Commerzbank successfully completes first share buy-back programme
Shares worth €122 million repurchased (0.97 per cent of share capital)
CFO Bettina Orlopp: “With the completion of our first share buy-back, we have successfully established this capital distribution instrument.”
Commerzbank AG successfully completed its first share buy-back programme today (Friday). Since 7 June, the Bank has bought back a total of 12,134,305 of its own shares (ISIN DE000CBK1001) in the amount of €122 million at an average price of around €10,05 per share. This corresponds to a share of 0.97% of the Bank’s share capital. The repurchased shares are expected to be redeemed in the second half of the current year.
The share buy-back programme complemented the dividend payment of 20 cents per share for the 2022 financial year. The Bank has distributed a total of €372 million to its shareholders, which corresponds to 30% of the Group’s profit after deduction of the AT 1 coupon payments.
“It is important to us as Board of Managing Directors that our shareholders participate in the financial success of the Bank,” said Chief Financial Officer Bettina Orlopp. “With the completion of our first share buy-back, we have successfully established this capital distribution instrument. We are convinced that our earnings development will enable further distributions to our shareholders.”
For the 2023 financial year, the Bank aims to increase the pay-out ratio to 50% of the Group’s profit after deduction of the AT 1 coupon payments.
Commerzbank with strong start to the year – net profit almost doubled
Commerzbank had a very good start to the 2023 financial year. Despite the market turmoil and additional burdens from the Swiss franc mortgages of mBank, Commerzbank increased its operating result by more than 60% in the first quarter. Net profit almost doubled. The Bank continued to benefit from higher interest rates and a good fee business. As a result, the underlying net interest income reached a record high, even though the momentum slowed slightly compared to the previous quarter due to higher interest rates on deposits. In terms of costs, Commerzbank remained on target despite high inflationary pressure. The risk result was low, despite the tense macroeconomic situation. Whilst maintaining a comfortable capital ratio, the Bank accrued for the targeted pay-out ratio of 50% in the first quarter.
Meanwhile, the European Central Bank (ECB) and the Finance Agency have approved Commerzbank’s first share buyback programme of €122 million. It complements the 20 cents per share to be proposed as a dividend at the Annual General Meeting on 31 May 2023. In line with its capital return policy, Commerzbank will distribute 30% of last year’s net profit after deduction of AT 1 coupon payments.
“Commerzbank is in good shape. Our transformation is making good progress and is increasingly paying off. We had a very good start to 2023, continuing the strong performance of the previous year,” said Chairman of the Board of Managing Directors Manfred Knof. “The interest rate development continues to give us a tailwind, and the fee business has delivered a good result. We are fully on track to meet our targets for 2023 including a pay-out ratio of 50%.”
The Bank continued to move ahead with the implementation of its “Strategy 2024”. As an example, the sector-specific service for large companies was expanded. In addition to around 90 German corporations that are already being served within the sector approach, this service has now been expanded to include around 300 German and international large corporates. The digital offerings have also been expanded. The new advisory centre, which creates the link between the branches and online and mobile banking in the Private and Small-Business Customer business, has further improved its processes and is being well received by customers.
A strategic focus continues to be the alignment of the Bank’s business with sustainability criteria. Commerzbank has made significant progress on this topic since the beginning of the year. In March of the current year, it was the first German bank to receive the approval from the Science Based Targets initiative (SBTi) for its CO2 reduction targets by 2030. In addition, the Bank launched the Impact Solutions Platform, a digital marketplace for small-business customers and corporate clients. Here, customers can connect with providers from the green tech sector and find innovative solutions for their sustainable transformation. In April, Commerzbank became a member of the biodiversity initiative Taskforce on Nature-related Financial Disclosures (TNFD). Their recommendations are the basis for consistent and comparable reporting practices regarding nature-related risks and opportunities.
Entering the second half of “Strategy 2024”, the Bank also launched its new brand campaign “No time to hesitate. It’s time for action.” Following the successful turnaround and its return to the leading German stock index Dax, Commerzbank is further increasing its visibility in the market. In the campaign, Commerzbank positions itself as a bank for ambitious customers who are encouraged to look ahead optimistically and tackle challenges despite multiple crises.
Strong operating performance: Significant increase in net interest income, good net commission income
In the first three months of the current year, the Bank benefited from rising interest rates and the recovery on the stock markets. Overall, revenues amounted to €2.668 billion (Q1 2022: €2.793 billion). This reflects additional provisions for legal risks related to Swiss franc mortgages and the discontinuation of special conditions from the ECB’s Targeted Longer-Term Refinancing Operations (TLTRO) programme. Adjusted for exceptional items and the charges from Poland, revenues increased slightly.
Net interest income rose by almost 39% year-on-year to €1.947 billion. Net commission income noticeably exceeded the previous quarters. At €915 million, it still remained below the exceptionally strong figure of the previous year’s quarter (Q1 2022: €970 million).
Thanks to active management and lower compulsory contributions, costs were on track and slightly below the previous year despite high inflationary pressures. Overall, total expenses decreased by 3.4% to €1.724 billion in the first quarter (Q1 2022: €1.785 billion). Compulsory contributions fell by around a quarter to €260 million due to a decline in the European bank levy. In contrast, operating costs rose by 1.8% to €1.464 billion (Q1 2022: €1.438 billion) which are based on higher accruals for variable compensation due to the strong first quarter. The ongoing job reductions and a decline in administrative expenses had a positive effect on the cost base. The cost-income ratio was 64.6%.
The risk result was low at minus €68 million in the first quarter. At the same time, the Top-Level Adjustment (TLA) was almost unchanged at €483 million (Q4 2022: €482 million). The non-performing exposure ratio (NPE ratio) remained strong at 1.1%. In the first quarter of 2022, the risk result, marked by a significant TLA increase following the start of the war in Ukraine, had been minus €464 million.
In total, the Bank increased its operating result by 61% to €875 million in the first three months of 2023 (Q1 2022: €544 million). All in all, the net profit after tax and minority interests amounted to €580 million (Q1 2022: €298 million).
The Common Equity Tier 1 ratio (CET 1 ratio) increased slightly to 14.2% as of 31 March 2023 (31 December 2022: 14.1%, 31 March 2022: 13.5%). The gap to the regulatory minimum requirement (MDA threshold), which was raised to 10.01% in the first quarter due to activated countercyclical and sector-specific capital buffers, remains very comfortable at 420 basis points. The return on tangible equity (RoTE) improved to 8.3% (Q1 2022: 4.0 %), buoyed by the low risk result.
“We are steering the Bank through a very dynamic environment with clear priorities. In this respect, the high quality of our loan book and our conservative risk management are paying off. We are benefiting from the fact that we have – thanks to our considerable transformation progress – significantly improved profitability and substantially increased our resilience,” Chief Financial Officer Bettina Orlopp explained. “We were able to further increase our ability to pay out capital to our shareholders.”
Segment development: Revenue growth continued in the operating business
In a challenging competitive environment, the business volume of the Private and Small-Business Customers segment in Germany remained largely stable. At €124 billion, the lending volume at the end of the quarter was almost unchanged, compared to the first quarter 2022 it was €1.8 billion higher. The mortgage volume was stable overall compared to the fourth quarter at around €95 billion. New mortgage business picked up over the course of the first quarter and exceeded the volume of the fourth quarter of 2022. Deposits amounted to €151 billion at the end of March and were higher year-on-year. Compared to the fourth quarter of 2022, the volume declined by about €3.5 billion due to cyclical and seasonal effects. The securities portfolio recovered significantly to €202 billion compared to the previous quarter thanks to higher stock market prices, but remained below the volume of the first quarter 2022. As of 31 March 2023, churn continued to be significantly below expectations with a net loss of 31,000 customers in the first quarter.
Overall, the segment increased its revenues in Germany by more than 8% to €1.147 billion (Q1 2022: €1.060 billion). This reflects a year-on-year improvement of 23% in net interest income. However, net interest income fell slightly compared to the fourth quarter mainly due to less benefits from prepayment of mortgages. The operating result increased by 7.4% to €290 million (Q1 2022: €270 million). This includes a higher risk result following the booking of additional TLA against the background of changed assumptions due to uncertainties from crises and the economy as well as the inflation and interest rate development.
mBank continued its strong operating performance in the first quarter, generating an operating result of €100 million (Q1 2022: €134 million) despite the new additional provisions for legal risks on Swiss franc mortgages of €173 million (Q1 2022: €41 million). Without these burdens and further negative effects of the “credit holidays” introduced by the Polish government, the operating result would have increased to €262 million (Q1 2022: €175 million).
The Corporate Clients segment continued its growth course driven by the positive development of net interest income from deposits. Net interest income of the segment was 36% higher than in the first quarter of 2022. Overall, revenues increased by approximately 16% to €1.078 billion (Q1 2022: €926 million) – the highest level since 2016. The strong operating result of €539 million (Q1 2022: minus €7 million) was also driven by a positive risk result of €54 million (Q1 2022: minus 286 million), which reflected the release of risk provisions following received repayments on adjusted claims. The cost-income ratio improved further in the first quarter to 55% (Q1 2022: 69.9%).
Outlook: Annual targets for 2023 confirmed
Commerzbank remains confident that it will continue its positive development in 2023 in a challenging environment. The Bank now expects net interest income to increase to around €7 billion and sees an additional upside potential depending on the actual development of the deposit beta. Net commission income is expected to be similar to the previous year’s level. The Bank continues to aim for a reduction of total costs to €6.3 billion – despite the high inflationary pressure. The decisive steering parameter remains the cost-income ratio with the medium-term target of 60%. In addition, the Bank confirms the outlook for the risk result of less than minus €900 million on the assumption of using the TLA. The CET 1 ratio is expected to remain unchanged at around 14%. All in all, Commerzbank is aiming for a net profit well above that of 2022. The outlook depends on the development of mBank’s Swiss franc mortgages and continues to be based on the assumption of a mild recession. In addition, the Board of Managing Directors is sticking to its target of a pay-out ratio of 50% of the Bank’s net profit after deduction of AT 1 coupon payments.
Commerzbank: Εκτίναξη κερδών το 2022
Ισχυρά μεγέθη που ξεπέρασαν τις εκτιμήσεις της αγοράς τόσο σε επίπεδο τριμήνου όσο και όλο το 2022 ανακοίνωσε η Commerzbank που είδε τη μετοχή της να πραγματοποιεί άλμα άνω του 8,6%.
Ειδικότερα, η δεύτερη μεγαλύτερη γερμανική τράπεζα, είδε τα καθαρά της κέρδη να αυξάνονται κατά 12% σε ετήσια βάση στο τέταρτο τρίμηνο, στα 472 εκατ. ευρώ από τα 421 εκατ. πέρυσι, την ώρα που οι αναλυτές προέβλεπαν ότι θα υποχωρούσαν στα 350 εκατ. ευρώ.
Για ολόκληρο το έτος, η Commerzbank κατέγραψε εκτίναξη των καθαρών της κερδών στα 1,435 δισ. ευρώ από τα 430 εκατ. ευρώ ένα χρόνο νωρίτερα, ξεπερνώντας επίσης κατά πολύ τις εκτιμήσεις για περίπου 1,359 δισ. ευρώ.
Παράλληλα, η Commerzbank προέβλεψε καθαρά έσοδα από τόκους “πολύ πάνω από” 6,5 δισ. ευρώ το 2023, “με σαφώς ανοδική επιπλέον δυναμική”. Το 2022 είδε τα καθαρά της έσοδα από τόκους να αυξάνονται κατά 33% στα 6,46 δισ. ευρώ.
Η τράπεζα με έδρα τη Φρανκφούρτη δήλωσε επίσης ότι στοχεύει σε καθαρά κέρδη φέτος σημαντικά υψηλότερα του 2022 και σε αύξηση του μερίσματος στο 50% των καθαρών της κερδών, μετά το 30% του 2022.
Commerzbank reports highest net profit in more than ten years thanks to strong revenue performance – positive outlook for 2023
Operating result in 2022 increased significantly to €2.1 billion (2021: €1.2 billion) despite one-off burdens in Poland – net profit more than tripled to €1.4 billion
Revenues increased by 12% to €9.5 billion thanks to dynamic development in customer business and interest rate turnaround
Costs reduced by 3.2% to €6.49 billion despite strong inflationary pressure and significant increase in compulsory contributions – cost-income ratio improved to 68.6% (2021: 79.3%)
High credit quality maintained – risk result at minus €876 million (2021: minus €570 million) due to economic downturn and Russia – ~ €500 million TLA still available
30 % pay-out ratio planned: dividend proposal of 20 cents per share and €122 million share buyback subject to ECB approval intended
Outlook 2023: Net result well above 2022 expected and a pay-out ratio of 50% targeted
Commerzbank more than tripled its net profit in the 2022 financial year to more than €1.4 billion despite the difficult economic environment and high one-off burdens in Poland, thereby clearly exceeding the announced target of over €1 billion. This is the highest profit in more than ten years. The Common Equity Tier 1 ratio improved further to a very comfortable 14.1%. The Bank has therefore the capacity to resume returning capital to its shareholders. In accordance with its capital return policy, the Bank intends to distribute 30% of its net profit after deduction of AT1 coupon payments by planning a dividend of 20 cents per share and by applying for a share buyback programme of €122 million.
Thanks to a strong customer business and with the tailwind of higher interest rates, revenue momentum accelerated over the course of the year. In addition, the Bank was able to reduce costs despite increasing inflationary pressures. The loan book also proved to be resilient in the face of economic uncertainties and the consequences of the Russian war of aggression against Ukraine. With the still available Top-Level Adjustment (TLA) of almost €500 million, the Bank is well prepared for the continuing economic challenges.
“Commerzbank has delivered as promised: We achieved our strategic and financial goals in the 2022 financial year. Despite the difficult economic environment and the high one-off burdens in Poland, we more than tripled our net profit and thus increased it even more than expected. That proves our strategy is working. Our turnaround is a success. Commerzbank is back,” said the Chairman of the Board of Managing Directors Manfred Knof. “At the halfway point of our transformation programme, we are on track to becoming the digital advisory bank for Germany. We will continue to keep up the pace in the second half of the implementation of our ‘Strategy 2024’ and achieve our return targets. Without slackening on cost discipline, we are now focusing on the customer business and revenue. Especially in light of the current profound social and economic changes, our strengths in the advisory business are paying off.”
The transformation of the Bank is well on track and the new business model in Germany and abroad is in place. The planned gross reduction of around 10,000 full-time equivalents with almost 9,000 departures contracted mainly in Germany has been finalised for the most part. In adjusting its branch network, Commerzbank has reached its target of 450 locations in Germany envisaged in the “Strategy 2024” already by mid-2022. This year it will be heading to the new target size of around 400 branches.
The branch network is now complemented by the new advisory centre. As an additional sales channel, it bridges the gap between the branches, online banking, and mobile banking. Here, qualified advisors are available to customers via telephone, email, or video, including in the evenings and at weekends – covering all financial topics such as accounts, cards, securities investments, and real estate financing. At the same time, comdirect will continue to expand its digital offerings as a bank for digitally savvy customers. Furthermore, Commerzbank intends to exploit revenue potential in asset management. In this context, business with affluent customers is to be expanded through targeted investments, especially to make Commerzbank even more attractive for new customer groups.
The Corporate Clients segment will build on its strengths as the leading bank for the Mittelstand and number one in foreign trade and leverage its advisory expertise to support its customers in the ongoing transformation of the economy. To this end, the Bank is responding to the current profound global shifts in world trade by adapting its foreign network as already communicated and will open new representative offices in Morocco and Jordan. With “Mittelstandsbank Direkt”, Commerzbank has also established the first comprehensive direct banking offering for small and medium-sized enterprises (SMEs) on the German market. Having migrated the first 6,000 customers to the new digital support model, the Bank will now further expand its offering, which will also be open to new customers.
The Bank will continue to drive the sustainable conversion of the economy and put an increased focus on environmental, social, and governance (ESG) issues. Already in 2022, the sustainable business volume increased to €246 billion (2021: €194 billion), for example through new ESG loans, green bonds, and sustainable investments. In addition, the Bank established a new ESG framework last year, which outlines the criteria for sustainable lending and explains reduction targets for CO2-intensive sectors. For more than half of its lending volume to private and corporate customers or 85% of the financed emissions, Commerzbank has meanwhile set concrete CO2 reduction targets resting on the scientifically based guidelines of the Science-Based Target Initiative (SBTi). In the current year, the Bank intends to further expand its ESG product range in the areas of financing, investments, derivatives, and research and thus build a sustainable ecosystem for Commerzbank customers. A focus in 2023 will be on the topics of biodiversity and social sustainability. This year, the sustainable business volume is to increase to €257 billion.
Strong revenues in customer business compensate for burdens in Poland
Buoyed by strong customer business, especially in the Corporate Clients segment, and thanks to the positive effects of the interest rate turnaround, Commerzbank increased its revenue by approximately 12% to €9.461 billion in 2022 (2021: €8.450 billion). This includes material one-off charges at the Polish subsidiary mBank. For the introduced so-called “credit holiday” scheme in Poland alone, negative revenue of €278 million plus a further €650 million in additional provisions for legal risks related to Swiss franc loans were incurred.
In the operating business, revenue momentum picked up strongly over the course of the year. As such, in the fourth quarter, underlying earnings in the Group saw an improvement of almost 30% year-on-year to reach €2.401 billion and by 18% for the entire year, amounting to €9.513 billion. Thanks to the tailwind from rising interest rates, net interest income for the full year 2022 increased by 33% to €6.459 billion (2021: €4.849 billion). In contrast, net commission income declined by 2.4% to €3.519 billion (2021: €3.607 billion) due to a market-related downturn in the securities business.
Despite growing inflationary pressures, Commerzbank has reduced its operating expenses by 6.2% to €5.844 billion in 2022 (2021: €6.230 billion). This reflects the savings from branch closures and job cuts. It was partly offset by higher provisions for the variable remuneration of employees. Compulsory contributions increased by 37.4% to €642 million (2021: €467 million). Of this, €326 million were incurred at mBank alone, where the additional contribution of €91 million to the Institutional Protection Scheme and the increase of the Borrowers’ Support Fund with a further €36 million had negative impacts. In addition, there was a further increase in the European bank levy. The Group’s total expenses fell by 3.2% to €6.486 billion in 2022 (2021: €6.697 billion). The cost-income ratio improved significantly to 68.6% (2021: 79.3%) and thus has come a big step closer to the medium-term target of 60%.
The risk result in 2022 amounted to minus €876 million and was affected by the increased economic uncertainties in the course of the year and the economic impact of the Russian war of aggression against Ukraine. In this context, the Bank continues to have an additional general loan loss provision (Top-Level Adjustment, TLA) of €482 million, which will be available for expected secondary effects like supply chain disruptions or higher energy prices. The quality of the Bank’s loan book remains very high with a non-performing loan ratio (NPE ratio) of only 1.1%.
In total, the operating result in 2022 increased by more than three quarters to reach €2.099 billion (2021: €1.183 billion). In the fourth quarter alone, the Bank significantly increased its operating result to €528 million (Q4 2021: €141 million). All in all, the net profit after tax and minority interests more than tripled to €1.435 billion (2021: €430 million).
The Common Equity Tier 1 ratio (CET 1 ratio) rose to a very comfortable 14.1% as of 31 December 2022 (December 2021: 13.6%, September 2022: 13.8%). This already takes into account the accrual for the planned pay-out of 30% of the net profit. As of end of December, the gap to the regulatory minimum requirement (MDA threshold) of around 9.5% was thus almost 470 basis points. The gap to the new MDA threshold, which is raised to around 10.1% in the first quarter of 2023 due to activated countercyclical and sector-specific capital buffers, is also very comfortable. The net return on tangible equity (RoTE) improved to 4.9% and thus made a leap forward towards the medium-term target of more than 7.3% in 2024.
Thanks to the good financial result of 2022, the Bank plans to distribute 30% of its 2022 net profit after deduction of AT1 coupon payments to its shareholders in line with its capital return policy. Thereof, €250 million will be paid through a 20 cents per share dividend if the planned proposal is approved by the Annual General Meeting at the end of May. In addition, with the approval of the Supervisory Board, the Board of Managing Directors has submitted an application for the approval of a share buyback programme with a volume of €122 million to the European Central Bank (ECB) and the Finance Agency.
“Our strong net profit proves that we have increased the Bank’s competitiveness and resilience. Commerzbank is now able to buffer crises and high extraordinary burdens without affecting its capital base. This gives us the strength to resume capital distribution to our shareholders,” said Chief Financial Officer Bettina Orlopp. “It is important to us that our shareholders benefit from our financial success. We deliberately chose a combination of the planned dividend payment and the applied for share buyback programme. As the Board of Managing Directors, we are convinced that our strategy will continue to create much value in the coming years and that we will be able to distribute further capital to our shareholders in accordance with our capital return policy.”
Segment development: Strong revenue momentum in both segments
The Corporate Clients segment increased its operating result by a good 60% to €1.066 billion (2021: €656 million) and thereby achieved the best result since 2016. There were increases across all product and customer groups. Net interest income increased by 23% and net commission income by almost 6%. Overall, revenues climbed by almost 20% to €3.792 billion (2021: €3.169 billion). The segment was thus also able to more than offset the higher charges from the risk result. The cost-income ratio amounted to 60.1% (2021: 74.6%).
Backed by the interest rate turnaround, the Private and Small-Business Customers (PSBC) segment improved its operating result in Germany by 43% to €1.090 billion (2021: €760 million). Revenues increased by 8% to €4.321 billion (2021: 3.997 billion). This is based on an increase in net interest income of 22% to €2.246 billion (2021: €1.837 billion), while net commission income was down by almost 9% to €1.904 billion (2021: €2.089 billion). This reflects a €30 billion drop in securities volume to €189 billion as a result of weaker stock markets. In contrast, the segment’s lending volume continued to rise by around €3 billion to €124 billion in 2022. The mortgage volume increased to €95 billion, but new business cooled over the course of the year. The deposit volume increased by more than €7 billion to €155 billion in 2022, the increase in the fourth quarter amounted to €2 billion.
mBank benefited from the surge in interest rates in Poland and nearly doubled its underlying revenues to €1.227 billion (2021: €687 million). However, this was more than offset by the burdens from the possibility of interest and redemption deferrals for private real estate financing (“credit holidays”) introduced by the Polish government as well as the additional provisioning for legal risk of Swiss franc mortgages and the increase in compulsory contributions. Overall, mBank reported an operating result of minus €90 million (2021: minus €186 million).
Outlook 2023: Positive development expected to continue
Commerzbank expects another demanding year in view of the challenging environment. It remains however optimistic that it will continue its strong business performance and thus make further progress towards its medium-term goals. The Bank anticipates a further increase in net interest income to well above €6.5 billion with clear additional upside potential. Net commission income is expected to remain stable. The Bank is aiming for a further reduction in total costs to €6.3 billion, even though the cost-income ratio is the key steering metric. On the assumption of using TLA, the Bank expects a risk result of less than minus €900 million. It predicts the CET1 ratio to be around 14%. All in all, the Banks aims for a net result well above that of 2022. In addition, the Bank intends to increase the pay-out ratio to 50% of the consolidated profit after deduction of AT1 coupon payments. The outlook is based on the assumptions that there will be a mild recession and that there will be no further substantial exceptional charges at mBank.
The figures for the year 2022 presented in this press release are preliminary and unaudited.
Commerzbank announces negotiations for in-house collective bargaining agreement for ComTS companies
Negotiations to start in February 2023
Verdi refrains from further strike activities before the start of negotiations
Commerzbank and the trade union Verdi will be entering into negotiations on an in-house collective bargaining agreement for the ComTS service companies. The talks are to begin in February 2023. Verdi has confirmed that there will be no further strike activities until the negotiations have started. The inclusion of Commerzbank in the collective bargaining agreements of the private banking industry remains unaffected by the start of negotiations on a ComTS in-house collective bargaining agreement.
“After intensive and constructive discussions, we have agreed on using the already scheduled date in mid-February for the start of the negotiations,” explained Sabine Schmittroth, Commerzbank’s Member of the Divisional Board for Human Resources.
The ComTS companies are independent companies within the Commerzbank Group. The ComTS service network is a supra-regional financial services provider that is particularly active in the area of business process settlement.
Change in the supervisory board chair of Commerzbank initiated
Helmut Gottschalk has decided, that after the next Annual General Meeting, due to his age, he will no longer be available for a new term of office as a member of the Supervisory Board and Chairman of the Supervisory Board. For this reason, he initiated an orderly succession process at an early stage.
Helmut Gottschalk informed the representatives of the shareholders on the presidential and nomination committee of his decision. They have very much regretted the decision because his work as chairman of the Supervisory Board is highly appreciated. In coordination with the Federal Ministry of Finance, he has also proposed Dr. Jens Weidmann as a new member of the Supervisory Board, who will also be available as chairman of the Supervisory Board, if he is elected. Shareholder representatives on the Presiding and Nomination Committee welcomed the proposal. It is planned to bring the matter to the attention of the competent bodies.
Helmut Gottschalk has been leading the supervisory board of Commerzbank since April 2021. In its 2024 strategy, the Bank has successfully implemented a comprehensive restructuring program in its current term of office, adapted its business model to changing business conditions and significantly improved its profitability in its core business. Under his leadership, he has also promoted the realignment of the Board of Management by appointing several new members of the Board of Management and established a new, performance-oriented remuneration system.
Regarding his decision to withdraw from the supervisory board chairmanship after the Annual General Meeting next May, at the end of his term of office, Helmut Gottschalk stated: “Commerzbank has made great progress over the past one and a half years with the realignment of its management team and the restoration of profitability in its core business and is now in a robust state again. It thus has good chances for shaping a sustainably successful future as an independent force in the German banking market. I am pleased that we are able to win the former President of Deutsche Bundesbank, Dr. Weidmann, a highly respected figure in the financial sector, for the nomination to the Supervisory Board for election, who, if elected, will also be available for the Chairman of the Supervisory Board.”
Dr. Jens Weidmann (54) was President of the Deutsche Bundesbank from 2011 to 2021 and in this capacity also a member of the Governing Council of the ECB. Before that, he was head of the economic and fiscal department in the Federal Chancellery. In addition, from 2015 to 2021, he was Chairman of the Board of Directors of the Bank for International Settlements.
CEO Commerzbank: «Δεν βλέπω επερχόμενη καταστροφή, αλλά μια ήπια ύφεση»
Ο διευθύνων σύμβουλος της Commerzbank, Manfred Knof, ανέφερε ότι η γερμανική τράπεζα έχει προετοιμαστεί για μια αύξηση των μη εξυπηρετούμενων δανείων, ωστόσο η κατάσταση “σίγουρα δεν αποτελεί καταστροφή ή οιωνό χρεοκοπίας”, καθώς μια “ήπια ύφεση” είναι το επικρατέστερο σενάριο.
«Έχουμε ήδη κάνει τις απαραίτητες προβλέψεις, ωστόσο μέχρι στιγμής δεν βλέπουμε ζητήματα στο εγγύς μέλλον», τόνισε ο Knof μιλώντας στο αμερικανικό δίκτυο CNBC, στο πλαίσιο του Ευρωπαϊκού Τραπεζικού Συνεδρίου στην Φρανκφούρτη, την Παρασκευή.
Τα μη εξυπηρετούμενα δάνεια είναι δάνεια τα οποία είτε εξοφλούνται καθυστερημένα είτε μόνον εν μέρει και είναι γνωστά ως “κακό χρέος”.
«Ευελπιστούμε σε ένα πολύ σταθερό και καλό αποτέλεσμα για το επόμενο έτος», πρόσθεσε ο Knof.
Άλλες προβλέψεις για τις οικονομικές προοπτικές της Ευρώπης δεν έχουν υπάρξει τόσο αισιόδοξες. Ο επικεφαλής οικονομολόγος της Berenberg, Holger Schmieding, δήλωσε στο CNBC ότι η καταναλωτική εμπιστοσύνη «έχει βυθιστεί τόσο κάθετα που η ύφεση πιθανότατα δεν θα είναι ήπια».
Ο Knof ανέφερε ακόμη ότι οι κινήσεις ρυθμιστικών αρχών, πολιτικών και τραπεζών δημιουργούν αισιοδοξία ότι οι τράπεζες θα μπορέσουν να διαχειριστούν το τρέχον οικονομικό περιβάλλον.
«Έχουμε μπροστά μας δύο δύσκολα χρόνια, ωστόσο είμαστε βιώσιμοι και ισχυροί. Εάν όλοι εργαστούμε από κοινού, θα μπορέσουμε να χειριστούμε την κατάσταση», πρόσθεσε.
Commerzbank continues strong business performance – key targets confirmed
Revenues up by 12% to €7.1 billion as of the end of September thanks to strong customer business and rising rates – one-off burdens in Poland compensated
Costs on track despite rising inflationary pressures, cost-income ratio improved to 69%
Quality of the loan book remains high – Risk result in Q3 at minus €84 million –€500 million TLA available for future challenges
Operating result after nine months at €1.57 billion (9M 2021: €1.04 billion)
Net result after nine months at €963 million (9M 2021: €9 million)
CET 1 ratio further improved to 13.8%
Group targets for 2022 and 2024 with RoTE of more than 7.3% and cost-income ratio of 60% confirmed
During the first nine months of this year, Commerzbank has already earned net €963 million after taxes and has therefore nearly achieved its targeted net result of more than €1 billion for the full year. As a result, Commerzbank continues to confirm its intent to pay a dividend. Over the course of the third quarter, revenue momentum continued to increase driven by strong customer business and rising interest rates. This enabled the Bank to compensate for the high burdens in Poland that have previously been announced. The loan portfolio continued to prove robust in the face of increasing economic uncertainties. In the third quarter, the risk result amounted to only minus €84 million. Because of the available top-level adjustments (TLA) of €500 million and the continuing comfortable capital base, the Bank is well prepared for upcoming economic challenges.
In the transformation of the Bank, additional important milestones have been achieved in the restructuring and reorganisation. In line with the planned gross reduction of around 10,000 full-time equivalents defined in the “Strategy 2024”, a reduction of around 8,350 positions has already been contracted, most of them in Germany. A further 1,100 full-time equivalents related to optimisation of locations outside of Germany shall be realised in the coming quarters. All 12 locations of the advisory centre for the German retail banking business have started operating. Furthermore, the original target for rationalising the branch network has been achieved ahead of schedule. The establishment of “Mittelstandsbank Direkt” in the Corporate Clients segment has also been successfully completed. By the end of November, the first 6,000 customers will have been transferred to the first direct bank offering for Mittelstand customers in the German market. The Environmental, Social and Governance (ESG) strategy has also been firmly anchored within the Group. One example of this is the achievement of €185 billion in sustainable business volume generated during the first nine months of the financial year. Thus, Commerzbank is well on track to reach the target of €207 billion by the end of the year.
“We have made great progress in the execution of our ‘Strategy 2024’ and are well on track to achieving our targets. This has made Commerzbank more resilient in a difficult environment. This is also reflected in our operating business that is continuing to show a very good progress despite the challenging market environment,” commented Manfred Knof, Chief Executive Officer of Commerzbank. “The focus in the next phase will be to maintain strict cost discipline while targeting our revenue potential even more consistently in both customer segments.”
For the next phase of the implementation of the “Strategy 2024”, the Bank has defined new priorities to continue developing revenue potential while continuing to focus on further efficiency increases in both customer segments. The successful launch of “Mittelstandsbank Direkt” in the Corporate Clients segment will be opened up for new customers in the coming year. Furthermore, the international network will be optimised in line with the changing trade corridors. As a result, Commerzbank will continue to be represented in all locations where its customers require it. The Bank thereby strengthens its position as the leading trade finance bank for Germany.
Positioning the Bank as a digital advisory bank is at the centre of the private customer strategy, benefitting from a needs-based product portfolio and full utilisation of the growth potential of its two-brand model. comdirect is the bank for digitally savvy who require no advisory service. Commerzbank stands for personal customer relationships and advisory services, both at branches and digitally. A large proportion of customer requirements will be addressed via its new advisory centre as well as via digital channels. The personal advisory service offering by Commerzbank will be tailored more to the needs of wealthy customers and clients with greater requirement for advisory service.
Commerzbank confirmed the most important financial goals of “Strategy 2024”. The Bank targets a return on tangible equity (RoTE) of more than 7.3% and a cost-income ratio of 60%. Based on the positive development of the customer business and supported by higher interest rates, the revenue forecast for the year 2024 has been raised to €10 billion; the previous target was €9.1 billion. The Bank is implementing the cost cutting programme as planned. As expected, costs will be above the level of €5.4 billion previously targeted, in particular due to the sustained inflationary pressures. Costs of €6.0 billion are now expected for 2024. Overall, Commerzbank now anticipates an operating result of around €3.2 billion for 2024, against the previous forecast of €3.0 billion.
Strong revenues in customer business compensate for burdens in Poland
Against the backdrop of a continued strong customer business and rising interest rates, Commerzbank increased its revenues by 12% to €7,098 million (9M 2021: €6,353 million) from January to September. This compensated for burdens at its Polish subsidiary mBank. As already announced, one-off charges of €270 million were booked in Poland during the third quarter for so-called “credit holidays”. Further provisions relating to Swiss franc loans amounted to €477 million. The momentum of revenues continued to gather pace in the customer business. Accordingly, underlying net interest income increased by more than 40% to €1.6 billion year-on-year, while underlying net commission income fell by around 3% to €849 million, primarily as a consequence of weaker securities markets. Total revenues in the third quarter amounted to €1,886 million (Q3 2021: €2,004 million). Without the burdens in Poland, revenues would have been exceeded by more than one quarter year-on-year.
Despite growing inflationary pressures, Commerzbank continues to be on track with its costs. Operating expenses were reduced by 7.8% to €4,291 million (9M 2021: €4,652 million) by the end of September compared with the equivalent period last year. This was driven by the savings from reductions in full-time equivalents and optimisation of the branch network. By contrast, compulsory contributions rose by almost 45% to €583 million (9M 2021: €402 million). This reflects continuing burdens in Poland where the additional contribution of €91 million to the Institutional Protection Scheme and the increase of a Borrower Support Fund with a further €39 million had a negative impact. In addition, there was a higher European bank levy. Total costs reduced by 3.6% to €4,873 million (9M 2021: €5,054 million) in the first nine months. Thus, the cost-income ratio was 69% (9M 2021: 80%).
The risk result after nine months was minus €654 million (9M 2021: minus €257 million), primarily due to Russia effects booked in the first half of the year. During the third quarter, the risk result amounted to minus €84 million (Q3 2021: minus €22 million) supported by a partial reduction of the top-level adjustment (TLA). The ratio of non-performing loans remained low at 0.9%. At the end of September, the Bank had an additional TLA of €500 million available for potential further direct effects emanating from the war between Russia and Ukraine and for secondary effects such as interruptions to supply chains, high energy prices, and the possibility of deterioration of the economic situation.
The operating result improved by 51% to €1,571 million (9M 2021: €1,042 million) during the period from January to September. The third quarter contributed €282 million (Q3 2021: €472 million) to this. The quarterly result after tax and minority interests amounted to €195 million (Q3 2021: €403 million). After nine months, from January to September, it amounted to €963 million (9M 2021: €9 million).
The Common Equity Tier 1 ratio (CET 1 ratio) increased slightly to 13.8% as of 30 September. Once again, this is net of a deferral for a planned pay-out ratio of amounting to 30% of the net profit. The buffer to the current regulatory requirement (MDA threshold) of 9.4% was 435 basis points as of the end of September.
“In the third quarter, we once again demonstrated our revenue strength and generated a triple-digit million profit despite the high burdens in Poland. We are on track to reach our target of more than €1 billion net profit this year. We continue to be firmly committed to the payment of a dividend,” said Bettina Orlopp, Chief Financial Officer of Commerzbank. “Our financial targets for 2024 show that we are very confident about the ongoing development of Commerzbank beyond year-end. Nevertheless, we continue to remain cautious about the potential risks in the current economic environment.”
Development of the segments
The Private and Small-Business Customers (PSBC) segment succeeded in slightly increasing the deposit volumes and maintaining its loan volumes despite intensifying concerns about the economy during the third quarter. The volume of mortgage business remained stable at €94 billion. In contrast, the volume of securities in custody declined by €6 billion to €182 billion (Q2 2022: €188 billion) in the third quarter, mainly due to the weak market developments. As a result, net commission income in the PSBC segment in Germany fell by around 10% to €451 million in the third quarter compared with the previous year. This contrasted with an increase in underlying interest income by nearly 16% to €556 million so that total underlying revenues went up by 8% to €1,075 million (Q3 2021: €996 million). Due to decreased operating expenses, the cost-income ratio improved to 65% (Q3 2021: 74%). The operating result of PSBC Germany rose to €321 million (Q3 2021: €292).
The development of mBank in Poland was impacted during the third quarter by the one-off burdens previously mentioned. The charges more than offset the overall good revenue development in the operating business. Without the negative revenues resulting from the introduction of possible deferrals of interest and repayment of private mortgage financing (“credit holidays”) and additional provision for Swiss franc loans, revenues would have increased by 49% to €469 million. Instead, mBank had to book negative revenues amounting to minus €278 million in the third quarter. The operating result of mBank was minus €528 million.
The Corporate Clients segment achieved its best quarterly result for the past seven years. The segment generated growth across all client and product groups. Underlying net interest income rose by 25% to €521 million (Q3 2021: €417 million) and benefitted from a stable lending business and an increase in deposits. On the basis of a strong transaction banking and capital markets business, underlying net commission income went up by more than 7% to €332 million (Q3 2021: €309 million). Overall, revenues increased by more than 31% to €1,021 million (Q3 2021: €775 million). Because operating expenses continued to fall, the segment improved its cost-income ratio to 49% (Q3 2021: 69%). Thanks to the release of provisions in connection with the reduction of Russia exposure, the risk result amounted to plus €13 million (Q3 2021: minus €29 million). Overall, the segment achieved an operating result of €536 million (Q3 2021: €215 million).
Outlook
Commerzbank anticipates an increase in interest income to more than €6 billion in 2022, while net commission income is likely to be slightly lower than in 2021. The Bank continues to target total costs at €6.4 billion, although pressure from inflation continues to increase. Based on the assumption of TLA usage, the Bank expects a risk result of around minus €700 million. Overall, the Bank confirms its target of a net profit of more than €1 billion this year. The CET 1 ratio is expected to be more than 13.5%. The Bank intends to propose a pay-out ratio of 30% of the net result for the 2022 financial year after deduction of the AT1 coupon payments. The outlook is based on the assumptions that there will not be a significant deterioration in the economic situation, for example due to potential rationing of natural gas.
Commerzbank still expects net profit of more than €1 billion in 2022 despite additional provisions at mBank
Polish subsidiary books additional provisions for Swiss franc portfolio of the equivalent of €490 millionOperating result of Commerzbank in Q3 to be impacted by corresponding amount Bettina Orlopp: “Despite the new burden in Poland, we are maintaining our earnings target for the full year 2022.”
Commerzbank continues to expect a net result of more than €1 billion for the financial year 2022, despite a further revenue burden at its Polish subsidiary mBank. The outlook remains under the assumption that the economic consequences of the geopolitical developments do not deteriorate significantly and the uncertainties around energy supply do not require material additional provisions for potential future credit losses.
mBank had previously announced that it has booked further additional provisions for its Swiss franc portfolio of PLN2.336 billion (approximately €490 million) as a result of the announced model review. The total provisions for credit agreements indexed on foreign currencies now amount to around €1.43 billion. The additional provisions will have a corresponding negative impact on Commerzbank’s results in the third quarter which will be booked as negative revenues in “Other net income”. mBank also announced a new settlement programme to reach individual agreements with customers.
The new burden adds to the negative revenues which were already announced for the third quarter in July this year due to possible deferrals of interest and repayment of private real estate financing (“payment holidays”) introduced in Poland by the legislation. Nevertheless, Commerzbank expects a positive operating result for the third quarter for the Group as long as the uncertainties about energy supply do not require a further significant risk provisioning.
“Despite the new burden in Poland, we are maintaining our earnings target for the full year 2022 in view of the strong overall revenue development,” said Bettina Orlopp, Chief Financial Officer of Commerzbank. “With the additional provision, mBank has further scope for settlements in its Swiss franc portfolio.”
Commerzbank promotes networking of young green technology companies
Commerzbank subsidiary neosfer organizes Europe’s largest Business-to-Business trade fair for sustainable innovations on October 5 and 6, 2022 in Offenbach am Main, Germany
Greentech start-ups meet sustainability experts, company representatives and visionaries
Trade fair draws attention to the implementation of sustainable transformation and highlights solutions for companies
On October 5 and 6, investors, company representatives and sustainability experts from science, research and politics will meet at the IMPACT FESTIVAL, the largest trade fair for sustainable innovations. Around 200 start-ups and scale-ups from the Greentech sector are expected at the Fredenhagenhalle in Offenbach. Prominent speakers include Hesse’s Minister of Economics Tarek Al-Wazir, climate researcher Prof. Dr. Hans Joachim Schellnhuber and Verena Pausder, founder of Pausder Ventures and investor.
“I am very pleased that with the IMPACT FESTIVAL our subsidiary neosfer, Commerzbank’s innovation unit and early-stage investor, has established a platform to create an ecosystem for sustainable and digital innovation,” said board member Jörg Oliveri del Castillo-Schulz, Chief Operating Officer of Commerzbank AG, before the event. Oliveri-Schulz will give a speech on the opening day about the need for collaborations and the importance of data for sustainability progress.
With its involvement in the IMPACT FESTIVAL, Commerzbank aims to connect relevant stakeholders such as forward-looking Greentechs and companies that need these technologies to achieve their sustainability goals, thus promoting digital and sustainable transformation. Commerzbank AG supports its subsidiary neosfer on site with specialist contributions, workshops and discussion partners on the subject of sustainability. Competent employees of the bank welcome their guests at the booth.
Oliveri-Schulz is convinced that the green transformation can only be mastered if we think and work in synergies. Cooperation between companies is the key to success in achieving necessary sustainability goals. “The time of pure competition is over. To realize the green transformation as quickly as possible, we must continue and intensify our cooperation efforts. In this regard, IT and data will be the most important foundation for all our efforts to become more sustainable in the future.”
While neosfer plays a significant role within Commerzbank’s commitment to digital and now sustainable collaborations, the bank is also involved in numerous initiatives itself. One example is the current project together with Deutsche Telekom’s T-Systems. This involves automating supply chains in German industry and integrating financial services into them. The use of 5G, Artificial Intelligence (AI) and Blockchain will enable more efficient, resilient and transparent supply chains. Given the growing pressure on companies to assess their supply chains for sustainability factors, this is a first step to help companies assess their supply chains.
Commerzbank is already cooperating with these GreenTech companies:
1. DABBEL – Automation Intelligence GmbH: The software developer Dabbel GmbH has developed an artificial intelligence-based software solution to increase climate efficiency in commercial buildings, which is used in Commerzbank and CommerzReal buildings.
2. Fairown Finance: The circular economy-focused start-up Fairown Finance offers a digital range of services to manage the entire subscription lifecycle, from financing and packaging to shipping and tracking.
3. SQUAKE.earth GmbH: Squake GmbH offers CO2 offsets for companies in the mobility sector. Travelers receive information about the CO2 emissions of their trip and can add the appropriate compensation.
4. Global Changer GmbH: has developed a tool that Commerzbank customers can use in the future to define their greenhouse gas emission reduction targets, create decarbonization roadmaps, and quantify realized savings measures.
Tickets for the IMPACT FESTIVAL can be booked online at https://impact-festival.earth.
A discount of 20 percent is granted by Commerzbank with the code:
Impact-Commerzbank20