Commerzbank hits record profit for a decade.
In the first quarter, Commerzbank enjoyed a streams of funds as interest rates made hardly any progress, surpassing what the bank had witnessed in the last decade. As it's likely that key interest rates will be raised with a milder approach in the future, the bank improved its predictions, specifically in certain aspects.
High interest rates for an extended period have been responsible for a strong beginning to the year for Commerzbank, with a soaring surge in profits. This Frankfurt-based bank obtained a consolidated gain of 747 million euros in Q1 - nearly 29% more than before, as announced by the publicly listed corporation. This outstanding outcome surpassed the expectations of analysts and was the best consolidated figure in over ten years. Income spiked by 3% to roughly 2.75 billion euros. Net interest earnings were up by 9.2%, amounting to 2.13 billion euros.
Group CEO Manfred Knof, who has been in charge since 2021, asserted, "We began the new year with incredible vigor. The robust customer business and an exceptional result in the initial quarter further reinforce our aim to enhance our profits in 2024." The bank's recent acquisitions in asset management and the payment transaction business are expected to create a noticeable impact on commission income throughout the year. An allocation of at least 70% of the bank's profit to its shareholders is in the plan for the current financial year. Knof has ordered a comprehensive restructuring process at the bank. Jobs were downsized, digital banking was expanded, and the branch network was condensed. The bank has now become prosperous.
Commerzbank revised its predictions for net interest income to approximately 8.1 billion euros for the year altogether. This is in response to earlier expectations of about 7.9 billion euros, in comparison to 8.37 billion euros in the previous year. Initially, the market pondered if the European Central Bank (ECB) would lower interest rates extensively in 2023, which would result in scant support for banks. However, less interest rate cuts are now predicted.
The corporate client segment performed exceptionally well in the first quarter, with income hovering around 13% to hit a record high of 1.22 billion euros. In contrast, mBank's profits decreased to 341 million euros after 356 million euros previously. The subsidiary's results continue to be impacted by specific charges due to provisions for legal risks associated with Swiss franc loans.
Commerzbank's return on equity rose to 10.5% in Q1, with the bank progressing towards its objective of securing at least 8% by 2024. The bank's Common Equity Tier 1 capital ratio increased to 14.9%, up from 14.2% at the end of March 2023.
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In the context of analyzing the quarterly financial performances of Dax companies, it's worth noting that Commerzbank's Q1 profits significantly exceeded its decade-long record, reaching 747 million euros, a 29% increase from the previous year. Given the expected mild interest rate hikes for future quarters, Commerzbank's quarterly figures for Dax companies indicate promising growth prospects for this banking giant.
Source: www.ntv.de
