Commerzbank lifts financial targets

26th Sep 2024 10:51

(Sharecast News) - Germany's Commerzbank reiterated plans to continuing growing as an independent bank on Thursday, including upping its financial targets, as it confirmed a first meeting with potential suitor UniCredit.

The German lender - which has caught the eye of Italy's UniCredit - said it expected earnings and profitability to improve "even more" in the coming years, with its return on tangible equity to reach more than 12% by 2027.

It had previously forecast a RoTE of 11% to 11.5%.

It also expects the return of capital to shareholders to be "accelerated and significantly increased", with net profit to rise above €3bn in 2027, and payout ratios of more than 90% in the year 2025 to 2027, subject to regulatory approval.

Jens Weidmann, chair of the supervisory board, said: "We are very satisfied with the implementation and ongoing further developement of our strategy until 2027.

"Commerzbank is continuously expanding its independent position as a strong pillar in the German banking market.

"As 'Bank for Germany', we firmly believe that it has considerable growth and appreciation potential."

Incoming chief executive Bettina Orlopp added: "We are continuously developing our robust growth history based on very solid assumptions, and are sharpening our financial targets.

"In this way, as in previous years, we will continue to create value for all our shareholders in the future."

Orlopp, who was named chief executive earlier this week, confirmed separately that talks would get underway with UniCredit on Friday.

The Italian lender has amassed a sizeable stake in Commerzbank, and earlier this month said it was keen to buy more shares and explore a possible tie-up.

Orlopp told investors there would be a first meeting with the lender on Friday. "UniCredit is now a shareholder and it is very normal that you exchange views," she said."

As at 1130 BST, shares in Commerzbank - Germany second-largest bank after Deutsche Bank - were up 6%.

The German government owns around 12% of Commzerbank.