Despite difficulties, Commerzbank anticipates a profit “far beyond” that of 2022.
(Reuters) – BERLIN -Commerzbank (ETR:CBKG), a German bank, said on Thursday that its net profit increased 12% in the fourth quarter, exceeding expectations and concluding the company’s second straight successful year despite extensive restructuring.
The bank stated that despite 2023 being “another hard year in view of the adverse climate,” it will nevertheless strive for a result that is “far above” 2022, boosted by higher interest rates.
In order to reduce expenses and increase profit, Commerzbank, one of Germany’s most well-known banks, has been eliminating thousands of employees and hundreds of branches. The bank is a contender to reenter the esteemed blue-chip DAX index.
The net profit for the quarter increased from 421 million euros to 472 million euros ($505.3 million). According to a consensus projection released by Commerzbank, it exceeded average expert forecasts of 350 million euros by a significant margin.
Commerzbank exceeded expectations by producing a net profit for the whole year of 1.435 billion euros, up from 430 million euros a year earlier.
“Our turnaround has been effective. Manfred Knof, CEO of Commerzbank, stated once more.
Shares were expected to open 1.9% higher.
Even yet, the bank’s domestic market is struggling with high inflation, a faltering economy, and ongoing issues at a Polish subsidiary.
Downside risks for Commerzbank, according to analysts at Deutsche Bank (ETR:DBKGn), include bad loans, a significant reduction in loan growth, declining interest rates, and delays in cost-cutting initiatives.
High interest rates are helping European banks, which are struggling due to the conflict, skyrocketing inflation, and an energy crisis.
Net interest income is expected to be “far over” 6.5 billion euros in 2023, according to Commerzbank, with “obvious additional upside potential.” It increased 33% to 6.5 billion euros for 2022.
A gauge of the state of the country is Commerzbank, which focuses on Mittelstand companies, the foundation of the German economy.
The bank has had a turbulent few years; in 2018, it was removed from the DAX index.
A year later, it engaged in unsuccessful merger negotiations with Deutsche Bank.
After that, the then-CEO came up with a new plan, but major investor Cerberus wasn’t happy with it and successfully started a push for new management and significant job losses.
The bank will elect its fourth chairman in three years in 2023 after Cerberus reduced its share in the organisation last year.
Due to a historical issue with mortgages and a rule that permits borrowers to forego monthly installments, mBank, a Commerzbank affiliate in Poland, struggled with operations last year.
($1 = 0.9341 euros)