9 4.5 4.4 4.9
Total assets (€bn) 565 510 560 565 510
^1 Net income from financial assets and liabilities measured at fair value
through profit and loss.
^2 Net result attributable to Commerzbank shareholders and investors in
additional equity components.
^3 2023 reduced by pay-out accrual and potential (fully discretionary) AT1
coupons – 2024 excluding net result.
Journalists can dial in to the press conference call on the results of the
second quarter, which begins at 10.30 a.m. CET today using the telephone
number +49 69 667738009. From 9.00 a.m. CET, you can also follow the
conference call for analysts in English live 1 online. The financial
publications and the recording of the conference call for analysts are
available on the 2 internet.
Press contact
Kathrin Jones +49 69 9353-45687
Svea Junge +49 69 9353-45691
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 and a strong
partner for around 25,500 corporate client groups. In addition, it
supports private and small-business customers in Germany with more than
€400 billion assets under management. 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, amongst others, 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: QRT
TIDM: CZB
LEI Code: 851WYGNLUQLFZBSYGB56
Sequence No.: 357272
EQS News ID: 2023263
End of Announcement EQS News Service
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