Commerzbank AG reported net income of €472 million ($505 million) for the fourth quarter, beating analyst expectations, and said it’s on track to continue growing profit this year.
(Bloomberg) — Commerzbank AG reported net income of €472 million ($505 million) for the fourth quarter, beating analyst expectations, and said it’s on track to continue growing profit this year.
Revenue rose to 2.36 billion euros on surging lending income between October and December, the German lender said in a statement Thursday. While that was just below analyst forecasts, the bank reported €1.44 billion in annual profit for 2022, the highest level in over a decade. Commerzbank said the net result for the current year would be “well above” the previous one.
The results cap the first half of a four-year turnaround plan under Chief Executive Manfred Knof that has received a boost from a series of interest rate hikes by European Central Bank. The revenue tailwind has enabled Knof to restart investor payouts and slightly raise his 2024 profitability target, though high inflation has also forced him to give up on several expense-reduction goals.
“Commerzbank has delivered as promised: We achieved our strategic and financial goals in the 2022 financial year,” Knof said in the release. “Commerzbank is back.”
He also vowed that the lender will “achieve our return targets” for 2024.
Commerzbank is benefiting from a brightening economic outlook for its German home market as fears about a energy blackouts recede. That scenario arose when Russia’s gas exports to Germany largely stopped in the wake of its war on Ukraine, with Commerzbank repeatedly citing it as the biggest downside risk to its guidance.
The lender Wednesday announced its intention to pay a dividend of 0.20 euro cents per share on last year’s profit, which would mark the first time in four years it’s returning money to shareholders. It also said it’s seeking regulatory approval for a share buyback as part of its pledge to pay out 30% of last year’s profits.
The dividend will total a payment of 250 million euros and buybacks are planned to be about 122 million euros, the bank said Thursday.
Commerzbank’s CET1 ratio — a key measure of capital strength — reached 14.1% in the quarter, a level the lender called “very comfortable.”
The high CET1 ratio “gives us the strength to resume capital distribution to our shareholders,” Chief Financial Officer Bettina Orlopp said in the press release. “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.”
(Adds details about payouts in final three paragraphs)
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