Under-fire Commerzbank sets ambitious profit goal

By Steve Goldstein

German bank being pursued by UniCredit offers return target above estimates

Shares of Commerzbank, the German bank being pursued by Italy's UniCredit, soared on Thursday after it forecasted improving profits and shareholder returns.

Commerzbank expects its net profit to rise significantly to over EUR3 billion in 2027 and aims for payout ratios of more than 90% for the years 2025 to 2027. It's aiming to increase its return on tangible equity to more than 12% by 2027.

Analysts polled by FactSet expected a 2027 profit of EUR3.05 billion and a return on tangible equity of 10.2%.

"We are continuously developing our robust growth history based on very solid assumptions and are sharpening our financial targets. By realizing additional earnings potential, for example in corporate clients business, asset management and at our Polish subsidiary mBank, as well as implementing further efficiency gains, we will improve our profitability more strongly than originally planned," said a statement from Bettina Orlopp, who will become the bank's next CEO.

The German government has backed Commerbank's independence after selling a minority stake it had put up for auction to UniCredit. The Italian bank subsequently entered into a derivatives agreement to increase its voting rights further.

Commerzbank shares (XE:CBK) jumped 6%, to reach a new 52-week high. The stock is up 50% this year.

UniCredit shares (IT:UCG) added 4% in Milan trade.

-Steve Goldstein

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09-26-24 0540ET

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