Germany’s second-biggest lender Commerzbank has recently said that its net profit almost doubled in the first quarter, thanks to “a tailwind” from higher interest rates.
The group also said it made a bottom-line profit of 580 million euros (USD 630 million), compared with 298 million euros over the same period a year earlier.
“We had a very good start to 2023,” CEO Manfred Knof said in a statement.
“The interest rate development continues to give us a tailwind, and the fee business has delivered a good result,” the top official remarked further.
Like other lenders in Europe, Commerzbank has benefited from a higher interest rate environment as the European Central Bank has raised borrowing costs at an unprecedented rate in recent months to combat inflation.
Inflation in Germany, Europe’s biggest economy, eased to 7.2% in April 2023 after peaking at 8.8% in October 2022.
Commerzbank said quarterly revenues fell slightly to just under 2.7 billion euros, from 2.8 billion euros in 2022. The lender said the dip was partly due to charges set aside to cover legal costs at its Polish unit mBank.
As per reports, Commerzbank has embarked on a major turnaround in recent years, focussing on winning new customers, digitisation and reducing its workforce.
The bank has also culled around 9,000 jobs since 2021, out of a planned 10,000.
The overhaul helped the group remain in the black for a second consecutive year in 2022, when it booked a net profit of 1.4 billion euros, as per a report from Zawya.
Commerzbank returned to the prestigious DAX index of Germany’s 40 top-listed companies in February 2023.
Looking ahead, Commerzbank said it was aiming for a full-year net profit “well above that of 2022”.
The European Central Bank (ECB) and the Finance Agency have approved Commerzbank’s first share buyback programme of €122 million. It complements the 20 cents per share to be proposed as a dividend at the Annual General Meeting on 31 May 2023.
In line with its capital return policy, Commerzbank will now reportedly distribute 30% of 2022’s net profit after the deduction of AT 1 coupon payments.