Commerzbank prematurely announces billions in profit – and wants to be in the Dax


The bank intends to publish its detailed figures on February 16 – based on the preliminary and unaudited annual financial statements.

(Photo: dpa)

Frankfurt Commerzbank or Rheinmetall? Investors have long been concerned with the question of who will move up to the Dax for the industrial gases group Linde in February. With a surprise coup, Commerzbank has now significantly improved its chances of being promoted to the Dax.

The institute presented figures in advance on Monday morning and shows earnings before interest, taxes, depreciation and amortization (Ebitda) of 3.37 billion euros for the past year. The bank has thus demonstrated that it has made an operating profit for two years in a row. This is a prerequisite for promotion to the Dax 40.

Apart from formal criteria such as operating profit, the market value of freely traded shares is decisive for promotion to the leading German index. According to this, Commerzbank has long been well ahead of Rheinmetall.

From the beginning of March, Linde will only be listed on Wall Street. That is why the German group, which has been the most valuable by market value to date, will be leaving the Dax at the end of February.

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Commerzbank will only present its final annual figures on February 16. One day later, Deutsche Börse wants to announce who will replace Linde on February 27th. The stock exchange uses market data from the end of January.

>> Read here: Commerzbank or Rheinmetall? Exciting race to succeed Linde in the Dax

According to CFO Bettina Orlopp, Commerzbank has already published the Ebitda for this reason in order to “enable Deutsche Börse to consider us as a successor candidate for Linde in the Dax 40 after two consecutive years without losses”.

Leap in consolidated earnings expected

The Ebitda is not a parameter that plays a role in the management of banks. Commerzbank focuses primarily on the operating result (earnings before interest and taxes) and the consolidated result after taxes. For the latter, analysts expect an average profit of 1.3 billion euros in 2022 – after 430 million euros in 2021.

Another key figure that the institute published on Monday together with the Ebitda shows that this magnitude is realistic. Your pre-tax profit rose to two billion euros in 2022 after 105 million euros in the previous year.

The main reason for the leap in profits at Commerzbank is net interest income, which is estimated to have risen by around a quarter. In addition, costs are likely to have fallen slightly as part of the restructuring of the Group. Commerzbank has announced that it will cut a total of 10,000 jobs and close almost 400 branches by the end of 2024 – and has already implemented most of them.

In the current year, analysts trust the money house to have a surplus of 1.7 billion euros. They assume that the bank will have to set aside a little more money for loan defaults due to the slowdown in the economy and higher energy prices. On the other hand, the burdens from the Polish subsidiary M-Bank are likely to be lower than in 2022. Rising interest rates will also continue to provide tailwind.

Commerzbank wants to pay dividends again

The fact that Commerzbank shares have performed well recently is also due to the fact that the institute intends to distribute part of its profits to its shareholders for the 2022 financial year for the first time since 2018. Analysts at Deutsche Bank assume that in addition to a dividend of 20 cents per share, there will also be a share buyback program worth 150 million euros.

Commerzbank was one of the founding members of the Dax, but was relegated to the MDax small-cap index more than four years ago. The former boss Martin Zielke explained at the time that the Dax descent did not change anything in the importance of the bank for the German economy.

However, the descent from the Dax was a major setback for Commerzbank’s reputation and self-image. After all, the leading index, which has meanwhile been expanded from 30 to 40 members, is regarded as the figurehead of the German economy. In addition, as a Dax climber, the Commerzbank share would benefit from the fact that providers of exchange-traded index funds whose products track the Dax would have to buy the institute’s paper.

Commerzbank shares rise only briefly, Rheinmetall shares lose

Rheinmetall is likely to be left behind again. The arms company’s shares have risen significantly since the start of the Russian war of aggression in Ukraine eleven months ago and have often been traded as a Dax candidate. In terms of market capitalization, however, Commerzbank has overtaken Rheinmetall.

On Monday, the Commerzbank share reacted only briefly to the news. At its peak, it rose by almost three percent to EUR 10.38, but quickly gave up almost all of its gains. The Rheinmetall share, on the other hand, fell 2.3 percent and has not yet recovered.

More: Europe’s banks are again making billions with interest – customers expect more attractive conditions

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