Commerzbank (CBK) Q2 2024 earnings summary

Executive summary

• Group net income for H1 2024 rose 12% year-over-year to €1,285m, with operating profit up to €1,954m, despite higher provisions for mBank FX mortgages and Russia-related legal risks.

• Return on tangible equity at 8.9% for H1 2024, with a target of at least 8% for the full year.

• CET1 ratio increased to 14.8%, supporting significant capital return plans.

• Strong business momentum and revenue growth across all segments, including mBank and Aquila acquisition.

• Share buybacks totaling €600m executed, with 4.5% of share capital repurchased and cancelled.

Financial highlights

• Q2 2024 revenues rose 1% year-over-year to €2,668m; H1 2024 revenues up 2% to €5,415m.

• Operating result for Q2 at €870m, nearly matching last year despite higher non-operational burdens.

• Net interest income for H1 2024 increased 3.1% to €4,204m; net commission income up 2.4% to €1,799m.

• Cost/income ratio at 60% in Q2 2024; improved to 55.8% (excl. compulsory contributions) for H1.

• Risk result for Q2 2024 at -€199m, mainly from individual cases and methodology updates.

Outlook and guidance

• 2024 guidance reaffirmed: net interest income around €8.1bn, commission income growth of 4%, cost/income ratio at 60%, risk result below €800m, and payout ratio of at least 70%.

• CET1 ratio expected to remain above 14% at year-end despite planned RWA growth.

• Capital return policy targets at least 70% payout ratio, including dividends and share buybacks, subject to regulatory approval and legal risks.

• Consolidated profit for 2024 anticipated to significantly exceed prior year, subject to mBank and Russia-related developments.

• NII for 2025 expected to be impacted by lower rates but offset by deposit and loan growth, with a bridge to €8.4bn NII by 2027.