Yahoo Finance Elevated rates boost Commerzbank to highest net income in over ten years
By Scott Kanowsky
Investing.com -- Commerzbank AG O.N. (ETR:CBKG) has reported better-than-expected fourth-quarter net income, pushing the annual number up to its highest annual level in over a decade, thanks in large part to recently elevated interest rates that helped offset weakness at its securities business.
In the three months to the end of December, net income grew by 12.1% to €472 million (€1 = $1.0703), well ahead of Bloomberg consensus estimates of €411.9M. During the 12 months until the end of December, the figure more than tripled compared to the same period in the prior year to €1.4 billion.
Undergirding this annual uptick was a tailwind from rising borrowing costs, which boosted net interest income for the full year by a third to €6.46B. Branch closures and job cuts in response to wider inflationary pressures contributed to a 6.2% reduction in operating expenses to €5.84B as well.
These returns were somewhat tempered by a 2.4% drop in net commission fees to €3.52B, reflecting a downturn at its securities trading unit stemming from a stock market declines last year.
Meanwhile, Commerzbank was hit by an operating loss at its subsidiary in Poland, mBank, that was linked to "the possibility of interest and redemption deferrals for private real estate financing" introduced by the Polish government.
The group flagged that it expects to see a "challenging environment" again this year, but said it is still aiming for a net result "well above that of 2022."
“Our strong net profit proves that we have increased the Bank’s competitiveness and resilience. Commerzbank is now able to buffer crises and high extraordinary burdens without affecting its capital base," said Chief Financial Officer Bettina Orlopp in a statement.
Analysts subsequently noted that they anticipate consensus estimates will likely be upgraded in the wake of the earnings.
Shares in Commerzbank jumped by more than 8% on Thursday.
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Elevated rates boost Commerzbank to highest net income in over ten years
