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FRANKFURT (dpa-AFX) - After the best quarter since the start of 2011, Commerzbank sees itself on course for the record profit it is aiming for in the current year. "We have started the new year with a lot of momentum. The strong customer business and the very good result in the first quarter reinforce our goal of increasing profits in 2024," said Group CEO Manfred Knof on Wednesday. The figures were well received on the stock market. The share price rose by more than five percent at midday, partly due to an increased forecast for net interest income, putting it at the top of the leading Dax index.

The fact that interest rates are not falling as quickly as expected a few months ago plays into the hands of the bank with its focus on medium-sized companies and private customers. However, the legal disputes surrounding Swiss franc loans in Poland remain a burden - probably beyond the current year.

In the first three months of 2024, earnings before taxes of just under 1.1 billion euros exceeded the level of the same period in the previous year by almost a quarter, as the Group announced in Frankfurt. The bottom line was a profit of EUR 747 million, around 29 percent more than a year ago. This also exceeded analysts' expectations. The last time Commerzbank performed better in a quarter was in the first quarter of 2011 with a net profit of 985 million euros.

At a good €2.1 billion, net interest income in the first quarter was close to the record figure for the third quarter of 2023 (€2.17 billion). The Executive Board raised its forecast for net interest income for the year as a whole by around 200 million euros to around 8.1 billion euros. For 2023, the figure on the balance sheet had risen by almost 30 percent to around 8.4 billion euros. Since the European Central Bank (ECB) ended the phase of zero and negative interest rates in July 2022 and subsequently raised key interest rates ten times, banks and savings banks no longer have to pay interest when they park money with the central bank, but earn money from it.

Commerzbank had to absorb further charges in the first three months at its Polish subsidiary mBank: Further provisions of 318 million euros were made there for legal risks in connection with foreign currency loans. For the second quarter, the management currently expects to have to set aside a further 80 million euros. According to CFO Bettina Orlopp, the Board of Managing Directors is currently assuming that the total charges for the year as a whole will "definitely" be below the EUR 1.1 billion of 2023.

Commerzbank has been struggling with problems in Poland for years. The main reason for this is Swiss franc loans that many Poles took out years ago for construction financing. When the Polish zloty depreciated against the franc, the burden on borrowers increased. As a result, many took legal action against Polish financial institutions for possibly unlawful clauses. Commerzbank is attempting to minimize legal risks in this area by reaching out-of-court settlements.

"Our goal is clearly to clear as much as possible in 2024. But that is not entirely in our hands," said Orlopp. This also depends on whether other borrowers in Poland accept settlement offers from the bank and how pending lawsuits progress. "We have to assume that there will still be charges in 2025. But this should then decrease significantly year on year," said the CFO.

A total of around 21,000 disputes have been concluded, either by settlement (almost 16,000) or by court judgment (more than 5,000). Of the 26,000 customers in Poland who still have an active loan with the bank, "a very large proportion have filed a lawsuit", said Orlopp.

In each of the past two years, Commerzbank's consolidated result in Poland was depressed by charges of more than one billion euros. Nevertheless, the bank achieved a record profit of 2.2 billion euros in 2023, boosted by the turnaround in interest rates. The Board of Managing Directors aims to exceed this figure in the current year - even "significantly", as can be read in the annual report for 2023. However, the outlook depends "on the development of the charges on mBank's Swiss franc loans", the bank qualified on Wednesday.

The bank's shareholders should also benefit from the targeted increase in profits for the year as a whole: The Management Board intends to distribute at least 70 percent of the profit to shareholders in the form of dividends and share buybacks. Commerzbank's largest shareholder since it was bailed out with billions in taxpayers' money during the 2008/2009 financial crisis is the German government.

With the increase following the figures, Commerzbank shares have increased their annual profit to 40 percent. Commerzbank has been flying high on the capital market since spring 2020. Since the record low as a result of the coronavirus pandemic, the share price has climbed by almost 440% to just under 18 billion. Thanks to this sharp rise, the bank returned to the DAX in February 2023.

Despite the recovery in recent years, the share is miles away from its record high before the financial crisis and the bursting of the dotcom bubble. Adjusted for many capital measures, including in connection with the state rescue, the record high is almost 285 euros from spring 2000./ben/zb/DP/zb