Commerzbank Surprises with Record Profit and Share Buyback Scheme
In a surprise move, Commerzbank released its quarterly results ahead of schedule, boasting a “record” annual profit and announcing a new share buyback scheme. The German lender reported a 20% increase in net profit to €2.68 billion ($2.78 billion) in 2024, exceeding expectations.
Strong Financial Performance
The bank’s net income reached €8.33 billion in 2024, with foreign exchange valuation effects in the fourth quarter contributing to the strong performance. Its return on tangible equity, a measure of profit performance, rose to 9.2% in 2024 from 7.7% in 2023, surpassing the group’s target of at least 8%.
Share Buyback and Dividend Payout
Commerzbank plans to repurchase €400 million of shares and proposed to increase its dividend payout to €0.65 per share, up from €0.35 per share in the previous year. Shares in the lender jumped 2% following the announcement.
Standing Alone
The early release of results comes as Commerzbank faces speculation of a potential takeover by Italy’s UniCredit, which has built a 9.5% direct stake and an 18.5% stake via derivatives in the German lender. The German government has expressed resistance to the potential takeover, with Finance Minister Jörg Kukies criticizing UniCredit’s bid as “very aggressive, very opaque.”
CEO’s Confidence
Commerzbank CEO Bettina Orlopp attributed the profit increase to cost management and growth initiatives, stating, “We have exceeded our capital return promise to our shareholders… Thanks to increasing profitability and new growth initiatives, we will further enhance capital return in the coming years. Commerzbank is and remains an attractive investment.”
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