Commerzbank has not achieved such a high level of revenue in fifteen years. This performance is a direct result of the rise in interest rates, which has enabled its net interest margin to double in two years. In this respect, the worst-case scenario for the bank would be a further fall in interest rates in Europe.
In terms of spending, even more so than at Deutsche Bank, which has to contend with significant investment banking costs, cost-cutting efforts are producing remarkably convincing results: operating expenses have remained stable for five years, despite persistent inflation.
Highly exposed to its domestic banking market—the most difficult in Europe and possibly the most difficult in the world—Commerzbank managed to achieve a return on equity of 8.3% in 2024, a performance it had not delivered since the subprime crisis.
However, this performance remains in single digits, i.e. below the European sector average, which is itself chronically underperforming compared to US and Asian banks. Market capitalization, which has rebounded to almost 1x equity, has already fully priced in these improvements.
The group, which continues to resist takeover attempts by its second-largest shareholder UniCredit, has now achieved very satisfactory capitalization ratios. It therefore began buying back its shares two years ago and has already withdrawn 5.1% of outstanding shares over the period.
