Commerzbank Stock Rises On Profit Growth, Positive FY23 View

(RTTNews) - Shares of Commerzbank AG were gaining around 9 percent in the morning trading in Germany after the lending major reported Thursday higher profit in its fourth quarter, while fiscal 2022 recorded the highest net profit in more than ten years, thanks to strong revenue performance. The company further announced dividend, and issued positive outlook for fiscal 2023.

Chairman of the Board of Managing Directors Manfred Knof said, "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. "

For fiscal 2023, Commerzbank expects net result well above 2022 and targets a pay-out ratio of 50 percent of the consolidated profit.

The Bank anticipates a further increase in net interest income to well above 6.5 billion euros with clear additional upside potential. Net commission income is expected to remain stable.

In fiscal 2022, net profit was 1.44 billion euros, despite the difficult economic environment and high one-off burdens in Poland, and net interest income was 6.46 billion euros.

The Bank further said it is aiming for a further reduction in total costs to 6.3 billion euros in 2023.

Commerzbank noted that 2023 will be another demanding year in view of the challenging environment, yet it remains optimistic to continue its strong business performance and thus make further progress towards its medium-term goals.

Further, citing the strong profit performance, the Bank said it intends to distribute 30 percent 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 euros.

In adjusting its branch network, Commerzbank has reached its target of 450 locations in Germany envisaged in the "Strategy 2024" already by mid-2022. In 2023, the company plans the new target size of around 400 branches.

In the fourth quarter, consolidated profit grew 12.1 percent to 472 million euros from last year's 421 million euros. Pre-tax profit was 488 million euros, significantly higher than prior year's 115 million euros.

Total revenues grew 12.7 percent to 2.36 billion euros from prior year's 2.10 billion euros. Revenues excluding exceptional items were 2.40 billion euros, up 29 percent.

Net interest income climbed 50.7 percent to 1.96 billion euros from 1.30 billion euros last year. Meanwhile, net commission income dropped 12.6 percent to 806 million euros.

In Germany, Commerzbank shares were trading at 11.23 euros, up 8.93 percent.

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