Commerzbank (CBK) Q4 2023 earnings summary

Executive summary

• FY2023 operating result rose to €3.421bn from €2.099bn; net profit increased 55% to €2.224bn, the highest in 15 years.

• Strong customer business and higher rates lifted revenue; cost discipline and a lower risk result supported earnings despite €1.094bn of mBank Swiss franc loan provisions.

• Strategy 2024 objectives were delivered one year early; the 2027 plan targets broader revenue sources and less dependence on net interest income.

• Planned 2023 shareholder distribution totaled €1bn, equivalent to a 50% payout ratio.

Financial highlights

• FY2023 revenue rose 11% to €10.461bn from €9.461bn; operating result was €3.421bn and net result €2.224bn.

• Net interest income was €8.391bn versus €6.290bn in 2022; net commission income was €3.386bn versus €3.519bn.

• Operating expenses were €6.006bn; total costs including compulsory contributions were €6.422bn, within the €6.4bn target.

• Risk result improved to -€618m from -€876m; FY revenue included €1.094bn of mBank CHF-loan legal provisions.

Outlook and guidance

• FY2024 targets include NII of ~€7.9bn, NCI growth of 4%, CIR of ~60%, and net profit above FY2023; 2025 NII is expected slightly below 2024.

• FY2024 risk result is expected below -€800m assuming TLA use; CET1 is expected to remain above 14% despite distributions and RWA growth.

• FY2024 payout target is 70+X% of net profit after potential discretionary AT1 coupons, capped at net profit and subject to regulatory approvals.

• Guidance assumes a mild German recession and remains subject to future mBank CHF-loan burdens.