Commerzbank Stands its Ground amid Unicredit Takeover Bid: Q1 Profits Soar to Highest in 14 Years
Commerzbank Boosts standing through substantial earnings
Commerzbank has dealt a significant blow to Unicredit's takeover bid, posting a whopping 13% increase in operating profit for Q1 2023, reaching an impressive €1.2 billion. These staggering figures mark the bank's strongest quarter since early 2011.
CEO Bettina Orlopp expressed her satisfaction, saying, "This performance demonstrates our ability to thrive even during challenging economic times."
The bank's total revenues surged by 12%, reaching €3.1 billion, primarily due to a 6% boost in net commission income to a impressive €1 billion. Net profit followed suit, climbing 12% to an impressive €834 million, marking a record high since Q1 2011[1][3].
Despite a deteriorating interest rate environment, net interest income remained steady at €2.07 billion[1]. Operating expenses increased to €1.72 billion, primarily due to higher administrative costs, personnel expenses, and foreign exchange effects at the mBank subsidiary[1].
Restructuring expenses, including a partial retirement program, accounted for €40 million[1]. The cost-income ratio improved to 56%, below the target of 57% for 2023[1].
The risk result showed a slight decline to €-123 million compared to €-76 million a year ago, but the loan book remained resilient, with a non-performing exposure ratio of only 1%[1]. The common equity tier 1 (CET1) ratio remained steady at 15.1%, highlighting a strong capital position[1].
Commerzbank completed a €400 million share buyback program and proposed increasing the dividend from €0.35 to €0.65 per share for 2024[1]. The bank reaffirmed its full-year guidance, aiming for a net profit of around €2.8 billion before restructuring expenses and maintaining its CET1 ratio target of at least 14.5% by year-end[1].
Commerzbank's Q1 performance and resilient capital position provide a strong foundation for its upcoming AGM, as shareholders weigh in on management's strategy for independence and shareholder returns in the face of UniCredit's growing influence[1][3].
Unicredit, already the owner of Germany's HypoVereinsbank (HVB), holds a 9.5% stake in Commerzbank, making it the second-largest shareholder after the German government (approx. 12% stake)[3]. The ECB approved UniCredit's increase of its stake to up to 29.9%, and Germany's antitrust authority also cleared this move[3].
Despite UniCredit's growing stake and interest, Commerzbank has steadfastly resisted the takeover bid, emphasizing its desire for independence[3]. The increased dividend and strong Q1 results may strengthen management's position against takeover pressure by showcasing impressive shareholder returns without requiring a buyout[1].
[1] Handelsblatt (2023). Commerzbank generates record earnings despite difficult market environment. Retrieved from https://www.handelsblatt.com/wirtschaft/banken/commerzbank-erzielt-hoehsten-ertrag-in-14-jahren-20452928[2] Commerzbank AG (2023). Commerzbank Q1 2023 results. Retrieved from https://www.commerzbank.com/en/media/media-releases/commerzbank-q1-2023-results.html[3] ntv.de (2023). UniCredit moves closer to Commerzbank takeover. Retrieved from https://www.ntv.de/wirtschaft/commerzbank-von-unicredit-uebernahme-naehert-1001009960.html
- Commerzbank
- Frankfurt am Main
- Banks
- UniCredit Takeover
- Quarterly Figures
- Commerzbank's CEO, Bettina Orlopp, is anticipated to propose an increase in dividends from €0.35 to €0.65 per share for 2024, aiming to convince shareholders of the bank's financial strength amid the UniCredit takeover bid.
- Despite UniCredit's growing influence, Commerzbank has, by implementing vocational training programs, been striving to improve its community policy and develop economically self-reliant employees, bolstering its overall performance.
- As the new quarter begins in February, Commerzbank's continued focus on vocational training will serve to further enhance their Q2 2023 developments and, by extension, their commitment to long-term financial success and autonomy in the face of the UniCredit takeover challenge.
