Commerzbank reported a 55% surge in net profit for 2023 on Thursday, marking its most robust financial performance in 15 years, largely driven by elevated interest rates. The net profit for the year exceeded expectations, reaching 2.2 billion euros ($2.36 billion), up from 1.4 billion euros the previous year. Although fourth-quarter net profit showed a decrease of over 16% compared to the same period in the previous year, it surpassed consensus estimates released by Commerzbank.
Investors responded positively to the results, causing shares to rise by approximately 3.7% in morning trading on Thursday. The impact of high interest rates was evident, with net interest income increasing by around 30% for the entirety of 2023 and 8.5% higher in the fourth quarter.
In its outlook, the bank acknowledged the challenge posed by a “continuing economic slowdown” in the current financial year but expressed optimism about surpassing 2023 net profit levels. Deutsche Bank analysts Benjamin Goy and Marlene Eibensteiner described the results as a “solid set of 4Q23 results” and maintained their buy rating on the stock in a Thursday analyst note.
While noting that the 2024 guidance aligns with expectations, the analysts questioned whether the implied net interest income slowdown is too conservative, especially considering Commerzbank’s track record of beating and raising its own 2023 net interest income guidance five times.
The reported results follow a significant business overhaul at Commerzbank, which received a bailout from the German government during the 2008-2009 financial crisis. The bank disclosed a reduction in costs to 6.4 billion euros in 2023, down from 6.5 billion euros the previous year.
