Germany’s Commerzbank reported a consolidated net profit of €470mn ($478.9mn) for Q2 vs. a net loss of €527mn ($536.9mn) in the previous year. Total revenues were at €2.4bn ($2.5bn), up 30.1% YoY driven by strong customer business and rising interest rates. Net interest income rose 26% YoY to €1.5bn ($2.5bn) due to significant interest rate hikes in Poland and the rise in long-term interest rates in Germany. Net commission income increased 5% YoY to €896mn ($913mn) supported by high volumes in payment transactions in the Corporate Clients segment. Restructuring costs came down massively (95.2% YoY) to €25mn ($25.5mn). The bank has been implementing cost-reduction programs, in turn driving operating costs down by 16.4% YoY to €1.4bn ($1.4bn) primarily through personnel reductions and savings from the optimized branch network. The cost-to-income ratio fell sharply to 64.8% from 93.6% last year. Russia’s net exposure reduced by 45% since February to €1bn ($1bn). For 2022, the lender has guided for total costs to reach €6.4bn ($6.5bn) as a result of the higher compulsory contributions in Poland of approximately €100mn ($101.9mn). It also anticipates a net profit of more than €1bn ($1bn) and a 30% dividend pay-out. Recently, the lender’s long-term issuer and senior unsecured ratings were downgraded to A2 from A1 by Moody’s. The bank’s CET1 ratio stood at 13.7%, up 30bp YoY.
Commerzbank’s 7% perp is trading at 94.94, down 0.13 points at a yield of 9.19%.