Commerzbank raises barriers to protect its independence and shield shareholders. At a time when the spotlight is on potential UniCredit's moves, the German institute is playing it safe, presenting itself with solid numbers and an important promise for shareholders: a rain of dividends and a sturdy one buyback program.
Commerz closes 2024 with record profits and growing revenues
Commerzbank recorded a sharp increase in profits, which reached 2,68 billion euros, marking a 20% leap compared to 2023. The revenues grew by 6% to €11,11 billion, mainly driven by a surprising increase in net fee income, which rose by 7% to €3,64 billion.
The main driver of the performance was the growth of net commissions, which exceeded forecasts, with an increase of 7%. interest margin remained substantially stable, at 8,33 billion euros (compared to 8,37 billion the previous year). Another positive sign is the improvement in efficiency: the cost/income ratio dropped to 59% (from 61% in 2023), while the RoTE (Return on Tangible Equity) rose to 9,2%, comfortably exceeding the minimum target of 8% and the previous year's figure of 7,7%.
Thursday February 13 the new strategic plan, but in the meantime the bank has already revealed its cards.
Dividends doubled and a 400 million buyback to protect shareholders
Commerzbank has decided to focus decisively on dividends to strengthen the bond with its shareholders: a proposal will be made payout of 71% of net profit, net of AT1 coupons, with a dividend di € 0,65 per share (almost double the 0,35 euros distributed in 2023). But that's not all: the board of directors also approved a new purchasing program of own shares, with a maximum value of 400 million euro.
The buyback, which has already received approval from BaFin (Germany's supervisory authority) and the ECB, will begin after the publication of the 2024 results and will be completed by the shareholders' meeting in mid-May 2025. This buyback represents the second tranche of the bank's third buyback programme, following the completion of the first tranche of €600 million in January 2025.
Overall, Commerzbank shareholders will receive a dividend of EUR 2024bn for XNUMX. return of capital of approximately 1,73 billion euros, equal to 71% of net profit (after deduction of AT1 coupons).
It is not difficult to read behind these moves a clear message to Unicredit, which holds a 28% stake in the German bank, including through derivatives. By increasing dividends and buybacks, Commerz is strengthening its position and defending its independence, showing that it is ready to protect shareholder value and repel any takeover attempts.
Comments
“We have exceeded our promise of return of capital to our shareholders,” said the CEO Bettina Orlopp and added: “Consistently managing costs and focusing on growth initiatives enabled us to significantly increase the net result of the last financial year.” Looking ahead, Orlopp added: “Thanks to increased profitability and new growth initiatives, we will further increase the return on capital in the years to come. Commerzbank is and remains an attractive investment,” the CEO concluded.
