Commerzbank plans big share buyback despite profit dip

7th Aug 2024 09:18

(Sharecast News) - Commerzbank, Germany's second-largest listed bank, announced a 4.8% decline in second-quarter net profit on Wednesday, reporting earnings of €538m compared to €565m in the same period last year.

Despite the dip, the Frankfurt-based lender unveiled plans for a €600m share buyback, pending approval from the European Central Bank and the German government.

The drop in profit was put down to a decrease in net interest income and continued financial burdens from its Polish subsidiary mBank and legal issues in Russia.

Nevertheless, Commerzbank's revenue saw a slight increase of 1.5% year-on-year to €2.7bn, with rising fee income partially offsetting the decline in net interest income.

Chief executive officer Manfred Knof highlighted the first half of 2024 as the bank's most successful in 15 years, with profits up 12% on the year.

The bank's total assets jumped 11.6% to €560bn, and its common equity tier one (CET1) ratio improved to 14.8%.

Commerzbank confirmed its full-year outlook, projecting net interest income of at least €8.1bn and maintaining a cost-income ratio of around 60%.

The bank, which was undergoing a big restructuring under Knof's leadership, said it continued to streamline its operations and expand into asset and wealth management in the period, marked by its recent acquisition of a majority stake in Aquila Capital.

At 1047 CEST (0947 BST), shares in Commerzbank were down 5.23% in Frankfurt, at €12.49.

Reporting by Josh White for Sharecast.com.