Commerzbank posts record profit with strategic growth plans

FRANKFURT - Commerzbank AG (OTC:CRZBY) (ETR:CBK) has reported a record net profit of approximately €2.7 billion for the financial year 2024, marking a 20% increase from the previous year. The bank’s operating result also saw a 12% improvement, reaching €3.8 billion. This performance surpassed the bank’s own targets, with a return on tangible equity (RoTE) of 9.2%, well above the minimum goal of 8%.

The revenue growth, which climbed by 6% to €11.1 billion, was primarily driven by robust customer business and a 7% increase in net commission income, amounting to €3.6 billion. Despite interest rate cuts by the European Central Bank, net interest income remained strong at €8.3 billion. The cost-income ratio improved to 59%, reflecting the bank’s focus on cost management and efficiency.

Aiming to leverage this momentum, Commerzbank (ETR:CBKG) has outlined an ambitious strategy for accelerated growth and transformation, targeting a 15% RoTE by 2028. The bank plans to expand its asset and wealth management business and focus on deepening relationships with corporate clients to enhance capital efficiency. Digitalization and artificial intelligence are also expected to drive efficiency gains.

Commerzbank anticipates a continual revenue increase, with net commission income expected to grow by about 7% on average, despite further interest rate cuts. The bank’s cost-income ratio is projected to improve to around 50% by 2028, with a net result target of €4.2 billion.

For 2024, Commerzbank has increased its capital return to around €1.73 billion, planning a dividend of 65 cents per share. The bank’s CET 1 ratio stood at a comfortable 15.1% at the end of 2024, indicating potential for substantial shareholder returns in the coming years. For 2025, Commerzbank anticipates a payout ratio of 100% of the net result after restructuring charges and AT 1 coupon deductions.

Commerzbank’s CEO, Bettina Orlopp, stated, "With yet another record result, we have shown that we are creating substantial added value for our shareholders, customers, and employees." The bank’s CFO, Carsten Schmitt, also highlighted the foundation set by the 2024 results for increasing shareholder returns through revenue growth and strict cost discipline.

Corporate Clients and Private and Small-Business Customers segments both contributed to the positive performance in 2024, with significant revenue increases and operating results. The Polish subsidiary mBank also continued its strong growth trajectory.

The bank’s strategy, named "Momentum," sets ambitious financial targets through 2028, focusing on growth potential and strengthening digital distribution channels. As part of this strategy, Commerzbank will continue to invest in technology and pursue strategic partnerships, such as the recently announced long-term partnership with Visa (NYSE:V) for payment cards.

The information provided is based on a press release statement from Commerzbank.

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